|Empowerment Zones Case Studies
|Links:||New York City Empowerment Zone|
New York City was expected to receive an Empowerment Zone (EZ) grant because of New York City Congressman Rangel’spivotal role in adding the Empowerment Zones and Enterprise Communities initiative to the Omnibus Budget of 1993. Upper Manhattan combined with the South Bronx to submit a proposal demonstrating their need and outlining a strategic plan to accomplish the four EZ goals. The four principles underlying the EZ initiative are economic opportunity, sustainable community development, community-based partnerships and a strategic vision for change. The Upper Manhattan group, led by the political establishment of Harlem with close ties to Congressman Rangel, hired consultants from CUNY and Columbia University to write the strategic plan. The Bronx’s contribution was written by a local community development organization, Sobro. After the proposal was accepted drawing the lines of the EZ became a political battle which resulted in carefully drawn lines of New York City’s Empowerment Zone (EZ) weave their way from Harlem through Upper Manhattan and into parts of the South Bronx.
Once New York received the grant, the lead organizations became The Upper Manhattan Empowerment Zone Development Corporationand the Bronx Overall Economic Development Corporation. The empowerment zone covered thirty census tracks, two thirds of them are located in Upper Manhattan. According to the 1990 census data, there are 166,178 in the empowerment zone, 54% women, 42% of the population was below the poverty level.
Each Empowerment zone is guaranteed $100, but New York’s funds were matched by both New York State and New York City. With a total of $300 million in tax benefits, city land and grants, New York City’s Empowerment Zone had the resources to support large and small projects. The major themes in the NYEZ were “vigorous economic and commercial activity” and a “well-educated, trained and connected workforce.” Compared to other EZ plans, New York’s plan was the most sharply focused on economic development through attracting businesses and promoting entrepreneurship. One of its biggest projects was an $11.2 million loan to build Harlem USA, a mall on East 125th, which will house business like Old Navy, Gap, HMV, Disney and a 9 screen multiplex. Other businesses are moving to Harlem like Starbucks, Pathmark, Body Shop, Block Buster and Rite-Aid.
In addition to large business, the EZ supported small business creation and retention. 75% of the business in the EZ have less than 10 employees and 31% of the EZ residents are employed in small businesses. From 1997-2000 the number of establishments owned by EZ residents increased from 347 to 1,267 (265%) and the NY EZ establishment owners were most satisfied with the zone as a place to do business than owners in other EZs. Smaller projects include financing entrepreneur day care centers, book stores and other small businesses. The Bronx has received much less money than Upper Manhattan, partly because it has less people, but also less political power.
Negative EZ effects
Some community members thought that too much of the profit was leaving the EZ zone and that the commercial industries were for patronage, not employment. Lloyd Williams, the President and CEO of the Greater Harlem Chamber of Commerce is distressed by the fact that “Unfortunately, the major beneficiaries of the zone to date have been some of the large corporations.” The questionable level of commitment to sustained, local development stems from the leadership. According to HUD, the overall resident influence was the lowest in New York and was categorized as “present, but not active in shaping the agenda.” The governing board reflects New York’s business focus- 29% of their board were external corporate representatives, 13% were EZ business people and 2% were elected officials.
The NY EZ is mitigating these concerns by creating a small business development organization. Along with the Small Business Association, the NY EZ created the Business Resource & Investment Service Center (BRISC) which provides entrepreneur seminars, counseling and financing.
From 1995-2000, employment went up by 17%, percent of residents employed in the EZ rose by 154%, percent of zone establishments owned by minorities increase by 16%. In central Harlem, general crime decreased by 60%, murders decreased by 83% and shootings by 84.
Conclusion: Is private business solving the problem of poor communities?
The NY EZ was very successful, in fact, it was the most successful HUD Empowerment Zone. However, New York also had three times as much public funds than other cities, more political capital, and stronger community institutions. Paradoxically, NY had the lowest level of awareness and utilization of financial business incentives of any Empowerment Zone. At the same time, to date, NY has spent only $162 million of public dollars and has leveraged $362 from private enterprise. This multiplier effects shows that public investment can spark private investment, which helps solve the problems of poor communities by providing community development and economic opportunity.