Empowerment zones: How successful are they?

March 03, 1997|By Neal R. Peirce

DOUG BECKER'S decision to move his burgeoning Sylvan Learning Systems to the Baltimore waterfront is the kind of development the Clinton administration dreamed of when it first proposed empowerment zones for America's cities.

Sylvan last month opened its world headquarters, scheduled to expand to 600 employees, in a $32 million office and apartment complex in the Baltimore empowerment zone. It's the first major corporation to move to central Baltimore in over 20 years.

Not everything has gone quite so smoothly for the six urban empowerment zones -- in Atlanta, Baltimore, Chicago, Detroit, New York and Philadelphia-Camden -- since Washington designated them in December 1994. They're sharing most of the program's $2.5 billion in tax breaks and $1.3 billion in grants.

Unlikely coalitions

The competition for empowerment designation had real benefits as unlikely coalitions of neighborhood activists, city officials, business moguls, foundations and universities worked together on applications. Close to 300 cities applied.

The winners found the next steps a lot tougher. Especially controversial: Who would run the zone programs, dispensing grant dollars? Would it be the broad-based city coalitions that wrote the applications? Or the legally responsible city governments?

The question put many city halls and neighborhood organizations at loggerheads. Some governors even used their power over federal fund disbursement as an excuse to torment mayors they didn't like, reports Renee Berger in Planning magazine. Eventually, with deals designed to accommodate each city's politics, most of the control issues have been resolved.

But there's still the nagging question: Are empowerment zones worth our investment? Are they causing urban breakthroughs that wouldn't have occurred?

Investment in Detroit

Example: Without prospect of an enterprise zone, would industries and financial institutions have agreed to invest $1.8 billion in Detroit's troubled inner city? Would the new stadium at Temple University in Philadelphia have gone forward? A reverse commuting program in Baltimore?

Indeed, do empowerment zones create truly new jobs? Or do they just move existing jobs around a metropolitan region?

Sylvan Learning Systems' move evokes all those questions. CEO Doug Becker, a 30-year-old Baltimore native, obviously relishes the idea of moving a major corporation from suburban Columbia into Maryland's largest city.

''There's real excitement for our employees and customers in a downtown location,'' he told me. ''You have to come to the city for first-rate amenities, culture, the heart of commerce -- things you're hard-pressed to find in the suburbs.''

Some employees, said Mr. Becker, were worried about crime -- yet even Columbia has been experiencing break-ins and other unpleasant incidents. Parking worries were eased by the existence of large land parcels right at the waterfront.

What about finance? Everyone assumes that taxes and operating expenses are significantly higher in the city than in a suburb. But Sylvan ''challenged the assumption,'' Mr. Becker said. It found a brand-new building with favorable rents, bolstered by significant city and state assistance. And there is a $3,000-a-year federal tax credit for employees who live in the empowerment zone.

''Without zone designation, I think we'd have moved -- but it would have been a harder decision, and we'd have left more employees in the suburbs,'' he said.

Beyond financial health

But will he now hire many zone residents, especially people from low-income communities who have drug and criminal records? Mr. Becker waffled on that question but did say: ''We're a training and education company. We want to set values that go beyond the financial health of our firm.''

He is an urban entrepreneur with a public consciousness few CEOs emulate. His firm, growing fast with a 2,450-person work force, operates 650 learning centers around the world. It administers professional licensing exams at 1,300 testing centers.

Sylvan's getting ready to plunge into the growing after-school hours programming niche, in partnership with National Geographic. Already, it provides remedial education, within public schools, for more than 10,000 students -- ''flying below the radar as far as critics of privatization are concerned,'' says a Baltimore school official.

President Clinton is asking Congress to approve another 20 empowerment zones, and critics are already asking for proof of the benefit.

Sylvan's move to Baltimore suggests one answer. The few billion dollars involved will offset some of corporate America's lemming-like (and often federally subsidized) flight to America's ever-more-congested suburbs. And by making investment in our wounded urban cores more credible, the program might just cut urban blight and dependency, make the centers of our urban regions more competitive, and in the long run do the whole country a real favor.

Neal R. Peirce writes a column on state and urban affairs.

Pub Date: 3/03/97

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