Collaborative Governance for Urban Revitalization: Lessons from Empowerment Zones 9780801470912

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COLLABORATIVE GOVERNANCE FOR URBAN REVITALIZATION

COLLABORATIVE GOVERNANCE FOR URBAN REVITALIZATION Lessons from Empowerment Zones Michael J. Rich and Robert P. Stoker

CORNELL UNIVERSITY PRESS

ITHACA AND LONDON

Copyright © 2014 by Cornell University All rights reserved. Except for brief quotations in a review, this book, or parts thereof, must not be reproduced in any form without permission in writing from the publisher. For information, address Cornell University Press, Sage House, 512 East State Street, Ithaca, New York 14850. First published 2014 by Cornell University Press First printing, Cornell Paperbacks, 2014 Printed in the United States of America Library of Congress Cataloging-in-Publication Data Rich, Michael J., author. Collaborative governance for urban revitalization : lessons from empowerment zones / Michael J. Rich and Robert P. Stoker. pages cm Includes bibliographical references and index. Summary: The authors confront the puzzle of why the outcomes achieved by the original Empowerment Zones varied so widely given that each city had the same set of federal policy tools and resources and comparable neighborhood characteristics. Their analysis shows that revitalization outcomes are best explained by the quality of local governance. ISBN 978-0-8014-5250-5 (cloth : alk. paper) ISBN 978-0-8014-7912-0 (pbk. : alk. paper) 1. Enterprise zones—United States. 2. Urban renewal—Government policy—United States. 3. Urban renewal—Georgia—Atlanta. 4. Urban renewal—Maryland—Baltimore. I. Stoker, Robert Phillip, 1954–, author. II. Title. HT175.R53 2014 307.3'4160973—dc23 2013043252 Cornell University Press strives to use environmentally responsible suppliers and materials to the fullest extent possible in the publishing of its books. Such materials include vegetable-based, low-VOC inks and acid-free papers that are recycled, totally chlorine-free, or partly composed of nonwood fibers. For further information, visit our website at www.cornellpress.cornell.edu. Cloth printing Paperback printing

10 9 8 7 6 5 4 3 2 1 10 9 8 7 6 5 4 3 2 1

To Susan Clarke, Thomas Cook, Richard Nathan, and Clarence Stone mentors, colleagues, friends

Contents

Preface Introduction

ix

1

1.

Federal Aid and the Cities

13

2.

Good Governance

37

3.

Revitalization Strategies and Programs

53

4.

Local Governance Structures and Processes

85

5.

What Happened in EZ Neighborhoods?

103

6.

Atlanta’s Empowerment Zone

130

7.

Baltimore’s Empowerment Zone

164

8.

Explaining Revitalization Outcomes

198

Conclusion

226

Notes References Index

247 259 275

Preface

As students of urban politics and federal policy implementation we began a collaborative effort more than a decade ago to examine the relationships among policy design, local governance, and neighborhood outcomes. Much of the urban literature has studied these topics from one of two approaches—case studies of the local politics of policy implementation or evaluations of the effects of federal interventions in urban communities. Few studies have connected process and outcomes. This book is an effort to do just that, in the hope of improving the knowledge base that supports efforts to revitalize distressed neighborhoods. The Clinton Administration’s Empowerment Zones and Enterprise Communities initiative (EZ-EC), launched in 1994 as perhaps the federal government’s most ambitious effort to revitalize distressed neighborhoods, provides an opportunity to examine the connections between local processes and outcomes. Each of the original EZ cities (Atlanta, Baltimore, Chicago, Detroit, New York, and PhiladelphiaCamden) received a $100 million block grant and access to a variety of federal policy tools that included federal tax incentives, private facility bonds, waivers of regulatory barriers, and preferential treatment for federal aid to assist in carrying out projects and programs to transform their most distressed neighborhoods. From 1992–1994, Michael Rich served as the founding executive director of the Providence Plan, a new intermediary organization that led the city of Providence through the strategic planning process and prepared the city’s application for designation as an enterprise community, which the city received in 1994. In 1995, Rich, who had then joined the political science faculty at Emory University, ix

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and Robert Stoker of the George Washington University became field research associates for Atlanta and Baltimore, respectively, in the national evaluation of the EZ-EC initiative commissioned by the U.S. Department of Housing and Urban Development (HUD). We completed field research in our respective EZ cities for the Rockefeller Institute of Government’s Implementation Assessment (from 1995 through 1997) and continued in those roles in HUD’s second evaluation of the EZ-EC initiative, the Interim Outcomes Assessment (from 1998 through 2001), which was directed by Abt Associates and the Urban Institute. As the Interim Outcomes Assessment wound down, we agreed to continue research in our respective cities and explored the possibilities of writing a summative evaluation of the six original urban EZs. After discussions with several publishers, we embarked on a book-length project that would use the experiences of the EZs to assess the efficacy of collaborative approaches to urban revitalization, paying particular attention to the linkages between policy design (tensions between market and government policy tools), policy implementation (breadth and depth of governance structures and processes and capacity to act), and neighborhood outcomes (what happened in distressed neighborhoods). However, in contrast to other evaluations of the EZ-EC initiative, our evaluation focused on local outcomes and processes. Rather than asking whether the EZ-EC initiative worked, we asked how and why it worked in some cities but not in others. Many colleagues contributed to this project. Richard Nathan and David Wright of the Rockefeller Institute of Government directed the EZ-EC Implementation Assessment. Scott Hebert of Abt Associates and Avis Vidal of the Urban Institute directed the EZ-EC Interim Outcomes Assessment. Colleagues who served as field research associates in the other EZ cities were: Chicago (Charles Orlebeke), Detroit (Robin Boyle), New York (Elizabeth Mueller, Kian Tajbakhsk, and Brian Sahd) and Philadelphia-Camden (Robert Bailey). We gratefully acknowledge their contributions to our understanding of the EZ effort in their cities. Support for the early rounds of the Atlanta field research was provided by Micheal Giles, who provided introductions to many of the city’s key government, business, civic, and community leaders, and Robert Brown, as well as a number of very capable graduate students who scheduled and summarized interviews, chased down numerous documents and reports from a variety of local groups and organizations, gathered an extensive inventory of newspaper articles on the Atlanta EZ effort, and compiled a comprehensive history of Atlanta Empowerment Zone meetings and events. These include Doug Alexander, Heather Dash, Virginia Hettinger, Gibbs Knotts, Elizabeth Stiles, Aristide Sechandice, and Laurel Parker West. A special note of thanks goes to Adrienne Smith, who did a superb job coding and reconciling expenditure data on the uses of EZ funds in the six EZ cities and compiling information on each city’s local governance structure.

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We would also like to thank several people who provided valuable assistance, background and referrals on the EZ efforts in their cities. In Chicago, Chuck Orlebeke; in New York, John Mollenkopf; in Detroit, Robin Boyle; and in Philadelphia, David Bartelt, Eva Gladstein, Ira Harkavy, Deborah McColloch, and Wendell Pritchett. Several scholars and practitioners provided valuable comments on the manuscript or conference papers that included material later incorporated into the manuscript. We appreciate the assistance of Henry Cisneros, Susan Clarke, Marvin Mandell, Karen Mossberger, Richard Nathan, Clarence Stone, and Chris Walker. We are also grateful to colleagues at our home institutions. At Emory, Micheal Giles and Richard Doner offered very helpful comments and insights on the entire manuscript, and David Nugent and Moshe Haspel commented on selected chapters. In addition, Moshe Haspel provided assistance with data management and wrote Stata scripts that facilitated the analysis reported in chapter 5. At George Washington University, Jeffrey Henig, Paul Wahlbeck, and Harold Wolman provided valuable assistance and support. We are also grateful to Michael Leo Owens and Thomas Remington, coorganizers of the conference A Global Look at Governance: The State-MarketCivic Nexus, sponsored by Emory’s Claus Halle Institute for Global Learning, for the opportunity to present a preliminary version of our analysis. We also wish to thank Barbara Haley of HUD for the opportunity to present a summary of our analysis to HUD staff and other researchers in the Washington, DC, area. In particular, we wish to thank Judson James from HUD’s Office of Policy Development and Research, and Bill Barnes, research director at the National League of Cities, for their helpful comments and observations at that gathering. The empirical analysis of revitalization outcomes reported in chapter 5 evolved over the course of the project. We appreciate the comments and suggestions offered by several colleagues including Thomas Cook of Northwestern University, Michael Oakes of the University of Minnesota, and Kyle Beardsley David Davis, and Lance Waller from Emory University. We are especially grateful to Professor Oakes for his telephone and email consultations on the early phases of the analysis, his careful reading of various drafts of chapter 5, and his many helpful suggestions for creating a rigorous evaluation in a real world setting that posed challenges for conventional data analysis methods. We also wish to express our appreciation to the two anonymous reviewers who provided excellent comments to Cornell University Press. The final manuscript is much improved due to their suggestions. We also thank Melissa Connor and Kathleen Hatfield at Plus One Media for their assistance in the composition of the maps and figures included in the book. We are especially grateful to Michael McGandy, our editor at Cornell University Press, for his enthusiastic

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support and assistance throughout the review and production processes, and to Karen Hwa for her superb copyediting. Financial support for the field research conducted in Atlanta and Baltimore between 1995 and 2000 was provided by HUD through the Rockefeller Institute of Government at the State University of New York at Albany and Abt Associates. Support for additional field research in Atlanta and Baltimore, as well as data acquisition and analysis in all six cities, was provided by Emory University (Emory College and the Laney Graduate School of Arts and Sciences) and the George Washington University (Political Science Department). Although many people and institutions contributed to this work, the comments, opinions, and conclusions presented here are ours and do not necessarily represent the views of HUD, the Rockefeller Institute of Government, Abt Associates, the Urban Institute, Emory University, or the George Washington University. Finally, and most importantly, we wish to thank our families for their continued love, support, and encouragement throughout what often seemed to be a never-ending stream of late nights and weekends of research, writing, and editing: thanks to Amy Tozer and Aaron and Grace Tozer-Rich; thanks to Patricia, David, Gregory, and Katharine Stoker.

INTRODUCTION

For more than one hundred years the federal government has grappled with the complex problem of how to revitalize distressed urban areas. In 1892, Congress appropriated twenty thousand dollars to develop a plan to address the problems of slums in American cities (Willmann 1967). A century later, the Clinton administration launched the Empowerment Zones (EZ) and Enterprise Communities (EC) initiative—a multibillion-dollar community revitalization effort to create economic opportunity and promote sustainable community development in areas suffering from pervasive poverty, high unemployment, and physical or economic decline. Although many federal urban programs were created and many more were proposed but never came to fruition in the years between these two events, the EZ-EC initiative was distinctive. Empowerment Zones ended more than a decade of gridlock in federal policymaking over the appropriate role of the federal government in addressing urban problems (Rich 1993b). Republicans lauded the virtues of free markets and maintained that government was the problem; the most effective way to promote prosperity in distressed inner-city neighborhoods was to get government out of the way by removing regulatory barriers, reducing or eliminating taxes, and fostering entrepreneurism. Democrats, on the other hand, favored continued support of a variety of federal grant-in-aid programs that provided cities with resources for affordable housing, economic development, public safety, job training, education, and services for low-income children and families. EZ designees, for the first time, got both; designated cities received 1

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INTRODUCTION

federal tax and regulatory relief and a flexible federal social services block grant to support local programming and governance. Another feature of the EZ-EC initiative was its emphasis on targeting federal resources. Unlike the Model Cities program, which was intended initially to target only a handful of “model cities” but dispersed federal grants to more than 150 cities, the EZ-EC legislation called for the creation of only six urban and three rural EZs. This concentration of federal urban assistance, within a limited number of neighborhoods in a small, select group of cities, was unprecedented, and at the time it was thought to be critical for attaining tangible evidence about the effectiveness of revitalization initiatives. The EZ initiative was predicated on the assumption that city governments could advance neighborhood revitalization by embracing a comprehensive, collaborative, community-based approach. Such a transformation, however, would require not just a new toolkit and federal resources but a shift in the nature of local governance. The EZ-EC initiative encouraged cities to develop a strategic vision for change and back up that vision with a new style of collaborative governance focused on performance, adaptability, and learning. This reflected both the nascent community-building paradigm that was taking hold through foundation-funded pilot projects in several American cities in the late 1980s and the reinventing-government movement that was advanced during the Clinton administration.1 The paradigm featured comprehensive, collaborative, community-based partnerships to address the needs of poor residents in distressed neighborhoods (Sharp and Beaudry 1994; Kingsley et al. 1997; Kubisch et al. 2010). While the federal government had previously encouraged public-private partnerships to promote urban revitalization (Fosler and Berger 1982; Frieden and Sagalyn 1989), the EZ-EC application process mandated the development of a broad, inclusive partnership among all segments of the local community to develop a strategic plan. These participants were to be integrated into a collaborative problem-solving process that coordinated their actions by developing procedures to promote cooperation and manage conflict. Cities were encouraged to reinvent local governance by identifying goals and performance benchmarks, mobilizing participants from multiple sectors (government, business, and nonprofits), developing plans to achieve benchmarks, encouraging linkages across programs and projects to achieve a whole greater than the sum of its parts, and making midcourse corrections as new problems or opportunities emerged. Finally, the EZ-EC initiative was one of the first federal urban policies to promote regionalism. The enabling legislation required that one of the original urban EZs include a metropolitan area located in different states, promoting the idea of regional solutions to urban distress. The initiative further promoted

INTRODUCTION

3

regionalism by encouraging cities to consider strategies to connect zone residents to regional economic opportunities, rather than focusing solely on efforts to bring jobs to zone neighborhoods. While not all elements of regionalism were successful, the EZ-EC initiative was a pathbreaking effort to promote regional strategies for revitalizing inner-city neighborhoods.2

The Original Urban EZs The problems of persistent, concentrated poverty and neighborhood distress were decades in the making and their root causes generally extended well beyond neighborhood—and city—boundaries (Rusk 1995, 1999; Ferguson and Dickens 1999; Dreier et al. 2004). Thus, as Alice O’Connor (1999) observed, urban revitalization initiatives are swimming against the tide; with limited resources, urban policies struggle to counteract long-standing macroeconomic trends (such as deindustrialization and globalization), better-funded federal policy initiatives (such as transportation and housing policies that encourage suburban development), and severe social problems (such as limited educational achievement, idleness, dependency, and crime) that are often concentrated in inner-city neighborhoods. The original urban EZs (in Atlanta, Baltimore, Chicago, Detroit, New York, and Philadelphia-Camden) were selected as the federal government’s first round of designations, in December 1994. Each EZ city received a $100 million federal block grant and was eligible for special federal tax incentives. Although other cities were later designated as EZs, the federal resources provided were less generous (Stoker and Rich 2006). The original EZs thus represent the high-water mark for federal support for urban revitalization that encouraged collaborative, performance-based local governance and broad community participation. Based on demographic, social, and economic trends, the original urban EZs exhibited signs of distress that were common in many large American cities. All but New York experienced substantial population declines between 1970 and 1990, though the city also lost population during that period. All the EZ cities showed increasing concentrations of poverty and growth in the size of their poverty populations. As Paul Jargowsky (1997) reports, there was a national trend toward increased concentration of poverty in urban neighborhoods at this time. However, the EZ cities experienced this trend more intensely than did many other big cities. In addition, the geographic areas designated as EZs within these cities were substantially more disadvantaged than the city as a whole, with poverty and unemployment rates generally twice as high in zone neighborhoods as compared to citywide rates (Wright et al. 1996, 28–30).

4

INTRODUCTION

The original EZ cities had extensive experience with other federal urban programs. All had large inventories of public housing and urban renewal programs dating to the 1950s and 1960s; all were participants in the Model Cities program (1966–1974); and all but Atlanta ranked high in the number of grants and amount of funds awarded through the Urban Development Action Grant program (1978–1989). All but New York had received at least one HOPE VI public housing transformation grant by the time of their EZ designation. Many EZ cities also had experience with local community-building initiatives. In 1991 former president Jimmy Carter announced the creation of The Atlanta Project, a comprehensive effort designed to eliminate poverty (Giles 1993). At about the same time, the Transforming Community Program was under way in Baltimore’s Sandtown-Winchester neighborhood as the city worked in partnership with the Enterprise Foundation (Brown et al. 2001). And in New York, the Surdna Foundation was guiding the Comprehensive Community Revitalization Program (Miller and Burns 2006), a neighborhood revitalization effort in the South Bronx. Each of these cities drew from these experiences in crafting their EZ strategic plans. Despite these similarities, there were important differences in how the original EZ cities designed their local programs and how they organized and operated local governance processes. In addition, there was substantial variation in what the original EZs accomplished (Rich and Stoker 2010). As a result, the primary puzzle we confront is this: Why were the outcomes achieved in the original EZs so different given that each city had the same set of federal policy tools and resources, and the characteristics of their zone neighborhoods were broadly comparable? Our analysis shows that differences in revitalization outcomes across the EZ cities are best explained by the quality of local governance.

Governance Matters Our central claim is that governance matters—that is, the quality of local governance influences the prospects that urban revitalization efforts will be successful. The primary lesson suggested by the original urban EZs is that good local governance makes positive contributions to revitalization efforts, while poor local governance retards progress. Consequently, the key question is, How to govern? That is, how to develop and sustain a comprehensive strategy for advancing economic opportunity and community development in distressed urban neighborhoods? By good governance, we mean more than the quality and effectiveness of the individuals and institutions that constitute local government. Although government is important, successful local governance is not solely about city government.

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5

Rather, as Gerry Stoker (2000, 93–94) explains, “Governance involves working across boundaries within the public sector or between the public sector and private or voluntary sectors. It focuses attention on a set of actors that are drawn from but also beyond the formal institutions of government.” Good local governance transcends local government by creating institutions that encourage key local stakeholders (inside and outside government) to make durable commitments to a revitalization agenda, creating a legacy that can outlast changes in local government leadership. The fragmentary distribution of power in liberal democracies can hamstring local government and give rise to the need for local governance (Elkin 1987; Stone 1989; Gates 1991). Urban political power is fragmented because cities are embedded within a larger federal system; the policy tools and resources available to urban governments are limited (as in the case of taxing and spending authority derived from state governments) and subsidiary (as manifest in the “strings”—substantive and procedural—attached to federal grant-in-aid programs). In addition, the need to compete with other jurisdictions to attract and retain investment makes urban centers especially sensitive to capital mobility and the division of power between market and state (Peterson 1981). Consequently, the most elementary imperative of local governance is to generate and sustain the political momentum that is required to overcome this fragmentary distribution of power to create the capacity to solve important public problems (Stone 1989; Stone et al. 2001). Our perspective on local governance is grounded in urban regime theory (Elkin 1987; Stone and Sanders 1987; Stone 1989; Ferman 1996). Regime theory examines institutionalized cooperation between power centers within a city to explain how and why a particular policy agenda is created, advanced, and sustained. By contrast, our concern with urban governance is the relationship between the quality of local governance and the ability of communities to solve problems related to distressed neighborhoods. A governance process is not as broad or stable as an urban regime. Regimes are durable political arrangements that structure urban politics for an extended period (Stone 1989, 3). By contrast, our notion of local governance refers to community problem solving for a specific issue—such as the revitalization of distressed neighborhoods. Governance processes typically operate within a particular policy domain and, thus, on a more limited scale than urban regimes. Although it is likely that governance processes reflect some of the key characteristics of the broader regime in which they are embedded, several different governance processes may be operating simultaneously within the same urban regime. Indeed as Susan Clarke (2007, 27) points out, “New governance arrangements interact with the institutions in which they are embedded or, more tellingly, the institutions whose shortcomings gave rise to the governance arrangements themselves.”

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INTRODUCTION

Good local governance creates or enhances the capacity to act in conditions of diffuse authority, interest conflict, and mutual dependency (Stoker 2000; Chaskin and Garg 1997; Stone 1989). Diffuse authority exists when the power to address important social problems is held in many hands. Because no one is in charge, no one can issue commands to marshal the resources that are necessary for effective problem solving. Conflicts of interest exist when there are benefits to be realized from cooperation and policy coordination, but there are differences of opinion about the ends or means of policy. Thus, steps must be taken to promote cooperation. Mutual dependency exists when the actions or inactions of each stakeholder have consequences for all. Thus, gains can be realized from cooperation and opportunity costs are imposed by a lack of cooperation. For example, efforts to deconcentrate poverty by redeveloping public housing may be delayed or derailed if residents protest in court. Cooperation can be encouraged by offering support services, enhancing financial incentives, and creating a right of return. In the absence of good local governance, businesses, nonprofits, and government agencies make uncoordinated decisions. Consequently, the resources they control that could contribute to urban revitalization are not used effectively; their uncoordinated efforts may even work at cross-purposes. Good local governance allows a coordinated response to multiple, overlapping problems by orchestrating the efforts of numerous institutions and coordinating the resources the city can muster to address tough problems. Good governance reflects three interrelated dimensions that our evidence suggests are critical to successful urban revitalization: • Local capacity. How do diverse urban communities create the capacity to act—that is, how do they come together to develop and sustain political support to advance an urban revitalization plan? • Community participation. How—if at all—is the community most directly affected by the revitalization agenda integrated into the governance process? What role—if any—do residents and community-based organizations play in planning, implementing, and evaluating urban initiatives? • Local program integrity. Does local governance make effective use of scarce resources? That is, do urban revitalization initiatives integrate problem solving, combat corruption, and reflect lessons learned from experience? Critics may suggest that the outcomes achieved in the original urban EZs varied because social and economic conditions were different. That approach, however, does not explain the patterns of outcomes we observed. The two EZs that consistently produced positive results, Baltimore and Philadelphia, were among

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the most troubled cities in terms of market conditions and indicators of urban distress. On the other hand, Atlanta (the EZ with the weakest revitalization outcomes) was among the cities that were most advantaged in terms of social and economic trends and conditions. To be clear, our point is not that the social and economic context is irrelevant; our point is that poor local governance can squander a favorable context and good local governance can overcome a difficult context. This suggests that while contextual factors are important, what cities do in response to local context matters.

Governing Baltimore’s Empowerment Zone The Baltimore EZ illustrates the contributions that good local governance can make, even when a city is disadvantaged by social and economic conditions. During the late 1990s, EZ officials in Baltimore negotiated numerous contracts to attract or expand businesses in the zone that exchanged financial support and other considerations for specific employment goals. This resulted in job creation that enhanced the employment and earnings prospects of zone residents (Rich and Stoker 2010; Jacob France Institute 2005). Thirty years earlier, the inability to negotiate similar agreements was a key component of the failure of the Economic Development Administration’s (EDA) Oakland initiative. Jeffrey Pressman and Aaron Wildavsky’s (1973) analysis of the obstacles encountered by the EDA while implementing an urban redevelopment program in the late 1960s in Oakland shows the consequences of poor governance. The EDA launched an experimental initiative to encourage job creation through targeted business development in order to provide opportunities for Oakland’s long-term unemployed (mostly minority) residents. The expansion of the facilities operated by the Port of Oakland, including the construction of a new hangar for World Airways, was the largest component of the Oakland initiative. The EDA initially agreed to provide assistance to World Airways (in the form of low-interest loans and grants) to finance construction of the hangar. However, tensions emerged during contract negotiations when the EDA demanded that World Airways accept specific employment obligations in exchange for financial support. The contract attempted to create a mutually beneficial exchange relationship: World Airways would receive financial benefits in exchange for providing jobs to Oakland’s long-term unemployed, helping the EDA to meet its employment goals. Although the initial contract negotiations indicated that there was room for agreement, the accord eventually collapsed (Stoker 1991). The EDA insisted that employment goals for World Airways should be included in the contractual agreement. Absent clear employment provisions, the EDA had to trust World

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INTRODUCTION

Airways to make a serious effort to employ Oakland’s long-term unemployed residents. Placing employment provisions in the contract was a way to ensure that the financial support provided to World Airways would advance the EDA’s employment goals. However, the contract provisions that reassured the EDA brought conflicts with World Airways to the forefront. Contract negotiations collapsed; World Airways did not receive the EDA’s financial assistance and Oakland’s long-term unemployed residents did not get jobs. Stephen David and Paul Kantor (1983) interpreted the EDA’s failure as a manifestation of systemic problems of federalism; by promoting job creation for the long-term unemployed, federal officials were promoting a redistributive policy, placing them in conflict with local businesses and officials who were interested in developmental policies. Baltimore’s EZ officials offered low-interest loans and training grants to businesses in exchange for employment guarantees. Although this arrangement seems to invite exactly the sort of conflict that David and Kantor suggest undermined the Oakland initiative, firms in Baltimore signed on. How did EZ officials overcome what was considered a systemic problem of federalism? Baltimore’s local governance process created several companion programs to recruit and train zone residents to fill employment slots. This reduced the uncertainty and enhanced the rewards connected with cooperation to pursue employment goals, making it possible for business leaders and EZ officials to agree despite their conflicting interests (Stoker 1991). EZ officials in Baltimore developed a “customized training” program in conjunction with business partners to train workers for specific, emerging job opportunities in the zone. EZ residents who completed the training were assured that the skills they had developed through training would lead to a local job opportunity. EZ officials used customized training as one part of a larger package of economic incentives to attract business investment to encourage employment growth in the zone. Consider how the actions of Baltimore’s EZ officials differed from those of EDA officials in Oakland. Rather than demanding that businesses accept responsibility for achieving employment goals (an uncertain and risky burden for any firm to accept), EZ officials partnered with the firms to expand business growth, create employment opportunities, and accomplish employment goals by recruiting and training zone residents. These partnerships were possible because of the local governance arrangement and processes within Baltimore’s zone. The primary governance structure in Baltimore’s EZ was Empower Baltimore Management Corporation (EBMC). The EBMC board of directors was composed of the city’s business, philanthropic, nonprofit, and governmental elite along with members of zone communities who were included as representatives of six “village centers” (VCs). The VCs, community-based nonprofit

INTRODUCTION

9

corporations sponsored by EBMC, were vital participants in this process because they conducted outreach programs to recruit zone residents for job placement and preparation programs and prescreened applicants to assure that they were viable trainees for customized training slots. The community outreach activities orchestrated by the VCs created a pool of employable, trainable zone residents to satisfy the workforce needs of firms that were expanding in the zone. Consequently, EBMC was able to offer a package of benefits to recruit firms and create jobs in the zone using a variety of policy tools: Below-market loans and grants helped to finance business relocation or expansion; community outreach programs implemented in the VCs helped to satisfy the firms’ personnel needs by recruiting zone residents; job preparation programs implemented by the VCs in conjunction with local nonprofits helped to prepare more zone residents to enter the labor pool; customized training prepared zone residents for real employment opportunities and provided a trained workforce for firms; and, because the workforce was drawn from the EZ, firms enjoyed a tax credit for employing zone residents. Although customized training did enhance the rewards of cooperation, the ability of business leaders and EZ officials to cooperate did not reflect an alignment of their interests and incentives. To the contrary, as David and Kantor observed, there is an inherent conflict in the implementation process when developmental policies promote redistributive goals. However, local EZ governance created a context in which it was possible for businesses and EZ officials to cooperate in spite of their conflicts (Stoker 1991). This was a result of good local governance: an institutionalized relationship between local businesses, nonprofits, economic development officials, philanthropies, local government agencies, community-based organizations, and zone residents that resolved conflicts and coordinated their collective efforts to enhance Baltimore’s EZ programs.

Study Design and Implications Our analysis of the outcomes produced in the original urban EZs uses a mixedmethods approach that combines field research, secondary analysis of previous EZ studies, and quantitative analysis of the effects of local EZ programs. We have completed more than a decade of field research in Atlanta and Baltimore, including interviews with city officials, business executives, civic leaders, and a variety of neighborhood-based stakeholders, as well as analysis of EZ strategic plans, progress reports, budget documents, newspaper stories, and attendance at a variety of EZ meetings and events.3 The study also incorporates original and secondary research completed in the four other original EZ cities. Our

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quantitative analysis of local EZ outcomes is based on a quasi-experimental design that examines the effects of the EZ intervention across a variety of revitalization outcomes (jobs, poverty, unemployment, and housing and business investment) in EZ census tracts compared with a matched-pair set of comparable census tracts in each city. By looking at local programs separately we are able to account for significant variation in the construct validity of the EZ initiative across cities (i.e., cities emphasized different goals, strategies, and programs) as opposed to studies that have pooled all the EZ cities into a single analysis (which assumes a consistent intervention in all EZ census tracts). In addition, by extending our analysis of EZ outcomes to include a variety of different components of neighborhood well-being we can better determine how—if at all—EZ effects vary by type of outcome, both within and across cities. These design choices in turn enhance our ability to detect variations in the relationships between local governance, EZ strategies, and neighborhood change across outcomes, treatments, and settings. As Andrew Jordan, Rüdiger Wurzel, and Anthony Zito (2005, 477) have observed, “The governance ‘turn’ has generated much theorizing, but there is still surprisingly little comparative empirical work. There is, however, a growing appreciation of the need to move beyond theorizing and conduct more detailed empirical testing.” By synthesizing research on process and outcomes using a mixed-methods approach, we are able to develop a more detailed understanding of the key determinants of successful urban revitalization. Thus, although the foreground of our study focuses on the determinants of successful strategies for revitalizing distressed urban communities, the backdrop reflects concerns that have shaped the study of urban politics (who governs? and to what effect?), public policy (the interrelations of the public, private, and nonprofit sectors), public administration (design and implementation of public programs), and federalism (the balance between federal and local control) over the past fifty years. Our work makes two contributions to the existing literature. First, the existing EZ evaluations have not emphasized local outcomes. By contrast, we emphasize local variation. Rather than asking if the EZ initiative worked, we ask where it worked and why. Second, the existing literature has separated questions about process (EZ governance) from questions about outcomes. We have joined these concerns, linking the quality of local governance to local outcomes. By our doing so, our work fuses long-standing theoretical concerns in political science, urban politics, public administration, and public policy with evaluation research. Our findings have implications for how we think about and study the revitalization of urban neighborhoods. These include the composition and effects of urban policymaking processes; policy design and implementation, particularly the tools of government action and the implications those tools have for successful implementation; program evaluation, especially the challenges of evaluating

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complex social interventions composed of multiple components and directed at multiple targets (e.g., individuals, families, neighborhoods, and communities); and federalism and intergovernmental relations, especially the local politics of neighborhood change. In particular, our findings provide empirical support for the importance of local governance for effective community problem solving. Our findings also have implications for federal policymakers and local stakeholders. The Obama administration has given higher priority to urban issues by establishing the White House Office of Urban Affairs and creating new initiatives, such as Promise Neighborhoods, Choice Neighborhoods, and Sustainable Communities, that are rooted in a place-based approach to urban problems. These principles, many of which are similar to the EZ-EC initiative, are summarized in the White House Neighborhood Revitalization Initiative (unveiled in September 2010). According to the Obama administration, “the Neighborhood Revitalization Initiative is operating under a shared theory of change—that an integrated, coordinated effort to increase the quality of a neighborhood’s (1) educational and developmental, (2) commercial, (3) recreational, (4) physical, and (5) social assets, sustained by local leadership over an extended period, will improve resident well-being and community quality of life. The initiative’s goal is to support the transformation of distressed neighborhoods into neighborhoods of opportunity—places that provide the opportunities, resources, and environment that children, youth, and adults need to maximize their life outcomes” (White House Office of Urban Affairs 2010, 2). As the Obama administration strives to transform its Neighborhood Revitalization Initiative into successful local programs, it is essential to consider the lessons from the EZ initiative, particularly those pertaining to local governance and federal actions that can help to enhance the quality of local governance. Our findings also have implications for the local stakeholders in urban revitalization and local politics, broadly conceived. They lend empirical support to the observation by Bruce Katz and Jennifer Bradley (2013, 3) that “the real, durable reshaping is being led by networks of city and metropolitan leaders—mayors and other local elected officials, . . . heads of companies, universities, medical campuses, metropolitan business associations, labor unions, civic organizations, environmental groups, cultural institutions, and philanthropies.” They add that “the cavalry is not coming. Mired in partisan division and rancor, the federal government appears incapable of taking bold action to restructure our economy and grapple with changing demography and rising inequality.” Although our findings show that good local governance is the foundation of successful urban revitalization, they also show that a variety of different local stakeholders can contribute to good governance. Given the intense interest across a variety of institutions in grappling with the difficult problems associated with

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urban distress, this is a hopeful message. Crafting effective local governance structures and processes is a real possibility that offers a positive local agenda for foundations, nonprofits, and community-based groups (Chaskin and Karlström 2012; Greenberg et al. 2010; Living Cities 2012). Although governmental leadership can spur good governance efforts, as the Baltimore and Philadelphia EZ experiences show, local stakeholders can develop independent or complementary actions to advance and sustain a good governance agenda (see also Katz and Bradley 2013, chap. 5).

Organization of the Book The initial chapters of the book establish a foundation for understanding urban revitalization and the role of governance. Chapter 1 describes the evolution of federal urban policy and the EZ initiative, paying particular attention to how the design of federal policy instruments reflects the prevailing ideology of the time regarding the appropriate roles for public, private, and nonprofit actors in the revitalization of urban communities and the continuing quest for effective strategies for coordination. Chapter 2 presents an overview of governance and, in particular, government involvement in the revitalization of urban communities. The middle chapters examine the EZ initiative. Chapter 3 describes the local strategies and programs in the original urban EZs. Chapter 4 describes and assesses the quality of local governance in the original urban EZs. Chapter 5 presents our evaluation of what happened in EZ neighborhoods (as compared with their matched-pair comparison areas) in the six original urban EZs. We complement the outcome evaluation with two case studies of the cities that anchor the ends of our EZ performance continuum. Chapter 6 presents a case study of Atlanta’s EZ. Chapter 7 presents a case study of Baltimore’s EZ. The book’s final chapters link the analyses of EZ process and outcomes to assess our theory of urban revitalization. Chapter 8 examines the evidence we have presented to identify the key determinants of success in the original urban EZs—our conclusion is that positive outcomes that were achieved are most plausibly linked to good local governance. Finally, in the concluding chapter we examine the implications of our work, for both theory and practice, offering recommendations for the design and execution of future revitalization initiatives. We argue that urban revitalization outcomes are related to the quality of local governance. Consequently, federal urban policymakers and other stakeholders concerned with revitalizing distressed neighborhoods (foundations, nonprofits, community-groups, and state and local governments) should embrace and encourage good local governance.

1 FEDERAL AID AND THE CITIES

In the aftermath of the riots in South Central Los Angeles in April 1992, big-city mayors hoped national attention would once again focus on the problems of the cities. Although mayors and other urban leaders thought the time was ripe for a new approach to federal urban policy, political partisans disagreed about the causes of the riots. Marlin Fitzwater, President George H. W. Bush’s press secretary, suggested that the violence in Los Angeles was caused by the failure of the Great Society’s antipoverty programs when he remarked that “many of the root problems that have resulted in inner-city difficulties were started in the ’60s and ’70s” (Devroy 1992, A8). When Fitzwater’s comment was met with an outcry by leading congressional Democrats the Bush administration retreated from this claim. Public opinion reflected the partisan divide. In a survey conducted by the Washington Post more than half (55 percent) of the respondents blamed current urban problems on “the failure of President Bush and former President Ronald Reagan to deal with the problems of inner cities” (Morin and Yang 1992, A1). On the other hand, more than four of ten respondents attributed urban distress to the failure of Great Society programs. Regardless of where they placed blame however, the vast majority of respondents noted that older urban programs should be abandoned in favor of “a whole new approach” and three of four suggested that a “lack of knowledge and understanding about the best ways to solve the problems” was the major impediment to addressing the nation’s urban problems. 13

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The Evolution of Federal Urban Policy The Empowerment Zones and Enterprise Communities (EZ-EC) initiative was created in response to the Los Angeles riots. The initiative’s distinctive design combined federal grants-in-aid, the long-standing foundation of federal urban policy, with supply-side policy tools (tax and regulatory relief) that became popular during the Reagan administration. As we noted in chapter 1, the initiative also reflected lessons learned from comprehensive community development demonstrations that were gaining traction in several national foundations in the early 1990s (Kubisch et al. 2010) and included features that reflected the efforts of President Bill Clinton’s administration to reinvent government. Finally, the EZ-EC initiative was also a legacy of earlier federal urban programs. In this chapter we review the evolution of federal urban policy to highlight the legacies and unresolved issues from previous policies that influenced the design of the EZ-EC initiative. We pay particular attention to the local context to illustrate how the historical development of federal urban programs has affected the institutions, organizations, and practices for addressing concentrated poverty and its consequences in American cities.

Rebuilding the Inner City Urban historian Jon Teaford (1990, 11) observed that by the close of the 1930s the nation’s big cities “were perceived as relics in radical need of rehabilitation and restructuring. Local leaders and urban experts viewed this decline of the central cities largely as physical rather than a social problem . . . [and] the commonly identified enemy of the late 1930s and early 1940s was ‘blight.’” Although notable renaissance partnerships emerged in a few cities, in part as a consequence of state laws that granted cities the power of eminent domain and authorized public aid to private interests through tax exemptions and special bond financing, the 1940s were, in Teaford’s words, largely “a decade of planning and proposal development.” Teaford noted that “a perquisite for renewal was a mobilized private sector, an energetic leadership in city hall, and a firm financial foundation” and while many cities had achieved the first two, finding the money to pay for their grand plans proved more difficult. The federal urban renewal program, authorized under Title I of the Housing Act of 1949, appeared to be the catalyst many cities had been waiting for; the federal government agreed to cover two-thirds of the net cost incurred by local governments for acquiring and clearing blighted properties and selling the cleared land to private developers (Foard and Fefferman 1966). The local onethird share could be met by contributions from state or city governments and

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15

could also include in-kind assistance such as street, water and sewer, and related public improvements to make the site more attractive for private development. The urban renewal program, however, restricted federal funds to only those projects that cleared predominantly residential sites or prepared land for predominantly residential development. Consequently, the program was little used by cities interested in revitalizing the urban core, which in most cities at that time was largely composed of a collection of aging commercial and industrial properties, many vacant or abandoned. In the 1960s, urban renewal gathered momentum, partly because of legislative amendments that extended the eligible uses of urban renewal funds to include commercial, industrial, institutional, and mixed-use developments. The rise in redevelopment activity, coupled with the increased pace of federally funded expressway construction, substantially increased the disruption in inner-city neighborhoods. By 1964, nearly two-thirds (63 percent) of the families relocated by urban renewal were nonwhite, leading one observer to note, “It is not surprising that slum clearance came to be labeled ‘Negro clearance,’ and urban renewal as ‘Negro removal,’ and a target for civil rights groups” (Lowe 1967, 207).1 A counter narrative to the revitalization agenda advocated by business and political elites emerged in the 1960s that encouraged rehabilitation, renewal, and preservation of existing neighborhoods as opposed to clearance and redevelopment. Perhaps the clearest statement was made by Jane Jacobs (1961, 270–73), who wrote in The Death and Life of Great American Cities that urban renewal “merely shifts slums from here to there, adding its own tincture of extra hardship and disruption.” Jacobs added that the antidote to the elimination of slums and blight, or “unslumming” as she preferred, “hinges paradoxically, on the retention of a very considerable part of a slum population within a slum. . . . If the conditions for generating diversity can be introduced into a neighborhood while it is a slum, and if any indications of unslumming are encouraged rather than thwarted, I believe there is no reason that any slum need be perpetual.” A year later a detailed ethnographic portrait of Boston’s West End urban renewal project was provided by Herbert Gans (1962). Although the West End was deemed by urban planners to be a slum, Gans revealed it to have a wellfunctioning social structure where life was similar to what one would find in any neighborhood or small town. By mid-decade, several critiques of urban renewal were circulating in the academy and the popular press. These included Martin Anderson’s (1964) The Federal Bulldozer, James Wilson’s (1966) Urban Renewal: The Record and the Controversy, and Jeanne Lowe’s (1967) Cities in a Race with Time. A common theme in these works was that the human aspects of communities were being lost in the fervor to revitalize the physical landscape of cities. As Lowe (1967, 207) observed, “Many local [urban renewal] agency officials

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exhibited little understanding of or concern for complicating ‘social’ problems. They were under pressure from their city’s business and government leaders to reach the ‘brick and mortar’ stage so that higher taxes could be realized from new buildings on the former slum land. There was a tendency, as one federal housing official put it, to ‘give the families a few dollars and tell them to get lost.’”

Fighting Poverty Although the critiques of urban renewal may have been sufficient to shift federal policy toward a more comprehensive approach, a broad array of societal forces were reformulating the urban problem, with poverty at the center of that reformulation. As James Sundquist (1968, 19), who served in the Bureau of the Budget during the administration of President Lyndon B. Johnson, observed in Politics and Policy, offering his assessment of the formulation and implementation of Johnson’s Great Society, “Until 1964 the word ‘poverty’ did not appear as a heading in the index of either the Congressional Record or the Public Papers of the President.” Sundquist attributes the origins of the War on Poverty to the convergence of several “streams of thought and action” that began to flow together in the early 1960s, fundamentally changing the federal role in urban affairs. The first was President John F. Kennedy’s Committee on Juvenile Delinquency and Youth Crime, which was directed to formulate a coherent, community-based strategy for addressing the problem of juvenile delinquency. The second came from the Ford Foundation, then the nation’s largest philanthropy, which in the late 1950s developed an interest in urban problems. According to Sundquist (1969, 11), the foundation’s leaders were “looking for a new and broader approach to the social as well as the physical problems of the urban ‘gray areas.’” By 1963, the Foundation’s Community Development Program had funded local initiatives in four cities— Oakland, New Haven, Boston, and Philadelphia—and a statewide effort in North Carolina to create new nonprofit corporations to “coordinate all agencies in the community, public and private, whose activities impinged upon the poor.” Other contributions to the War on Poverty came from the nation’s welfare and employment and training programs, which increasingly emphasized helping welfare recipients and the long-term chronically unemployed achieve selfsufficiency through supportive services such as training in literacy and basic work skills. According to Sundquist, these developments, along with the growing civil rights movement, Michael Harrington’s (1962) The Other America, and several newspaper articles that vividly described poverty in rural and urban America, contributed to President Kennedy’s decision to make a comprehensive assault on poverty the centerpiece of his 1964 legislative agenda.

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Although work on the antipoverty initiative was briefly suspended following Kennedy’s assassination, Sundquist (1969, 21) reports that “President Johnson lost no time in restoring their momentum,” as he fully endorsed the poverty initiative, considering it to be “my kind of program. . . . Move full speed ahead.” One of Johnson’s first actions as president was to declare an “unconditional war on poverty in America,” in his budget message to Congress in January 1964, calling for over $1 billion ($7.4 billion in 2012 dollars) in new budget authority to begin an all-out assault on poverty. EC O N O MI C O PPO RTU N I TY AC T

The Economic Opportunity Act of 1964 created new programs and brought structural changes to antipoverty efforts. According to Sundquist (1969, 31), “the distinctive contribution of the War on Poverty as an idea lay less in what it added to the battery of operating programs than in the unifying theme it provided for the activities of many governmental and private agencies and the coordinating devices that were created—OEO [Office of Economic Opportunity] in the executive office of the President and the community-action agency in each community.” Sanford Kravitz (1969, 58–59), who was associate director of the Community Action Program (CAP), observed an array of problems with existing efforts that formed the foundation for the CAP. These included the following: • Many voluntary ‘welfare’ programs were not reaching the poor. • If programs were reaching the poor, the services offered were often inappropriate. • Services aimed at meeting the needs of disadvantaged people were typically fragmented and unrelated. • Realistic understanding by professionals and community leaders of the problems faced by the poor was limited. • Each specialty field was typically working in encapsulated fashion on a particular kind of problem, without awareness of the other fields or of efforts toward interlock. • There was little political leadership involvement in the decision-making processes of voluntary social welfare. • There was little or no serious participation of program beneficiaries in programs being planned and implemented by professionals and elite community leadership. Kravitz (1969, 60) added that the planning team responsible for the CAP “accepted the basic concept that a local group—a city, a county, several counties,

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or a tribe—had the capacity for coherent, rational, cooperative action in a War on Poverty.” Kravitz explained: Our model of how the community-action program would work went something like this: A community would carefully study its poverty problems, locate the most severe pockets of need, and identify them as target areas slated for intensive effort. It would plan a program for these areas that would affect all relevant institutions, that is, the schools, social services, job opportunities. It would enhance its ability to implement program objectives by inclusion of political leadership. It would “remain honest” to its purposes by inclusion of voices representing the poor, residents of the target neighborhoods. Thus, the model implied a central local authority to exert influence on and make decisions about the local poverty program, presumed the capacity to engage the major community-service-delivery institutions in a coordinated effort, and above all, assumed the power of persuasion necessary to allocate resources to carry on the program. In most cities, the local institutions established to coordinate the CAP were new nonprofits created specifically for that purpose, which was a major departure from the prevailing practice that had typically relied on local government agencies. The task force that prepared the administration’s legislative proposal cited several reasons not to limit community action agencies (CAAs) to local government agencies, including not having the program captured by “establishment” agencies that in the opinion of the task force had not been responsive to the needs of the poor and the fact that many communities did not have a “unit of local government which realistically could be counted on to provide the comprehensive coordination that experience had indicated was needed” (ACIR 1966, 25). The regulations issued to implement the CAP required that “each applicant agency must demonstrate its ability and intention to mobilize community resources against poverty through the establishment of linkages among and within service systems and through other means.”2 The CAAs were also required to “provide ample opportunity for participation in policy-making by the major public and private agencies responsible for services and programs concerned with poverty, other elements in the community as a whole, and the population to be served by the community action program” (ACIR 1966, 27). John Wofford (1969, 83), who served as staff assistant to the deputy director for operations at the Office of Economic Opportunity, notes that while OEO received a great deal of criticism (much of this from big-city mayors) in 1965 and 1966 for paying too much attention to the structure of CAAs and not enough to the content of their plans, “structure was essential, too. Only by focusing on local

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structure, we believed, would communities significantly change local institutions so that the community could itself cope with its poverty.” What became known as “maximum feasible participation” (of residents in the target areas and the groups and agencies that serve them) as a means to foster local change was the most controversial aspect of the CAP (Moynihan 1969) and, as Sundquist observed, became a counterforce to the act’s intention of fostering the mobilization and coordination of resources to address poverty. Based on several hundred field interviews with individuals at all levels of government involved in local CAPs, Sundquist and David Davis (1969, 47) concluded that “the CAAs successes have not been as coordinators. They have been, rather, as inducers of innovation and constructive change—and those objectives, as will be seen, are at war with the objective of coordination.” Sundquist and Davis (1969, 46) attributed the weaknesses of CAAs as resource coordinators to two fundamental factors: “One was the pervasive conflict with other institutions that rose when the CAAs began vigorously to challenge the status quo, to innovate, to raise a myriad of questions about how America’s communities had served their poor.” The second was the “frequently adverse community impressions of the agencies as administrative organizations—impressions of their competence, their leadership, their efficiency.”3 MO D EL C I T I E S

Reflecting on his experience with the CAP, John Wofford (1969, 98) noted, “The controversies that erupted in community after community in building a consensus behind a local program found their way quickly to the national stage, antagonizing Republicans and Democrats alike.” He added that “The White House was an important receiver of complaints from governors, mayors, congressmen, and senators, and before a year of operation was barely over, it had become embroiled in controversy.”4 Sundquist and Davis (1969, 79) report that it quickly became evident that if the administration was to move forward in its War on Poverty, a new approach was required, and within three years of launching the CAP, a new program—Model Cities—“had supplanted community action, in the minds of the President and his staff advisers, as the central instrument for coordinating the Great Society’s attack upon the problems of the urban slums.” Charles Haar, who served on the presidential task force that designed the Model Cities program and later as an assistant secretary at the Department of Housing and Urban Development (HUD), noted that Model Cities represented a “new approach” to urban problems through an amalgamation of urban renewal and community action. According to Haar (1975, 44; emphasis in original), Model Cities was based on five principles: “concentration of sufficient resources to show what selected cities could achieve in a few years; coordination of all

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available talent and aid in target areas; mobilization of local leadership and initiative, public and private; locally initiated programs, but with limited federal oversight; and experimentation in devising fresh solutions and applying new technologies to city problems.” As with community action, the key to a coordinated, comprehensive response would rest with the local agency. Unlike the case with CAAs, however, HUD specified that the city demonstration agency (CDA) must be a public agency. Sundquist and Davis (1969, 83–85) noted that the CDA “could be the city itself, or a county, or an established agency, or a new one, but ‘it should be closely related to the governmental decision-making process in a way that permits the exercise of leadership by responsible elected officials.’ ” Beyond this, “if a new agency were created or an existing agency designated, it should function in fact as though it were an integral part of the municipal government or the county, with clear accountability to the local elected officials.” Sundquist and Davis (1969, 85) concluded that “the contrast with OEO’s community action agencies could hardly have been more pointed.” Similar, though less stark, contrasts were found in the citizen participation provisions: “instead of ‘maximum feasible’ participation, Model Cities demanded only ‘widespread’ participation but the term was similarly undefined.” In a contrast to OEO, with its strong beliefs on how maximum feasible participation should be carried out, HUD secretary Robert Weaver told Congress, “No precise formula for citizen involvement will be imposed” and that “it will be up to the cities themselves to devise appropriate ways in which citizens will participate” (quoted in Sundquist and Davis 1969, 85). Mechanisms for organizing citizen participation could be classified into two broad categories—“bicameral” and “unicameral”—and a city’s choice between the two was largely driven by its community action experience (Sundquist and Davis 1969, 86–87). In cities where the CAA had taken a “confrontation” approach, a bicameral structure was more likely to emerge in which residents of the target neighborhood through an independent community-based organization would participate in developing and reviewing program proposals “in more or less equal partnership with the city’s public and private agencies.” In contrast, in cities “where the poor had been unorganized or less assertive, the model cities plan would embody a unicameral structure within which the neighborhood residents and the agency representatives were to join in a single planning process.” Agreement on which path to follow, however, was not always easily reached. In many cities (perhaps as many as a third, according to Sundquist and Davis) the choice between the two approaches involved prolonged negotiations, and in a few cities (e.g., Newark and Oakland), the negotiations were so protracted that HUD temporarily removed them from the list of participants.5 Community participation in the development of a comprehensive plan for addressing poverty and neighborhood renewal through Model Cities proved to

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be a challenge. Sundquist and Davis (1969, 97–98) found that as the Model Cities program progressed—even in cities with unicameral structures—the unified planning model did not prove durable, largely because “city authorities and slum residents do have different interest, objectives, and outlooks, and antagonism and conflict are inevitable.” Under these circumstances, they concluded, it “becomes less and less possible for the city demonstration agency to keep both sides persuaded that it can simultaneously represent their respective interests.” Indeed, Sundquist and Davis (1969, 99) found that cities that had a more “residentdominated” program were also less successful in obtaining the endorsement and commitment from city and agency officials outside city government. They noted that “to make the model cities coordinating concept work, then, a new mechanism would have to be established as an ‘integral part’ of the city government responsive to the mayor or city manager to fill the vacuum that the CDA was originally designed to fill. Such mechanisms have not yet been developed, but the problems of inadequate coordination have already appeared.” The lack of coordination was evident in several ways: parallel organizations (CAAs and CDAs) working in the same neighborhood attempting to craft and implement a resident-based, comprehensive plan for poverty reduction; inability to engage other federal, state, and local agencies to join in the model cities effort; and only modest success in leveraging resources beyond the funds made available through model cities (Pressman 1975). Bernard Frieden and Marshall Kaplan (1975, 228–29) observe that “one of the ironies of the model cities experience is that despite the widespread conviction that appropriations were inadequate, the cities proved unable to spend even those funds that were allocated to them. In 1970, actual outlays in the model cities amounted to only 18 percent of the supplemental funds that HUD had committed.” Frieden and Kaplan noted that the reasons for the low expenditure rates included delays in HUD’s review of city plans and plan amendments; the lengthy process required to draw down funds to pay for program expenditures; difficulties some cities faced in translating their plans into detailed programs and activities; local red tape, as manifest in cumbersome city rules and procedures for purchasing, contracting, and hiring personnel; the complexities of mixing supplemental Model Cities funds with grant funds from other federal programs (different deadlines, requirements, and priorities); and the limited authority of the mayor and the model cities agency to direct the activities of “recalcitrant city agencies.”6 Despite these shortcomings, Frieden and Kaplan concluded that the Model Cities program did “show the way toward a style of federal administration and review that could reconcile local flexibility with national purposes. . . . Federal reviews in the Model Cities Program . . . did move the cities into action on the issues that mattered most: defining project boundaries to include the poor

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and disadvantaged minority groups; concentrating available federal and local resources within these areas, strengthening the role of the mayor, and giving the residents a voice in planning and operating the projects that affected them.” However, “at the same time, model cities confirmed that further attention is needed to bolster the mayors’ political ability to help the poor, improve the capacity of local governments to manage complex programs, and to strengthen mayoral control over federal resources going into their cities” (Frieden and Kaplan 1975, 248).

Community Development Block Grants In 1960, only a handful of federal grant programs existed and the vast majority of programs that assisted cities did so through state governments. In less than a decade federal aid was transformed. By 1968, there were about four hundred federal aid programs, and nearly all were categorical grants that limited assistance to a specific purpose. In addition, though federal-state grants were still the predominant form of intergovernmental assistance, an increasing number of the new federal programs provided direct aid to local governments. Although cities were enjoying support from numerous federal grants, it was difficult for mayors to predict how much federal aid they were eligible for, or more alarmingly, to know how much aid they had actually received. Oakland mayor John Reading told a congressional committee convened in 1966 to examine the federal role in urban affairs that his city had over 140 federally funded programs and projects. Testimony from other mayors and local government officials called for greater local discretion and control over federal resources coming into their cities. Detroit mayor Jerome Cavanagh proposed a block grant for cities that “would make available adequate, continued financing while cutting paperwork drastically and giving full consideration to the diversity of local needs and local innovation, control and flexibility” (quoted in Rich 1993a, 26–28). Edward Logue, administrator of the Boston Redevelopment Authority and former urban renewal administrator in New Haven, supported Mayor Cavanagh’s proposal and called on Congress to authorize $15 billion in block grants and revenue sharing funds over the next five years. President Richard Nixon aimed to consolidate intergovernmental grants across a number of policy domains as the centerpiece of his domestic policy agenda; he called “for a New Federalism in which power, funds, and responsibility will flow from Washington to the States and to the people” (quoted in Conlan 1998, 32). A string of legislative initiatives consolidated categorical grant programs and provided more flexibility to state and local decision makers: general revenue sharing was enacted in 1972, the Comprehensive Employment and Training Act (CETA) was passed in 1973, and the Community Development

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Block Grant (CDBG) program was authorized in 1974. CDBG, which continues to this day, consolidated seven existing federal programs, including urban renewal and Model Cities, into a block grant for housing and community development that gave local government officials greater control over federal aid for revitalizing urban neighborhoods (Dommel 1982). However, Congress did not always share Nixon’s enthusiasm for state and local control. The statutory language authorizing CDBG was ambiguous, reflecting the disagreement between the Nixon administration and Congress. As a result, the emphasis placed on national goals varied from one presidential administration to another. The Nixon administration favored local discretion.7 Michael Rich (1993a, 35) noted that “during the initial years of the block grant program, HUD interpreted the social targeting objectives very loosely (for example, the department did not quantitatively define ‘maximum feasible priority’ or ‘principally benefit’), and communities were given broad discretion in allocating their entitlement funds among various eligible activities.” By contrast, the administration of President Jimmy Carter moved quickly to give the CDBG program a sharper focus and to target assistance to serve low- and moderate-income persons and neighborhoods. In 1977 HUD outlined the department’s commitment to targeting CDBG benefits to low- and moderate-income individuals and instructed HUD field offices to subject CDBG applications “to a thorough and meaningful review” to that end. Evidence from various studies indicated that HUD’s efforts to redirect the CDBG program were successful; a Brookings Institution study (Dommel et al. 1980) and HUD’s annual reports to Congress on the CDBG program noted that social targeting had increased, particularly among suburban communities (Rich 1993a, chap. 8). During the administration of President Jimmy Carter, HUD also moved to increase the geographic concentration of local uses of CDBG funds because federal officials believed that local officials were spreading their funds too broadly, diminishing the likelihood of attaining any physical evidence of renewal in city neighborhoods. HUD required communities to designate neighborhood strategy areas (NSAs) that would receive CDBG-funded physical development activities in a “concentrated and coordinated” manner. HUD also required that CDBG-supported social and public services take place within the boundaries of city-designated NSAs. The emphasis on social and geographic targeting ended with the Carter administration. When President Ronald Reagan took office, one of HUD’s first actions was to cease reviews of local CDBG applications (Dommel et al. 1983). As a result of legislative amendments passed in 1981, CDBG entitlement communities were no longer required to submit a formal application nor would HUD engage in any “front-end” review of proposed local programs (though performance reviews of

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local programs continued). The New York Times ran an editorial titled “Another Retreat from Fairness” in which they denounced the policy shift and proclaimed that “this cynical retreat would deprive the poor of a vital ally in local tugsof-war for the money. It also invites cities to squander the money on undeserving projects in ways that are likely to discredit the entire program. . . . The proposed deregulation would in effect turn the community development grants into a general revenue sharing that cities can spend as they see fit” (Rich 1993a, 45). Although the Reagan administration’s emphasis on local flexibility was largely continued under President George H. W. Bush, HUD secretary Jack Kemp did propose reforms to increase CDBG targeting, though those changes were not adopted by Congress. One noteworthy change to the CDBG program was made during the Bush administration: Congress mandated that 70 percent of CDBG expenditures must benefit low- and moderate-income persons.8 In addition, the limited CDBG planning and citizen participation requirements were enhanced in 1990 by the creation of the HOME Investment Partnership Program, which provided a formula-based grant to support a broad mix of housing activities (new construction, rehabilitation, homebuyer assistance, tenant-based assistance). The new law required a local plan for the use of HOME funds, known as the Comprehensive Housing Affordability Strategy (CHAS), which provided greater access to the planning process for citizens. Local officials were required to consult with social services providers, government agencies, and officials when planning housing programs. HUD extended this requirement to other programs—including CDBG—in 1995, requiring cities to submit a consolidated plan that addressed all of a community’s housing and community development needs (Turner et al. 2002). Despite conflicts over targeting and local discretion, the CDBG program did mark a significant transformation of the federal role in urban affairs; federal aid was extended to hundreds of new communities that heretofore had not participated in major urban programs. Through CDBG’s entitlement system and formula allocation, local governments were now assured of an annual distribution of federal funds, determined by a needs-based formula and general purpose local government officials (mayors, city councilors, planners) had significant flexibility regarding the use of those funds. CDBG also influenced local government structure by spawning the creation of departments of community development. At the same time specialized local organizations, such as urban renewal authorities, city demonstration agencies, and community action agencies that had often operated outside the formal structures of city government withered away as federal assistance to those agencies dried up. CDBG also enabled cities to develop new tools for neighborhood revitalization. These included revolving loan funds to foster housing rehabilitation

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(and later economic development). Community capacity also was enhanced by CDBG. Many cities began to rely on nonprofit agencies, particularly community development corporations, as delegate agencies for carrying out CDBG-funded activities. These included not only housing rehabilitation and home ownership programs but also a wide range of social services. The CDBG program represented a sharp departure from the federal government’s more active role in urban affairs during the 1960s. The CDBG program, save for a brief period during the Carter years, placed little emphasis on poverty reduction and place-based strategies for fostering neighborhood revitalization. In addition, CDBG became an example of what Christopher Howard, Michael Lipsky, and Dale Rogers Marshall (1994) referred to as the “routinization” of citizen participation that distinguished the federal urban programs of the 1970s from their predecessors. CDBG required only two public hearings, one prior to the submission of the application and a second near the end of the program year to assess program performance. Although a number of cities did establish local citizens' advisory committees, it was not until the Carter administration that citizen participation became a prominent aspect of the CDBG program. Yet even those modest steps toward greater citizen participation ended in 1981 when the Reagan administration “deregulated” the program.

Urban Development Action Grants Urban Development Action Grants (UDAGs) were targeted, competitive, project grants that formed the cornerstone of President Carter’s national urban policy. The program, created in 1977 as part of the reauthorization of the CDBG program, was intended as a response to the fiscal and economic distress that affected many cities in the 1970s, particularly the Frostbelt cities in the Northeast and Midwest. UDAG was an effort to provide distressed cities with additional funds on top of their CDBG entitlements to foster larger-scale development projects than the housing rehabilitation and related neighborhood improvements (sidewalks, drainage, parks) that were typically supported with CDBG funds. Between 1978 and 1989 the UDAG program awarded $4.6 billion to finance about three thousand projects in twelve hundred cities. Almost half of UDAG awards and almost two-thirds of UDAG dollars were used in cities to finance commercial projects (Rich 1992). Most development activities supported by UDAG were located in downtowns (one-third of the projects and slightly more than half of all funds), though a similar share of projects and about one-fourth of UDAG funds supported neighborhood projects. The UDAG program was targeted for termination by the Reagan administration as part of its effort to reduce the role of government. David Stockman

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(1986, 143), budget director for most of the Reagan presidency, referred to UDAG as “pork” and described the program as “the most ideologically offensive and wasteful bit of federal spending on the block.” President Reagan proposed termination of the UDAG program in each of his budgets, and though Reagan did not succeed in eliminating the program, funding was reduced by more than two-thirds during his administration; the program was terminated in 1989. Despite the controversies, UDAG helped to transform the way in which cities approached economic development. As Rich (1992, 169) observed, “UDAG played an important role in moving local economic development beyond tax incentives and infrastructure improvements. The city role in promoting economic development is more extensive, uses a greater variety of tools and techniques, and institutional arrangements than was the case prior to UDAG.” Clarke and Rich (1982) point out that UDAG encouraged an entrepreneurial approach, which emphasized the financial aspects of development deal making. Many cities used their UDAG grants to encourage private development through the use of below market rate conventional loans, participation in the project’s net cash flow, or through some other type of revenue generation such as equity participation or leasing. According to HUD’s (1982, 156–57) evaluation of the program, over 70 percent of participating metro cities strengthened their capacity to stimulate economic development through actions such as creating a new office of economic development, hiring new staff, the first use of one or more economic development tools, or the city’s assuming a lead role in a land development deal. On the other hand, critics charged that the UDAG program did too little to encourage citizen engagement in the planning process and accelerated the decline of city planning. UDAG’s planning and participation requirements were even more modest than CDBG. Beyond this, in terms of targeting, UDAG was less prescriptive than CDBG. For example, the impact on low- and moderateincome persons was only one of nine criteria for selecting UDAG projects.

Enterprise Zones The Reagan administration further altered the course of federal urban policy in the 1980s with its strong preference for a “supply side” approach to urban problems. Urban revitalization was expected to follow from policies that strengthened local economies through tax cuts, deregulation, and lower inflation as opposed to federal grants that provided cities with funds to subsidize local development. The supply side strategy reflected the fundamental principle of President Reagan’s urban policy—government’s retreat could advance urban revitalization. The idea originated in Great Britain in the late 1970s when Sir Geoffrey Howe, a leading member of the Conservative opposition in Parliament, proposed

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creating “enterprise zones” to redevelop blighted areas in British cities. Howe argued that rather than another government program, what was needed to revive abandoned industrial sites was the removal of as much government as possible; private investment would create jobs in distressed urban areas if taxes and government regulations could be reduced or eliminated (Butler 1991; Mossberger 2000). Howe’s ideas were translated into policy when he served as chancellor of the exchequer under Prime Minister Margaret Thatcher; two dozen enterprise zones were created throughout Great Britain during the 1980s. The idea that reducing business taxation and regulation could encourage economic development quickly became popular among U.S. conservatives. In 1979, the Heritage Foundation published a report that advocated enterprise zones as the foundation for federal urban policy (Butler 1980). A year later, Congressman Jack Kemp (R-NY) introduced legislation detailing an American version of enterprise zones and Ronald Reagan embraced the concept during his presidential campaign. In contrast to British enterprise zones that aimed to redevelop vacant and abandoned industrial areas, the U.S. version recast enterprise zones as a community development tool to revitalize depressed inner-city neighborhoods. Enterprise zones were promoted as an alternative to conventional government programs that relied on public investments to revive such neighborhoods. It was expected that targeted tax and regulatory relief would reduce business costs and increase profits, thereby attracting private investment and creating jobs in distressed areas. Although the Reagan administration promoted enterprise zones, Susan Clarke (1982) notes that congressional Democrats raised three objections. First, opponents argued that the location and expansion decisions of business firms depended on factors other than tax incentives. Consequently, revitalizing distressed areas required a broader strategy that included additional tools (and funding) to create infrastructure, improve public safety, and enhance human capital. Second, opponents were concerned that low- and moderate-income residents might not benefit from urban programs that relied on tax incentives and regulatory relief. Enterprise zone opponents believed that government’s role needed to be enhanced, not restricted, to increase social targeting. Third, opponents were concerned that enacting federal enterprise zones might constrain or even jeopardize funding for existing federal urban programs. S TAT E EN T E R PR I S E ZO N E S

While Washington was deadlocked on federal enterprise zones, the idea gained popularity in the states. By 1983, nearly half the states had established enterprise zone programs and by 1993, forty states and the District of Columbia had created more than three thousand enterprise zones (HUD 1995b). The state

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programs, however, were different from what had been proposed at the federal level. According to Michael Wolf (1990, 7), “The paradigm derived from Butler, Kemp-Garcia, and Reagan comprised a federal, supply-side, antiregulatory, conservative-Republican program to attract new, small businesses to the inner city.” Wolf added that as enterprise zones moved from theory to practice in the states, a new paradigm emerged that indicated the most effective zones were “state and local, public-private, reregulatory partnerships, passed and endorsed by liberals, moderates, and conservatives of both parties, designed not only to attract small, moderate, and larger employers, but also to retain existing businesses in urban, rural, and suburban areas.” Rather than viewing enterprise zones as free market sectors, state enterprise zone programs viewed tax and regulatory relief as two tools within a larger kit to encourage economic development through public-private partnerships. State enterprise zone programs varied in their geographic scope and the tax incentives and other inducements they offered to attract investment (HUD 1995b). For example, the entire state of Arkansas was designated as an enterprise zone. By contrast, in Connecticut, the first state to establish enterprise zones, seventeen separate zones were created that targeted distressed areas across the state. Although most of the incentives offered by state programs were tax abatements or credits for state and local taxes, some states also included wage tax credits and a few states extended tax credits to individuals employed by zone firms. Many state programs included capital financing (direct loans, venture capital funds, and capital made available through industrial development authorities or tax increment financing districts). About half the states offered regulatory relief. A few states provided funds for infrastructure improvements, job training, and technical assistance. These differences led Roy Green and Michael Brintnall (1991, 243) to observe that the only common feature among the many state enterprise zone programs “is the partnership of public and private enterprise to engineer growth.” Although the gridlock in Washington precluded the creation of federal enterprise zones during the 1980s, the idea that tax and regulatory relief could encourage business and job growth continued to influence federal urban policy in the 1990s. By 1989, influential state and local government organizations had endorsed the concept of federal enterprise zones, though these groups called for a more expansive program to revitalize distressed communities that would complement—not replace—existing federal efforts. Despite these endorsements, a federal enterprise zones initiative continued to stall in Washington as Democrats and Republicans could not agree on the mix of policy tools and the appropriate level of funding to support the effort. When the riots erupted in South Central Los Angeles, however, interest in providing federal assistance to

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distressed communities was revived. During a tour of the riot-torn area, President George H. W. Bush announced a proposal to respond to the needs of Los Angeles and other distressed inner-city areas—the centerpiece of the proposal was federal enterprise zones. Although the Bush administration and congressional leaders pledged to work together on an urban aid bill, partisan differences, fiscal stress, and posturing for strategic advantage for the 1992 presidential election proved to be too many obstacles to overcome (Rich 1993b). However, in October 1992 Congress did pass legislation that provided $2.6 billion over five years to create fifty enterprise zones and also authorized $2.5 billion over five years for new spending targeted to enterprise zones for job training, education, health, housing, and law enforcement programs. President Bush, however, vetoed the bill the day after he lost the election to Bill Clinton. Since Congress had adjourned, a vote to override the veto did not occur.

Comprehensive Community Initiatives While gridlock and partisan differences in Washington stymied efforts to craft a new federal approach to addressing the nation’s urban problems, beginning in the late 1980s various local strategies emerged that advanced comprehensive community development as a solution for addressing the causes and consequences of concentrated poverty. Although the origins of these community-building initiatives were many and diverse, including national and local foundations, community-based organizations, local governments, and later the federal government, they shared many characteristics that distinguished the communitybuilding approach from contemporary urban initiatives (Chaskin 1998; Kubisch et al. 2010). First, they were collaborative efforts, frequently involving participants from a variety of key sectors of the community: business, government, communitybased organizations, universities, foundations, and most important, residents. Second, they were holistic initiatives in that they focused on problems relating to people and places simultaneously as opposed to treating each of these problems separately or forcing a tradeoff between assisting people and aiding places. Third, they were strategic, with an emphasis on long-range planning and resource mobilization within and without the community. Fourth, they were community-based, and they often involved “empowerment” and “self-sufficiency” as stated goals or means to guide operations. Many of the initial comprehensive community development initiatives originated in the major national foundations that provided the ideas, seed capital, and technical support to guide these early efforts. In addition, federal agencies later

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established demonstration projects to foster collaborative problem solving in specific substantive areas. A U.S. Department of Justice (1995) report identified more than twenty community-based initiatives that were administered by seven federal departments and agencies. All these programs, though varied in their substantive and geographic scope, were community based and citizen driven and featured a holistic approach to improving the lives of low-income children, families, and neighborhoods (Sirianni 2009). Collaborative initiatives that could trace their origins to local elected officials were also under way in several cities (Cunningham et al. 2007). In some cities community-building initiatives could be directly traced to residents, as was the case with the Dudley Street Neighborhood Initiative in Boston (Medoff and Sklar 1999). In sum, by the early 1990s a new architecture for urban revitalization had emerged, accompanied by a new sense of optimism that the problems of poverty and neighborhood decline could be overcome (Sharp and Beaudry 1994). The Committee for Economic Development (1995, 2), an independent research and policy organization composed of business leaders and educators, firmly supported the new paradigm, stating that “unless we invest in the community prerequisites for inner-city revitalization, no effort to solve any of these problems [crushing inner-city communities today] will have more than marginal impact.” The committee’s statement “proposes a watershed change in how the public, private, and philanthropic sectors approach each problem in inner-city neighborhoods. Community building alone will not revitalize distressed communities, but no initiative will succeed without it.”

Federal Empowerment Zones President Clinton moved quickly during the initial months of his administration to craft a new approach to address the nation’s urban problems. The proposal, which called for the creation of ten empowerment zones and one hundred enterprise communities, reflected Clinton’s experience with enterprise zones as governor of Arkansas and his call for “comprehensive” enterprise zones, which was a central element of his presidential campaign platform. The Clinton administration’s proposal moved beyond strict reliance on regulatory relief and tax incentives to also include block grant funding to support programmatic initiatives to create jobs and revitalize distressed communities. In addition, the initiative was firmly rooted in the community-building paradigm as evidenced by its call for strategic planning, comprehensiveness, and broad-based community partnerships that provided a meaningful opportunity to empower zone residents.

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At a congressional hearing to consider the administration’s proposal, Richard Cowden (1993, 6), executive director of the American Association of Enterprise Zones, observed that “tax relief alone doesn’t amount to redevelopment strategy” and, during the panel discussion, added, “There has been this simplistic position that if we offer X tax incentive, it will create X jobs, but the problem is the other intervening factors.” Cowden (1993, 33) said, “Our organization actively encouraged cities and States to incorporate a more direct approach to the problems of their low-income areas. Investment and job creation incentives may have their place, but we have found that the cities and States that are willing to repair infrastructure, improve security, upgrade housing, provide training, and remove signs of blight, tended to generate far more favorable results from their zone programs.” Michael Wolf, director of the enterprise zone project at the University of Richmond, stated that while “Bill Clinton is the third President to put enterprise zones on his agenda . . . [the administration’s proposal] is much more in tune with the zone concept as it has evolved in states and localities throughout the nation.” Wolf (1993, 77–78) explained: First, this is a multi-faceted program that seeks to match the best government has to offer with the entrepreneurial spirit of business (employers and investors) and the constructive activism of local residents. While the previous administration was strongly opposed to any governmental presence in the zones . . . the current vision of EZs recognizes that the federal government may indeed be the only institution with the resources, the expertise, and the commitment to overcome some severe disincentives to economic rebirth of the nation’s most distressed communities. In fact, the Economic Enterprise Act of 1993 is one of the first substantive indications that the new administration views the federal government not as the nation’s great problem, but as a key part of the solution. As Sarah Liebschutz (1995) observed, the Clinton administration’s legislative strategy had two parts: authorization for the tax incentives to stimulate private investment and job creation would be included in the Omnibus Budget Reconciliation Act (OBRA) of 1993 and funding authorization for the programmatic elements of the initiative would be included in separate legislation. Although Republicans opposed Clinton’s plan and were united in their opposition to OBRA, Liebschutz noted that enactment would depend on mobilizing Democratic support for the initiative, which was weak from the outset. Many Democrats were disappointed that the proposal would target assistance to only a few communities, while others felt the initiative gave too much emphasis to tax

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incentives; traditionally Democratic constituencies such as the National League of Cities felt more emphasis should be given to expand existing federal urban programs. In addition, since the EZ-EC initiative was included in the administration’s omnibus budget bill, which called for a $500 billion deficit reduction target, many Democrats had higher priorities for the use of limited federal resources than urban revitalization. Democratic support for the initiative, therefore, was weak. However, Clinton did have an important ally in Representative Charles Rangel (D-NY), whose district included Harlem, a distressed area in New York City. Liebschutz points out that Rangel’s support was critical for the enactment of Clinton’s EZ-EC initiative and the congressman was instrumental in shaping its final form. Rangel, who served on the House Ways and Means Committee, was one of the House budget conferees in 1993 and insisted that the administration’s EZ-EC initiative be included in the final omnibus budget bill. Perhaps most important, Rangel also succeeded in getting the conferees to accept a $1 billion line item for direct federal spending earmarked for communities participating in the EZ-EC program.9 The conference report on the omnibus budget bill, which included numerous controversial tax and spending provisions, was cleared by the narrowest possible margin despite Democratic control of both houses of Congress. The House of Representatives passed the report by one vote and Vice President Al Gore cast the tie-breaking vote in the Senate in favor of the report. After more than a decade of deliberation and debate, a federal enterprise zone program had finally been adopted and funded.

Not a Typical Federal Program The EZ-EC initiative was a compromise that contained many features similar to those of the Kemp-Garcia bill (tax incentives that targeted a limited number of distressed areas) and also met the objections raised by Democrats that an enterprise zone program must go beyond tax incentives to include direct federal assistance for community development and social programs. The EZ-EC initiative’s benefits were two tiered and the amount and type of assistance depended on whether a community was designated as an empowerment zone or an enterprise community. EZ designees each received a $100 million Title XX Social Services Block Grant (SSBG). These funds could be used over a ten-year period to support a broader range of activities than was normally permitted under the SSBG program. The flexible funding would allow local leaders to plan deliberately and to develop revitalization strategies that reflected local needs. EZ communities were also eligible to use a variety of federal tax incentives designed to encourage

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private investment and create jobs. Special tax provisions (HUD 1999a) available to the EZs included the following: • Wage tax credits. The Empowerment Zone Wage Credit provided a credit against federal taxes of up to three thousand dollars for businesses for each year of empowerment zone designation for every existing employee and all new hires who live and work in the zone. • Work Opportunity Tax Credits (WOTC). The WOTC provided a credit against federal taxes of up to twenty-four hundred dollars for businesses for new hires from groups that have high unemployment rates or other special employment needs (target groups included youth ages eighteen to twenty-four and summer hires aged sixteen to seventeen) who live in the zone. • Increased Section 179 expensing. This provision allowed businesses located in zones to claim increased Section 179 deduction (initially twenty thousand dollars, but increasing to thirty-five thousand dollars for property acquired after December 31, 2001) on certain depreciable property such as equipment and machinery. EC designees received $3 million in block grant funds, but no tax incentives. Both EZ and EC cities were eligible to apply for new federal tax-exempt private facility bonds and for waivers of federal regulations and program requirements. Both types of cities also received special consideration for any pending or subsequent applications for federal aid tied to a program or activity needed to carry out their strategic plan. According to HUD, the EZ-EC initiative was “not a typical federal program” and, as HUD assistant secretary Andrew Cuomo (1994, 39) noted in his testimony before a congressional hearing convened shortly after passage of the EZ-EC initiative, “this program offers the opportunity to prove to the nation that we do know how to revitalize devastated areas, that new partnerships created from the bottom up, that focus on comprehensive solutions can truly make a difference.” The EZ-EC initiative was based on four key principles: (1) expanding economic opportunity, (2) promoting sustainable community development, (3) fostering community-based partnerships, and (4) crafting a strategic vision for change. Although the initiative’s application guide (HUD 1994) stated, “The first priority in revitalizing distressed communities is to create economic opportunities—jobs and work—for all residents,” the key principles implied that successful economic development must be part of a broader agenda for community revitalization. The principles also implied that economic development efforts were more likely to succeed when they were grounded in a strategy that coordinated economic,

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environmental, and physical renewal with community and human development programs. Finally, the principles implied that community revitalization must be supported and driven by a broad coalition that includes local, state, and national governments, the private sector, nonprofit agencies, community-based organizations, and residents. Almost three hundred applications were submitted to HUD in June 1994 for the urban portion of the program, among them seventy-four for EZ designation and two hundred nineteen for designation as an EC. Six cities (Atlanta, Baltimore, Chicago, Detroit, New York, and Philadelphia-Camden) were designated as urban EZs. Los Angeles and Cleveland were designated as Supplemental EZs; Boston, Houston, Kansas City, and Oakland were designated as Enhanced ECs and sixty-one cities received EC designation.10

Promoting Local Governance The EZ-EC application guidelines encouraged the development of local processes for comprehensive planning and service integration that attacked problems holistically. In addition, members of “the community” were to be mobilized and included as significant participants in the policymaking process. The guidelines also implied that the problems of distressed urban communities require an ongoing, institutionalized response; it was insufficient merely to have episodic programs to address discrete problems. To be effective, the forces for change must be comprehensive and sustainable. However, rather than imposing a standardized program in all sites, the guidelines encouraged the development of local strategic plans that reflected local problems, resources, and opportunities. Encouraging reforms in local program development and implementation was also part of the EZ-EC initiative. The initiative’s design reflects many aspects of what David Osborne and Ted Gaebler (1992, 19–20) termed an entrepreneurial model of governance—based on principles that included citizen empowerment, performance management, preventive measures, decentralization, reliance on market mechanisms, and cross-sector collaboration—that formed the foundation of the Clinton-Gore Reinventing Government initiatives. The influence of the entrepreneurial governance model was reflected on page 1 of the guidebook (HUD 1994, 1) for the urban EZ-EC applicants: The success of the Empowerment Zones and Enterprise Communities requires that effective means of coordination be established and maintained from the beginning. There must be cooperation, from the neighborhood, to the region, and among the institutions, and organizations

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of each. It must integrate economic, physical, environmental, community, and human development. Success will depend on actual collaboration in which partners share a vision, establish common goals, and agree to use their power to achieve them. This coordination means a commitment of resources and, if necessary, a willingness to alter existing policies and roles of agencies and organizations. Isolated approaches have proven ineffective because the problems of cities and poor families cross individual program lines.

The Triumph of Market-Oriented Policies Although two additional rounds of EZs were designated in later years, significant changes were made in the initiative’s design. The $100 million block grants that were provided to each of the original six EZ cities were replaced by HUD empowerment zone grants in round II. While round II designees (fifteen urban EZs were announced in January 1999) were each authorized to receive as much as $100 million in federal grant support, the funds were subjected to the annual appropriations process and funding lagged (GAO 2004). Round II urban EZs received about $24 million each between 1999 and 2003. Round III designees (eight urban EZs were announced in December 2001) did not receive any grant funding as part of their package of EZ benefits. The significance of these changes is that federal policy had once again shifted, this time to emphasize tax incentives and regulatory relief to encourage private investment without block grants to finance local programs and establish governance strategies for determining priorities and coordinating efforts. Under President George W. Bush the Renewal Community initiative, passed by Congress in the final days of the Clinton administration, was introduced. The transition from EZs to renewal communities continued to deemphasize block grant funding to local governments while placing increased emphasis on taxoriented policy tools (Stoker and Rich 2006). Block grants were not part of the tool kit the federal government provided to the forty urban and rural renewal communities announced in December 2001. However, renewal communities did enjoy employment tax credits, capital gains tax cuts, and business tax breaks, though the employment credits available to these communities had only half the value of the credits provided to empowerment zones. On the other hand, capital gains tax credits were far more generous and the introduction of a new commercial revitalization tax credit appeared to be far more conducive to stimulating business investment than any of the existing EZ tax incentives.

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Something Old, Something New Although touted as a new approach for revitalizing the nation’s cities, the EZ-EC initiative reflected the legacy of past federal urban policies. Four themes that were present in earlier iterations of federal urban policy reemerged in the design and implementation of the initiative: (1) how to craft a comprehensive attack on the problems of concentrated poverty and its consequences; (2) how to design an institutional entity capable of coordinating a comprehensive antipoverty initiative and, in particular, where (inside or outside city government) to locate such an entity; (3) how to mobilize and engage residents in distressed neighborhoods and the groups and organizations that serve them in the design and execution of revitalization strategies; and (4) how to effectively engage state governments in urban revitalization initiatives.

2 GOOD GOVERNANCE

Many American cities experienced a renaissance during the 1990s. Long-standing trends toward urban decline were reversed; more young people finished high school, more people went to work, and poverty, though persistent, became somewhat less concentrated in central cities. Celebrating these developments, Paul Grogan and Tony Proscio (2000) touted several “comeback cities” in which social and economic conditions improved. They identified two trends that were evident in comeback cities: population growth (in many cases reversing decades-long declines) and gains in median income. Although these changes did not reduce poverty, Grogan and Proscio suggested that comeback cities did provide a decent, safe place for people of limited means to live and work. Grogan and Proscio remarked, “Something is happening in formerly bleak neighborhoods all over the country” (241). They identified four developments to explain why some cities were coming back. First, there are community development corporations (CDCs), which are committed to revitalizing particular distressed urban areas. They lauded CDCs for their emphasis on core American values (self-help, local control, community development, and public-private partnership). CDCs that form constructive partnerships with local government and private investors provide leadership and social capital in urban communities and are an alternative to the “do-nothing patronage groups” that once dominated city politics (90). Second, Grogan and Proscio attributed the urban renaissance to the recreation of functioning markets in many inner-city neighborhoods. This 37

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was evident because of the increasing availability of private capital to support housing and retail markets. They suggest that markets reemerged in urban America because of housing opportunities created by CDCs, federal regulatory changes that encouraged banks to lend in urban areas and the consolidation that occurred in the banking industry during the 1990s, the realization by retailers that urban areas contained untapped markets, and population trends that created a steady supply of new residents and potential customers. Finally, Grogan and Proscio identified two policy shifts that contributed to the comeback. A marked reduction in urban crime took place during the 1990s; this was attributed to local police departments that applied new techniques that emphasized a restoration of social order. Grogan and Proscio also credited a reduction in the influence of public bureaucracies as a contribution to the comeback. Local bureaus such as welfare, public housing, and public schools, despite their noble intentions, had become “a bureaucratic albatross and a social disaster— concentrating poverty, insulating failure, limiting upward mobility, and stifling initiative” (6). The deregulation of urban life (a result of policies such as welfare reform, HOPE VI public housing transformation programs, and, to a lesser extent, school choice initiatives such as vouchers and charter schools) contributed to the comeback by freeing city residents from the influences of dysfunctional public bureaucracies. Federal urban policy was noteworthy for its absence from this list. However, among the comeback cities was New York, home of one of the original EZs. While praising the sort of bottom-up initiatives that can turn cities around, Grogan and Proscio linked the urban rebirth in New York to the EZ by remarking that “federal tax credits and flexible ‘block grants’ to cities are working far more effectively than the old top-down government programs” and that these policies “triggered a flood of private capital” to support neighborhood programs (58). However, they ultimately downplayed the initiative’s significance: EZs were “more prescriptive than its inventors intended” and “in some places, [their] load of special-purpose grants have led to massive patronage or to squabbling among competing service programs” (253). Where Grogan and Proscio see a failed federal program, we see ineffective local governance. The problems encountered in New York are the consequences of the local governance process gone wrong. On the list of pathologies in New York’s EZ are patronage, partisan conflict, squabbling among competing service providers, and ineffective bureaucracies. These pathologies are not necessarily components of local EZ programs or a result of federal policy design—they are a list of the failures of local governance processes in New York.

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Theories of Governance The celebration of the urban renaissance highlights issues that have long been central concerns in U.S. urban policy. What are the requisites of good governance? Should federal urban policy strive to bypass and minimize the role of local government, as might be done through an emphasis on federal tax incentives, or should federal urban policy invest in the development of more effective local governance, as might happen through a block grant approach that requires the creation of a comprehensive strategic plan and a broad-based, inclusive planning process? Is government an obstacle to progress that must withdraw in favor of voluntary organizations and market-oriented policies to stimulate private investments? Or is government an essential part of a local governance process that contributes to urban revitalization by sparking community mobilization, supporting community-based organizations, and developing local plans and programs to complement market-oriented policies? Local capacity is a closely related issue. Does the central role played in the urban renaissance by CDCs and revitalized markets imply that federal policy should target areas that enjoy social capital and market potential? Or can federal urban policy make a difference even in pockets of severe distress, where the limits of community capacity and market potential are likely to be most pronounced? These questions are the heart of the recent urban policy debate in the United States that revolves around the clash between neoliberal and collaborative models of governance.

Neoliberal Governance From the neoliberal perspective, good governance often means getting government out of the way. Advocates contend that policies that reduce the burdens of business taxation and regulation can unleash market forces to accomplish urban revitalization goals. Neoliberal ideas have shaped public policies in the United States and Europe as well as in international organizations such as the International Monetary Fund, the World Trade Organization, and the World Bank for more than a quarter century.1 Consistent with the tenets of classic economic liberalism (see Friedman 1962), neoliberals prefer relationships that are mediated through market transactions; such relationships are thought to be based on free and voluntary exchanges that allow people to directly express their preferences and, if necessary, to vote with their feet.2 Neoliberals favor market mechanisms as a form of social organization and prefer market-oriented public policies, such as tax and regulatory relief

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(Hackworth 2007). Government regulation and taxation are thought to distort markets and create inefficiencies (Friedman 1962). Neoliberals associate “planning” with government picking economic “winners and losers” and assert that planning can never be as rational as the organic growth of the market (Hayek 1960). Beyond this, neoliberals assert that active government causes civil society to wither, undermining citizenship and democracy and reducing voluntary actions to improve society (Titmuss 1971). Neoliberal policies seek to empower individuals as entrepreneurs and consumers and construct urban revitalization as a problem of efficiency and comparative advantage that markets can solve when incentives are properly arranged. Market deregulation and reductions in business taxation are thought of as opportunities to stimulate markets through government’s strategic retreat. Neoliberal ideas have significant implications for the role of government in policymaking: Government’s primary role is to avoid disrupting private decisions while creating a context in which markets can flourish (Jessop 2002). Although government should enforce order (through contracts, corporate rights, and property rights), intrusive regulatory policies and business taxes should be limited to create an ideal environment for unfettered capitalism. Market-oriented policies fit neatly into this philosophy because they avoid many government failures (such as rent-seeking, waste, corruption, and opportunity costs); they limit direct budgetary cost to government; (within limits) they are self-implementing and thus circumvent government agencies and reduce concerns about government competency; they are inexpensive for government to administer; and they are difficult for politicians to exploit. Adam Harmes (2006, 735) argues that neoliberals have developed a policy agenda for multilevel governance “which is fully consistent across the federal, regional, and global levels.” Neoliberals advocate a global governance system of “market-preserving federalism” that encourages capital mobility to constrain government through the creation of “inter-jurisdictional competition.” Marketpreserving federalism advances a particular distribution of power across levels of government—the goal is to create a form of federalism in which “subnational governments compete for mobile citizens and firms within the context of a national economy.” The key concern is to create and maintain a viable “exit option” for firms and individuals so that if they choose to, they may vote with their feet. Thus, neoliberals advocate decentralization of some key governmental functions—subnational governments are seen as the proper province of “market-inhibiting” policies (such as those of taxes and regulations) because the exercise of such power is expected to be constrained by interjurisdictional competition. The role of national governments and global governance institutions is to lock in “market-enabling” policies (most important, the free migration of

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capital and labor). As Friedrich von Hayek suggested, the point of neoliberalism is to transform subnational governments “into quasi-commercial corporations competing for citizens” (quoted in Harmes 2006, 736). Applying Harmes’s insight to urban policy, the apparent neoliberal agenda is to provide localized relief from market-inhibiting policies. As urban policy, neoliberalism would rearrange economic incentives to create comparative advantages in interjurisdictional competition. The influence of neoliberalism on federal urban policy is evident in the transition from empowerment zones to renewal communities that we described in chapter 1. By reducing tax and regulatory burdens selectively, neoliberal policies shape the environment in which markets operate in order to encourage economic growth in targeted areas. As government’s burdens are reduced, economic incentives are changed and investments are expected to flow into distressed urban communities, creating employment opportunities and income gains.

Collaborative Governance A collaborative governance process that develops local plans and programs to complement market-oriented policies is the prominent alternative to neoliberalism (see Agranoff and McGuire 2003). Effective collaborative governance creates the capacity to act in the conditions that characterize the urban political environment—diffuse authority, interest conflict, and mutual dependency. Although local government is likely to take a leading role in the development of collaborative governance, institutional structures are typically hybrid organizations that blend public resources provided by various levels of government with private resources from business, philanthropic, and nonprofit organizations (Peters and Pierre 1998). As a result, the distinction between what is private and what is public is blurred. In addition, the programs implemented through collaborative governance are likely to consider a variety of means to accomplish policy objectives and thus do not always rely on direct government provision of goods and services. This reflects a results-oriented management style that emphasizes outcomes over commitments to particular bureaus, partners, or programs. Advocates see many potential virtues in collaborative governance. Collaborative governance can afford opportunities for the communities that are most affected by policy to participate in the process (Sirianni 2001, 2009; Fung 2004). This has two benefits. By providing a significant community voice in policymaking, collaborative governance makes it less likely that the community will mobilize as a blocking coalition (Gates 1991). Beyond this, urban revitalization initiatives are enriched when the community is engaged in problem solving. Community engagement is an alternative to the more professionalized views

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of public problems and possible solutions as the community contributes local knowledge (Kretzmann and McKnight 1993; Warren 2001). Finally, collaborative governance can build and enhance community capacity by providing social and political experiences to disadvantaged, marginalized groups (Stone et al. 2001; Warren 2001; Putnam 2000). Collaborative governance is a local process that coordinates the resources, expertise, and energy of a broad cross-section of actors within the urban environment. An effective governance process will commit these actors to a coordinated, sustainable plan that complements market-oriented policies to create employment opportunities and income gains. As Fosler (2002, 59) concludes, “The grand challenge—and the great promise—of cross-sector collaboration, is to connect all three sectors across political boundaries within the same place, and at the same time connect the national, regional, and local organizations of all three sectors that affect the well-being of that place.”

Pulling Policy in Different Directions Neoliberal and collaborative governance are pulling urban policy in different, but not necessarily opposite, directions.3 Both theories emphasize the importance of economic incentives. For neoliberals, incentives are the crucial concern; the targeted retreat of government is expected to enhance incentives for private investment in distressed communities. By contrast, for those who favor collaborative governance, enhancing private incentives is helpful, but insufficient, because collective action problems inhibit private investment in distressed communities. Both neoliberal and collaborative theories of governance suggest that good local governance is a necessary condition for economic development. Both theories acknowledge the importance of actors from the business, nonprofit, and philanthropic communities. For neoliberals, these actors are expected to fill the void that is created as government retreats. For those who favor collaborative governance, private and nonprofit actors are valuable partners in a local governing coalition that bring resources, expertise, and credibility to the policymaking process. The theories diverge most dramatically on the role of government. From the neoliberal standpoint, government should get out of the way to provide a context that will be attractive to investors and encourage service provision from charities and nonprofits. From the standpoint of collaborative governance, government is an essential participant that should actively engage in coordination, planning, and programming to achieve revitalization goals. Despite this divergence, the contending theories agree that government plays several distinctive roles in the policymaking process. One is the creation of market potential. Government can designate particular areas as development targets— this designation is an important signal to investors. By designating development

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targets and committing resources to support the effort, governments can encourage, orchestrate, and coordinate private sector investments. Beyond this, government can help investors to overcome scale problems by creating a critical mass that enhances the value of individual investment. A scattering of new homes in a sea of distress is less valuable than a cluster of new homes in a neighborhood that is showing signs of improvement. A new business in isolation is less valuable than a new business located in a bustling retail district. The designation of development targets reduces uncertainty and risk for investors, especially in weak market cities or in distressed neighborhoods within strong market cities. In addition, government has particular powers that are vital to economic development. Land use is one example. Zoning authority that can determine permissible land uses and eminent domain powers that allow government to assemble the land needed to carry out a redevelopment agenda of sufficient scale are indispensable powers that only government can wield. This power creates and protects property values. Beyond this, government’s ability to tax selectively is important. While readers may suppose that neoliberals think of economic development policy only as an opportunity for tax relief, the capacity of government to selectively increase taxes is also a key power. Special tax zones can be created to offer advantages such as attractive infrastructure (signage, streetscapes, or lighting) and enhanced services (sanitation or public safety) that the private sector may find it difficult to provide on its own. This variation in the level of taxes and services appeals to neoliberals because business investors can vote with their feet by selecting investment locations that provide the most appealing mix of taxes and services. However, while neoliberals are more favorably disposed to the local level of government, they generally prefer policies that advance the principle of limited government, implying a general strategy of bypassing government rather than investing in improved governance. On the other hand, those who favor collaborative governance expect government to be an active participant in the policymaking process and want to invest to improve local governance. They emphasize the positive contributions that good governance can make by combining and orchestrating resources from many sources to encourage economic growth, connecting residents to emerging opportunities in the marketplace, and overcoming market failures.

A Curious Divide Despite the central place of governance in theories of economic revitalization, over the past decade, as federal urban policy has embraced market-oriented policies, a curious divide has emerged between urban policy in the United States and international efforts to encourage economic growth to alleviate poverty and privation. While U.S. urban policy has deemphasized governance, organizations

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such as the World Bank, the U.S. Agency for International Development (USAID), and the International Monetary Fund (IMF) have concluded that the quality of governance (including local governance) is crucial to their efforts to improve material conditions within developing countries. The link between international development assistance and good governance has evolved over time. The World Bank initially promoted a reform agenda in recipient nations by attaching political “conditionalities” to development assistance. However, after several years of experience in which recipient nations “paid lip service” to public sector reform, but failed to make meaningful changes, “the World Bank and several donor countries have shifted their focus from attempting to induce good governance . . . to requiring performance and good governance as a prerequisite from a recipient government” (Nanda 2006, 274). USAID explicitly linked governance to development assistance by creating a new Millennium Challenge Account that was designed to encourage and reward good governance. The emphasis on governance followed years of frustration with the Washington Consensus—a set of market-oriented policy recommendations advanced by the World Bank and USAID in the 1990s that encouraged private enterprise, trade liberalization, and direct foreign investment.4 The frustrating results of these policy prescriptions led to the emergence of a new viewpoint emphasizing governance.5 Moises Naim (2000, 101) observed: “A general unease about the policy direction of the last 10 years has prompted a search for a free-market model that recognizes an important role for the state and pays more attention to social policies.”

Governance in International Development Policy In 1999 the World Bank moved to institutionalize concerns about good governance through the Heavily Indebted Poor Countries Initiative, which explicitly linked the quality of governance to World Bank programs for poverty reduction. The initiative called for the development of a public sector reform agenda. The motivation for such planning is summed up this way: “Good governance and effective public sector institutions are critical for reducing poverty, because good policies and investments do not survive in poor governance environments” (Shah 2002). More recently, the World Bank initiated a Worldwide Governance Indicators project that provides estimates of six different dimensions of the quality of governance for 212 countries (Kaufmann et al. 2009, 2002a). The attributes of good governance advanced by the project are the following: • Voice and accountability. Participation of citizens in selecting their government and enjoyment of political rights. • Stability and absence of violence. A low likelihood that government will be destabilized or overthrown by violent means.

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• Government effectiveness. The quality of public services, the degree of independence of the civil service, the quality of policy formation and implementation, and the government’s commitment to these values. • Regulatory quality. The capacity of government to formulate policies and regulations that promote private sector development. • Rule of law. Confidence in the quality of rules of society, including contract enforcement, property rights, and criminal justice. • Control of corruption. Limiting the extent to which public power is used for private gain. Although these standards reflect many neoliberal concerns, they transcend limited government. For example, rule of law standards not only emphasize property rights and contracts; they also speak to the qualities of the criminal justice system. Regulatory quality is linked to the goal of private sector development but anticipates active state regulation of financial markets. Voice and accountability standards refer to an open, competitive political process with broad suffrage and civil rights. Stability and absence of violence refers to the absence of government instability brought through violent, extraconstitutional means. Government effectiveness refers to the capacity of government to “formulate and implement sound policies” and includes consideration of “the quality of the bureaucracy, the competence of civil servants, the independence of civil servants from political pressures, and the credibility of government’s commitment to policies” (Kaufmann et al. 2002a, 5). Control of corruption refers to the absence of “the exercise of power for private gain” (6). This is not a formula for limited government. Any lingering doubts that the international development community has embraced more active governance were put to rest by John Williamson (1990), who first articulated the Washington Consensus. He has since proposed a second generation of reforms that encompass government action to provide “decent infrastructure, a stable and predictable macro-economic, legal, and political environment, and a strong human resource base” (2003, 1479). Beyond this, Williamson contends that government should reduce inequality and develop a social safety net by expanding opportunities and services for the poor.

Corruption As the international development community embraces more active governance, corruption remains a prominent concern (Kaufmann 1997). Although the effects of corruption have been disputed in the past, the current consensus is that it is a serious problem that hinders economic growth.6 Some analysts had suggested that corruption could compensate for poor governance because it “greases the wheels” of the public sector, establishing a working relationship between investors

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and political elites to get things done (Huntington 1968; Leys 1965). From this perspective, graft has the effects of speeding action, circumventing burdensome regulations, improving the quality of public servants (more capable people will be attracted to public service by the opportunity to receive bribes), and directing public support to capable, efficient firms that can afford more generous bribes (Meon and Sekkat 2005). Interesting parallels can be drawn between this view and urban political machines in the United States (Scott 1969; Erie 1990). Using data on economic performance, corruption, and the quality of governance, Peter-Guillaume Meon and Khalid Sekkat (2005) compared the “grease” and “sand” hypotheses about the relationship between corruption and economic growth and concluded that the effects of corruption are inconsistent with the grease hypothesis. Corruption tends to hamper economic growth by imposing costs; “bad governance increases the cost of corruption” and “inversely, good governance alleviates the cost of corruption” (85). Thus, corruption does not compensate for poor governance; poor governance is likely to magnify the ill-effects of corruption. Corruption is now widely viewed as a symptom of poor governance that puts “sand in the wheels” of economic development (Azfar et al. 2001). Corrupt civil servants may delay action to create the opportunity to solicit bribes. Corrupt officials may distort the macroeconomy by limiting competition and making inefficient public investments. In addition, corruption does not serve as a hedge against political instability because corruption increases the risks associated with political change rather than compensating for them (Meon and Sekkat 2005). Finally, corruption undermines economic growth if income gains “largely accrue to an elite that benefits from misgovernance” using “illicit activities to shape the state laws and regulations.” This “can lead to additional demand for private purchase of laws and regulations,” further eroding the quality of governance (Kaufmann et al. 2002b, 206–9).

Local Governance in International Development Although the international development literature is primarily focused on national policies and institutions, subnational governance is a growing concern (Bevir 2009). Cities and metropolitan areas within developing societies are seen as growth centers. Consequently, comparative analysts recognize that in a competitive global environment, “local policies and institutions can make a difference in the effectiveness with which municipalities respond to these challenges and engage their citizens in positive developmental activities” (Stren 2003). Country-specific studies of metropolitan governance have linked urban redevelopment to concerns about local governments’ autonomy and capacity.

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Cristina Rodriguez-Acosta and Allan Rosenbaum (2008) suggest that national governments in Latin America pose a significant challenge for metropolitan governance. Until the recent wave of democratic reform that was accompanied by decentralization, Latin American nations were dominated by central governments and capital cities. Consequently, the economic, political, and administrative power of the state was often concentrated in a single metropolitan area. As political power has been decentralized, local governing capacity (which was retarded by the existence of strong central states) has become an issue of growing importance. The challenges of metropolitan governance in Latin America are a consequence of the fragmentation of public authority, the limited capacity of local government, and social problems (such as concentrated poverty, substandard housing, and limited basic services) that are growing ever more serious. Although metropolitan areas have their own distinctive histories and values, they did identify several common local governance concerns: a history of “centralized and omnipresent national government; lack of an adequate regulatory framework; lack of resources; weak mechanisms of citizen participation; lack of transparency; and weak administrations” with inadequate capacity to confront the growing problems of metropolitan life (29). Similar concerns have been identified for local governments in South Asia. The status of local governments reflects the evolution of national political institutions and, recently, the drive for decentralization and democracy. The creation of effective local government is crucial because of the tendency for central governments to have been “oppressive, corrupt, monopolistic, and inefficient” (Haque 2008, 42). Although there has been a trend toward formal decentralization, problems are still likely to be treated as functional responsibilities of central state bureaucracies. In addition, local governments typically have limited capacity (that is, limited financial and human resources) to carry out effective local programming and the continuing dependency of local governments on central governments makes them more akin to subordinates than autonomous participants in the policymaking process. Beyond these limitations, local governments in South Asia are challenged by local elitism that is often associated with gender, racial, religious, or caste inequality. Although local government matters in developing societies, local governance processes increasingly transcend the formal organs of government through partnerships and networks of government, the private sector, and nongovernmental organizations. Mark Bevir (2009, 121) links the emergence of governance to the retreat of government and suggests that fragmentation, cooperation, and interdependence are key concerns as “the state increasingly depends on other actors to deliver services and coordinate policies.” Beyond this, recent decentralizing reforms have pushed responsibilities downward in developing societies and this

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can challenge local capacity; because fiscal resources do not always follow the shift in responsibility, local governments may find their fiscal capacity is challenged by unfunded mandates (Mathur 2003). Globalization and local competition for mobile capital investments create tension in local governance that is familiar to urban leaders in the United States: how to compete in the global race for investment while still improving the lives of city residents (McCarney 2003)?

Good Governance in Postindustrial Democracies The problems of developing societies may seem to be a far cry from urban policymaking in a postindustrial democracy like the United States. For example, much of the international development literature focuses on the transition to democracy and decentralization of national government institutions—these characteristics distinguish international development from the problems of governance in the United States.7 However, many of the local governance challenges identified in the international development literature also structure and constrain urban policymaking in postindustrial democracies. Capital mobility is a key concern that limits the capacity of local governments to influence economic development policy (Peterson 1981). Competition for investment between jurisdictions places local governments at a significant disadvantage in developing societies and in postindustrial societies alike. Disinvestment is common in areas of urban distress. Although this difficulty is mitigated somewhat in strong market cities that possess distinctive locational advantages, in weak market cities investors hold the upper hand (Jones and Bachelor 1993). Limited fiscal capacity is a related challenge. The fiscal capacity of postindustrial cities is likely to exceed that of cities in developing societies, but it is probable that fiscal constraints will be serious in distressed, postindustrial cities where population losses and disinvestments are coupled with the demands of serving a dependent population. This constraint reflects resident and investor mobility as affluent residents and investors may choose to seek greener pastures (with lower taxes and superior services) in the suburbs (Tiebout 1956; Ostrom et al. 1961). Theories of fiscal federalism suggest that the fiscal constraints that cities must confront are magnified when policymakers operate in the redistributive policy domain (Peterson 1981). Consequently, fiscal constraints are especially salient when local development efforts strive to combat poverty. Like cities in developing societies, urban areas in postindustrial democracies are constrained by their subordinate political status. As subsidiary political jurisdictions, cities are embedded within larger polities (in the United States, this includes the federal and state governments) that structure their policy

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environments and limit the tools that are available to encourage local economic growth and combat poverty (Ladd and Yinger 1989). Consequently, local problems reflect the influence of policy decisions made at higher levels of government and local officials have fewer options for creating revitalization plans. Beyond these structural similarities, two concerns about the quality of local governance in the developing world have direct parallels to urban policymaking in the United States: the limits of local capacity and the corrosive effects of corruption. The political economy of cities in the developing world and in postindustrial democracies reflects the capacity of local government and the local nongovernmental sector. One element of local capacity reflects the structural constraints that have already been noted—specifically, limitations of public power within a market-based economic system and within a policymaking context in which government relies on nongovernmental organizations to develop and implement policy. Government does not control many of the decisions that influence economic outcomes in the city. Consequently, policymaking must engage and include stakeholders who are not part of city government. This introduces the problem of governance to urban politics—effective governance must operate within policy networks that encourage cooperation from nongovernmental actors (Stone 1989). This suggests that good governance also depends on the qualities of local nongovernmental organizations. In the international development arena quasi-governmental organizations (such as the World Bank and the International Monetary Fund) are key sources of finance for local development initiatives that are often implemented in cooperation with networks of nonprofit organizations that work with or parallel to local government to deliver needed services. In the United States, foundations finance many urban revitalization initiatives (in whole or in part) by working with networks of local nonprofit service providers and local government agencies. Corruption is a related concern that can undermine the quality of life in postindustrial cities by degrading the quality of education, police, housing, and other public services. For example, Lydia Segal (2002) has described systemic corruption within the New York City public school system. She reports that the city’s custodial system, which is supposed to clean and maintain the public schools, has been plagued by corruption since the 1920s. Corrupt practices include bribery, extortion, theft, and nepotism. It was common for custodians to give no-show jobs to friends and lovers, to redirect school maintenance resources to renovate and improve their homes, and to extort kickbacks from contractors. Many custodians worked second jobs and did not even come to work regularly in their assigned schools. Although the state intervened to try to end these abuses, the reform measures failed to change the culture of corruption. Segal observes that many large urban school districts face similar problems: “Many of the country’s

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large public school custodial systems, from Chicago to Detroit to Los Angeles, face patterns of ingrained wrongdoing” (446). Theories of governance suggest that the quality of local governance may be an important concern related to economic growth and poverty alleviation. The international development field provides useful advice by focusing attention on the quality of governance, and particularly local governance. Our contribution is to consider how the quality of local governance is related to economic and community development in postindustrial democracies. What is the role of governance in economic and community development in a postindustrial, democratic context? We observed in the introduction that the quality of local governance reflects three concerns—local capacity, community participation, and program integrity. Our first and most important concern is local capacity: does the governance process create and sustain the capacity to act? If this capacity is severely constrained, other aspects of good governance are of little importance. To establish capacity local governance processes must overcome the fragmented distribution of power that is characteristic in American cities by attracting participants from multiple sectors. Effective governing arrangements are necessary to coordinate action among many actors who may disagree about the means and ends of urban revitalization policy. This makes effective local conflict resolution a necessary condition for good local governance. Local leadership in the governmental and nongovernmental sectors is a related concern. Within local agencies and service delivery systems, effective revitalization initiatives require experienced, effective leadership. Cities with more seasoned leaders who are familiar with the local context (problems, programs, institutions, neighborhoods, and key stakeholders) as well as the rules of federal grantsmanship are more likely to be successful. Cities with effective partners in the philanthropic and nonprofit communities have more potential resources to tap in order to create capacity. Beyond this, the governance process must generate or attract the resources that are required to sustain and implement revitalization plans (resources include funding, but also local organizational capacity). Thus, a particularly critical local capacity is the ability of governmental and nongovernmental organizations to tap sources of financial support; in the current U.S. context this normally means competitive grantsmanship from federal agencies or leading national philanthropies. Second, do governing arrangements incorporate the interests and concerns of all the various stakeholders in distressed urban areas? Good governance will provide meaningful opportunities for community participation. Failure to provide this may result in the development of community opposition that can delay or even derail local revitalization plans. However, in postindustrial democracies, the goal is not simply to empower the community through participation but to

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empower the community to effectively solve its problems. Emphasizing responsible participation can help to minimize the problems that are often associated with community participation such as discrimination, domination by factions, and parochialism (Fung 2004; Warren 2001). Good governance will encourage participants to develop a vision that is rooted in the community’s legitimate concerns and ensure that resources and solutions are effectively aligned with community needs. Third, does the governance process make effective use of scarce resources? Merely fighting corruption sets the bar too low in postindustrial democracies. A more positive and ambitious standard is that good governance must have program integrity. In part, our notion of program integrity reflects the entrepreneurial approach to community problem solving that is found in Osborne and Gaebler’s (1992, xix) ideas about entrepreneurialism: “An entrepreneur . . . uses resources in new ways to maximize productivity and effectiveness” in the private sector, the public sector, and the nonprofit sector, in contrast to a more narrow definition generally used to refer to businesspeople willing to take on greater risk in exchange for the possibility of a greater return. As we noted in chapter 1, some elements of the EZ-EC initiative encouraged entrepreneurial governance. As Osborne and Gaebler observed, “When we talk about the entrepreneurial model, we mean public sector institutions that habitually act this way—that constantly use their resources in new ways to heighten both their efficiency and their effectiveness.” But integrity is more than an entrepreneurial style of policymaking. In postindustrial democracies, service integration across sectors—that is, coordinated action that orients a variety of different services toward solving interrelated local problems—is a hallmark of good governance. Good governance makes effective use of scarce resources by establishing integrated problem solving while limiting waste, corruption, and abuse. Initially, this requires an integrated plan that reflects a realistic connection between means and ends. In addition, program integrity means honoring commitments—good local governance will build initial consensus in support of a revitalization plan and continuously reshape the consensus as the plan evolves. Finally, a governance process with program integrity is constantly improving policymaking by learning from experience and making adjustments. Plans must be assessed and redirected to reflect lessons learned about what does and doesn’t work in the local context.

Conclusion The urban renaissance brought welcome changes to many American cities. However, the widely celebrated improvements in urban conditions have highlighted

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issues that have long been central to U.S. urban policy. What are the requisites of good governance? This chapter has examined neoliberal and collaborative models of governance to identify three key characteristics—local capacity, community participation, and program integrity—that are widely regarded as the foundations of good governance. In chapter 4 we will examine the extent to which these characteristics were present in the original urban EZs; chapters 6 and 7 provide a more detailed examination of local governance, EZ program implementation, and revitalization outcomes in Atlanta and Baltimore. In chapter 8, we will examine the relationship between these features of local governance and the revitalization outcomes that the original urban EZs achieved.

3 REVITALIZATION STRATEGIES AND PROGRAMS

The EZ initiative was designed to foster a comprehensive approach for creating jobs and economic opportunities in distressed communities. The legislation and program guidelines (HUD 1994, 17) made it clear that nominated areas “must suffer from pervasive poverty, unemployment, and general distress” and also made it clear that the strategies for revitalizing distressed communities needed to be locally designed and driven. To establish the foundation for our evaluation and assessment of the EZ initiative, this chapter describes the demographic, socioeconomic, and market conditions and trends in the original six EZ cities, paying close attention to the interconnectedness between conditions and trends in neighborhoods, cities, and metropolitan areas. As Katherine Bradbury, Anthony Downs, and Kenneth Small (1982, 28–29) concluded in one of the first major assessments of urban hardship, “Nearly every big city is part of a larger regional urban settlement that forms a unified economic market. Neither current nor future changes in cities can be realistically considered apart from their relationships to these surrounding urban settlements.” We would add neighborhoods to the list of nested geographies that should be considered in fully assessing the local context and its influence on EZ outcomes. We also examine in this chapter the strategies and programs the EZ cities included in their strategic plans to improve conditions in their designated zone areas, as well as the strategic planning processes used to identify their zone areas, strategies, and programs. As that analysis shows, though there were many commonalities in program elements, the EZ cities varied widely in their revitalization strategies. 53

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Local Conditions in EZ Cities The 1990 census provided encouraging news for many American cities. The census documented that the steep population declines many American cities had experienced during the 1970s had slowed in the 1980s. Although all six EZ cities experienced double-digit population declines in the 1970s, led by Detroit, where population declined by 20 percent, only that city had a double-digit population decline in the 1980s (14.6 percent) and New York recorded a population increase of 3.5 percent. Despite this encouraging news, as the 1990s began urban conditions in many American cities remained troublesome. Time magazine ran a cover story in September 1990 titled “The Rotting of the Big Apple” and in April 1993 its cover asked, “Is the City of Angels going to hell?” A year earlier, the Los Angeles riots in the aftermath of the Rodney King verdict brought national attention to the desperate conditions in South Central Los Angeles and elevated discussions on the need for a federal policy response to revitalize distressed neighborhoods in cities across the country. One useful benchmark for comparing the extent of urban hardship and distress in EZ cities is the Intercity Hardship Index, originally developed by Richard Nathan and Charles Adams (1976, 1989) for assessing urban conditions in the 1970s and updated through 2000 by Lisa Montiel, Richard Nathan, and David Wright (2004).1 The updated analysis by Montiel, Nathan, and Wright included eighty-six of the nation’s largest cities and noted that while the plurality of central cities in 1990 had low hardship, half the cities included in the study had moderate to very high hardship levels. The ten most troubled cities in 1990, according to their analysis, were predominantly located in the Midwest and Northeast and included Chicago and Detroit. Table 3.1 reports population trends and urban hardship scores for the six original EZ cities for the period 1970–2000. Most of the EZ cities followed a trajectory different from those of the majority of cities included in the urban hardship analysis. Atlanta, Chicago, Detroit, and Philadelphia all saw their intercity hardship rankings increase between 1970 and 1990—indicating increased levels of urban hardship—with the largest increases in urban hardship recorded by Chicago and Detroit. New York also saw its levels of urban hardship increase as its ranking rose from twenty-eight in 1970 to nineteen in 1990. Although Baltimore consistently ranked among the nation’s most distressed cities, it was the only EZ city to steadily improve its hardship ranking during this period (dropping from six in 1970 to fifteen in 1990). In 1990, four of the original six EZ cities (Atlanta, Baltimore, New York, and Philadelphia) had “very high” levels of urban hardship and Chicago and Detroit had the “highest” levels of urban hardship, with both cities ranking among the top ten most distressed cities among all large American cities. H. V. Savitch and Paul Kantor (2002, 10) provide another perspective on urban distress. They classified cities in terms of market strength by examining

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TABLE 3.1 Population trends and urban hardship in EZ cities, 1970–2010 ATLANTA

Population, 2000 (thousands) Percent change 1970–1980 Percent change 1980–1990 Percent change 1990–2000 Percent change 2000–2010

BALTIMORE

CHICAGO

DETROIT NEW YORK PHILADELPHIA

416

651

2,896

951

8,008

1,517

14.5 7.3 5.7 0.8

13.1 6.5 11.5 4.6

10.6 7.4 4 6.9

20.4 14.6 7.5 25.0

10.4 3.5 9.4 2.1

13.4 6.1 4.3 0.5

23 21 21 25

6 9 15 17

22 14 9 11

10 3 3 6

28 17 19 10

18 16 16 15

Highest Very high Highest Moderate Highest Very high Highest Very high Very high Highest Highest Very high Very high Highest Highest Highest

Very high Very high Very high Very high

Intercity Hardship Rank* 1970 1980 1990 2000 Intercity Hardship Rating 1970 1980 1990 2000

Moderate Very high Very high Moderate

Sources: U.S. Bureau of the Census, Census of Population, various years and Montiel et al. 2004. * Lower ranks indicate higher levels of distress.

population trends and levels of distress. Cities that experienced population losses and exhibited signs of urban distress were classified as cities in “decline” that typically have “hollowed-out” central business districts and “derelict, high-crime neighborhoods.” Cities that are gaining population have low distress scores and are classified as “growth” cities that enjoy favorable market conditions. Savitch and Kantor argue that growth creates more opportunities for urban leaders to develop an effective revitalization agenda. None of the EZ designees qualify as “growth” cities. However, prior to designation, market conditions in five EZ cities were consistent with “decline” (population loss and high levels of distress). In terms of population trends, two cities stand out: Detroit experienced a double-digit population decline during the 1980s, while New York registered an increase. However, New York was not distinguished from the other EZ cities in distress: the city’s 1990 rank and classification (nineteenth and “very high”) placed the city in the midst of the EZ designees. Detroit however, was also an outlier in terms of distress. In 1990, Detroit had the highest intercity hardship ranking among EZ designees (third in the nation). How did changes in urban hardship in the original EZ cities compare with changes that took place nationwide? This section summarizes the demographic, socioeconomic, and market conditions in EZ cities and their metropolitan areas by constructing indexes of urban distress, disparity, and change for a larger sample of cities and metropolitan areas.

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To capture the multiple dimensions and levels of local conditions in the EZ cities, we constructed three indexes: one measuring the level of distress, calculated separately for cities and metropolitan areas for two points in time (1990 and 2000); one measuring city-metropolitan disparities, calculated for two points in time (1990 and 2000); and one measuring the trajectory of urban change between 1990 and 2000, calculated separately for city and metropolitan conditions. Each index was based on five indicators as noted below: Distress—1990

Distress—2000

Percent of persons below poverty, 1989 Unemployment rate, 1990 Median family income, 1989 Median value of owner-occupied housing units, 1990 Percent of housing units vacant, 1990

Percent of persons below poverty, 1999 Unemployment rate, 2000 Median family income, 1999 Median value of owner-occupied housing units, 2000 Percent of housing units vacant, 2000

Disparity—1990

Disparity—2000

City minus metro poverty rate, 1989 City minus metro unemployment rate, 1990 City minus metro housing vacancy rate, 1990 City/metro ratio of median family income, 1989 City/metro ratio of median housing value, 1990

City minus metro poverty rate, 1999 City minus metro unemployment rate, 2000 City minus metro housing vacancy rate, 2000 City/metro ratio of median family income, 1999 City/metro ratio of median housing value, 2000

City Trajectory of Urban Change, 1990–2000

Metro Trajectory of Urban Change, 1990–2000

Percent population change, 1990–2000 Percent change in total jobs, 1990–2000 Percent change in median family income, 1989–1999 Percent change in median housing value, 1990–2000 Percent change in vacant housing units, 1990–2000

Percent population change, 1990–2000 Percent change in total jobs, 1990–2000 Percent change in median family income, 1989–1999 Percent change in median housing value, 1990–2000 Percent change in vacant housing units, 1990–2000

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The indexes include three indicators from the Intercity Hardship Index (poverty, unemployment, and income, though our index uses median family income and the Intercity Hardship Index used per capita income); the other indicators were selected to tap a broader dimension of economic need and market strength (e.g., housing value, housing vacancy rate, population change, job change).2 The sample for this analysis consists of all cities with 2000 populations of 100,000 or more (n = 245) and all metropolitan areas with 2000 populations of 150,000 or more (n = 252). Details on the construction of the indices are available in the online appendix.3 Table 3.2 presents a summary of local conditions in the six EZ cities by using information from all three indexes to convey the multiple dimensions (level of distress, city-metropolitan disparities, and trajectory of change) and geographies (city, metropolitan area) involved in assessing the local socioeconomic context. The table presents a ninefold typology based on the city and metropolitan distress indexes and also adds information on city-metropolitan disparities and trajectories of change for cities and metropolitan areas. The table shows that New York was the EZ city with the most favorable local conditions (relatively low levels of city distress and city-metropolitan disparities). Chicago and Atlanta also appear to be moderately advantaged compared with the other EZ cities despite their relatively high levels of distress and disparity. Chicago’s city distress score was the second lowest among the EZ cities and its metropolitan area distress score placed Chicago in the second-lowest quintile among all large metropolitan areas; Chicago’s trajectory scores for both city and metropolitan area ranked in the middle quintile. Atlanta’s advantage comes primarily from its metropolitan context, as the city’s metro area had very low TABLE 3.2 Summary of local conditions in EZ cities LEVEL OF METROPOLITAN DISTRESS LEVEL OF CITY DISTRESS

Very High

VERY LOW

Atlanta  

LOW

Baltimore  

MIDDLE QUINTILE

Detroit  =

Philadelphia   High

Chicago  =

Middle quintile Key Disparity index  City-metropolitan disparities rank in the highest quintile.  City-metropolitan disparities rank in the middle quintile. Trajectory index  City and metropolitan conditions trajectories rank in the more favorable quintiles. = City and metropolitan conditions trajectories rank in the middle quintile.  City and metropolitan conditions trajectories rank in the least favorable quintile.

New York  

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distress and both city and metropolitan trajectory indexes were positive, indicating improved urban conditions during the 1990s. Baltimore, Philadelphia, and Detroit all had very high levels of distress and the highest city-metro disparities score possible for both 1990 and 2000. Metropolitan distress was slightly lower in Baltimore and Philadelphia than Detroit, suggesting somewhat more favorable conditions in those cities; however, in both Baltimore and Philadelphia the city and metro trajectory scores were very low, indicating relatively weaker gains (or stronger declines) during the 1990s compared with the nation’s largest cities and metropolitan areas. Detroit’s trajectory scores ranked in the middle quintile for both city and metro area, though the city’s metro area had relatively higher levels of distress than Baltimore or Philadelphia.

Characteristics of EZ Neighborhoods One of the key policy design elements of the EZ initiative was its place-based orientation and emphasis on geographic targeting of resources and effort. The legislative and program guidelines placed limits on the size, scope, and characteristics of the areas nominated for EZ designation. In size, urban EZs could be no larger than twenty square miles and were required to be within established population thresholds, which ranged between fifty thousand and two hundred thousand depending on the city’s population size. In addition, the zone area could contain no more than three noncontiguous areas. Nominated areas were also required to demonstrate “pervasive poverty, unemployment, and general distress.” The legislative and program guidelines established poverty thresholds that nominated areas were required to meet (HUD 1994, 17–18): 20 percent for each census tract, 25 percent in at least 90 percent of the census tracts, and 35 percent in at least 50 percent of the census tracts. In addition, the guidelines required a poverty rate of 35 percent for any census tract that contained a portion of the city’s central business district. The guidelines also noted that the poverty thresholds would be automatically met for any nonresidential census tracts and for any census tracts with less than two thousand population that were zoned 75 percent or more for commercial or industrial use. Most cities had far more census tracts that met the poverty thresholds than they could accommodate with the population and land area restrictions. As noted later in the chapter, cities considered various factors in drawing their zone boundaries and in several cities the designation of zone areas was hotly contested. Overall, all six of the original EZ cities met the initiative’s objective of identifying areas of “pervasive poverty, unemployment, and general distress.” As table 3.3 shows, conditions in the EZs were consistently worse than citywide and

TABLE 3.3 Conditions in Empowerment Zones, cities, and metropolitan areas, 1990 or 1989 ATLANTA MSA

Population % African-American % Hispanic % High School

CITY

BALTIMORE EZ

MSA

CITY

CHICAGO EZ

MSA

CITY

EZ

2,960

394

50

2,382

736

73

7,411

2,784

200

25.1

66.8

90.0

25.7

59.0

78.0

19.0

38.7

71.5

1.9

1.9

2.4

1.2

1.0

0.5

11.1

19.2

24.2

78.7

69.9

43.1

74.7

60.7

45.7

76.7

66.0

44.0

72.8

62.7

48.6

68.5

60.7

51.4

68.4

63.7

49.9

Graduates % in Civilian Labor Force % Unemployed

5.1

9.1

17.5

4.8

9.2

15.0

6.7

11.3

24.6

% Below Poverty, 1989

10.1

27.3

54.7

10.1

21.9

41.8

11.3

21.6

49.1

Median Family Income,

41.0

25.2

10.0

42.2

28.2

15.7

42.8

30.7

12.5

1.63

1.0

0.40

1.50

1.0

0.52

1.39

1.0

0.41

62.7

43.1

18.9

63.7

48.6

30.1

61.0

41.5

16.8

9.7

14.6

20.8

5.8

8.9

17.6

6.1

9.3

19.7

1989 (in thousands) Median Family Income (ratio to city figure) % Owner-Occupied Housing % Vacant Housing

DETROIT

Population % African American % Hispanic % High School

MSA

CITY

4,267 22.0

NEW YORK EZ

MSA

CITY

1,028

101

8,547

75.5

67.4

23.6

PHILADELPHIA EZ

MSA

CITY

EZ

7,323

191

4,922

1,586

39

25.6

49.1

18.9

39.5

63.8

1.8

2.8

10.2

21.6

23.7

45.6

3.4

5.3

25.4

75.4

62.1

49.0

70.3

68.3

47.1

75.9

64.3

42.2

64.2

55.0

43.4

62.5

61.7

50.4

65.0

58.4

45.0

Graduates % in Civilian Labor Force % Unemployed

8.9

19.7

28.9

8.3

9.0

17.7

5.7

9.6

23.7

% below Poverty, 1989

13.1

32.4

47.9

17.5

19.3

43.2

10.4

20.3

52.1

Median Family Income,

40.7

22.6

15.2

37.5

34.4

15.7

41.9

30.1

11.8

1.80

1.0

0.67

1.06

1.0

45.7

1.39

1.0

0.39

69.5

52.9

30.9

33.3

28.7

3.0

69.7

62.0

39.3

5.1

8.7

17.5

5.2

5.3

8.7

6.6

10.5

21.2

1989 (in thousands) Median Family Income 1989 (ratio to city figure) % Owner-Occupied Housing % Vacant Housing

Sources: U.S. Bureau of the Census and U.S. Department of Housing and Urban Development (State of the Cities Data System).

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metropolitan conditions. Several patterns stand out. For poverty and unemployment, rates for both indicators were typically twice as high (or greater) in the EZs than in the city or metropolitan region. The zones also included neighborhoods where minority populations were heavily concentrated. In most cities this included a concentration of African Americans, but there were also substantial Hispanic populations in the New York, Philadelphia, and Chicago EZs. In comparison with metropolitan and citywide figures, zone residents had much lower levels of educational achievement and lower incomes. Housing markets in the zones were also consistently weak when compared with their metropolitan and citywide counterparts (the EZs had fewer owner-occupied housing units and much higher vacancy rates). In sum, the original EZs were composed of distressed areas within some of the most distressed American cities, a challenging context for revitalization efforts.

The Strategic Planning Process The EZ initiative encouraged strategic planning. Cities interested in designation were directed to develop a comprehensive, community-driven plan that reflected local opportunities and constraints. The federal EZ-EC application guide noted, “All too often, communities have been put in the position of responding to the rigid dictates of various Federal programs and Washingtonbased planning. . . . The tables are being turned. Our goal is to provide you with the flexibility you need to plan more strategically through a community-driven process.” HUD secretary Henry Cisneros added, “Our challenge is to provide an opportunity to all Americans. We believe the best strategy for community empowerment is a community-driven comprehensive approach which coordinates economic, physical, environmental, community and human needs” (HUD 1994, 4). The application guide proclaimed that the EZ-EC initiative would not be “a typical federal program,” nor would it require “a typical application.” Local plans were to “outline the investments your community is willing to make in revitalization and the commitments—financial and otherwise—from the private, nonprofit, and public sectors. The plan should also explain to us how our Federal investment can be used to reap the largest returns for your community, your region, and our nation as a whole” (HUD 1994, 6). Cities were encouraged to address the following issues: “How was your strategic plan put together? What is the overall vision for revitalization of the designated area? How will your approaches to different community problems be linked together to make your

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61

vision a reality? What government resources will be used to support your plan? What private resources are committed to implement your plan? What are the barriers to the successful implementation of your plan? How are your State and local governments going to reinvent themselves to help implement your plan? How will you implement your strategic plan and what benchmarks will you use to measure progress?” (22–24). Although the application guidelines did not feature specific requirements, the Clinton administration’s intentions about community mobilization were clear: “Your application will be judged both by the substance of the strategic plan and by the extent to which the plan reflects the participation of community residents, citizen groups, the private and nonprofit sectors, and your local government entities” (6–7). To assist communities in preparing strategic plans, HUD held over a dozen regional workshops across the country. These events covered content and process; a central message was that HUD was taking very seriously the nature and extent of community participation in the planning process. As part of its implementation assessment of the EZ-EC initiative, HUD engaged the Rockefeller Institute of Government to undertake a field network evaluation study of the EZ-EC initiative, focusing on the strategic planning process and the choices cities made regarding strategies, programs, and selection of their zone neighborhoods in eighteen communities (including all six of the original urban EZs). The initial report concluded that “the field associates for this study were nearly unanimous in their assessment that the citizen participation that occurred during the development of their city’s strategic plan was significantly and substantively greater than that which has taken place under previous federal urban initiatives. Associates reported that outreach was more extensive and that a wide group of community stakeholders were involved in the planning process” (Wright et al. 1996, 2). Marilyn Gittell and colleagues (2001) also examined the strategic planning process in the original EZ cities and reported similar findings, noting that community organizations were eager to participate and excited about the opportunity to be partners in planning and decision making to revitalize their communities. There were essentially two phases to the planning process, an initial “quiet” phase that often included the mayor, key aides, and local business, civic, and community leaders, and a “public” phase that engaged a broader group of stakeholders. In five cities (all but Atlanta), the initial impetus for planning came from the mayor’s office, though the decision to move forward to pursue EZ designation was often made in consultation with others. In New York, for example, Congressman Charles Rangel, who had been instrumental in the enactment of the EZ

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initiative, met with Mayor David Dinkins to encourage the city to apply. In both Atlanta and New York, new mayors were elected in November 1993, and their election resulted in the processes in both cities being opened to a broader group of participants. The Rockefeller Institute noted that “regardless of when or how the strategic planning process was initiated, in most cities the process began as a city government-directed process and evolved—sometimes gradually, sometimes rapidly—into a more open and community-oriented planning process” (Wright et al. 1996, 17). Cities used several means to encourage community input: five established steering committees; four created citizens’ advisory boards; and other means for gathering input included task forces, community meetings, and workshops (Wright et al. 1996, appendix II). Mobilizing community participation proved challenging and the transition to a broad, inclusive planning process did not always go smoothly. In Atlanta and New York, much of the initial planning, including selection of the EZ neighborhoods, took place without significant community input. When the process was opened up, many of those decisions were reconsidered and in some cases overturned. In other cities tensions were evident. In Chicago, the issue of city versus citizen control resulted in a heated public confrontation. During the session, a community leader from the West EZ Cluster took the microphone from a somewhat startled deputy planning commissioner who was presiding. City officials and consultants were then asked to leave the auditorium so that the 200 community representatives present could caucus. The caucus produced a proposal that the original 30-member coordinating council be re-constituted to include 15 members appointed by the mayor and 15 who would be delegates chosen by the three zone cluster groups. The re-constituted council would then oversee the remainder of the application process. The city team returned to the session and agreed to take the proposal to the mayor, who subsequently endorsed and implemented it (Wright et al. 1996, 19).

Drawing EZ Boundaries The EZ initiative required cities to focus their efforts on a small set of target neighborhoods and therefore zone boundaries became a key consideration in local planning. The legislation placed limits on both the geography of the zone area and the overall population. These conditions were designed to enhance effectiveness of the initiative by preventing cities from spreading their resources

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63

too thin. In addition, EZ borders were required to follow census tract boundaries. For many applicant cities geographic targeting posed a formidable problem, as they had far more eligible areas than they could include in their EZs. In New York, for example, more than 2.8 million residents lived in the city’s 750 census tracts that were eligible for EZ designation. Less than 10 percent of the eligible census tracts and resident population were included in New York’s EZ.4 The processes cities used to select zone boundaries varied. In Atlanta, a small working group headed by representatives of The Atlanta Project and city planning and development agencies initially identified the zone in fall 1993. Mayor Maynard Jackson endorsed the area and obtained a city council ordinance formally adopting the proposal. During spring 1994 newly elected mayor Bill Campbell opened the planning process to more citizen input. Citizen participants insisted on revisiting the zone area. In response, the city council passed a resolution rescinding the original designation and called for a new effort to identify the zone. A committee was formed and, following consultation with city planning officials, recommended four alternative configurations, ranking each based on criteria established by the Community Empowerment Board (CEB). The recommendation was approved by the CEB and endorsed by the mayor and the city council. Figure 3.1a shows Atlanta’s zone. In Baltimore, boundaries were discussed as part of the overall planning process. Three noncontiguous areas in east, west, and south Baltimore composed the zone. The final decision was made by the mayor in consultation with local elites (including key members of Congress). Several concerns shaped Baltimore’s zone. First, there is a well-established political competition between the Eastside and Westside neighborhoods in Baltimore. The zone included neighborhoods both east and west of the central business district. Second, two educational anchors (the Johns Hopkins medical campus and the University of Maryland) and one historically black college (Coppin State University) were included. Third, the zone overlapped substantially with the Sandtown-Winchester neighborhood (the site of an ongoing comprehensive community development initiative). Finally, the zone included two areas with development potential: Fairfield, which featured large tracts of open and underused industrial land, and Fells Point, a popular entertainment district that included underdeveloped harbor-front property. Figure 3.1b shows Baltimore’s zone. In Chicago, community groups submitted more than thirty proposals to the Empowerment Zone Coordinating Council (EZCC)—a thirty-two-member board composed of community agencies, businesses, and state and local government officials appointed by Mayor Richard M. Daley—for consideration for inclusion in the zone. Even after the proposals were pared down to meet federal

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75 85

20 20

75

Legend 85

EZ Tracts Central Business District 0

.5

1

1.5

Miles

FIGURE 3.1A Atlanta’s empowerment zone

eligibility requirements, the population exceeded federal guidelines. The EZCC received additional input from the city’s planning and development staff, who recommended the inclusion of several industrial tracts. Although community groups complained that “the neighborhood planning process was being circumvented for the benefit of special interests” and several city officials objected to the proposal, the boundaries (including the industrial tracts) were unanimously endorsed by the city council (Chaskin and Peters 1997, 28). Figure 3.1c shows Chicago’s zone.

REVITALIZATION STRATEGIES AND PROGRAMS

65

83

West Baltimore

East Baltimore

395 95 95

Baltimore Harbor

895

Fairfield

Legend

0

EZ Tracts Central Business District 1 2

3

Miles

FIGURE 3.1B Baltimore’s empowerment zone

In Detroit, a working group of appointed and self-appointed representatives from citywide and community-based organizations proposed EZ boundaries, which were reviewed and “blessed by” Detroit’s mayor. As the Rockefeller Institute noted, “Interestingly, the community-based participants—who were described as having muscled their way into the process—were successful in selecting an area that generally comported with their own respective areas of concentrated activity” (Wright et al. 1996, 23). Figure 3.1d shows Detroit’s zone.

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90

West Humboldt Park

West Garfield Park

East Garfield Park Lake Michigan

West Town

90

Pilsen

55

90

Oakland

South of the Yards South Side

Legend EZ Tracts Central Business District 0

.5

1

Woodlawn 1.5

Miles FIGURE 3.1C Chicago’s empowerment zone

Citizens were least successful in exerting influence on zone boundaries in cities where “high-level” politics were engaged. These cities included New York, where intense negotiations among Congressman Charles Rangel and newly elected Mayor Rudolph Giuliani and Governor George Pataki yielded a closed process. Similarly, the unique nature of the Philadelphia-Camden zone, which was vying for selection as the sole bistate zone, also involved intense discussions

REVITALIZATION STRATEGIES AND PROGRAMS

67 94

94

75

375

96

Detroit River

Legend Canada 0

EZ Tracts Central Business District .5 1

1.5

Miles

FIGURE 3.1D Detroit’s empowerment zone

among local elected officials from the cities, their respective states, and interested congressional leaders. In the end, local political elites negotiated the division of EZ resources between the two cities and once that decision was reached, each city made relatively independent decisions on which neighborhoods to include. In Philadelphia, one of the most important factors taken into consideration was the capacity and experience of neighborhood-based organizations. As one local official noted, “It was very important to us that we picked neighborhoods that had the capacity and leadership to get things done. We had been working with community-based organizations for many years through a variety of urban initiatives and felt we had a pretty good understanding of where those neighborhoods were.”5 The zones in New York and Philadelphia are shown in figures 3.1e and 3.1f, respectively.

Local Uses of EZ Funds The choices cities made regarding local programs and strategies suggests that rather than thinking of the EZ initiative as a uniform federal program that was

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87

Hudson River

95

95

Upper Manhattan

895

87

South Bronx

278

East River

Legend EZ Tracts Central Business District 0 .5 1 1.5 Miles FIGURE 3.1E New York’s empowerment zone

implemented in several different sites, it may be more appropriate to think of it as a set of distinctive local programs spawned by the same federal initiative. The EZ cities used different strategies and programs to achieve different objectives to address the needs of their distressed neighborhoods and the residents who lived there. These different emphases, however, tended to draw from the same set of revitalization tools such as housing and business revolving loan funds, job

REVITALIZATION STRATEGIES AND PROGRAMS

Schuylkill River

North Philadelphia

69

American Street

76

Delaware River

West Philadelphia

676 95

Legend

0

EZ Tracts Central Business District .5 1 1.5 Miles

FIGURE 3.1F Philadelphia’s empowerment zone

training programs, community policing initiatives, one-stop service centers, and the like. To understand how cities actually used their EZ resources and how those choices may have differed from those included in their strategic plans, we examined the annual PERMS reports (Performance, Monitoring, Review and Management System) filed by each EZ city.6 Table 3.4 presents data from the 2006 PERMS annual reports filed by the original EZ cities, two years after the end of the ten-year initiative or, as in the case of Atlanta, Detroit, and New York, the most recent PERMS report or local financial report filed. The data in table 3.4 reflect the amounts and proportions of each city’s $100 million in EZ funds that were allocated to support local programs. The totals do not sum to $100 million because not all of the funds were allocated by the closing date of the reports and the reports typically omitted planning and administrative expenses. In addition, because of the nature of the bistate zone, Philadelphia’s total EZ allocation was set at $79 million. Because the EZ funds were controlled by the EZ implementing authority in each city (though subject to review and approval by state and in some places city officials), they are the best indicator of the priorities and preferences of each city’s EZ effort.7

85,427

Total

100.0

0.0

7.0

0.1

26.9

4.2

4.1

83,035

0

8,293

91

8,061

2,313

7,565

30,581

26,131

DOLLARS

100.0

0.0

10.0

0.1

9.7

2.8

9.1

36.8

31.5

PERCENT

BALTIMORE

90,494

2,800

3,201

4,987

19,531

1,220

33,049

14,342

11,364

DOLLARS

100.0

3.1

3.5

5.5

21.6

1.3

36.5

15.8

12.6

PERCENT

CHICAGO

79,449

0

2,009

3,460

10,269

8,990

50,107

4,464

150

DOLLARS

100.0

0.0

2.5

4.4

12.9

11.3

63.1

5.6

0.2

PERCENT

DETROIT

74,877

978

13,671

380

1,724

300

2,198

5,136

50,490

DOLLARS

100.0

1.3

18.3

0.5

2.3

0.4

2.9

6.9

67.4

PERCENT

NEW YORK

69,485

28

2,834

5,899

6,446

1,800

6,377

472

45,629

DOLLARS

100.0

0.0

4.1

8.5

9.3

2.6

9.2

0.7

65.7

PERCENT

PHILADELPHIA*

Source: Authors’ analysis of PERMS 2006 Annual Reports for Baltimore, Chicago, and Philadelphia; PERMS 2005 annual report for Detroit; PERMS 2001 annual report for Atlanta; local financial reports for New York (April 2006). Note: Dollar amounts in thousands. Percentage totals may not add to 100 due to rounding. * Philadelphia only. Excludes EZ allocations by city of Camden.

0

5,988

49

Other

Planning and Administration

Physical Improvements

23,000

3,561

Public Safety

Housing

3,520

400

Human Services

57.3

48,909

Business Development

Workforce Development

0.5

PERCENT

DOLLARS

ATLANTA

EZ Cumulative program allocations by category

PROGRAM CATEGORY

TABLE 3.4

REVITALIZATION STRATEGIES AND PROGRAMS

71

To identify the top local priorities (percentages presented in boldface in the table) we selected the program categories that had the highest proportions of EZ funds and summed until the total proportion was at least 50 percent of the reported EZ allocations. Each of the cities adopted a multifaceted strategy to create economic opportunities that included business development, workforce development, human services, public safety, housing, and physical improvements. However, the extent to which these elements were a local priority varied from one city to another. In several cities business development was the top priority. Three cities—Atlanta (57 percent), New York (67 percent), and Philadelphia (66 percent)—allocated a substantial majority of their EZ funds to business development programs. In Baltimore, workforce development (37 percent) was the top priority, with business development (32 percent) a close second. Within the cities where business development was the primary focus, there were differences in the ways local programs encouraged economic opportunity. In Baltimore and Philadelphia, business development programs focused on providing capital by creating business loan programs. In New York, emphasis was placed on funding specific projects as well as business finance. The largest single item in New York’s budget, which accounted for more than $8 million in EZ funding, established a loan fund targeting small businesses in the Bronx. The largest development projects were located in Upper Manhattan and included budgeted items of more than $5.6 million for a General Motors auto center and more than $3.7 million for the Harlem USA retail and entertainment complex. Atlanta also provided funds for business finance while underwriting two large revitalization projects: the Historic Westside Village development project at $9.2 million and the Southside/Pryor Road development project for $12.4 million. By contrast, two EZ cities (Chicago and Detroit) prioritized human services and housing. A distinctive feature of Chicago’s program was that EZ officials there funded a larger number of programs than was true in any of the other cities. For example, Chicago financed over seventy different human services activities. Large allocations were made to support healthcare and childcare facilities and programs. Chicago’s tendency to fund a large number of activities was also evident in housing as more than twenty housing initiatives received EZ funds totaling more than $19 million. In Detroit the largest share of EZ funds was awarded for human services and the largest single EZ allocation ($10 million) was earmarked for an Innovation Fund to support existing community programs to stabilize families and support individual efforts to become productive members of the community. Other large programs in Detroit included Schools as the Heart of the Community

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(an after-school activities initiative); Homebound Elderly Care Management (services to assist homebound elderly residents); and the Family Place (an early childhood support and resource center). Baltimore’s program was distinctive because workforce development received the largest allocation of EZ funds. The local program for workforce development in Baltimore was unusual; more than $13 million in EZ funds was used to create career and family support centers in six village centers throughout the zone. These programs were designed by leaders in each of the village centers and integrated an array of services to meet the needs of different zone residents, including literacy training, job training, and drug or alcohol rehabilitation. In addition, $9.4 million of EZ funds were allocated to finance customized training, a program that worked with zone employers to recruit and train zone residents for specific job opportunities.

From Planning to Action Some EZ cities did not fully implement the vision laid out in their strategic plans. While cities such as Detroit and Philadelphia followed closely the strategies and priorities laid out in their strategic plans, other cities—notably, New York and Atlanta—changed course during implementation. In cities where there were substantial revisions from the priorities laid out in their strategic plans, those reallocations of EZ funds appear to be more the result of a shift in key decision makers—generally a rise in the influence of political elites and a decline in citizen influence—than a change in the nature of the problems to be addressed. In addition, cities that developed vague plans, such as Atlanta, were more vulnerable to reprogramming and repurposing of EZ funds than those cities that developed more detailed plans. In Detroit, the plan clearly enunciated a human capital development strategy for fostering greater economic opportunities for zone residents—two-thirds of the city’s proposed EZ funds were to be allocated for human services programs. The city, partly because of the detailed description of strategies, programs, activities, and budgets included in its strategic plan, largely followed those priorities during implementation. Indeed, the city’s 2005 PERMS report noted that “economic development, despite its obvious importance, has never been the primary focus of the Detroit EZ” (Detroit 2005, 5). Philadelphia was another city that closely followed the priorities laid out in its strategic plan. Philadelphia’s plan was also detailed, though the financial allocations were not as programmatically detailed as those in Detroit; the final EZ aggregate allocations in Philadelphia, however, matched very closely the priorities reported in its strategic plan.

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73

The sharpest departures from strategic planning, which took place in New York and Atlanta, followed a consistent pattern—shifting EZ allocations from human services to economic opportunity, primarily business development. In New York, nearly 75 percent of the city’s EZ funds ended up supporting economic opportunity activities, whereas the city’s strategic plan had only proposed allocating about 20 percent of EZ funds for economic development. By contrast, while the strategic plan called for an investment of 39 percent of EZ funds for human services, only 3 percent was actually allocated. Large shifts also occurred in support for housing in New York (20 percent in the strategic plan versus 2.3 percent based on the city’s 2006 EZ financial report). According to Gittell and colleagues (2001, 24), “A detailed business and economic development focus did not appear in the Upper Manhattan or the Bronx EZ strategic plan, but this agenda subsequently is emanating from state and city officials, from business oriented board members and from the senior staff members of the oversight, Bronx and Manhattan EZ governance boards.” They noted, for example, that “economic development projects [were] an express priority of the Manhattan EZ Executive Director, a Harvard trained, former housing and planning official, who is reluctant to fund traditional social services programs.” Similar shifts took place in Atlanta. Although Atlanta’s original strategic plan budget identified Lifting Youth and Families Out of Poverty as the single largest strategic theme ($36.3 million), most of the activities in this category were never implemented; the vast majority of funding for this category was redirected for other uses, primarily economic development. By the time the Atlanta initiative came to a close, more than half of all the funds ($50.3 million) were earmarked for projects to support the strategic theme of expanding employment and investment opportunity. More than $30 million of the EZ funds Atlanta allocated for economic development were awarded to four major redevelopment projects. These shifts were a source of considerable conflict between the citizen representatives on the governance board, local EZ staff, and Mayor Campbell, with the citizen representatives frequently claiming that the proposed reallocations were not consistent with the priorities in the strategic plan or the community-based process that identified those priorities. Baltimore also followed the reallocation trends observed in New York and Atlanta, though its shift of EZ funds from human services to economic development was less extensive. As Baltimore’s EZ program shifted priorities, human services and community development funds were shifted to creating economic opportunity and business development. However, the repercussions of these changes were less severe in Baltimore, because the city’s EZ leadership was able to convince zone residents and community-based organizations to support the changes.

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In Chicago there were also revisions to the city’s strategic plan, though the magnitude of those changes are more difficult to assess, since Chicago’s strategic plan did not include a budget. Gittell and colleagues (2001, 31) noted that “when HUD designated Chicago as an EZ site, the mayor and the city council took charge of the EZ process, rewrote the program, and limited the participation of the community organizations in EZ governance.”

Local Priorities in Other Studies Our analysis of local EZ programs leads to conclusions somewhat different from those presented by other EZ evaluations. For example, Diedre Oakley and HuiShien Tsao (2006) analyzed budgetary data from the PERMS reports, including EZ funds and all other funding sources, and organized the data around three key EZ principles (community-based partnerships, economic opportunity, and sustainable community development). They observed that the economic opportunity principle received the majority of funding in all the EZs they examined except Chicago, and that most of the economic opportunity expenditures were devoted to development initiatives. Consequently, they concluded that the innovative nature of the EZ initiative may have been exaggerated: “Despite the official rhetoric emphasizing the empowerment of people and communities, the actual programmatic emphases reveal more traditional economic development strategies” (456). Our view is that their conclusion reflects the influence of the leveraged funds data given in the PERMS reports. Because most of the leveraged funds identified in the reports were private business investments, including these funds in the analysis naturally leads to the conclusion that economic development was the highest priority. The leveraged funds are less a reflection of local EZ program priorities than differences in the extent to which local authorities claimed credit for private investments that occurred in the zones, claims that an evaluation of the EZ-EC initiative by the U.S. Government Accountability Office (GAO) found suspect. The GAO (2006) evaluation characterized EZ programs based on the number of activities reported in each city, organized into eleven different programmatic areas. The report downplayed the value of the data provided by the PERMS system because the GAO thought the financial data were unreliable. Consequently, although the GAO did use the PERMS reports to sketch local program content, it counted the number of activities reported rather than the resources allocated to each activity. In its reply to the GAO report HUD disputed the contention that the financial data were not reliable. Our view (based on our field research in Atlanta and Baltimore that included detailed analyses of local financial systems,

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such as draw down reports from the state agencies administering the EZ funds, and our review of local financial reports in Chicago and New York) is that the PERMS data concerning the use of EZ funds do reflect local decisions and priorities, though we agree with the concerns the GAO expressed about the reliability of data concerning leveraged funds. The findings from the GAO report as well as the federally sponsored evaluations are consistent with our conclusions in that they observe significant variation from one EZ program to another in terms of strategic focus (Wright et al. 1996; Hebert et al. 2001). However, the GAO reached different conclusions about local priorities. It concluded that the top priorities in Atlanta were housing and public safety; in Baltimore workforce development and business assistance; in Chicago workforce development, human services (including education) and housing; in Detroit human services; in New York business assistance (including access to capital) and workforce development; and in Philadelphia education and business development (including access to capital). Only in Baltimore and New York, according to the GAO, were the majority of activities oriented toward the economic opportunity principle. The GAO observed that the majority of activities in Atlanta, Chicago, Detroit, and Philadelphia were oriented toward community development. Our concern about the GAO’s conclusions is that counting activities gives equal weight to small and large efforts and that can create misleading conclusions about local priorities (compare, for example, GAO’s assessment of Atlanta’s emphasis on housing and public safety with our classification of the Atlanta initiative as being focused almost exclusively on economic development). The evidence about local program expenditures reveals significant variation in local priorities and shows that there was no national “Empowerment Zone Program.” Rather, the EZ initiative spawned very different local programs that reflected different combinations of strategies and programs to achieve different objectives in each city.

Market-Oriented Policies Our discussion of local programming so far has emphasized local planning for the use of federal EZ funds. However, as we explained in chapter 1, the EZ initiative also featured several market-oriented policies. Contemporary federal urban policy reflects the view that tax incentives are an effective means to encourage economic growth and create jobs. However, there is substantial evidence to contradict this belief. Alan Peters and Peter Fisher evaluated seventy-five state enterprise zones in thirteen states and found that tax incentives were unlikely to attract firms or create jobs because the incentives only reduced net wages from 1.6 to 7.1

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percent, a reduction that could easily be offset by a small wage premium. Peters and Fisher (2002, 225–226) attributed the ineffectiveness of zone incentives to “the fact that many zones are in older, distressed, inner-city neighborhoods. Such places suffer from a number of important locational deterrents—high levels of crime, poor infrastructure, poorly skilled workers and so on—and it is unlikely that tax incentives alone, small as they usually are, will make up for these negatives.” Although tax incentives were a prominent feature of the EZ initiative, evidence on the utilization and effectiveness of the tax incentives is limited, largely because of the lack of available data (GAO 1999, 2004). As part of the interim assessment of the EZ initiative, a survey of businesses was conducted in the original urban EZs (Hebert et al. 2001). Approximately eighteen hundred businesses were surveyed—three hundred per zone—during two waves, in late 1997 and in 2000. The surveys found that business awareness of the special tax incentives was low and few businesses used them. Overall, use of the Wage Tax Credit increased from 9 percent in 1997 to 11 percent in 2000; use of the Work Opportunity Tax Credit remained flat at 3 percent, and the percentage of zone businesses using the Section 179 special expensing provisions actually declined by half, from 8 percent to 4 percent from 1997 to 2000. Despite efforts in many cities to inform businesses about zone tax incentives, awareness remained low. According to Hebert and colleagues (2001, 3–21), “Almost half (49 percent) of establishments were unaware of the EZ Wage Tax Credit, while fully 69 percent were unaware of the Section 179 Expensing Provision and 71 percent were unaware of the Work Opportunity Tax Credit.” The surveys also revealed wide variation across EZ cities in terms of business awareness and use of tax incentives. On average, about half the businesses surveyed were aware of the EZ Wage Tax Credit, though only 11 percent of respondents indicated they had used the credit. Awareness and use was much lower for the other two tax incentives, as only about one-third of EZ businesses, on average, were aware of the Work Opportunity Tax Credit and Section 179 expensing provisions; less than 5 percent of zone businesses used these incentives. Generally, businesses in Baltimore and Philadelphia-Camden were more likely to be aware of the credits; awareness was lowest among EZ businesses in Atlanta and New York. Similar findings were reported by the GAO (1999). The report was based on a mail survey of twenty-four hundred businesses in nine EZs and examined the uses of the Wage Tax Credit, enhanced depreciation for business property, and tax-exempt facility bonds among urban and rural and large (fifty employees or more) and small businesses. Generally, the report concluded that small urban businesses were least likely to claim any of the tax credits. Among all businesses,

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the employment credit was the one used most frequently. However, the employment credit was most often used by rural and large urban businesses; 42 percent of large urban businesses and 32 percent of rural businesses claimed this credit, while only 6 percent of small urban businesses did so. The enhanced depreciation for investments was used by only 9 percent of large urban business, 4 percent of small urban businesses, and 8 percent of rural businesses. Only ten businesses in all reported the use of tax-exempt facility bonds. The GAO (1999) also noted why businesses did not claim the tax benefits that were available to them. For the employment credit, most of the respondents that did not use the credit explained that they were not eligible because their employees lived outside the zone or they did not know about the credit. For the enhanced deductions for business investments, most of the respondents that did not claim the credit said they did not know about it or they had not made any qualifying investments. The overwhelming reason the tax-exempt bonds were not used is that businesses did not know about them. A subsequent GAO (2004) report noted that the number of corporate returns claiming the Empowerment Zone Wage Credit (and the dollar volume of credits claimed) increased steadily between 1995 and 2001. The GAO estimated that corporations and individuals claimed a total of $251 million in Wage Tax Credits during this period. The report also observed that state and local governments between 1995 and 2001 issued a total of $315 million in tax-exempt EZ facility bonds. Finally, the GAO noted that the obstacles to the use of tax incentives reported by zones businesses in its earlier report remained, particularly among small businesses.

Regulatory Relief Regulatory relief was another distinctive feature of the EZ initiative. The EZ-EC application guide encouraged localities to identify specific federal programmatic, regulatory, and statutory provisions that were barriers to creating economic opportunities and promoting sustainable community development. According to the EZ-EC guidelines (HUD 1994, 11), “The particular impediments that will present major challenges to you under this initiative should be made clear to us in your strategic plan. In turn we will focus our energies on overcoming those barriers. Your help in identifying impediments is essential to us, and you should explain what you want us to examine as an addendum to your strategic plan.” Most waiver requests were submitted during the year following zone designation; by April 1996 federal departments and agencies had responded to those requests. According to Hebert and colleagues (2001), the urban EZ cities filed over one hundred requests; nearly half of those were submitted to HUD. The

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number of waiver requests varied from seven in Atlanta to more than thirty for the Philadelphia-Camden bistate zone. Although the waiver requests were quite diverse, the waivers most often requested included the following (Hebert et al. 2001, 6–14): • Exemption from, or changes to, Davis-Bacon requirements, especially the prevailing wage provisions (all refused because this would require statutory changes) • Modification of the Job Training Partnership Act eligibility requirements and definitions (usually refused) • Flexibility in using CDBG or HOME funds (most HUD responses said the requested flexibility already existed) • Changes in Section 8 eligibility, targeting, and use of funds (most HUD responses said the requested flexibility already existed) • Changes in AFDC, Food Stamp, and Medicaid eligibility (most referred to the Single State Agency coordinating these types of waivers) Overall, less than 5 percent of the waiver requests were approved or partially approved and 29 percent were denied. For 26 percent, the responding federal agency declared that the city already had authority to take the requested action and therefore a waiver was not required. In other instances, the federal agency reported it did not have the authority to grant the requested waiver, usually because it required a statutory change, or that it required additional information from the applicant city to better understand what provisions they were seeking relief from. Hebert and colleagues (2001, 6–14) attributed the lack of a clear pattern regarding waiver outcomes to two factors. One was a lack of understanding on the part of local officials concerning “the laws and regulations governing their proposed programs and/or what kind of information the Federal agency would need in order to make a determination about their request”; the other was that some cities were likely using the waiver process “to complain about Federal programs they did not like or that they felt were poorly designed.” They concluded that “both the localities and the Federal agencies found the waiver process less than fully satisfactory, and little ‘cutting of red-tape’ resulted from the process.” Similar findings were reported by Erickson (1992, 169) in his comprehensive assessment of the state enterprise zones experience: “We found very little regulatory relief in practice. The regulatory relief that is used tends to be procedural rather than substantive.”

Leveraged Investments One expectation undergirding the EZ initiative was that cities would use their designations, available tax incentives, and block grant funding to leverage additional

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financial assistance from public, private, and nonprofit partners to help implement their strategic plans. One benefit of EZ designation was that cities would receive competitive preference for additional federal grants, loans, or technical assistance to support their strategic plans. For example, the Environmental Protection Agency offered preferential treatment for federal assistance through programs to help EZ cities clean up brownfield sites. HUD and the U.S. Department of Agriculture (USDA), which was responsible for overseeing the rural component of the EZ-EC initiative, published a supplementary guide to federal programs (President’s Community Enterprise Board 1994) to assist EZ cities in identifying available federal resources that could serve as potential sources of support for their strategic plans; about 40 percent of the nearly one hundred grant programs listed in the guide featured priority treatment for EZ cities. Ten programs—nearly all administered by HUD or USDA—provided a specific funding set aside for projects located in designated EZ-EC communities. The largest of these were HUD’s Section108 Loan Guarantee ($500 million) and Project-Based Rental Assistance Certificates ($500 million) programs. In addition, several federal departments and agencies provided targeted technical assistance and expedited processing of grant applications in support of EZ and EC cities. Although evidence is spotty, HUD’s data management system did indicate EZ-funded projects that included additional federal support. Although the data did not capture whether those awards were made on the basis of priority treatment for EZ communities, it appears that the initiative was no more successful in attracting other federal resources to EZ neighborhoods than had been the case under the Model Cities program. A GAO report (2004, 68) noted that HUD and USDA officials believed that “many federal agencies that provided competitive preferences to applicants located in EZ-ECs in round I no longer offer these preferences.” Another HUD official pointed out that the number of federal programs with preference for EZ-EC cities may have declined because the president’s Community Enterprise Board disbanded.8 In March 1997, HUD released a commissioned report prepared by Price Waterhouse (1997) that provided an overview of public and private investment in the original urban EZs. Total public and private investment commitments in the zones, according to the report, exceeded $2.7 billion and more than $2 billion in private investment had been obligated. Overall, nearly two-thirds of the total investment commitments in the EZs ($1.8 billion) was for business retention or expansion to create jobs, investment pools for capital access and innovative financing needs, job training, and entrepreneurial and business support services. Over half of this amount ($1 billion) was attributed to the expansion of two automobile manufacturing plants in Detroit. Other notable investments included support for neighborhood-based shopping districts in Baltimore; conversion of an old cotton bag mill into offices, retail, and residential lofts in Atlanta; brownfield remediation

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and model industrial corridor revitalization in Chicago; Harlem USA, a retail and entertainment complex in New York; and loan funds to be capitalized through community development finance institutions in Philadelphia’s three zone neighborhoods to support small and micro business loans. Price Waterhouse also reported that the urban EZs had total investment commitments of $734 million to support housing and infrastructure projects, which included $306 million in public funds and $380 million in private dollars. The focus of much of this investment was increasing the supply of affordable housing with an emphasis on promoting home ownership. A wide variety of partners were engaged, including public housing authorities, private developers, communitybased nonprofit organizations, and mortgage lenders; projects included redevelopment of vacant or blighted land, housing rehabilitation and new construction to increase home ownership opportunities, and the use of housing investments to attract additional neighborhood-based retail and commercial investments. GAO’s evaluation (2006, 17–18) acknowledged that EZ communities had indeed leveraged other resources but noted, “We could not verify the actual amounts.” The GAO report stated that “for the sample of activities we reviewed, either supporting documentation showed an amount conflicting with the reporting amount or documentation could not be found.” GAO added that “the definition of ‘leveraged’ varied across sites, as the federal agencies did not provide EZs and ECs with a consistent definition of what leveraged funds should include. As a result, designated communities included different types of funds in the amounts they reported as leveraged.” Some EZ cities, for example, “reported as leveraged funds other investments made in the EZ area, aside from those directly funded with the EZ-EC grant funds, although other designated communities did not.” Atlanta, for example, in its 1997 annual report noted that to date more than $1 billion had been invested in the Atlanta EZ. These investments included, among others, construction of a new arena for the Atlanta Hawks National Basketball Association team and the Atlanta Thrashers National Hockey League team ($215 million) and construction/conversion of Centennial Olympic Stadium to Turner Field to accommodate the Atlanta Braves Major League Baseball team ($205 million). Both these investments, though technically inside the EZ, would have taken place regardless and in the case of the conversion of Olympic Stadium to the Braves baseball stadium, represented commitments that were made before the city was an EZ designee.

Benchmarking Before initiating local EZ programs and activities, designated cities executed an intergovernmental memorandum of understanding with HUD, which followed

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the successful completion of the benchmarking process and approval of the city’s local governance plan. As part of the agreement, HUD required each city to designate a primary authority responsible for implementing the local program. In addition to the primary authority, federal expectations about community participation in governance resulted in the creation of advisory structures in several cities, though the number and character of these entities varied. Before EZ block grant funds were released, cities were required to identify benchmarks and activities for the first two years of the initiative. Benchmarks were indicators that local sites compiled and reported to HUD to show progress made toward the goals articulated in their strategic plans. Benchmarking was also a key element of the Clinton administration’s framework for reinventing government that encouraged designated cities to incorporate a performance management perspective to guide the implementation of their strategic plans. By allowing each city to establish its own benchmarks, HUD hoped to provide the flexibility communities needed to implement their strategic plans while at the same time securing the data and information required to ensure accountability in federal program oversight. Each benchmark was linked to a particular outcome (“the measurable changes that take place in the community over a period of time”) and all of the community’s benchmarks “should cover all aspects of the Strategic Plan” (HUD 1995a, 2). For each benchmark, cities were required to identify the category of need the benchmark addressed; the projects, activities, and tasks needed to accomplish the benchmark; the agencies and organizations that would serve as the lead implementing entities; baseline and anticipated outcomes; project milestones; and the amount and sources of program funds. Although the focus of the benchmarking process was on activities that would launch during the first two years of the initiative, HUD expected and allowed communities to add, modify, or delete individual benchmarks as implementation progressed. HUD viewed benchmarking as part of the intergovernmental management system to monitor and evaluate progress in the EZs. However, cities saw the completion of the benchmarking process as the way to gain access to EZ funds and viewed benchmarking as bureaucratic red tape they had to wade through in order to obtain their grants. The benchmarking process also presented challenges in several cities that had difficulty translating their strategic plans into specific programs and activities—particularly in cities where their strategic plans had been short on specifics regarding the proposed uses of EZ funds. Community participation generally declined during the benchmarking process (Wright et al. 1996; Chaskin and Peters 1997; Gittell et al. 2001; Hebert et al. 2001). The significant community participation that occurred during the initial EZ planning was widely attributed to various federal requirements that encouraged meaningful citizen participation. The reductions in community participation

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during benchmarking may also reflect federal influence (or the lack thereof). There was considerable time pressure to finish the benchmarking quickly, despite the fact that benchmarking was a novel idea (Wright et al. 1996). HUD used the financial leverage it enjoyed to enforce federal benchmarking requirements by linking the release of EZ funds to the completion of the process. This created an incentive for local leaders to marginalize the community during benchmarking in order to gain quicker access to their funds. Consequently, in some cities benchmarking became a “technical” exercise, carried out with limited community participation. The narrowed community influence during benchmarking was significant because the benchmarks were not only a management tool; they were also a means for establishing local priorities by deciding which action plans to advance first (Wright et al. 1996). Although citizen participation was limited in many cities as benchmarking was delegated to city staff or the EZ implementing agency, there were some noteworthy exceptions. Some elements of the community in Detroit exercised significant influence over the benchmarking process because the strategic planning process in Detroit was dominated by a handful of community development corporations that wanted to ensure that the plan would be implemented as they designed it. Beyond this, they developed an elaborate benchmarking process because they wanted to quit the governing process so that they would not forfeit their opportunity to apply for financial support from the zone (Gittell et al. 2001). In the Bronx, a “detailed process” was established to create benchmarks that “included a relatively high level of community involvement” (Wright et al. 1996, 65). Benchmarking in Philadelphia also had significant community input because the benchmarks were developed jointly by technical staff and community trust boards that were established to ensure ongoing community participation in the initiative (Gittell et al. 1998).

Citizen Influence Table 3.5 summarizes citizen influence in the EZ strategic planning and benchmarking processes. The data suggest that during the early stages of the process— strategies, programs and activities, and selection of zone boundaries—many cities were able to attain meaningful levels of citizen participation in which citizens were able to share planning and decision-making responsibilities and in some instances become the dominant decision makers. Citizen participants in five of the EZ cities (all but Philadelphia) either determined the top-level revitalization strategies (Atlanta, Baltimore) or had major influence on their selection (Chicago, Detroit, New York).

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TABLE 3.5 Community influence in strategic planning and benchmarking

EMPOWERMENT ZONE

SELECTING STRATEGIES

DEVELOPING PROGRAMS AND ACTIVITIES

SELECTING ZONE BOUNDARIES

DEVELOPING BENCHMARKS

Atlanta

Determined

Major influence

Determined

Minor influence

Baltimore

Determined

Major influence

Minor influence

Minor influence

Chicago

Major influence

Major influence

Major influence

Minor influence

Detroit

Major influence

Major influence

Determined

Major influence

New York—Upper

Major influence

Minor influence

Minor influence

Minor influence

New York—Bronx

Major influence

Major influence

No influence

Major influence

Philadelphia

Minor influence

Major influence

Minor influence

Major influence

Manhattan

Sources: Wright et al. 1996; Chaskin and Peters 1997. * Scores for benchmarking are inferred based on the authors’ reading of program narratives, including Wright et al. 1996; Chaskin and Peters 1997; Gittell et al. 2001, 1998; and Hebert et al. 2001.

In all six cities citizen participants had major influence in identifying specific programs and activities that were included in the strategic plans. In terms of identifying the boundaries for their designated zone areas, citizens in Atlanta and Detroit determined the zone boundaries and in Chicago citizen participants had major influence on the selection of zone neighborhoods. On the other hand, citizens in Baltimore, New York, and Philadelphia had only minor (or no) influence on selecting their zone boundaries. Finally, in terms of benchmarking, the table shows that citizen influence declined. Citizens in Detroit and Philadelphia achieved major influence; one city (New York) had mixed influence (citizens had major influence over benchmarks in the Bronx EZ but only minor influence in the Upper Manhattan EZ); and citizens in Atlanta, Baltimore, and Chicago only had minor influence in establishing benchmarks.

Local Priorities, Programs, and Participation Our examination of local planning and benchmarking suggests that there was no uniform national EZ program. Designated cities developed distinctive local plans and used market-oriented policies differently. This was no accident; the flexibility HUD encouraged in the design and implementation of the initiative resulted in different local goals, programs, and strategies. Local flexibility also influenced the possibilities for community participation. There is substantial evidence that EZ cities achieved remarkable levels of citizen participation during the initial planning process. However, following that early burst, community participation

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dropped off during the benchmarking process and continued to wane throughout the implementation phase in most cities. These observations about local strategies and programs have important implications for our evaluation of the EZ initiative, particularly regarding the construct validity of the treatment. As we have shown in this chapter, there was great variability from city to city (and within cities over time) in what it meant to be in an empowerment zone. Therefore it is essential that evaluation researchers be sensitive to these differences in the treatment construct in drawing inferences on what effects—if any—the EZ initiative had on the revitalization of urban neighborhoods. In the next chapter, we show that variations were not limited to strategic choices and program priorities; there was also wide variation across the EZ cities in terms of the quality of their local governance processes.

4 LOCAL GOVERNANCE STRUCTURES AND PROCESSES

As the original EZ cities made the transition from planning to implementation, many of the processes and organizations that had contributed to strategic planning were abandoned or transformed. As a result, the nature of local governance (and citizen participation, particularly) changed significantly. In many cities the extensive community participation that was evident during strategic planning dropped off significantly during implementation (Wright et al. 1996; Gittell et al. 2001; Hebert et al. 2001). Three factors made the transition from planning to implementation, which always has been difficult for federal urban policies, especially difficult for the EZ initiative. First, in the 1990s strategic planning and benchmarking were novel activities for local policymakers. Although HUD provided technical assistance, local officials were responsible for completing those tasks, and few had experience in doing so. For example, most saw benchmarking as a technical requirement for gaining access to their EZ funds as opposed to an innovative approach for managing federal programs. Second, cities did not have much time to craft their strategic plans (generally about five months) and many plans were incomplete or short on the specifics. Third, after designation, there were pressures in many cities to reconsider their strategic plans (which were exacerbated by the lack of specifics in some plans), often brought by parties who had not participated in the planning process. Thus, not only did tensions mount between local officials and community participants; strife also emerged within the community between those who had participated in planning and the “Johnny-come-latelies.” 85

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Our analysis of local governance reveals significant variation in the structures and processes created to implement local EZ programs; decisions about structure and process had important consequences for community participation.1 Recall that one of the distinctive features of the EZ-EC initiative was that the federal government required cities to address issues of community participation and local governance, though it stopped short of prescribing specific structures or processes. During strategic planning the most open, community-engaged processes were in Atlanta and Detroit. However, during implementation the most open, community-engaged processes were in Baltimore and Philadelphia. Our assessment of the quality of local governance (reflecting local capacity, community participation, and program integrity), detailed in this chapter, finds that Baltimore and Philadelphia were the two EZ cities where the principles and practices of good governance were most fully developed. By contrast, in Atlanta the principles of good governance were least developed.

Local Governance for Urban Revitalization Although federal guidelines encouraged flexible local strategic planning with broad community participation, less emphasis was placed on community participation during implementation. The original EZ cities developed local plans that aimed to achieve goals that reflected local opportunities and constraints. In this process, widespread community participation was evident. However, the decline in citizen influence in many cities as local EZ programs moved from strategic planning to benchmarking foreshadowed a larger, continuing pattern. Table 4.1 summarizes the structural characteristics of local EZ governance. A fundamental structural decision cities faced was whether to establish the primary implementing entity within city government or as a separate quasipublic organization. Atlanta, Baltimore, and Detroit established new quasi-public, nonprofit corporations formally separated from city government; New York, in both Upper Manhattan and the Bronx, relied on existing nongovernmental structures. By contrast, Chicago and Philadelphia established their primary governing entities within city government. In most cases, formal participants in EZ governance—generally board members—were selected by appointment, usually by the mayor. However, in some cities the mayor’s appointment power was constrained by corporate bylaws that specified appointment of particular institutional (or sectoral) representatives, commitments that often originated in each city’s strategic plan.2 There were also significant differences in the scope of authority enjoyed by the implementing organizations. The most autonomous organizations, which

Atlanta Empowerment Zone Corporation

Quasi-public corporation

Controlled budgets and contracts

Single tier

Community Empowerment Advisory Board

Mayor, but constrained by ongoing community conflict

Primary Governance Entity

Organizational Form

Scope of Authority

Levels of Governance

Advisory Community Participation

Who Really Was Empowered?

Empower Baltimore’s leadership and Village Centers

Mayor, city council, and alder and - women

None

Advisory Council

Mayor, city council, and selfselected community-based organizations

None

Single tier

Single tier

Two tiers: Empower Baltimore and village centers

Quasi-public corporation

Empowerment Zone Development Corporation

DETROIT

Required approval from mayor and city council

City government

Empowerment Zone Coordinating Council

CHICAGO

Required approval from mayor and city council

Controlled budgets and contracts

Quasi-public corporation

Empower Baltimore Management Corporation

BALTIMORE

Sources: Wright et al. 1996; Chaskin and Peters 1997; Gittell et al. 2001.

ATLANTA

Characteristics of Empowerment Zone governance

ACTIVITY

TABLE 4.1

Community Trust Boards

Mayor, through city Empowerment Zone office and CTBs

Bronx borough president, business elites, and policy professionals Congressman Rangel, business elites, and policy professionals

Two tiers: Mayor and Community Trust Boards

Controlled budgets and contracts

City government

Mayor, through city Empowerment Zone office

PHILADELPHIA

None

Two tiers: state and local

Subject to a limited review by state officials

Quasi-public corporation

Bronx Overall Economic Development Corporation

NEW YORK BRONX

None

Two tiers: state and local

Subject to a limited review by state officials

Quasi-public corporation

Upper Manhattan Empowerment Zone Development Corporation

NEW YORK MANHATTAN

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had independent budgetary and contracting authority, were in Atlanta and Baltimore, where these powers were vested in quasi-public corporations that were not subject to review by city government, though they did require evaluation from the state agency overseeing the disbursement of federal EZ funds. A middle ground on autonomy existed in New York, where proposals from the two local development corporations were subject to a limited review at the state level. The least autonomous implementing organizations were in Chicago and Detroit, where the mayor and city council had to approve any significant decisions. In Philadelphia, the mayor exercised control over EZ budgets and the city used its established procurement procedures for contract management to implement the EZ program, though influence over the proposed uses of funds generally resided with the residents who were active in the zone-based community trust boards (Gittell et al. 2001). EZ cities were evenly split between single- and multi-tiered governance. Singletiered structures were found in Atlanta, Chicago, and Detroit, with one governing entity overseeing all zone activities. The multi-tiered structures found in the other cities varied significantly. In New York, the two tiers were composed of the state’s economic development agency and the two local development corporations that managed each of the city’s EZs. This was unusual because New York’s primary implementing organizations composed the second tier. By contrast, in Baltimore (village centers) and Philadelphia (community trust boards) the second tier was created below the primary implementing entity to enhance community participation. In Atlanta, Baltimore, and Philadelphia, the primary governing entity was supplemented by advisory boards to enhance community participation. Although these advisory bodies varied in how participants were selected, the most common method was appointment by the mayor. However, in Philadelphia, onethird of the membership on the community trust boards was elected by zone residents. In Chicago and Detroit, the primary EZ governing organization did not sponsor an advisory body. This may reflect the fact that in these cities the primary implementing organization was not the real source of decision-making authority; the real power in Chicago and Detroit resided in city government. In New York, local decision-making power was split between influential political officials in Upper Manhattan and the Bronx and was often shared with state, congressional, and citywide officials.

Representation in Local Governance Substantial variation is evident when EZ cities are compared in terms of community representation on their governing boards. Although representation on

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TABLE 4.2 Percentage of seats held on EZ governing boards, June 2000 TYPE OF REPRESENTATIVE

ATLANTA

BALTIMORE

CHICAGO

DETROIT

NEW YORK

PHILADELPHIA

Individual Activist or EZ

35

27

62

36

13

15

12

13

0

16

9

39

Nonelected Public Official

24

23

8

20

4

24

Elected Public Official

18

3

0

0

2

2

Zone Businessperson

0

7

21

0

18

7

12

17

0

12

29

2

0

10

15

16

24

10

Resident Community-Based Organization or Nonprofit Organization

Nonzone Businessperson Other Source: Hebert et al. 2001, 6–5.

governing boards did not always translate into substantial influence, table 4.2 shows that Chicago stands out as the city that provided the most representation for zone residents; Detroit and Philadelphia also provided a majority of seats on their EZ governing bodies to zone residents and representatives of communitybased organizations. Other key stakeholders included public officials and businesses. Public officials (elected and nonelected) held more than 40 percent of the seats on Atlanta’s governing board, and Baltimore, Philadelphia, and Detroit also earmarked at least one-fifth of their governing board seats for public officials. Chicago and New York provided the least representation for public officials, though public officials in both cities—particularly elected officials—did exercise considerable influence. Representation of business interests was most common in New York, where nearly half of the seats on the governing board were held by business representatives. The governing entities in Baltimore and Chicago also had notable representation of business interests.

Power in Local Governance The question of overriding importance is who was empowered by EZ local governance. The most common answer is local political elites (i.e., the mayor and city council). Although the EZ initiative tried to foster innovative governance and there was evidence of an exceptionally high level of community participation during strategic planning, local political elites often asserted themselves during implementation and in many cities zone governance returned to established decision-making patterns. All the major studies of the EZ initiative agree that as the process moved from strategic planning toward local implementation, citizen influence waned. Gittell

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and colleagues (2001, 27–28) noted, “Mayors who may have supported the rhetoric of community participation during the strategy development stage became far more interested in dominating the process once their cities were designated as EZs and they were assured of receiving $100 million in grants. Mayors in all of the cities asserted control over the EZ dollars and the composition of governance boards.” They also remarked that “after designation as an EZ, city councils in Detroit and Chicago inserted themselves into the decision-making and administrative process.” The assertion of power by local political elites took different forms and had different consequences in the EZ cities. In Atlanta, the power struggle between Mayor Campbell and community representatives over local EZ governance crippled implementation. Mayor Campbell insisted on control over the Atlanta Empowerment Zone Corporation (AEZC). Of the seventeen board members, the mayor selected eleven (himself included), leaving six slots for community representatives.3 In addition, according to the AEZC’s bylaws, the mayor served as chairman of the AEZC.4 Although the AEZC had the authority to revise the strategic plan, approve benchmarks, allocate funds, and award contracts, the mayor’s power of appointment and the fact that he chaired the board of directors ensured that he dominated the process. Zone residents and neighborhood leaders protested this arrangement—both during the strategic planning process and in the AEZC board meetings, particularly on issues related to the adoption of the AEZC by-laws, the hiring of an executive director, and the process and procedures used for approving projects. Indeed, to ensure that citizens would not be written out of the EZ process, the Community Empowerment Board, an advisory body initially formed during the strategic planning process and later expanded to include representatives from each of the sixty-nine neighborhoods that met the eligibility requirements for EZ designation, dissolved itself and later incorporated as a separate thirtysix member Community Empowerment Advisory Board (CEAB) with its own limited budget and small staff to ensure that it would not wither away during the transition from planning to implementation. However, the mayor viewed the CEAB as an advisory body and the conflict continued because of unresolved issues regarding what role the CEAB would play in the governance process. That conflict eventually took a toll; Mayor Campbell “seemed to lose interest” in the program after his reelection in 1998 and stopped attending meetings; community representatives were “disillusioned by the process.” Although the community was not able to advance its agenda, it did form a “united front” against the mayor. Although the CEAB representatives were not always successful in preventing the mayor in obtaining an “expedited” review of the “time-sensitive” projects he brought to the AEZC board, they were able at times, however, to slow the process down and in some instances gained important concessions that

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ensured that the use of EZ funds would remain consistent with the goals and objectives of the strategic plan. In Baltimore, the Empower Baltimore Management Corporation (EBMC) was created to implement the city’s EZ initiative. In comparison with other EZ implementing organizations, EBMC enjoyed substantial budgetary autonomy and contracting authority without the need for review by or approval from city government (Chaskin and Peters 1997). EBMC was governed by a thirtymember board, in which six slots were set aside for community representatives, with most of the members appointed by the mayor. There was a brief controversy when the first president of EBMC gave too little attention to community participation. However, the community’s concerns were assuaged when he was replaced by new leadership that was more supportive of this practice (Gittell et al. 2001). EBMC operated through a committee structure with leading members of the board (who were also leading members of the business, philanthropic, and nonprofit sectors in Baltimore) serving as committee chairs. This allowed elites to dominate the process. EBMC created an advisory council composed of fifty representatives of zone residents, businesses, and community-based organizations. The advisory council did not have any substantial power but was routinely consulted about decisions by EBMC’s leadership and staff. EBMC also created six village centers (VCs) that were a distinctive feature of zone governance in Baltimore. The VCs were separate nonprofit corporations that each served a segment of the zone and were governed by a board composed of zone residents, businesses, and other stakeholders within their boundaries. The VCs received financial and technical support from EBMC to create independent planning and operating capabilities. They had significant responsibilities for program development and implementation and served as the primary vehicle for community participation (Gittell et al. 2001). Although business and civic leaders in Baltimore did successfully control the process through their domination of EBMC’s committee system, they used that control in part to foster community participation and to build the capacity of VCs to serve as effective implementing agents. In Chicago, a “war of attrition” was waged over community participation in EZ governance. The war ended when the mayor and city council created a process of their own design over the objections of community activists (Wright et al. 1996). The resulting entity, the Empowerment Zone Coordinating Council (EZCC), had thirty-nine members; most, including fifteen community representatives, were appointed by the mayor. Although the EZCC had the power to propose projects, the purse strings were held by the city council (essentially, the EZCC, though designated as the city’s primary governance entity was in reality an advisory body to city officials). This governing process provided no formal

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role for many groups that had been active in the creation of the strategic plan and ceded the real power in Chicago’s EZ program to the city council and the staff from the Department of City Planning (Gittell et al. 2001; Chaskin and Peters 1997). Although Mayor Daley did initially appoint some vocal critics of city hall to the EZCC, their influence was reduced when the EZCC was restructured in 1999 and representatives more acceptable to local aldermen were appointed (Gittell et al. 2001). The conflict over governance in Chicago reflected fundamental disagreements about the purpose of the EZ: city officials saw the zone as a way to finance and advance existing initiatives, while the community saw the zone as a way to “reinvent the public participation” in the city (Wright et al. 1996, 52). Political elites in Chicago captured the governance process, protecting the privileges of the aldermen and reinforcing the established political system. Issues related to governance created significant conflict between the community and city hall in Detroit (Wright et al. 1996). The city council became the power center in Detroit’s EZ governance process because it reserved the power to approve all contracts (Chaskin and Peters 1997). Although there was an Empowerment Zone Development Corporation (EZDC) that was dominated by its twenty-five-member executive committee, the EZDC was “essentially an advisory body” whose only real power was the ability to propose changes in the strategic plan, subject to the approval of the mayor and city council (Wright et al. 1996, 53). Many of the resourceful community-based organizations that contributed to the development of Detroit’s strategic plan refused to participate in the EZDC because doing so would have made them ineligible to receive EZ funds to support their programs. This opened the door for representatives of groups that were not active in developing the strategic plan to participate in zone governance. However, the community development corporations that dominated the strategic planning process used the benchmarking process to lock in the strategic plan so they could safely quit the governing process without endangering the financial support they expected to receive. Since program implementation in Detroit so closely followed the strategic plan, there was little significant work for the EZDC to do (Gittell et al. 2001). In Detroit, the domination of local political elites was constrained by self-selected, community-based organizations that were able to structure zone governance to capture resources to advance their agendas. Despite the development of separate processes to govern the Upper Manhattan and Bronx segments of New York’s EZ, the governance process in New York was “hotly contested” (Wright et al. 1996, 46). However, this was an unusual contest because it pitted EZ officials in the city against the state—conflicts in the other EZ cities were generally between city hall and the community. Initially, the EZs in New York were quietly dominated by Democratic Party elites. However,

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when Republicans George Pataki (governor) and Rudolph Giuliani (mayor) were elected, significant conflict erupted over control of New York City’s EZ initiative. HUD even threatened to revoke New York’s designation due to the conflict (Gittell et al. 2001). The resolution of this conflict resulted in limited state oversight coupled with substantial community-level discretion that allowed local elites outside city hall to dominate different segments of New York’s zone (Congressman Rangel dominated Upper Manhattan and Bronx’s borough president, Fernando Ferrer, dominated the Bronx). Financing for the New York zone was managed by the New York Empowerment Zone Corporation (NYEZC), created as an arm of the state economic development agency. That agency disbursed the Title XX Social Services Block Grant funds (and city and state matching funds) to the Upper Manhattan Empowerment Zone Development Corporation (UMEZDC) and the Bronx Overall Economic Development Corporation (BOEDC), the two local nonprofits that implemented the program in their respective EZ areas. UMEZDC and BOEDC were required to submit budget plans with benchmarks to the NYEZC for a limited review to ensure that their actions were consistent with the strategic plan. Once proposals were approved, UMEZDC and BOEDC selected vendors to implement the projects (Chaskin and Peters 1997; Wright et al. 1996). In both parts of New York’s zone, political elites outside city hall dominated governance. Although community participation was welcomed and encouraged by Mayor Edward Rendell during the strategic planning process in Philadelphia, following designation he created a governance process in which he had the final authority to make zone decisions (Gittell et al. 2001; Chaskin and Peters 1997). An Empowerment Zone Office was established within the Mayor’s Office of Community Services (MOCS) to oversee the program. However, the MOCS “actively sought to involve community groups and residents” through town meetings, block parties, mass mailings, and outreach (Gittell et al. 2001, 49). The mayor’s extensive involvement in the EZ was reflected in his commitment of staff resources, making Philadelphia one of the most capably managed zones. Each of the three geographic areas within Philadelphia’s zone was overseen by a community trust board (CTB); there was no central governing board. The CTBs had discretion in terms of planning, benchmarking, and recommending programs to the mayor. The CTBs were largely community controlled; one-third of members were elected from the community, one-third was appointed by the community, and one-third was appointed from businesses, city agencies, and nonprofits by the mayor (Gittell et al. 2001). In Philadelphia, the mayor and his immediate staff fostered a professionalized governance process that welcomed community participation.

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The Quality of Local Governance In chapter 2, we identified three characteristics of good local governance: (1) local capacity, creating and sustaining the capacity to act; (2) community participation, promoting meaningful, responsible community participation in the decision-making process; and (3) program integrity, effectively using scarce resources. We argued then that these characteristics are not entirely independent, nor does scoring high on one dimension necessarily imply that a city will score high on other dimensions. However, creating and sustaining the capacity to act was seen as the threshold condition for good governance; if this condition is not satisfied, the other characteristics of the governance process make little difference.

Local Capacity One way to assess local capacity is to examine the community development industry in EZ cities. The Urban Institute conducted a study of the National Community Development Initiative (NCDI), a collaborative endeavor launched in 1991 by seven national foundations and one corporation to encourage the growth of CDCs in twenty-one cities. The study examined the state of the community development industry in each NCDI city in 1997 and assessed how capacity and performance in each city had changed since the launching of the NCDI effort in 1991 (Walker and Weinheimer 1998).5 For our analysis, we selected three indicators that we felt best captured elements of the capacity to act element of good local governance in the EZ cities: • Strategies and system leadership. (1) Clear public strategies (have local leaders articulated clear public strategies for the revitalization of lowincome communities that guide city agencies in planning and investment decisions?); (2) public-private strategies (do the public, corporate, banking, philanthropic, and nonprofit sectors agree on the strategies for city and neighborhood revitalization?); and (3) public support for CDC strategies (do public agency funding and policy decisions give CDCs a central role in the delivery of government programs in low-income neighborhoods?) (Walker and Weinheimer 1998, 90–92). • Leadership and collaboration. (1) Leadership in multiple sectors able to mobilize the support of others within each sector for the pursuit of community development goals; (2) collaboration within sectors to accomplish community development goals; and (3) collaboration across sectors to accomplish community development goals (Walker and Weinheimer 1998, 94–97).

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• CDC capacity. (1) the number of CDCs rated by local experts as “consistently capable” of producing at least ten housing units per year; (2) the number of top-tier CDCs that include those that both produce ten units or more annually and are considered to have solid local reputations for effective management, governance, and ties to neighborhood; and (3) the size and change in CDC operating budgets between 1990 and 1994 (Walker and Weinheimer 1998, 5). These indicators suggest which cities enjoyed the greatest potential to enhance local capacity by establishing relationships with capable existing nonprofit, community-based organizations. The data in table 4.3 show that two cities (Baltimore and New York) were advantaged in this regard, scoring “high” or “very high” on all three dimensions. By contrast, Atlanta and Detroit had little opportunity to enhance local capacity by drawing on local strengths in their community development industries and thus scored “low” on two of the three dimensions of local capacity. If creating local capacity is essential for good governance, the original urban EZs can be sorted initially into three ordered categories (as shown in the quality of governance summary presented in table 4.4). Baltimore and Philadelphia ranked highest on capacity because these cities were able to translate their strategic plans into a set of concrete programs and activities and move their programs forward in a timely fashion, largely because program implementation in those zones was not seriously constrained by conflict. This does not imply that there were no conflicts in these cities; rather it suggests that the conflicts that did inevitably erupt were effectively managed.6 Beyond this, as table 4.3 indicates, Baltimore had significant opportunities to take advantage of an effective set of community-based organizations.7 The governance process in Baltimore took advantage of those opportunities by establishing contracting relationships with local nonprofits to provide services to zone residents. The capacity to act was compromised to varying degrees in the other four cities. In Chicago, Detroit, and New York capacity was moderate because, as the case narratives presented here suggest, there was significant conflict in each of

TABLE 4.3 Capacity of the community development industry ATLANTA

BALTIMORE

CHICAGO

DETROIT

NEW YORK

PHILADELPHIA

Strategies and Leadership

High

Very high

Moderate

Low

High

Moderate

Collaboration/Partnerships

Low

High

Low

Low

Very high

Low

CDC Capacity

Low

High

Very high

High

Very high

High

Source: Walker and Weinheimer 1998.

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TABLE 4.4 The quality of local governance OVERALL QUALITY OF LOCAL GOVERNANCE

CAPACITY TO ACT

COMMUNITY PARTICIPATION

PROGRAM INTEGRITY

Atlanta

Low

Low

Low/Moderate

Low

Baltimore

High

High

High

High

Chicago

Low/Moderate

Moderate

Low

Low/Moderate

Detroit

Moderate

Moderate

Moderate

Moderate

New York

Low/Moderate

Moderate

Low

Low/Moderate

Philadelphia

High

High

High

Moderate/High

Source: Authors’ analysis of primary and secondary sources.

these sites that created implementation problems, though for the most part these cities were able to convert their EZ resources into tangible projects and programs. As table 4.3 indicates, New York also enjoyed significant potential to enhance the quality of local governance with capable CDCs. However, that potential was only partially realized because of the lingering conflicts that plagued local governance. Finally, Atlanta was the site where local capacity was lowest because conflict in the implementation process was such a severe constraint that it paralyzed the program. Beyond this, Atlanta enjoyed little potential to establish fruitful partnerships with local CDCs. In addition, high levels of administrative and executive board turnover as well as an extremely complicated and ambiguous decisionmaking process for committing and expending EZ funds significantly slowed program implementation. These factors created significant limitations for Atlanta’s ability to use its EZ resources, and at the end of fifteen years, Atlanta returned approximately $29 million to the federal government in unspent EZ funds.

Community Participation Table 4.4 indicates that Baltimore and Philadelphia were also the sites that ranked highest in terms of incorporating the community into the policymaking process, though they did so in very different ways. Although Baltimore’s EZ agenda was established centrally by Empower Baltimore, substantial responsibility to plan and implement community-based initiatives and integrate services was placed on the VCs. Empower Baltimore, however, invested heavily in capacity building for the VCs so that they could fulfill their responsibilities. By contrast, in Philadelphia’s decentralized process, the community, through the community trust boards in each zone neighborhood, set the agenda by taking requests to the mayor’s office, where they were vetted by an experienced, capable staff and generally adopted. The mayor’s office did not necessarily rubber-stamp these requests,

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nor on the other hand, were neighborhood goals and objectives significantly displaced by those of the mayor. Other cities were generally less effective at incorporating the community into the decision-making process. In Chicago, conflicts between local political elites and the community resulted in changes in the governance process that limited the community’s influence. As Gittell and colleagues (2001, 22) reported, though community groups in Chicago had “unilaterally draft[ed] a governance structure plan in which community representatives held 2/3 of the seats on the board,” which the city accepted during the application process, later, after months of negotiation, the mayor developed his own governance plan, reducing community representation to 38 percent and mandating that the community representatives be appointed by the mayor. Gittell and colleagues (2001, 22–23) concluded: “Ultimately the Chicago governing structure included an EZ governance board which would make funding decisions that had to be approved by the City Council. Despite the fact that the clusters had been involved in putting together the strategic plan, there was no formal role for them in the governance structure.” Similarly, in New York, local political and business elites dominated a process that marginalized community participants. Gittell and colleagues (2001, 40–41) describe the New York EZ initiative as “an unrepresentative structure,” noting that while “many town hall style meetings were held to discuss local priorities for the EZ application, in the end, however, a group of staff and consultant professionals drafted the proposals. After the city was given the EZ designation, community participation was curtailed and the earlier comprehensive committee structure formally disconnected from the ongoing process.” They concluded: “Ultimately, the Upper Manhattan Empowerment Zone Board has been more of an elite body than a representative grass roots group with intimate ties to the community that the EZ is meant to serve.” In Detroit, community participation was moderate because the group that was most active in developing the strategic plan was dominated by the city’s strongest community-based organizations. However, smaller and less established organizations had difficulty participating. As Gittell and colleagues (2001, 38) noted, “Early on Detroit CDCs were the most influential of any city’s CDCs in developing the EZ. Influence notwithstanding, they failed to represent a wide cross section of residents in the Zone and did not reach out to other groups or organizations. . . . Because implementation so closely followed the approved strategic plan in Detroit, those involved in implementation, including the Empowerment Zone Development Corporation, had far less influence than those who were active in the planning period.” In Atlanta, Mayor Campbell and the community representatives serving on the Atlanta Empowerment Zone Corporation board were frequently at odds

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regarding zone priorities. These differences were deeply rooted in the lack of trust between parties, with distrust dating back to unfilled promises made by city hall during the days of urban renewal and model cities. Beyond this, the priorities in the EZ activities that were advanced by the mayor were often at odds with the strategic plan. Representatives of zone residents consistently claimed that the projects that were being funded—typically business assistance projects that were brought to the board by the mayor as projects requiring “special action”—did not reflect the priorities and goals in the plan. As a result, we rate incorporation of the community into the local decision-making process as low to moderate in Atlanta; moderate because citizens participated in developing all aspects of the local program (e.g., strategic planning, selection of the zone, benchmarks, and governing board), but low because citizen influence waned considerably over the course of the initiative and in the end citizens had relatively modest influence on the programs, projects, and activities that were actually funded and implemented.

Program Integrity Program integrity is the most difficult local governance component to assess. Our classification of program integrity is based on the elements of entrepreneurial decision making we described in chapter 2; that is, the extent to which scarce resources are used effectively is indicated by integrated problem solving, process transparency, the absence of corruption, and programmatic adjustments that reflect lessons learned from experience. As we noted in our descriptions of local programs, all the original EZs implemented multifaceted programs. Consequently, integrated problem solving is not indicated simply by looking for multiple programs; integrated problem solving is indicated by specific elements of the local process that coordinate the activities and opportunities available to zone residents. The absence of corruption is indicated by the capacity of the governance process to detect, limit, and correct instances of waste, fraud, or abuse. Learning over time is indicated by specific actions that develop program benchmarks, monitor progress, and allocate resources to reflect lessons learned, such as reprogramming funds from slow-moving or lower-priority projects to higherpriority needs or opportunities. To operationalize the degree of local program integrity we looked for evidence of four practices. First, program integrity is higher when local EZ initiatives are integrated, coordinated, aligned, and supportive of a comprehensive neighborhood revitalization strategy rather than when activities are ad hoc, isolated, disconnected, and scattered. A second element of program integrity is doing what you say—that is, honoring the commitments made during the planning process. This is not a matter of simply “sticking to the plan.” Effective use of resources

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may require changes and adjustments, especially as local learning takes place. A governance process has integrity to the extent that broad support for the plan is continuously reconstructed, even as the plan evolves. A third element is financial propriety. Local EZ programs have greater integrity when decision making is transparent and appropriate rules and regulations are followed for the allocation, procurement, and use of EZ resources. This does not imply an absence of financial impropriety, but it does suggest the need for effective procedures to detect and deal with impropriety that does occur. Finally, program integrity is high when cities exhibit the practices of an effective learning community. A decade is a long time for a city government to sustain the focus and momentum of a comprehensive neighborhood revitalization initiative, particularly given the changes in political and administrative leadership and neighborhood conditions that are likely to occur. Cities with high program integrity are able to stay focused and yet are not locked into courses of action that have been shown to be ineffective. Cities with strong program integrity are able to make midcourse adjustments to produce desired revitalization outcomes. In our judgment, local program integrity was weakest in Atlanta, where the limited success in implementing any sort of local program in conjunction with unstable leadership precluded the possibility of integrated problem solving and learning from experience. In addition, EZ leaders in Atlanta were not able to develop consensus about proposed changes in the strategic plan. In particular, Mayor Campbell proposed changes with little consultation with community representatives, resulting in attempts by the community to delay many local initiatives. Beyond this, Atlanta stood out in financial mismanagement. The HUD Office of Inspector General (OIG) conducted an audit in 1998 that found more than $1.5 million in EZ funds had been improperly used, including $739,178 in EZ funds that did not benefit zone residents and $829,000 in EZ funds that were used to relocate two businesses to the zone from locations outside the zone, a violation of federal law (HUD 1998a, 5–6). A subsequent HUD audit of the Historic Westside Village revitalization, one of the city’s major EZ initiatives, found the city “did not adequately manage and control the Project . . . allow[ing] significant violations of HUD requirements to occur without early detection or prompt corrective action.” As a result of the audit, the city was required to repay $1.5 million in HUD Section 108 and EDI funds associated with the project to compensate for ineligible costs or undocumented expenditures (HUD 2003). We classified the EZ programs in Chicago and New York as having low-tomoderate program integrity. In Chicago, following EZ designation the aldermen asserted their privileges and were able to gain control of the governance process, introducing concerns about favoritism and norms of patronage (patronage is presumed to be an ineffective use of resources). The assertion of control by these

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officials compromised program integrity because changes to the strategic plan were made with limited community consultation. The influence of the officials also produced a fragmented and particularistic pattern of policymaking that prevented integrated problem solving and learning from experience. Beyond this, the HUD OIG audit in Chicago raised a number of concerns about the EZ program, including $670,417 in EZ funds that were inappropriately used, $121,590 that did not benefit zone residents, and more than $1 million in EZ expenses that did not have adequate documentation to certify the activities “benefitted zone residents or were reasonable and necessary expenses” (HUD 1998b, i). Policy coordination was limited and irregular in New York. Gittell and colleagues (2001, 41) observed that the EZ program in Manhattan failed to coordinate its efforts with ongoing efforts to encourage public housing residents to move from welfare to work. Although several nonprofits did undertake workforce development initiatives, “interagency coordination did not emerge.” The situation in the South Bronx portion of the zone was somewhat better; efforts were made to coordinate services by targeting public housing residents (though the larger public housing population resided in the Manhattan portion of the zone). Coordination across sectors for economic development initiatives was more effectively encouraged. Although New York was not targeted by HUD’s OIG for an audit, Grogan and Proscio (2000, 253) have noted that the EZ program led to “massive patronage.” Gittell and colleagues (2001) also observed that the governance structure in New York did not effectively integrate the various competing ethnic communities found within the zone. Finally, term limits for the members of the governance board in Manhattan institutionalized leadership instability, making it difficult to learn from experience. Detroit achieved a moderate level of program integrity. Although the city did follow the strategies, programs, and priorities laid out in its strategic plan, the governance process institutionalized an inflexible plan that was unable to make midcourse adjustments. The rigid relationship between the strategic plan and the city’s EZ program was designed to protect the interests of the nonprofits that were active in securing EZ designation. This precluded thoughtful assessments of the program and the adjustment of local priorities based on program experience. Beyond this, although the plan did finance ongoing initiatives by the city’s nonprofits, no mechanism was created to coordinate the variety of services available to zone residents. On the positive side, financial impropriety was less evident in Detroit: the HUD OIG’s audit of Detroit’s initiative found only a small amount of EZ funds (less than three thousand dollars) were used inappropriately HUD 1998c, iii). Although we assigned a moderate-to-high rating for program integrity in Philadelphia, the features of the city’s governance process suggest that learning

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was more likely than integrated problem solving. Professional staff from city agencies received programmatic requests from committees composed of zone residents, community leaders, nonprofit organizations, and business people (the community trust boards). This decentralized process implies that service integration would have to have originated in the community. As a consequence, the process in Philadelphia was more likely to be responsive to the community’s concerns, but less likely to integrate problem solving across policy domains. The governance process in Philadelphia shows one way to maintain communitybased support for changes in the strategic plan. By giving the community trust boards agenda control, city officials ensured that changes that were made reflected the shifting priorities of the community. Thus, as the local program evolved, it did so in response to the demands and experiences of the community. Philadelphia also gets high scores for integrity because the policy development process within city hall and consistent leadership at the city level implies that the city’s EZ staff had the opportunity to learn from experience (Gittell et al. 2001, 50). Finally, Philadelphia did not have major issues with financial mismanagement. Although HUD’s Office of Inspector General did issue some critical findings following its 1998 audit of Philadelphia’s EZ initiative, the amount of funds that were found to not comply with the strategic plan or benefit EZ residents was relatively small; approximately eighty-four thousand dollars was misspent or inappropriately committed (HUD 1999b, 9–10). We assigned the highest program integrity rating to Baltimore. Although not targeted by HUD’s OIG for an audit, the city’s EZ program did experience a minor financial scandal in one VC (improper payments were authorized by the community organization’s leadership). However, Empower Baltimore had procedures in place to manage financial irregularities; support for the VC was suspended until a local audit was completed to ensure that the organization’s finances were in order. The VCs were a key element of Baltimore’s strategy to integrate problem solving; each VC (with the assistance of capacity building initiatives sponsored by Empower Baltimore) planned local family support and workforce initiatives that integrated services for zone residents, especially zone residents preparing for work. In addition, Empower Baltimore coordinated the workforce development programs with the business development initiatives undertaken in the zone, most particularly through the customized training program, which prepared zone residents for specific job opportunities that were emerging as a result of business development efforts in the zone. Finally, Baltimore undertook a deliberate process to assess its local EZ programs against benchmarks and redirected resources to programs that were deemed to be effective. However, although substantial changes in the strategic plan were undertaken, EZ officials in Baltimore took time to build consensus within the governance process before making those changes.

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Local Governance Quality The governance structures and processes created by the original EZ cities varied widely, as did the quality of local governance. Our examination of local governance concludes that Baltimore and Philadelphia were the two EZs with the strongest local governance, scoring high on all the dimensions of local governance quality during program implementation. Detroit, New York, and Chicago (in that order) form a middle group in which the quality of local governance was compromised somewhat, most often by limited community participation and low levels of program integrity. Finally, EZ governance was weakest in Atlanta, where the local capacity to act was never fully realized.

5 WHAT HAPPENED IN EZ NEIGHBORHOODS?

Good government, as Donald Campbell (1969, 409) noted in his classic article, “Reforms as Experiments,” is expected to evaluate its actions and to make decisions to “retain, imitate, modify, or discard [programs] on the basis of their apparent effectiveness.” Although scholars were quick to recognize the political consequences of evaluation, the idea that systematic evidence of program effectiveness should be mustered and examined when deciding how to solve social problems is now accepted as a requisite of good government (Weiss 1975; Aaron 1978; Levitan and Wurzberg 1979; Rossi et al. 2003). Evaluation research contributes to good government by distinguishing programs that work from programs that do not. However, evaluation research is not always discriminating; in some circumstances it can erect insurmountable hurdles for government programs, tripping and discrediting sound and unsound programs alike (Schorr 2003; Smyth and Schorr 2009). In this chapter we discuss evaluation standards and methods, reexamine the existing evaluations of the EZ-EC initiative, and present evidence of local revitalization outcomes based on our own analysis of what was accomplished by the original urban EZs. The summative assessment of the EZ initiative is contested. Although several evaluations concluded that the effects of the EZ initiative were negative or that improved conditions in the target neighborhoods could not be attributed to the initiative, others found that EZs produced measurable benefits. However, evidence concerning the impacts of the EZ initiative has been based primarily on econometric models designed to estimate the program’s national effects. Prior to 103

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the publication of our preliminary evaluation findings (Rich and Stoker 2010), which we expand upon and extend in this chapter, the possibility that EZ effects may vary locally was largely overlooked. Research focusing on variation in local outcomes creates new possibilities for knowledge about urban policymaking by linking local EZ outcomes to variations in local conditions, strategies and programs, and governance structures and processes. The accomplishments and limitations of the EZ initiative have important consequences for the development of federal urban policy as well as important lessons for local stakeholders regarding best and promising practices for the revitalization of distressed neighborhoods. If the conventional wisdom concludes that the EZ program failed, urban problems will seem less tractable and government’s efforts to tackle these problems will seem feckless and futile (Lemann 1994). Beyond this, evaluation results that deemphasize important local differences in performance will likely discredit a promising urban revitalization strategy that needs to be refined, not abandoned. Finally, potentially useful urban research will be stifled because scholars will be more likely to search for new strategies than to ask the question implied by the EZ evaluation results presented in this chapter: Why did positive effects occur in some settings, treatments, and outcomes but not in others?

Not a Typical Federal Program As we explained in chapter 1, the EZ-EC initiative was a distinctive and innovative federal policy. The initiative’s guidelines suggested that targeted economic and community development programs were to be crafted by a local planning process that encouraged collaborative, cross-sector, comprehensive, community-based solutions to address the problems of distressed communities (Galston and Tibbetts 1994; Liebschutz 1995). In addition, “the community”— particularly zone residents—was to be mobilized and included as significant participants in the process (Rubin 1994; Gittell et al. 1998). Federal guidelines also implied that resolving the problems of distressed urban communities would require an ongoing, institutionalized response; it was insufficient merely to have ad hoc programs to address discrete problems. Effective change, according to the EZ program guidelines, is comprehensive, integrative, and sustainable. However, rather than imposing a standardized program in all sites, the initiative encouraged the development of local strategic plans that reflected local problems, resources, and opportunities, and a governance strategy to ensure effective coordination and implementation of the programs and activities identified in local plans.

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Our review of local programs and governance in chapters 3 and 4 established an important premise for the evaluation of the EZ initiative: although in one sense the initiative was a national program because the original urban EZs received the same portfolio of federal assistance, we have shown local officials used these resources in very different ways in very different institutional contexts. Evidence about local effects is important because local EZ programs and the outcomes they produced were often substantially different. In addition, local capacity was important to EZ program success because federal guidelines emphasized local programming and collaborative policymaking. Consequently, we have argued that it is also appropriate to think of the original urban EZs as a series of distinctive local programs as opposed to a uniform national program that was implemented in several sites. Such an approach, in our view, provides a fuller understanding of the EZ initiative’s performance and highlights the key determinants of successful revitalization strategies.

Evaluation Strategy and Program Design It is difficult to evaluate urban revitalization initiatives because urban communities are open, dynamic systems that can be influenced by many factors. To evaluate targeted economic and community development initiatives, program effects must be distinguished from the many confounding factors that also can influence urban economic performance and neighborhood quality of life. However, the scale of urban revitalization initiatives is typically small in relation to the scope of the local economy. Consequently, even when programs work as expected, the magnitude of program effects when viewed against the overall size of the target population and the local economy can make them difficult to detect. This is particularly true for the EZ initiative: although $100 million is a large sum of money, when it is expended over a ten-year period in a large urban area it is possible to exaggerate the significance of the federal block grants provided to the urban EZs. For all the original EZ cities, their annualized EZ funds were smaller than their annual Community Development Block Grant (CDBG) entitlements, and in some cities their annual CDBG grant exceeded their entire ten-year EZ. For example, in fiscal year 1995 the annual CDBG grant for Chicago was $118.9 million and $239.7 million for New York City.1 In addition, several features of the EZ initiative further complicated the task of evaluation. First, local program activities were designed to overlap and complement one another in order to compose a comprehensive attack on numerous, related problems. Even when changes are observed in the zones, it is difficult to know which particular program activities or combinations of program activities are responsible (Granger 1998). Second, the policy tools used were often indirect,

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especially the market-oriented tools such as tax incentives. This makes it more difficult to forge a plausible link between program activities and outcomes because the chain of causation can be long and indirect. Third, local interventions were expected to be synergistic. For example, reducing crime was expected to encourage investment; investment was expected to generate job growth; and job growth was expected to increase incomes and housing values as workers purchased homes in the zone to live near where they work, encouraging the development of a sustainable community and creating new markets for consumer-oriented businesses. The objectives of the program are (by design) interrelated in intricate ways, making it difficult to establish the trails of causation from specific program activities to outcomes. Beyond this, as we noted previously, the approach HUD embraced to develop and implement the EZ initiative reflected a new community-building paradigm that emphasized comprehensiveness, collaboration, community participation, and strategic planning (Gibson et al. 1997; Kubisch et al. 2010). When partners participate in the development, financing, and implementation of local programs, EZ funds may be only one of many resources that support local activities. It is unclear what share of the credit should go to the EZ program when funding comes from several sources and what standards should be used to evaluate success when EZ resources may not be necessary or sufficient to achieve a measurable change in neighborhood conditions but make a contribution nonetheless. Finally, by encouraging strategic planning to establish local goals, objectives, and outcomes, HUD allowed significant variation among local EZ programs, making it difficult to apply a common evaluation framework across sites. Some of these problems simply cannot be surmounted. In particular, the initiative’s design precludes linking outcomes to discrete activities because many different programs that were expected to produce synergies were implemented simultaneously and the level of information HUD required EZ cities to report on individual activities was not very detailed.2 Local EZ initiatives must be evaluated as “packages of programs” and this will make it difficult to establish links between outcomes and specific programs or activities within each city. In addition, it is not possible to fully untangle the effects of “empowerment zone resources” (i.e., the Title XX block grants, tax incentives, private facility bonds, regulatory relief) and other leveraged funds that supported EZ programs, particularly given the uncertain standards that prevailed in local accounting decisions about what counts as leveraged funds. Although many elements of the EZ-EC initiative complicated the task of evaluation, one aspect of its design did make evaluation more feasible. Federal guidelines required that the geography of each EZ correspond to census tracts. Although this requirement complicated the local problem of identifying

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boundaries for the zones because it sometimes divided established neighborhoods, it also provided a basis for evaluation. By comparing data aggregated on the census tract level at different points in time for census tracts in EZs (treatment) with data for comparable census tracts outside the zones (control), a quasi-experimental evaluation framework can be developed to more rigorously isolate the effects of the EZ intervention.

Existing Evaluations HUD’s initial plans for evaluation and assessment of the EZ-EC initiative called for a series of national studies that would be conducted in three phases. The initial studies, the implementation assessment, were conducted by the Rockefeller Institute of Government and based on a network of field researchers in eighteen designated areas, including all six EZs. The Rockefeller Institute submitted a series of reports, each focusing on a specific topic: community participation, planning, and governance (Wright et al. 1996); job training and workforce development (Wright et al. 1997b); and community development financing (Wright et al. 1997a).3 The second phase, the interim outcomes assessment, was led by researchers at Abt Associates and the Urban Institute and also included a network of field researchers in eighteen sites, including all the original EZ cities and several additional jurisdictions that participated in the Implementation Assessment. The Interim Outcomes report, released at the halfway mark of the EZ-EC initiative (Hebert et al. 2001), covered many of the same process issues examined in the Implementation Assessment and also began to explore local outcomes, particularly those related to job creation and business use of EZ resources and incentives. The third phase, a long-term impact study, to assess EZ-EC outcomes at the end of the ten-year initiative, was never commissioned by HUD. However, several evaluations of EZ-EC outcomes were produced. Evaluations published by the U.S. Government Accountability Office (2006) and Deirdre Oakley and Hui-Shien Tsao (2006) concluded that while conditions improved in some EZ neighborhoods, the changes could not be attributed to the initiative. Although both these studies assessed the EZ-EC initiative with a combination of local and national analyses, their conclusions emphasized the national findings and treated evidence of local program effects as aberrations that were overshadowed by the lack of statistically significant national effects. By contrast, several other national evaluations using econometric methods found positive, statistically significant effects across a range of outcomes (Busso and Kline 2008; Ham et al. 2009; Hanson 2009; Krupka and Noonan 2009). However, these evaluations did not examine the local effects of the EZ initiative, nor did their designs allow them to comment on how—if at all—EZ effects may have

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varied across settings, treatments, and outcomes. These studies considered the EZ initiative as a uniform program that was implemented consistently from tract to tract within cities, across EZ census tracts nationally, and over time. While each of these evaluations used innovative estimation techniques to establish a counterfactual to the zone experience (see further discussion below), all the studies incorporated simplistic notions of the EZ “treatment,” providing few details on local programs and how—if at all—they varied across cities. We use an alternative analytic strategy that relies on propensity score matching procedures to compare the mean difference between treatment (EZ) and control (non-EZ) census tracts in each EZ city after adjusting for differences between the two groups of census tracts. Our analysis focuses on five indicators that tap outcomes related to the EZ’s goals of creating new economic opportunities and fostering sustainable community development: (1) the number of jobs created between 1996 and 2004, (2) the percentage change in the number of persons below poverty between 1989 and 1999, (3) the percentage change in the number of persons unemployed between 1990 and 2000, (4) the trajectory of the amount of home mortgage dollars originated for single-family home purchases between 1994 and 2006, (5) and the trajectory of the amount of dollars originated for business loans between 1996 and 2006.4 Cities began their EZ activities in mid-1995 and most continued operations through 2004, the end of the ten-year EZ authorization for the federal block grant. A few cities with unexpended funds at the end of their ten-year grant period, such as Atlanta, successfully petitioned the federal government to extend their use of EZ funds beyond the original expiration date.

Comparing Evaluation Methods Our evaluation approach differs from the existing evaluations in four important ways: (1) we conceive of the EZ initiative as a collection of local programs rather than a uniform national program, (2) we analyze a different (though overlapping) set of cases, (3) we use multiple measures and methods to operationalize key EZ outcomes, and (4) we use a different analytic strategy to estimate program effects. A summary comparison of the existing evaluations and their findings is presented in table 5.1.

Defining the Treatment Group There is wide variation across the existing evaluations in terms of what constitutes an “empowerment zone” and thus the treatment group is not equivalent

Effect Estimates

Data Sources

1990–2000

Fixed-Effects

 O2000–1990

WLS

 O2000–1990

Proprietary

Census:

1990–2000;

(n = 953)

Census:

Census tracts

(n = 866)

differences

difference-in-difference; terfactual mean outcome

(2) EZ tract – imputed coun-

Double difference-in-

Random Effects

1980–1990–2000

Census:

(n = 240 to 26,652)

Census tracts

(3) All zone tracts in state

(2) Contiguous tracts/

(1) Nearest tract/

score weighted

(1) Propensity

1990–2000

Census:

(n = 1,892)

Census tracts

EZ-EC/RCs

Round I EZs and future

Non-EZ-EC/RC tracts:

Oct90-city90

 Oct00-city00 -

OLS and IV

1990–2000

Census:

(n = 1,262)

Census tracts

EZ-EC/RCs

EZs and future

jected Round I

Zone tracts in re-

Round I and

KRUPKA AND NOONAN 2009

(Continued)

 O2000–1990

OLS and 3SLS

1990–2000

Census:

(n = 106,957)

groups

Census block

Round III EZs

Zone tracts in

each EZ city

Zone tracts in rejected

Round I EZs

HANSON 2009

Non-EZ tracts within

Round I EZs

HAM ET AL. 2009

Round II EZs

Round I EZs, SEZs

BUSSO AND KLINE 2008

troit, New York EZs

Baltimore, Chicago, De-

OAKLEY AND TSAO 2006

Census tracts

of EZ tracts

5-mile radius

tracts within

Non-EZ-EC/RC

SEZs

Round I EZs,

GAO 2006

Summary comparison of studies of national effects of the EZ initiative

Level of Analysis

Control

Treatment

Sample

TABLE 5.1

NEG

POS

—

NEG

—

—

—

Employment

Unemployment

Income

Poverty

Property Values

Rent

Vacancy Rate

—

—

—

POS

NEG

POS

—

—

OAKLEY AND TSAO 2006

Key: NEG—Negative effects; EZs fared worse than control tracts. POS—Positive effects; EZs fared better than control tracts. NEU—EZ tracts and control tracts fared about the same. * Statistically significant finding. Source: Authors’ literature review.

NEG

Businesses

EZ Outcomes

GAO 2006

POS / NEG

POS* / POS

POS* / POS

POS* / POS*

POS / POS

POS* / POS*

POS* / POS*

—

BUSSO AND KLINE 2008

—

—

—

POS*

POS

POS*

POS*

—

HAM ET AL 2011

TABLE 5.1 (Continued) Summary comparison of studies of national effects of the EZ initiative

—

POS/ POS*

—

POS* / NEG

—

—

POS* / NEU

—

HANSON 2009

—

—

POS*

—

—

—

—

—

KRUPKA AND NOONAN 2009

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across studies. Most studies also include a set of cities that is different from ours. Our decision to focus on the six original urban EZs is based on concerns about the construct validity of the treatment—that is, ensuring comparability of available policy tools across EZ cities. The GAO (2006) and Busso and Kline (2008) studies included Cleveland and Los Angeles. While these cities were designated as “Supplemental” EZs in round I, the federal resources and policy tools available to the original urban EZs were different; federal funds in Cleveland and Los Angeles came from a different source that only permitted economic development as an eligible activity and these cities did not have access to the federal tax incentives in the early years of their initiatives (Wright et al. 1996; Hebert et al. 2001). Oakley and Tsao’s (2006) evaluation examined four of the original urban EZs, eliminating Atlanta and Philadelphia. Although Oakley and Tsao correctly note that Atlanta’s EZ program was formally terminated when the city received designation as a renewal community (RC) in 2001 (before its EZ designation had expired), Atlanta’s EZ activities continued by virtue of a special agreement with HUD. In addition, Atlanta’s RC program did not get off the ground until 2005 (see chapter 6 for further details). Consequently, we included Atlanta in our set of EZ cities. Oakley and Tsao also eliminated the Philadelphia-Camden zone because of the difficulty of identifying comparison tracts in a bistate zone. We have taken a different tack in addressing this issue. Rather than eliminate the PhiladelphiaCamden EZ entirely, we have included only the Philadelphia part of the zone. Despite federal intentions to encourage interstate collaboration, the two cities’ EZs were essentially independent initiatives. Each city had its own budget (Philadelphia received $79 million of the $100 million grant) and separate governing entities, strategies, and programs. Douglas Krupka and Douglas Noonan’s (2009) evaluation included both round I and round II EZs. Although round II EZs—designated in 1998—were authorized to receive as much as $100 million in federal grant support (the same amount that was provided to round I EZs), the funding came from HUD rather than the Department of Health and Human Services’ Title XX grants and was subjected to the annual appropriations process, rather than authorized in one bill. Although round II urban EZs anticipated grants of $10 million per year throughout their ten-year designation period, the actual amount appropriated was far less, with each EZ city receiving only about $24 million between 1999 and 2003 (Stoker and Rich 2006).

Identifying Appropriate Counterfactuals A key requirement for evaluating the EZ initiative is to establish a counterfactual condition to estimate what would have happened in EZ neighborhoods in

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the absence of the intervention. The EZ initiative provides an opportunity for what Campbell (1969) referred to as “reforms as experiments,” though in this case a quasi-experimental evaluation design is appropriate, since cities did not randomly assign census tracts as EZs. A randomized experiment is widely considered to be the gold standard in evaluation research, as it ensures that the treatment and control groups are identical in all respects (observed and unobserved) with large samples except that the treatment group was exposed to the intervention. Thus, any postintervention differences between the two groups can be attributed to the program, not to differences in the composition of the treatment and control groups.5 In situations where randomization is not possible or the assignment of subjects to treatment and control groups has already taken place, quasi-experimental evaluation designs are sometimes possible (Campbell and Stanley 1963; Cook and Campbell 1979; Shadish et al. 2002). The challenge for quasi-experimental analysts is to model the selection process that results in the assignment of subjects to treatment and control groups. By establishing group comparability in quasi-experiments, inferences about the effects of social programs can be made on firmer grounds. As in many of the existing evaluations, we used propensity score matching (Rosenbaum and Rubin 1983; Oakes and Johnson 2006) to construct a control group of census tracts for each EZ city.6 Our study differs from most of the existing evaluations in that we selected our control census tracts from the set of all other eligible (i.e., poverty rates of 20 percent or higher) census tracts within the city. By contrast, GAO selected their control tracts from all census tracts within a five-mile radius of EZ tracts, which included tracts that may not have been eligible and tracts located in other local government jurisdictions. Busso and Kline (2008) and Hanson (2009) selected their control tracts from the proposed zone census tracts in rejected round I EZ cities and the designated zone tracts in cities that were selected as EZs, ECs, or RCs in subsequent funding rounds.7 Both studies note that the use of census tracts in cities different from the treated zones allows one to control for spillover effects in control tracts adjacent to or near EZ tracts that may increase or diminish estimates of the effects of EZ designation. Krupka and Noonan (2009) used zone tracts in cities that were selected as EZs in round III. They contend that the round III zone tracts are likely to be comparable to the round I EZ tracts in terms of their unobservable characteristics.8 Ham and colleagues (2009) used nonEZ-EC-RC census tracts to constitute three different sets of control groups: one based on the nearest control tract to a zone tract, one based on all tracts that were contiguous to zone tracts, and one that included all nonzone tracts in the state. We see two general problems with the control groups used in the other studies. First, including census tracts that received other variations of the zone

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treatment—even if they are located in different cities—weakens the construct validity of the control group and thus diminishes the ability to detect an effect, as differences between treatment and control conditions are muddled (Shadish et al. 2002, 81).9 Second, using census tracts in different cities as controls for EZ tracts may overlook important differences in the local context (e.g., city and regional economy, political and institutional context, strength of community development industry) that may also diminish the comparability between treatment and control census tracts. This concern is especially salient since Busso and Kline (2008) found no evidence of spillover effects in their analysis.

Data and Indicators All the existing evaluations used census-derived indicators of neighborhood outcomes, which limited measurement to two points in time, 1990 and 2000. Neither date aligns well with the time period of the EZ initiative (1995–2005). The baseline measure is five years prior to the start of the EZ initiative and the postintervention measurement is at the midpoint of the intervention. Beyond this, EZ cities varied widely in how quickly they were able to translate their plans into action, making it unlikely that all the EZ cities were at comparable points in the implementation of their initiatives when the 2000 census was conducted. The GAO’s evaluation, however, also used two indicators of economic growth from a private, proprietary source (number of business establishments and number of jobs) at three time points (1995, 1999, 2004). Although we also used census-derived indicators of revitalization outcomes (poverty, unemployment), we included additional measures (jobs, business investment, and housing investment) that capture a broader range of conditions and better reflect the different goals and objectives of local programs. We also derive those measures from multiple sources, which limits plausible threats to validity from monomethod bias, and for multiple time points that allow better alignment between the time period of the intervention and the time period for measuring effects (see the chapter appendix for further discussion concerning data sources and indicators).

Estimating EZ Effects Perhaps the most important and distinctive feature of our evaluation design is how we estimate program effects. The GAO and Oakley and Tsao studies used econometric models that treated the EZ initiative as a “program” that was implemented at several different sites. Consequently, they pooled census tracts across the different cities and compared the mean outcomes for tract areas within the

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EZs to matched tracts outside the zones. Both these evaluations also included EZ effects estimates for each city separately, but both studies downplayed these local findings because they were considered to be inconclusive and inconsistent with the findings from the national models. All the other studies cited in our review also used a regression-based approach for estimating national EZ effects, generally employing some variation of a difference-in-differences estimation in comparing EZ census tracts with their control groups. However, these studies varied widely in terms of how the effects were defined and estimated as well as how counterfactuals were used to derive estimates (see table 5.1). Our assessment of EZ effects are based on three different estimation strategies (all based in some fashion on our propensity score analysis), each of which involves different assumptions and different techniques for calculating differences in outcomes between EZ and control census tracts. These include (1) estimating the average effect of the treatment on the treated, (2) fixed-effects regression, and (3) effect size. 1. AVERAGE EFFECT OF THE TREATMENT ON THE TREATED

Our first approach for estimating the causal effect of the EZ intervention involved the calculation of the average effect of the treatment (EZ) on the treated (EZ tracts), or ATT, for each EZ city. The ATT is a measure of the average effect of the EZ initiative on EZ census tracts and is derived by calculating the difference between each EZ census tract and its matched pair tract and then dividing the sum of those differences by the number of matched pairs. We used bootstrap resampling methods to calculate the standard errors of our ATT estimates. This is a different method from those other evaluations of the EZ initiative have employed, a method we believe more closely approximates the real-world contrasts between treatment and control conditions than do regression-adjusted estimates. As Michael Oakes and Pamela Johnson (2006, 374) point out, regression strategies fail to address the problem of off-support inference: “Averages and other statistical procedures that summarize information may end up obscuring fundamental differences between considered objects.” They add that “it is not difficult to show that parameter estimates may be based not on comparisons between actual persons [in our analysis census tracts] but rather on extrapolation, interpolation, regression smoothing, and imputation more generally.” Rather than compare the group mean for all of the zone tracts with the group mean for all the matched tracts (as the existing evaluations do in one form or another), we calculate the mean difference in outcomes for matched pairs of census tracts, thus more closely approximating the difference in outcomes between EZ census tracts and their matched-pair counterparts.

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A key assumption of the ATT method is that the treatment and control groups are comparable in all respects except the treatment group received the intervention and the control group did not. Table 5.2 summarizes the comparability of the EZ and control groups before and after matching for selected covariates for the EZ cities and shows that the propensity score-matching procedures were effective in substantially reducing covariate imbalance between the treatment and control groups. Overall, while 82 of the 126 comparisons between EZ and control census tracts were statistically significant prior to matching, only five remained statistically significant after matching and none of these were for our critical variables.10 As reported in table 5.2, none of the six EZ cities show a statistically significant difference at the .05 level between treatment and control groups after propensity score matching for the pretreatment measures for poverty rate (1989) and unemployment rate (1990), indicating that the two groups were, on average, equivalent on these key indicators. Our ATT estimates of EZ revitalization outcomes did not yield statistically significant findings for any of the five indicators in any of the original EZ cities.11 Only four ATT estimates (unemployment change in Chicago and New York, change in the number of jobs in New York, and business investment in Detroit) had p values  .20. Over half the ATT estimates, however, yielded results that were consistent with the expectation that EZ tracts would fare better than their matched-pair control tracts. Statistical significance is determined by several factors, including the magnitude of the effect (difference in means between

TABLE 5.2 Comparison of empowerment zone and control census tract group means before and after matching PERCENT POVERTY, 1989 CITY (MATCHED PAIRS)

SAMPLE

PERCENT UNEMPLOYED, 1990

EZ TRACTS

CONTROL TRACTS

P > |T|

EZ TRACTS

CONTROL TRACTS

P > |T|

Atlanta (n = 16)

Unmatched Matched

56.3 52.9

37.3 49.5

0.00 0.61

19.2 16.7

13.1 14.8

0.00 0.50

Baltimore (n = 20)

Unmatched Matched

42.6 40.9

34.1 37.2

0.01 0.34

15.6 14.9

13.4 12.4

0.15 0.14

Chicago (n = 68)

Unmatched Matched

46.6 44.6

35.7 45.0

0.00 0.85

25.5 24.2

19.5 24.3

0.00 0.98

Detroit (n = 34)

Unmatched Matched

49.1 47.0

38.6 47.7

0.00 0.76

29.3 29.5

24.5 28.5

0.00 0.67

New York (n = 45)

Unmatched Matched

44.6 44.0

35.4 45.1

0.00 0.66

19.1 18.0

14.8 17.5

0.00 0.73

Philadelphia (n = 8)

Unmatched Matched

54.3 50.0

34.5 50.6

0.00 0.92

24.2 23.5

16.0 26.6

0.00 0.52

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treatment and control groups), the variability of the effect (differences from one set of matched pairs to another), and sample size. Larger effects, less variability, and larger sample sizes all increase the likelihood of a statistically significant finding. Most social interventions, especially those that affect aggregated units such as census tracts, have small to moderate effects and thus require larger sample sizes, less heterogeneity, or both to attain statistical significance.12 2 . F I XED  EFFE C TS R E G R E S S I O N

The usual way to boost statistical power is to pool data across sites to increase the number of observations, as did all of the prior EZ studies. However, as we noted earlier, this procedure implies that the intervention is consistent across sites, a claim that we have rejected on the basis of our analysis of local program activities (see chapters 3 and 4) and the results of prior studies based on extensive field research (Wright et al. 1996; Gittell et al. 2001; Hebert et al. 2001). In addition, combining poor and good local performers in the same model to estimate national program effects dilutes and obscures potentially important local effects. To increase statistical conclusion validity, we also present a pooled data analysis of EZ effects, but take an approach different from that of the previous studies in constructing and analyzing our pooled sample. Unlike many of the other studies that included all the EZ tracts and all the non-EZ tracts, we sharpen the contrasts between the EZ tracts and the control tracts by limiting our pooled sample to only the matched EZ tracts and their matched-pair control tracts. Our estimates of EZ outcomes are derived from fixed-effects regression analysis (Allison 2009), which “controls” for all time-invariant variables—measured and unmeasured. We focus on the estimated coefficients for each of the original EZ cities. These coefficients indicate the difference, on average, between EZ tracts and comparison tracts over the time period estimated for each of the outcome measures, controlling for population and tract and time fixed effects that control for all time-invariant factors. In essence, each census tract becomes its own control group and the EZ coefficients represent the mean difference between EZ and control tracts on the outcome of interest (see the chapter appendix for further details on model specifications). Overall, more than half the estimates (eighteen of thirty) of EZ outcomes were in the predicted direction, with EZ census tracts faring better than their comparison tracts.13 EZ tracts outperformed comparison tracts in a majority of cities on the two economic indicators: change in the number of jobs between 1996 and 2004 (four cities to two) and business investment, measured as three-year moving averages between 1996 and 2006 (four to two). Estimates for all the EZ cities but Atlanta also indicate that EZ census tracts experienced greater declines (or smaller increases) in the number of persons below poverty between 1989 and

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1999 than their comparison tracts. Overall, only four of these estimates were found to be statistically significant: job change in Baltimore (EZ tracts favored), poverty change in New York (EZ tracts favored), business investment in Chicago (EZ tracts favored), and job change in Atlanta (control tracts favored). EZ outcomes were split evenly on the unemployment indicator; Baltimore, Chicago, and Philadelphia showed results in the predicted direction and the other three cities yielded estimates that suggested control tracts achieved greater gains in lowering unemployment. None of these estimates, however, was statistically significant. Finally, EZ cities fared worse on the housing investment indicator. Only Atlanta and Chicago showed greater housing investment in the EZ census tracts, as measured by the three-year moving average of home mortgage originations during the period 1994–2006, than in their control tracts, though neither of these estimates was statistically significant. Of the four cities where EZ tracts fared worse than their control tracts on the housing indicator, Detroit and New York had statistically significant differences, and Philadelphia had an estimated difference on the cusp of significance (p = .09). While pooling data across the six EZ cities did yield a very modest boost in statistical power over the ATT estimates based on matched pairs, the sample sizes in each city remained relatively small and the magnitudes of the standard errors remained relatively large, indicating that there is a great deal of variability in the outcome measures at the census tract level.14 As noted earlier, both these conditions are important determinants of statistical significance. 3 . EF F EC T S I Z E

Our third approach for estimating EZ outcomes focuses on effect size as opposed to statistical significance, “which conflates effect size and sample size” (Coe 2002). With a large sample size it is possible to attain statistical significance with very small effects, effects that may have little policy relevance. On the other hand, with small sample sizes even very large effects may not attain statistical significance. Effect size is the standardized mean difference between two groups and is computed as follows: Effect Size =

[Mean of experimental group] – [Mean of control group] Pooled standard deviation

Scholars disagree about the interpretation of effect size. Cohen (1998) provides a general rule for interpreting effect size based on terms like small (d = .2), medium (d = .5), and large (d = .8), though he urges caution in the universalistic application of that rule. Glass and colleagues (1981) argue that effect size should be considered only in relation to other similar interventions that seek to achieve the same effect. Coe (2002, 11) observes that “use of an effect size with a confidence

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interval conveys the same information as a test of statistical significance, but with the emphasis on the significance of the effect, rather than the sample size.” We calculated effect sizes for each outcome measure for each of the original EZ cities.15 Overall, the vast majority of effect sizes were in the small to moderate range (twenty-three of the thirty effect sizes we calculated were less than .5). Of the seven effect sizes greater than .5, four were in the predicted direction (EZ tracts fared better) with three in Philadelphia (poverty, unemployment, and business investment) and one in Baltimore (unemployment). All three moderate effects that were in the opposite direction (comparison tracts fared better) were in Atlanta (jobs, unemployment, and business investment). However, after constructing confidence intervals, none of the effect sizes were statistically significant. Once again, the wide variability in each of the groups (large standard deviations) and the small sample sizes worked against statistical significance. Philadelphia illustrates this problem. For the business investment indicator, the effect size in Philadelphia was .98, which can be interpreted as about 82 percent of the control group census tracts having business investment trajectories below the average in the EZ tracts, an effect most policy makers and program administrators would consider spectacular. However, because of small sample sizes (eight tracts in each group), the 95 percent confidence interval for the effect size ranged from .10 to 1.96. Two more observations in each group would have yielded a statistically significant finding. Sample size, though, was not the sole culprit that suppressed statistical significance. Variability within groups was also considerable. In Baltimore, for example, the effect size for unemployment was .55, indicating that about 70 percent of the census tracts in the control group had smaller declines or increases in the number of unemployed as compared with the EZ tract average. However, the standard deviation for the EZ group was about three times higher than its mean and the standard deviation for the control group was more than four times higher than its mean. At this magnitude of variation, one would have to double the sample sizes in each group (twenty to forty for EZ tracts and fourteen to twenty-eight for control tracts) to achieve statistical significance. S EN S I T I VI TY A NA LYS I S

We replicated each of our analytic strategies—ATT estimates, fixed-effects regression, and effect size calculations with confidence intervals—using alternative caliper widths for constructing our matched pairs.16 Overall our sensitivity analysis showed that the estimates—both coefficients and their standard errors—were very stable across the different samples based on caliper width.17 Although the results did vary by city and outcome indicator, in general the standard errors were slightly smaller in the larger samples (caliper width = .20). The coefficient

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estimates were about evenly divided; about half (fourteen of thirty) of the effects estimates were larger in the larger sample and about half (sixteen of thirty) were smaller in the larger sample. In only two instances did the coefficient’s sign flip between the larger and smaller samples and there were no instances where a finding was statistically significant in the larger sample and not so in the smaller sample (or vice versa).

Summing Up: What Happened in EZ Neighborhoods? In this section we provide a summary assessment of the available evidence from our empirical analysis of what happened to EZ neighborhoods in the original urban EZs. Our summary measure is based on the five revitalization outcomes included in our analysis, and each indicator is assigned a score between 2 and 2 based on the following criteria: 2 = Statistically significant difference; EZ tracts fared better than comparison tracts. 1 = No statistical difference; matched pair analysis shows more EZ tracts fared better than comparison tracts. 0 = No statistical difference; matched pair analysis shows relatively even distribution between EZ tracts that fared better and EZ tracts that fared worse. 1 = No statistical difference; matched pair analysis shows more EZ tracts fared worse than comparison tracts. 2 = Statistically significant difference; EZ tracts fared worse than comparison tracts. An additional point (positive or negative depending on the direction of the relationship) is assigned to each outcome indicator for effect sizes greater than .5. As noted above, the index assigns greater value to those outcomes where there is greater certainty about the nature of the effect (i.e., statistically significant finding), but also acknowledges the outcomes achieved (positive or negative) where the available evidence suggests EZ census tracts fared better (worse) than their control tracts. Table 5.3 summarizes the EZ performance scores and shows three clusters of cities: Baltimore and Philadelphia anchor the high end of the distribution, with each city attaining a score of 5, suggesting that the outcomes produced by the EZ initiative were strongest in those cities. Atlanta anchors the low end of the distribution, with a score of 6; suggesting EZ performance was weakest in that city. Chicago, Detroit, and New York fall between these two groups with scores that range between 0 and 2. It should be noted that all the EZ cities had positive

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TABLE 5.3 Summary of EZ outcomes by city DESCRIPTION

JOBS

POVERTY

UNEMPLOYMENT

HOUSING INVESTMENT

BUSINESS INVESTMENT

TOTAL

Summary Scores* Atlanta

3

0

1

0

2

6

Baltimore

2

1

2

1

1

5

Chicago

1

1

1

1

2

2

Detroit

1

1

1

2

1

0

New York

1

2

1

2

1

1

Philadelphia

1

2

0

0

2

5

5

Matched-Pairs Analysis Number of Cities Where EZ tracts fared better

4

5

2

0

EZ tracts no difference

0

1

1

2

0

EZ tracts fared worse

2

0

3

4

1

* Scoring criteria are discussed in preceding text.

scores on at least three of the five outcome indicators except for Atlanta, which had negative scores for two indicators and neutral scores for the other three. As an alternative summary measure of EZ performance, we simply tabulated a frequency count of EZ census tracts by city, based on the number of outcomes for which EZ tracts fared better than their matched pair counterpart. The results of that analysis, reported in figure 5.1, once again show that EZ performance was strongest in Baltimore and Philadelphia. In both cities, the percentage of EZ census tracts that outperformed their matched pair census tracts on at least four of the five outcome indicators was substantially greater than the share of EZ census tracts in each city that had the weakest performance. Indeed, Baltimore and Philadelphia had the highest share of EZ census tracts with strong performance (30 percent and 33 percent, respectively) and the lowest percentage of EZ census tracts with weak performance (4 percent and 11 percent). Atlanta also clearly emerges in this analysis as having weak EZ outcomes: 41 percent of the city’s EZ census tracts were outperformed by their control tracts on four or more of the five outcome measures, more than double the percentage of weak performing EZ tracts in any of the other five EZ cities. Atlanta also had the smallest share of EZ census tracts among the six original EZ cities with strong performance (14 percent), followed by New York (17 percent) and Detroit (21 percent). While there are differences in the two summary scoring schemes for assessing overall EZ performance, the two approaches show a strong correspondence in their ordinal rankings of cities based on how EZ census tracts fared compared to their matched-pair counterparts.

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45.0 40.0

0–1

4–5

35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Atlanta

Baltimore

Chicago

Detroit

New York Philadelphia

Total

FIGURE 5.1 Distribution of EZ census tracts by revitalization outcomes: number of revitalization outcomes in which EZ tracts fared better than their matchedpair control tract.

Finally, an additional robustness check compared our local findings with those from the other evaluations (GAO 2006; Oakley and Tsao 2006) that included local estimates. As noted earlier, there were a number of differences in the approaches, evaluation designs, measures, and analytic strategies used in these three studies. Table 5.4 presents a summary of the local findings for the outcome indicators (poverty, unemployment, and jobs) and cities where there was overlap. Although we used a different research strategy and a broader set of outcome measures than did the GAO and Oakley and Tsao, our findings are consistent with the local findings they report. For Baltimore, Chicago, and Detroit our findings directly align with the other two studies in the direction of the relationship on the poverty, unemployment, and jobs indicators, though the other studies were more likely to attain statistical significance on these measures than was ours. For Philadelphia, our findings directly align with the GAO study for all but the unemployment indicator (we found that EZ tracts and control tracts fared about the same), though the GAO study found statistically significant effects for all three indicators in Philadelphia and none of ours were statistically significant. For New York, our findings directly align with the GAO on all three indicators, but both the GAO study and our estimates differ from those in the Oakley and Tsao study for the two indicators they report. Finally, while our estimates for Atlanta on the jobs indicator align with those in the GAO study (though only our estimate is statistically significant), we



* 





*

* 

*

*

*

*

*

*

*

Atlanta

Baltimore

Chicago

Detroit

New York

Philadelphia

Key  EZ tracts fared better than control tracts. o EZ tracts and control tracts fared about the same.  EZ tracts fared worse than control tracts. * Statistically significant change; standards vary by source. NA Not applicable (cases or indicators excluded from the analysis).

*

*

*

ECONOMIC GROWTH—JOBS

UNEMPLOYMENT

GOVERNMENT ACCOUNTABILITY OFFICE

Are local results robust?

POVERTY

EMPOWERMENT ZONE CITY

TABLE 5.4

NA

* 

*

NA 

POVERTY

NA

NA

 NA

NA

NA

NA

NA

ECONOMIC GROWTH—JOBS

* 

NA 

UNEMPLOYMENT

OAKLEY AND TSAO

* 

o











o

*  



*

ECONOMIC GROWTH—JOBS





UNEMPLOYMENT

o 

POVERTY

AUTHORS

o 

* 





ECONOMIC GROWTH—INVESTMENT

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differ slightly on the other two indicators. GAO reports a positive, statistically significant effect for poverty in the Atlanta EZ, whereas we find that the EZ tracts and the control tracts fared about the same on the poverty indicator.18 For unemployment, GAO estimated that the EZ tracts fared worse than the control tracts, though this finding was not statistically significant. Our ATT and fixed-effects regression analyses also found that Atlanta’s EZ tracts fared worse than their control tracts on the unemployment indicator, though in each case the differences were not statistically significant. Based on an examination of the matched pairs, 6 EZ tracts fared better and 16 fared worse than their control tracts.

Conclusion Some may interpret the findings we present in this chapter, along with those from other major evaluations of the EZ initiative we summarized, as yet another example of what Peter Rossi (1987, 4) has referred to as the “Iron Law of Evaluation— the expected value of any net impact assessment of any large scale social program is zero.” Rossi reviewed two decades of efforts to evaluate major social programs and regarded his iron law as the most durable of his observations about evaluation research findings at the time of his essay. Although he did point out that there were exceptions to the rule, most evaluations of successful social programs yielded small effects. Rossi did not attribute the failure of social program evaluations to detect effects exclusively to how we conduct evaluations, as some have, but also pointed out that our understanding of social problems and the design of social programs are seriously underdeveloped. According to Rossi (1987, 18): Effective social policies and programs cannot be designed consistently until it is thoroughly understood how changes in policies and programs can affect the social problems in question. The social policies and programs that we have tested have been designed, at best, on the basis of common sense and perhaps intelligent guesses, a weak foundation for the construction of effective policies and programs. In order to make progress, we need to deepen our understanding of the long range and proximate causation of our social problems and our understanding about how active interventions might alleviate the burdens of those problems. This is not simply a call for more funds for social science research but also a call for a redirection of social science research toward understanding how public policy can affect those problems. The second factor Rossi attributed to the weak record of social programs is “the frequent failings in the implementation of social programs.” The solution,

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according to Rossi (1987, 19), is “a new profession of social and organizational engineering devoted to the design of human services delivery systems that can deliver treatments with fidelity and effectiveness.” Consistent with Rossi’s call for increasing our understanding of social problems, social programs, and effective implementation strategies, Katya Fels Smyth and Lisbeth Schorr have issued “a call to rethink what constitutes ‘evidence’ in finding social interventions that work.” Smyth and Schorr (2009, 13) argue that “the ‘flawed alternatives’ to randomized experiments may provide less certainty about the causal relationship between intervention and impact, but they do offer a broader range of information that may be more useful in making real-time judgments about the real-world effectiveness of What It Takes programs and other complex interventions, and will therefore make possible more informed decision-making.”19 Campbell’s vision of good government, which now is conventional wisdom, depends critically on the capacity of evaluation methods to be discriminating. However, if our methods cannot distinguish programs that work from those that do not, evaluation may provide misguided advice that can inhibit policy development. A full assessment of the legacy of the EZ initiative is important for informing future policy designs for federal urban policy as well as local revitalization strategies. By turning attention to the local effects of the initiative, we have tried to open new possibilities for generating policy-relevant knowledge to guide efforts to improve the quality of life in distressed neighborhoods. The evidence indicates that several EZ cities produced improvements in their distressed neighborhoods that can be attributed to the EZ initiative. These outcomes were detected by three independent evaluations, all using somewhat different designs, measures, and estimation methods. Although the evaluation results show that several EZs achieved measurable improvements in zone conditions, we don’t want to exaggerate these claims of success. The gains were modest. None of the local EZ programs fundamentally transformed distressed urban neighborhoods. However, given the problems of evaluating comprehensive urban revitalization initiatives and the modest resources that were devoted to the EZ effort, these gains are noteworthy. In light of these results, to conclude that the EZ initiative failed would be to give it a bum rap, especially considering the results achieved in Baltimore and Philadelphia. Having established the outcomes local EZ programs achieved, the next three chapters seek to explain these patterns and, in particular, to link EZ outcomes to their local determinants. As the conventional wisdom surrounding the EZ initiative develops, the results achieved by more successful local programs should be acknowledged and the lessons from cities that were less successful also deserve attention. Our emphasis on explaining local variation is consistent

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with a turn in evaluation research that encourages more rigorous study of the sources of variation of program effects. Michael Weiss, Howard Bloom, and Thomas Brock (2013, 1–2) observed that “average program effects may not tell the whole story. . . . To date evaluation research and public policy analysis have mainly focused on the average effects of programs and paid far less systematic attention to explaining variation in effects.” Studies that examine variation in program effects, according to Weiss, Bloom, and Brock (2), “have obvious value to policymakers and practitioners who want to know why some programs are more effective than others and what it might take to design and operate more successful programs.” The primary sources of variation, according to Weiss, Bloom, and Brock (13–22), consist of the “three Cs:” treatment Contrast, Client characteristics, and program Context. Treatment contrast is comprised of dimensions of the program (e.g, what services were provided, how much of each service was delivered, how well were services provided, and by whom). Client characteristics refer to the attributes of program targets and include factors such as risk (e.g., education, employment, income) and readiness (e.g., willingness to participate). Program context refers to the broader context or setting in which the program operates and includes factors such as local economic conditions and type of community (rural/urban/suburban). Other possible sources of program effects variation include implementation plan and process and organizational characteristics (e.g., leadership, capacity, culture, external monitoring). The key question implied by our local evaluation of the EZ initiative is why some cities produced positive outcomes while others did not. Our answer, based on analysis of many of the factors listed above that are presented in the following chapters, is the quality of local governance. Poor local governance retards progress, while good local governance provides a context in which urban revitalization programs are more likely to succeed.

Appendix: Data Sources, Outcome Estimations, and Empirical Findings Data Sources The following data sources were used for our five measures of revitalization outcomes: • Percentage change in number of jobs, 1996–2004. Source: Claritas BusinessFacts. Information on the methodology used by Claritas in obtaining this data can be found at http://www.claritas.com/collateral/bpoint/cbfmeth.

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•

•

•

•

CHAPTER 5

pdf. Note: To minimize the influence of outliers, tracts with a percentage change greater than 200 percent were trimmed to two hundred. Percentage change in the number of persons below poverty, 1989–1999. Source: U.S. Bureau of the Census, Decennial Census of Population, 1990 and 2000. Note: To minimize the influence of outliers, tracts with a percentage change greater than 200 percent were trimmed to two hundred. Percentage change in the number of persons unemployed, 1990–2000. Source: U.S. Bureau of the Census, Decennial Census of Population, 1990 and 2000. Note: To minimize the influence of outliers, tracts with a percentage change greater than 200 percent were trimmed to two hundred. Trend in constant dollar value of home mortgage loans, 1994–2006. Source: Federal Financial Institutions Examination Council, Home Mortgage Disclosure Act Data, Aggregate File, 1994–2006. Data provided at the census tract level courtesy of KnowledgePlex and the Urban Institute. Note: All dollars were converted to constant dollars (2008 = 100) and linear trends were calculated based on three-year moving averages. Trend in constant dollar value of business loans, 1996–2006. Source: Federal Financial Institutions Examination Council, Community Reinvestment Act Data, Aggregate File, 1996–2006. Note: All dollars were converted to constant dollars (2008 = 100) and linear trends were calculated based on three-year moving averages.

Estimating EZ Outcomes AT T

We initially chose not to pool our data because we believe it is more appropriate to think of the EZs as a series of field trials (with degrees of freedom 6–1) than as a uniform treatment simultaneously implemented in target neighborhoods.20 We are not pooling our data across the six EZ cities because we do not assume consistency of interventions—that is, the EZ initiative was the same across the EZ cities. As we noted in chapter 3, there was wide variation across the six cities in the design and implementation of their revitalization strategies and, as we showed in chapter 4, substantial differences in the quality of local governance in the EZ cities. Hence, an EZ census tract in Atlanta did not receive the same treatment as a census tract in Baltimore. If one can pool data (i.e., assume the EZ intervention was consistent) then the differences in the effects of the EZ by city are understood as mere effect heterogeneity, which many analysts dismiss from further exploration as their primary interest is in estimating the program’s overall effect. Our primary interest, on the other

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hand, is in assessing how well the EZ initiative worked, under what circumstances and conditions, for whom, and compared to what.21 Those questions, we believe, are best answered by an evaluation design that emphasizes site-specific assessment as opposed to a design focused on estimating an overall national program effect. For each of the original EZ cities, we included in our analysis all EZ census tracts and all census tracts in each city that were not included in a zone but met the federal requirements for designation (i.e., poverty rates of 20 percent or higher). Propensity scores were calculated using Stata’s PSMATCH2 module for the included census tracts in each city based on twenty-one covariates.22 Full results of the propensity score analysis and ATT calculations are available in the online appendix. The average effect of the treatment on the treated (ATT) for each of our outcome measures was estimated as follows: ATT =

Σye – yu i

ne

i*

=

ΣΔe = Δe ne

Where yei is the outcome for an exposed (e) census tract (i); yui* is the outcome of the matched unexposed census tract (counterfactual substitute); ne is the sample size of the matched pairs; and e is the pair-matched difference in outcomes. F I XED EF F E C TS A NA LYS I S

For the three revitalization outcome measures where observations were available for two points in time (jobs, poverty, unemployment), we used a first-differences approach. For each census tract we subtracted the value at time2 from the value at time1 for each variable and then estimated an ordinary least squares regression (OLS) on the difference scores. Our estimation equation is yi = µ  (CITYk * EZi)  2POPi  i where  indicates a difference score, T1—T2; i denotes census tract; y is an outcome variable such as number of jobs, number of persons below poverty, or number of unemployed; CITY is a set of dummy variables for five of the six EZ cities (Chicago is the reference city); EZ is a dummy variable for EZ status (1 = EZ tract; 0 = otherwise); POP is the tract population; and  is the error term, assumed to have a mean of zero, to have constant variance, and to be statistically independent of all right-hand side variables. For example, for the poverty outcome measure, for each census tract we subtract the 1989 value from the 1999 value and then regress the difference in poverty on the difference in EZ status and the difference in population over the same time period. This specification assumes that there are no additional time-varying tract-level factors beyond the EZ treatment and

TABLE 5.A1 Fixed effects estimates of revitalization outcomes TWO TIME PERIODS PER TRACT

Time Period Atlanta EZ

Baltimore EZ

Chicago EZ

Detroit EZ

New York EZ

Philadelphia EZ

Population

Constant

MULTIPLE TIME PERIODS

JOBS (1)

POVERTY (2)

UNEMPLOYMENT (3)

HOUSING INVESTMENT (4)

BUSINESS INVESTMENT (5)

1996–2004

1989–1999

1990–2000

1994–2006

1996–2006

−1492.37

100.17

29.24

1927.16

160.77

(582.66)

(138.41)

(34.93)

(1376.02)

(246.26)

p = .01

p = .47

p = .40

p = .16

p = .51

1046.88

−2.36

−32.21

−1673.34

243.32

(481.63)

(114.41)

(28.87)

(1318.81)

(241.09)

p = .03

p = .98

p = .27

p = .21

p = .31

−19.93

−29.27

−11.37

801.38

309.64

(245.39)

(58.29)

(14.71)

(783.71)

(143.47)

p = .94

p = .62

p = .44

p = .31

p = .03

666.64

−22.14

10.85

−2981.01

−41.90

(382.81)

(90.94)

(22.95)

(1063.77)

(194.88)

p = .08

p = .81

p = .64

p = .01

p = .83

61.17

−212.45

4.32

−2138.88

−272.69

(305.14)

(72.49)

(18.29)

(942.90)

(172.48)

p = .84

p = .00

p = .81

p = .02

p = .11

33.11

−113.63

−52.51

−3361.04

339.06

(691.63)

(164.30)

(41.46)

(1999.87)

(366.32)

p = .96

p = .49

p = .21

p = .09

p = .36

−.19

.56

.08

3.97

.75

(.13)

(.03)

(.01)

(.47)

(.12)

p = .13

p = .00

p = .00

p = .00

p = .00

−86.05

−132.55

−16.26

−9652.71

−1048.51

(187.95)

(44.65)

(11.27)

(1472.88)

(333.24)

p = .65

p = .00

p = .15

p = .00

p = .00

N

344

344

344

3,784

3,114

Prob > F

.11

.00

.00

.00

.00

.05/.02

.59/.58

.40/.38 .36/.12/.17

.08/.00/.00

R-sq/Adj. R-sq R-sq/within, between, overall

Note: Includes tract and time fixed effects. Standard errors in parentheses. Boldface text indicates statistically significant coefficients, p  .05.

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population that affect our outcome measure of interest—number of persons below poverty. For housing and business investment, where we have multiple observations per census tract, we use the mean deviation method algorithm that includes fixed effects dummy variables for time (years) and census tract. Our estimation equation for these two outcome measures is yit = i  (CITYk * EZit)  1 POPit  t  µi  it where i designates census tracts and t designates time periods. As before, y is the outcome variable of interest, CITY is a set of dummy variables for five of the six EZ cities (Chicago is the reference city), EZ is a treatment status dummy variable (1 = EZ; 0 = otherwise), POP is the census tract population that varies over time within units, t and µi are year and tract fixed effects, respectively, and  is the error term. As with the two-observation case, fixed-effects regression with multiple observations per case controls for all time-invariant predictors and in this specification assumes that there are no additional time-varying tract-level factors beyond EZ status and population. Table 5.A1 presents the results of the fixed-effects regression on the pooled data set for the five revitalization outcomes. Results from the fixed-effects regressions undertaken as part of our sensitivity analysis are available in the online appendix. EF F EC T S I Z E

We used the Stata procedure COHEND, written by David Tannebaum and distributed by the Boston College Department of Economics, for calculating effect sizes. Full results are reported in the online appendix.

6 ATLANTA’S EMPOWERMENT ZONE

Atlanta enjoyed many advantages in the fierce competition for EZ designation. These included extensive experience with federal urban programs and a highprofile antipoverty initiative launched by former President Jimmy Carter in 1991. Atlanta also was in the midst of final preparations to host the 1996 summer Olympic Games, which were expected to enhance economic opportunities in the city and its low-income neighborhoods. Indeed, shortly after Atlanta’s EZ designation HUD assistant secretary Andrew Cuomo called Atlanta “the Michael Johnson of Empowerment Zones,” a reference to the American sprinter who was favored to win several gold medals. Johnson, however, pulled up lame in the fourhundred-meter race and did not compete in his other scheduled events. Cuomo’s comment was ironically prophetic; like Johnson, Atlanta pulled up lame in its efforts to implement its EZ initiative. In January 2010, after a five-year extension to complete its EZ activities had expired, Atlanta returned $29 million in unspent EZ funds to the federal government. This chapter opens with a brief overview of the city’s history with federal urban initiatives to illustrate that Atlanta’s prior experience spawned path dependency that influenced and constrained the choices the city made regarding the governance arrangements and processes for its EZ effort. The major decision points relating to the city’s EZ initiative are then reviewed, focusing on the development of the strategic plan, creation of the EZ governance structure, and program implementation. Finally, the results of our local evaluation of Atlanta’s EZ

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impacts are presented and the chapter is concluded by tying Atlanta’s poor EZ performance to the weaknesses and deficiencies of its local governance.

The Past Is Prologue To fully understand the Atlanta EZ experience, it is important to examine the local context in which planning and implementation took place. Throughout the EZ experience, zone residents displayed significant distrust of city government (and corporate and civic leaders as well). The seeds of distrust were sown by the actions and inactions in the city’s previous experiences with federal urban programs and The Atlanta Project, a comprehensive community initiative begun in 1991. The Atlanta Housing Authority (AHA), the nation’s fifth-largest public housing authority, owned and managed thirteen public housing developments in the EZ, representing about one-fourth of the zone’s housing units and population (City of Atlanta 1994, 6). The city’s public housing stock was in poor physical condition, largely because of inadequate funding, deferred maintenance, high vacancy rates, high unit turnover rates, and generally poor management, all of which led to the AHA’s placement on HUD’s list of “troubled” public housing authorities in 1993. In Atlanta, as in many cities, the business community was the primary force pushing a redevelopment strategy to expand and revitalize the city’s central business district (Stone 1989; Keating 2001). City leaders aligned with the business community to pursue an urban renewal program in the 1950s and 1960s that devastated several in-town neighborhoods, replacing them with freeways and a collection of public facilities that included a convention center and a major league baseball stadium. The impact of urban renewal in Atlanta, particularly between 1956 and 1966, was dramatic; twenty-one thousand families and sixtyseven thousand people were displaced during this period; almost eight out of ten displaced people were African Americans (Stone 1976). Several urban renewal neighborhoods were later included in Atlanta’s EZ. Atlanta was also one the cities selected in the first round of the Model Cities program and over the course of the program received about $30 million in Model Cities funds. Four of the six Model City neighborhoods were later included within the boundaries of Atlanta’s EZ. Atlanta struggled to meet the Model Cities citizen participation requirements. According to a HUD-funded evaluation of the program (Kaplan et al. 1970, 35) “Direct sustained citizen involvement in Atlanta’s planning program was minimal. . . . The limited degree

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of citizen participation was the result of a conscious decision on the part of the CDA [Atlanta’s Model Cities agency], a decision apparently acquiesced in by the community.” The results of Atlanta’s Model Cities program were disappointing. According to Charles Weltner, a former congressman whose district included the Model Cities neighborhoods, more than $173 million in public funds, including those received from other federal agencies as well as state and local sources, were invested in Model Cities neighborhoods over the six-year initiative. Weltner (1977, 87) summed up the impacts of that investment as a rather “sobering scorecard” and concluded that “we made very little difference and in some cases at least we clearly had a negative impact on the lives of people we were sincerely trying to help.” For example, the program had planned to construct six thousand units of new housing in Model Cities neighborhoods, but when the program ended only 42 units had been completed, another 307 units were under construction, and 69 houses had been rehabilitated (Blackmon and Harris 1994). Distrust and disappointment in the city’s low-income neighborhoods was not confined to federal programs or public officials. In October 1991, The Atlanta Project (TAP), an initiative of the Carter Center, was launched to tackle persistent poverty and neighborhood decline. TAP had four principal goals: “to unite Atlanta as a community, to foster collaboration among service providers and other groups; to foster empowerment; and to enhance the quality of life in the neighborhoods” (Giles 1995, 6). A key objective was to bring coherence to the maze of federal, state, local, and private nonprofit organizations fighting poverty and a variety of related problems that contribute to neighborhood decline such as homelessness, substance abuse, teen pregnancy, and school dropouts. TAP focused its efforts in the neighborhoods with the greatest need and organized its efforts around twenty high school clusters, encompassing parts of the city of Atlanta and suburban Clayton, DeKalb, and Fulton Counties. Each cluster was led by steering committee of neighborhood stakeholders and assisted by business and university partners. Despite the emphasis on planning, coordination, and collaboration, the initial assessment of TAP (Giles 1995, 2) indicated that the vast majority of initiatives showed little relationship to the project’s goals. In addition, the report found that “the overall pattern at the cluster level, however, suggests little emphasis on collaboration.” Significant restructuring of TAP operations followed the release of the report, and a year later President Carter announced that TAP would reduce its staff by about 20 percent and cut its current annual operating budget of about $5 million in half by 1997 (Blake 1995). In August 1999, TAP formally shut down, transferring its residual assets to Georgia State University, which continued to provide support to the cluster committees for several years before ceasing operations in December 2007.

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As the preceding examples illustrate, the lives of Atlanta’s neediest residents were continually disrupted by mismanagement of public housing, displacement under urban renewal, and feckless revitalization efforts sponsored by government and philanthropic organizations. Although resident suspicion and distrust of public and business leaders is not unique to Atlanta, the interconnections among lack of trust, lack of institutional capacity, and weak performance that characterized Atlanta’s pre-EZ urban revitalization experience were more substantial than what other cities faced and presented a path dependent set of challenges that would be difficult for Atlanta’s EZ initiative to overcome.

Empowerment Zone Planning Strategic planning for the Atlanta EZ was not a single process of sequential phases led by a single entity. Rather it was a collection of efforts, at times only loosely coupled to one another, that included four key sets of actors: (1) the Empowerment Zone Group, an informal gathering of interested parties that began convening late in the summer of 1993, shortly after the legislation passed, and evolved into a more formal group (the EZ Management Committee) appointed by Mayor Maynard Jackson Jr. in fall 1993; (2) residents, who participated through a series of working groups created to garner citizen input in March 1994, and a more formal body, the Community Empowerment Advisory Board (CEAB), initially convened in late February 1994, that included citizen representatives from each of the neighborhoods included in the proposed EZ; (3) city staff, which consisted of the principal staff working on the EZ application led by the Commissioner of the Department of Planning and Development and also included the director of the Bureau of Planning, top-level advisors from the mayor’s office, and consultants; and (4) the technical team, which emerged near the end of the planning process and included a group of substantive area experts that was assembled by the city’s planning commissioner, to help write the application.

Getting Started The initial impetus for Atlanta’s EZ application was a series of meetings in fall 1993 that included representatives from the city’s Bureau of Planning, TAP, and a few other city officials. This group, which informally became known as the Empowerment Zone Group, did much of the advance work for the EZ initiative, well before they knew what the details of the application process would entail. The primary purpose of their meetings was to compare notes on what each of the principal parties knew about the new initiative and to discuss the prospects of

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Atlanta winning designation. The group also explored potential areas that would be appropriate for zone designation. These informal discussions soon evolved into a more formal arrangement. Mayor Jackson appointed a committee (the EZ Management Committee) made up largely of the same people who had been participating in the EZ Group to take the lead role in preparing the city’s application. As the planning process advanced, the committee felt it was important to obtain the public support of the mayor and the city council and encouraged Mayor Jackson to introduce a resolution, which was adopted by the city council, authorizing the mayor to prepare an EZ application for the geographic area that had been identified by the EZ Management Committee. Following the resolution, the committee recommended that the mayor establish a citizens advisory committee to incorporate the community into the planning process. Officials from the city then approached the Atlanta Housing Association of Neighborhood-based Developers (AHAND), which agreed to recruit members from each zone neighborhood to sit on the citizen’s advisory committee. The first meeting of the Community Empowerment Board (CEB) took place in February 1994. Newly elected Mayor Bill Campbell, formerly a city council member and the outgoing mayor’s endorsed candidate, addressed the group and noted that the purpose of the CEB was to “oversee the development and submission of the Atlanta Empowerment Zone application” and that its role would be advisory to the mayor and the Atlanta City Council. The mayor’s charge specifically identified three responsibilities for the CEB: (1) representing a community composed of twenty-eight neighborhoods included in the proposed EZ and helping to ensure broad, active community participation; (2) defining a vision for what the proposed empowerment zone is to become and developing a strategic plan to get there; and (3) reviewing the EZ application within the community by holding town meetings to receive public comment (City of Atlanta 1994, appendix, vol. 3, part I). The mayor added that “winning an empowerment zone has become the top priority of my administration in the next four months. However, I need your help. The active involvement of the neighborhood is crucial. I assure you, City Hall will not prepare the application for you.” Several CEB members raised concerns about the strategic planning process outlined by the mayor and city planning officials, especially the lack of citizen involvement in three areas: the designation of the zone, the design of the strategic planning process, and the implementation of the plan. Responding to a statement by a city official that “we” are behind and need to move expeditiously to complete the EZ application, a citizen member of the new board responded, “I am tired of getting things packaged and handed to us after the fact. This board should have been created and we should have been brought into this process six months ago.

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We are behind? I have a problem with your definition of the word we. The problem with all this is precisely that you did it, not we. You designed this process, you picked the zone, you chose the consultants, you control how the money gets spent in the planning process” (City of Atlanta 1994, appendix vol. 3, part I). On March 7, 1994, the city council passed another resolution—approved by Mayor Campbell a week later—that incorporated the EZ Management Committee’s recommendations that the city directly address the concerns raised at the CEB meeting by letting the zone fall out of the strategic plan instead of vice versa. The council resolution rescinded the earlier zone designation and called for an expanded CEB to include representatives of all sixty-nine neighborhoods with poverty rates of 35 percent or higher. The expanded CEB met for the first time in March 1994 and formed a nine-member executive committee to take the lead in recommending the area for EZ designation. The CEB, however, was reluctant to proceed further without more information from the city. Three issues were of greatest concern: what role the CEB would play in implementing the plan, why a March 19 deadline had been established for selecting the zone, and what role the EZ Management Committee would play. One respondent, who had been very active throughout the planning process, explained, “At this point the process in Atlanta was pretty much in the ditch. Serious conflicts about where the zone would be located and who was to be in charge of the initiative were impeding progress.” The respondent added that “the mayor needed someone who could come in and corral all this, bring business, the community, and government together and put the process back on track.”1 When the CEB next met, it was introduced to Joseph Reid, who had been brought in by Mayor Campbell to serve as the latter’s point person to shepherd the city’s EZ application process and help get the process moving forward again. Reid had previously served as director of the Department of Human and Economic Development in Athens/Clark County, Georgia, where he had led a highly acclaimed community-based strategic planning process. In addition, he was currently serving as a HUD consultant, providing presentations on grassroots engagement in community planning at the various regional workshops HUD was sponsoring across the country to brief communities on the EZ-EC initiative. The CEB executive committee presented its recommendation regarding zone selection, which was approved by a vote of eighteen to thirteen. To assuage the concerns of the neighborhoods not included in the zone, the CEB created the concept of “linkage” communities (i.e., those communities meeting the criteria for zone designation but outside of the proposed area) and agreed to keep them engaged throughout the strategic planning process. In April 1994, the CEB met and unanimously adopted its vision statement. The meeting also featured discussion of the mayor’s proposal for a governance

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structure that would guide implementation of the EZ initiative. The mayor had noted that the EZ initiative would be led by a board that he would appoint. In response to the mayor’s proposal, the CEB unanimously adopted a resolution to the mayor and the city council indicating that the CEB should be “empowered to continue until the vision was fulfilled and that all empowerment zone benefits are exhausted” (City of Atlanta 1994, appendix, vol. 3, part I). This was the CEB’s way of ensuring that it would not disappear once the planning ended and the money started flowing to Atlanta. It was at this stage of the planning process that Mayor Campbell became more directly involved, personally taking part in the negotiations. The mayor insisted that the city have control over the implementation of the EZ initiative and that he chair the board that would be created to oversee the Atlanta Empowerment Zone Corporation (AEZC), a new quasi-public entity that would be created to implement Atlanta’s strategic plan. According to one respondent, the mayor asserted that since he was the only one who was elected by all the citizens of Atlanta, he should be entitled to exercise control over the EZ initiative. Several CEB members noted that they were concerned that a newly elected mayor, and one having a lead role in helping his city prepare for the Centennial Olympic Games, would not have the time to act as chair of such an important initiative. After several meetings between the CEB leadership and Mayor Campbell, a compromise was reached on governance that called for a seventeen-member AEZC board chaired by the mayor. The board members would be drawn from public, private, and nonprofit agencies as well as zone residents. The CEB would appoint the six zone residents, with one of those six serving as vice chair. The other ten appointments would be made by the mayor. On June 30, 1994, deadline day, Mayor Campbell flew to Washington to hand deliver a copy of Atlanta’s application to HUD secretary Henry Cisneros.

Characteristics of Atlanta’s EZ Atlanta’s EZ encompasses a contiguous cluster of twenty-three census tracts that cover slightly more than nine square miles and, according to 1990 census data, was two persons shy of the allowable population maximum of fifty thousand (for cities Atlanta’s size under HUD requirements). More than half (54.7 percent) of zone residents lived in poverty and more than 70 percent of zone children lived in poor families. The unemployment rate in the zone was 17 percent compared with a citywide rate of 9 percent. Between 1980 and 1992 there was a net decline of 14 percent in private sector jobs in the EZ, and more important this figure concealed a loss of approximately six thousand manufacturing jobs that was partially

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offset by an increase of forty-five hundred lower-paying service and government jobs. According to 1990 data provided by Georgia Power, seven out of ten businesses located in the EZ were in either the retail trade (22 percent) or services (48 percent) sectors. Because of low-paying jobs and high unemployment, residents of the zone had very low incomes; well over half the residents earned less than ten thousand dollars annually and the median household income was $8,910. Approximately one-third of zone residents received public assistance.2 Physical conditions within the zone also showed signs of distress. Of the nearly twenty-three thousand housing units in the zone, one of five was vacant. About one of four housing units was a single-family detached unit and the home ownership rate was less than 20 percent. In addition, many zone residents were isolated and disconnected from other parts of the city and the region. More than half of zone residents did not have access to a private automobile and only a small section of the western portion of the EZ was served by the rapid rail transit system that connects the city with portions of suburban Fulton and DeKalb Counties. One factor that distinguished Atlanta’s zone neighborhoods from other highpoverty areas in the city was its array of community assets. Other distressed areas in Atlanta had some of these assets, but the designated zone area probably had a greater variety and concentration of assets. For example, while programs and initiatives were under way to address urban problems in Atlanta’s distressed neighborhoods, the EZ neighborhoods were better endowed. Many of the strongest nonprofit organizations in the city were located within the zone as were portions of four Atlanta Project clusters. Churches located in or near the zone were also key assets. Atlanta’s EZ featured several local enterprise zones, including seven housing enterprise zones, one industrial enterprise zone, and one commercial enterprise zone. In addition, the designated zone had a greater concentration of residential areas than had some of the alternative configurations that were considered. Finally, Atlanta’s EZ was strategically located. It abuts downtown Atlanta on three sides and has excellent access to interstate highways, and the southern portion of the zone is only a few minutes from Hartsfield Jackson International Airport, one of the nation’s busiest airports in both passenger and freight air transport. Further, the zone included and bordered many Olympic venues.

Atlanta’s Strategic Plan The central theme of Atlanta’s strategic plan was “Creating an Urban Village,” the title of the city’s strategic plan. According to the plan (City of Atlanta 1994, introduction, vii), “Eight small retail/business areas have been targeted within

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the Zone for renovation as village centers. Existing businesses and shops will be strengthened and new businesses will be launched. . . . Each will serve as a center of neighborhood activity and pride, a source of renewal for the community and each of the individuals residing there. Together, these eight urban centers will be woven into a patchwork of change that will create the tapestry of the much larger Urban Village that comprises the Empowerment Zone.”

Strategic Initiatives The city’s strategic plan (City of Atlanta 1994, introduction, 8) notes that an urban village “is built around four major principles: establishment of a village center, stabilization of local institutions, improvement of natural and man-made environments, and acquisition of better services and service delivery.” The plan gives examples of four urban village centers that have already been designed and notes that plans for all four have been drawn up and funding for the first three is either “committed or expected soon.”3 The plan further notes that additional areas will be identified, designed, and revitalized with resident input in coming years. Atlanta’s strategic vision was organized around four priorities that emerged from the strategic planning process and were largely determined by citizen input. 1 . EXPA N D I NG E M PLOYM E N T A N D I N V ESTM ENT O P P O RT U N I TI E S

The economic development component of Atlanta’s strategic plan, which was allocated $32.2 million in EZ funds, focused on community development finance. A majority of the economic development strategies and activities were efforts to increase access to capital—provide greater access to loan funds, create a combined loan/grant program, increase private and community linkages, and increase the type and scope of funds. According to the plan, the overriding goal of economic development was to find ways to generate new economic activity. Additionally, the plan argued that small businesses would be the source of most new jobs in the late twentieth and early twenty-first centuries. As a result, the remaining components of the economic development section presented strategies to generate economic activity. These included $480,000 in EZ funds to aid in the development of entrepreneurial start-ups and $8.8 million in EZ funds to expand and grow businesses. EZ funds were also allocated to establish and mentor ten to twenty community development corporations. 2 . C REAT I N G S A FE , LI VA B LE C O M M U NI TI ES

According to the strategic plan, threats to safe and decent living in the zone included crime, fire, hazardous materials, environmental degradation, and deteriorating

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infrastructure. In addition, the plan emphasized not only the personal and observable effects of crime but also the more diffuse effects such as loss of property, neighborhood deterioration, jobless youth, citizen resentment of higher prices in troubled neighborhoods, and security costs. All the EZ funds in this category were slated for activities related to public safety—community policing ($8 million), a citizen’s academy ($1 million), and a cadet program ($1 million), the last two being efforts to directly engage citizens in neighborhood-based public safety initiatives. 3 . L I F T I N G YO U TH A N D FA M I LI E S O U T OF P OV ERTY

The strategic plan (City of Atlanta 1994, “Youth and Families,” 1) notes that “while Zone residents have emphasized that creating economic opportunity is an essential component of empowerment, they have also placed a high priority on improving the human condition, recognizing that material and spiritual wellbeing are two sides of the same empowerment coin.” Indeed, the largest allocation of EZ funds, $36.3 million, was earmarked to support activities to directly address the “pervasiveness and depth of poverty” in the zone neighborhoods. The centerpiece of this strategy was to be the development of a comprehensive human services delivery system built around a “one-stop human services shopping model.” By the early 1990s, this approach had gained wide acceptance across the country and various forms of this model were in operation in several cities (Schorr 1989; Melaville et al. 1993). In Atlanta, several state and local initiatives, as well as those in the private and nonprofit sectors, were launched just prior to the EZ initiative that promoted a human services integration strategy. These included the Alliance for Human Services, The Atlanta Project, the Georgia Children’s Initiative, and the United Way’s Community Building efforts. Proposed activities under the Lifting Youth and Families Out of Poverty strategy were grouped into six activity areas: develop a comprehensive human services system and streamline access to services ($12.2 million), establish early childhood development programs ($14.5 million), reduce substance abuse ($2.2 million), improve the quality of education ($4 million), improve health and nutrition ($2.7 million), and provide for life skills development with emphasis on serving disadvantaged job seekers such as welfare recipients and ex-offenders ($600,000). 4. PROVIDING ADEQUATE HOUSING FOR ALL

According to the strategic plan, vacant, abandoned, or underused real property was a significant problem in the EZ neighborhoods. The plan emphasized that a “lack of adequate capital for acquisition and rehabilitation is the primary barrier to successfully using zone properties” (City of Atlanta 1994, “Adequate Housing,” 8).

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The plan also emphasized the demolition of vacant single-family and multifamily units and the construction of new units of both these types of dwellings. In addition, the plan called for the use of the Atlanta/Fulton County Land Bank for single-family and multifamily demolition and lot acquisition and for private sources to provide single-family and multifamily property and lot acquisition. A primary objective of the EZ housing strategy was to provide technical assistance and operating grants to civic associations and community development corporations (CDCs), which were to receive $4 million in EZ funds. The strategic plan noted that these EZ resources would be critical for neighborhood-based organizations to effectively increase the supply of affordable housing. Nearly two-thirds of the housing allocation ($13.2 million) was earmarked to assist the Atlanta Housing Authority in its efforts to modernize the city’s public housing stock. Other housing activities slated to receive EZ funds included supportive services to meet special housing needs ($2 million) and expansion of housing counseling services ($2 million), primarily to improve access to credit for EZ residents.

Implementation Before Atlanta could implement its strategic plan, issues relating to governance and process had to be resolved. These early battles, primarily between the EZ resident board members and the mayor, involved the AEZC’s bylaws, selection of the AEZC executive director, and the flow of information to board members, though at the heart of the matter all centered on the issue of control and the role zone residents would play in EZ implementation. Although resolution of those issues was critically important for establishing the structure and process through which Atlanta’s EZ initiative would be implemented, they diverted attention from the details of project execution and program development and consumed much of Atlanta’s EZ-related activity during the first two years. In addition, compared with the strategic plans that were submitted by the five other original EZ cities, Atlanta’s was woefully underdeveloped. While the plan articulated the city’s priorities and strategies, it left out the details of how those strategies would be carried out. This lack of detail contributed to two significant problems. First, the absence of programmatic detail made it easier for new projects and ideas to lay claim to EZ resources, a practice that infuriated the Community Empowerment Advisory Board (CEAB, formerly the Community Empowerment Board) members who claimed that such actions indicated that the mayor and the AEZC board members did not take the strategic plan very seriously. Second, the lack of specifics on how the various EZ-funded initiatives

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would be implemented meant that even where there was widespread consensus, a large amount of work needed to be done in order to translate those ideas into practice. Atlanta opted to initially benchmark $32.2 million of its EZ funds to cover the first two years of programmatic activity. The benchmarking process in Atlanta, begun in May 1995, was led by Joseph Reid, interim AEZC director. Through a series of meetings and workshops held over several weeks, groups of citizens and technical experts met to discuss and develop the benchmarks. HUD officials raised concerns about Atlanta’s benchmarking, noting that the city was primarily using the benchmarks to connect federal dollars with EZ activities as a way to begin the flow of funds but had not thought through the details of its EZ activities and how it would connect up with the goals and objectives identified in the strategic plan.4 Several participants voiced concerns that the process was too disjointed, largely because of the use of computer-assisted facilitation, and many raised questions about the representativeness of the participants. As one participant noted, “We had virtual partnerships; if you look at the roster of participants we had all the key stakeholder groups covered, but we were never in the same room at the same table at the same time to discuss priorities and performance indicators.”5 On the other hand, several respondents—mostly EZ residents—noted that the real value of the benchmarks was that they could be used to hold city officials accountable to ensure that the vision articulated in the strategic plan would be honored. As one zone resident who served on the AEZC board told us, “We’d just as soon see Atlanta send the money back to Washington as we would the city gain control over those funds and spend them on something they wanted to do that wasn’t in the strategic plan.”6 Despite these concerns, Atlanta was the first city to complete its benchmarks, which were accepted by HUD in July 1995. Having approved benchmarks, however, was not sufficient to begin the flow of EZ funds. Unlike most states, which opted to play merely a “pass through” role in the transfer of funds from Washington to the EZ communities, Georgia took its responsibilities for overseeing the EZ funds very seriously. The state was unwilling to sign off on their release until it was satisfied that Atlanta had the requisite criteria, processes, and procedures in place to manage a $100 million program. In a letter sent to Mayor Campbell shortly following Atlanta’s EZ designation, Georgia’s commissioner of the Department of Community Affairs (DCA) outlined a long list of issues that needed to be addressed before DCA would release any funds to the city (Higdon 1995). These included the implementing entity that would be designated to carry out Atlanta’s strategic plan, the city’s intent regarding the use of EZ funds for administrative purposes, designation of

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an official point of contact for dealing with the city on EZ issues, “identification and detailed description of the specific entities, mechanisms and procedures by which the City will ensure compliance with applicable laws and regulations at the City and subgrantee/contractor level for the activities funded through these grant funds,” and the means and methods by which the city would ensure financial accountability for the expenditure of EZ funds. The state communicated to the city that it would not release any funds for programmatic purposes until these terms and conditions were met to the satisfaction of the state, though it would be willing to advance the city a small portion of EZ funds to use for administrative purposes. It took nearly two years to satisfy the state’s terms and conditions. Several revisions were made to Atlanta’s strategic plan. The first took place in early 1995 and involved the use of EZ funds for administrative purposes. Although the city indicated in its plan that it would not use any EZ funds for administration, it reached an agreement with state and federal officials to use $1.7 million for administrative expenses. Subsequent revisions increased that amount to $4 million. The second change was a substantive one and amended the strategic plan to reallocate $13.2 million in EZ funds that were initially earmarked for public housing modernization to be carried out by the AHA. The AEZC’s housing committee was able to negotiate a compromise that reallocated $10 million to other housing activities, including $6 million for housing development and down payment assistance programs and $4 million that would be retained by the AHA for the establishment of a self-sufficiency center (Center for Home Ownership), managed by the AHA, that would provide comprehensive housing counseling services to promote home ownership. Atlanta made little progress in meeting the targets outlined in its original benchmarks. Major obstacles were related to disagreements regarding the roles that different stakeholders should play in EZ decision making. CEAB members, for example, firmly believed the CEAB should have veto power over funding proposals; if a proposal failed to pass the CEAB, it should be withdrawn from future consideration by the AEZC board. This, according to the CEAB members we interviewed, is what the legislation meant when it spoke of a community-driven process. Others (e.g., Mayor Campbell, AEZC staff, some board members, business leaders seeking EZ assistance) believed the CEAB’s role was only advisory and led in part to the insertion of advisory into the Community Empowerment Board’s name. These stakeholders maintained that the CEAB was but one of several sources of input on the merits of various proposed projects. In their view, a negative vote from the CEAB should not eliminate a project from subsequent funding consideration.

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One consequence of these different perceptions was a complicated—and frequently changing—proposal review process that extended the amount of time needed for the AEZC to reach a decision and, much to the chagrin of those seeking EZ assistance, injected a great deal of uncertainty into the EZ review process. Generally, when objections arose in AEZC board meetings regarding the appropriateness of a proposed project, the mayor typically sided—albeit reluctantly— with the CEAB and deferred action until subsequent board meetings. While this practice seemed to provide the CEAB members with some sense of “control” over what happened with EZ funds, it was largely a veto function that enabled the CEAB to delay or occasionally block actions the CEAB felt were inconsistent with the principles and priorities laid out in the strategic plan. As an initiator, the CEAB had little control in moving its agenda forward. This was because of the inability of the CEAB members to translate their ideas into the particulars of operational programs, and because of the unwieldy nature of CEAB meetings, which often proved challenging for such a large and diverse group of neighborhood interests to reach consensus on specific programs and activities. An additional (and perhaps the major contributing) factor in Atlanta’s implementation woes was a severe lack of administrative continuity and capacity. In the span of the first three and a half years there were four different executive directors of the AEZC and seven altogether over the life of the initiative. In August 1997, less than three years into the initiative, Mayor Campbell suspended all EZ operations and fired the AEZC’s twenty-two-person staff in response to a Georgia Department of Community Affairs (DCA 1997) audit filled with numerous charges of mismanagement; a pending federal audit (HUD 1998a) that was investigating allegations of improper use of EZ funds; and most important, the AEZC’s having run out of cash, as it had expended all the $4 million that been allocated for administrative costs. Nearly a year later, in July 1998, Joseph Reid was reappointed as EZ director and immediately turned to the Annie E. Casey Foundation for assistance in helping restart the initiative. The Casey Foundation, in partnership with the Community Foundation for Greater Atlanta, provided technical assistance and financial support to aid in that effort, and in March 1999 Casey engaged three consulting firms “to help develop a viable strategy under which the AEZ could move forward” (APCO 2000). At the time Reid took over management of the AEZC, only $26 million of the city’s $100 million in EZ funds had been converted into specific programs and activities, and of that amount only about $11 million had actually been spent. Reid and his small staff immediately focused their efforts on getting EZ activities benchmarked and approved for implementation. Although the amount of EZ funds approved by the AEZC board increased to $82 million,

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the approved activities were a sharp departure from the priorities expressed in the strategic plan. Most notably, through a series of project approvals for “corridor” projects, the EZ’s focus shifted to redevelopment. These projects included the following: • North Yards Business Park. At its February 1998 board meeting, the AEZC approved a $5 million grant for the North Yards Business Park to assist in the development of a fifty-acre mixed-use business park facility in the northwest quadrant of the zone, adjacent to the central business district. • Southside/Pryor Road. At its October 1998 board meeting, the AEZC approved $12.4 million in EZ funds to acquire, demolish, and redevelop a run-down, crime- and drug-infested shopping plaza along with an adjacent apartment complex into a mixed-use project designed to spur the revitalization of several EZ neighborhoods in the south quadrant of the zone. • Westside Village (MLK-Ashby Shopping Center). At its December 1998 board meeting, the AEZC approved $9.2 million in EZ funds for the development of vacant land in the EZ for a major mixed-use project in the west quadrant of the zone. • Butler Street/Auburn-Old Fourth Ward Neighborhood Revitalization Project. At its March 2000 board meeting, the AEZC approved $7.6 million for a comprehensive neighborhood revitalization strategy in the zone’s east quadrant. Funds would be used for a combination of economic development (renovation of an office building/business plaza, facade improvements along a major commercial thoroughfare, and human services activities). As table 6.1 shows, Atlanta’s strategic plan had emphasized Lifting Youth and Families Out of Poverty (36.3 percent) and Expanding Employment and Investment Opportunity (32.5 percent) followed by Providing Adequate Housing for All (21.2 percent). However by 2003, more than half the EZ funds approved and nearly 60 percent of the funds spent were for economic development, with funding for housing (about 25 percent of approved funds and less than 20 percent of expenditures) a distance second. Only 10 percent of the EZ funds approved by the board were for activities considered to contribute to Lifting Youth and Families Out of Poverty and these activities represented less than 7 percent of EZ funds expended. Atlanta’s EZ priorities had shifted; from a revitalization strategy with human capital development at its core surrounded by comprehensive community development, the EZ initiative had become a series of ad hoc economic development investments where the mayor used the EZ to finance major redevelopment projects.

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TABLE 6.1 Atlanta EZ funding allocations and expenditures, 1995–2003 Dollar amounts in thousands EXPANDING LIFTING EMPLOYMENT YOUTH AND SAFE AND AND FAMILIES OUT LIVABLE INVESTMENT OPPORTUNITIES COMMUNITIES OF POVERTY

PROVIDING ADEQUATE HOUSING FOR ALL

GOVERNANCE

TOTAL

Strategic Plan Budget Dollars Percent

32,480 32.5

10,000 10.0

36,320 36.3

21,200 21.2

− −

100,000 100.0

50,309 51.3

4,175 4.3

10,216 10.4

25,050 25.6

8,230 8.4

97,980 100.0

38,160 55.5 75.9

2,518 3.7 60.3

4,400 6.4 43.1

15,452 22.5 61.7

8,281 12.0 100.6

68,811 100.0 70.2

25,357 58.4 50.4

1,388 3.2 33.2

2,998 6.9 29.3

7,765 17.9 31.0

5,897 13.6 71.7

43,405 100.0 44.3

66.4

55.1

−

50.3

71.2

63.1

Board Approved* Dollars Percent DCA Approved** Dollars Percent Percent of boardapproved funds Expended** Dollars Percent Percent of boardapproved funds Percent of DCAapproved funds * As of February 2003. Source: City of Atlanta, Office of the Mayor, AEZC, Council Committee Briefing, February 2003. ** As of June 24, 2003. Source: Georgia Department of Community Affairs, Drawdown Report.

From Empowerment to Renewal The Community Renewal Tax Relief Act of 2000 authorized the designation of forty renewal communities (RC). The RC initiative shared features of the EZEC initiative that preceded it, the most important being the concept of targeting assistance to distressed communities and the mobilization of collaborative partnerships to promote job growth and economic renewal. As we noted in chapter 1, a key departure from the EZ-EC initiative was that the RC initiative did not provide any federal grant funds to designated communities. Instead, RCs were

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eligible to use a wide range of federal tax incentives, technical assistance, and related benefits. The RC application process was “streamlined and simple” compared with those used in the EZ-EC initiative (HUD 2001), requiring only that the state and local governments in a proposed RC area nominate it for designation and that the area (within a continuous boundary) be certified as an area of pervasive poverty, unemployment, and general distress. In addition, the process required that state and local governments commit to a “course of action” that provided the framework for how the governments, community and nonprofit organizations, and businesses would work together to perform at least four of the following within the RC: (1) reduce tax rates; (2) increase local services; (3) implement crime reduction strategies; (4) act to reduce or remove government requirements; (5) increase involvement in economic development activities; and (6) promote the giving, or selling at below fair market value, of surplus real property in the RC. The RC authorizing legislation, regulations, and application guide all made it clear that a local government with an empowerment zone or enterprise community designation was not precluded from applying for RC designation “as long as the RC nominated area does not contain any census tracts already included in the EZ or EC” (HUD 2001, 12). In November 2001, as the RC application deadline approached, the Atlanta City Council passed a resolution that authorized Mayor Campbell to submit an RC application. It was prepared by the city’s grants management department and in January 2002 HUD announced that Atlanta was one of forty RC designees. The city, however, lost its EZ designation because, contrary to federal rules, almost the entire EZ (twenty-one of twenty-three census tracts) was included in the RC (figure 6.1). Other EZ cities (Chicago, Detroit, and Philadelphia) also received RC designation, but all three also retained their EZ designation, since there was no overlap in the two areas. Also in January 2002, Shirley Franklin was sworn in as Atlanta’s new mayor. Before commenting on the EZ issue, Mayor Franklin sought further clarification from HUD on the RC designation and its implications for the city’s EZ, particularly the ability of the city to retain control of the approximately $53 million in unspent EZ funds. Although Atlanta was able to retain its unspent EZ funds, the transition from EZ to RC was fraught with several long and protracted struggles pertaining to representation, transparency, governance, and control. In January 2005, three years after its designation as a renewal community, the Atlanta Coordinating Responsible Authority (ACoRA) contracted with the Atlanta office of Enterprise Community Partners (formerly the Enterprise Foundation) to manage the city’s RC initiative.

FIGURE 6.1 Atlanta empowerment zone, renewal community, and linkage neighborhoods

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Integrated Strategic Plan One condition Atlanta had to meet to retain the use of its unspent EZ funds was to ensure that those funds would continue to be used for purposes that were consistent with the original federal statutory requirements governing the EZ initiative. In addition, because the amount of unspent EZ funds was so large and a considerable amount of time had lapsed since many of the EZ-funded projects were originally approved, the federal government required the city to develop an “integrated” strategic plan before making any decisions on the use of remaining funds. The city was also required to obtain significant input from residents of the original EZ in developing their integrated strategic plan. Nine priorities clearly emerged from the citizen engagement process and all of them linked back to the original four strategies included in Atlanta’s EZ strategic plan. The highest-scoring priority was “provide for business development including low interest loans for existing small businesses, a revolving loan program, grants, startup capital, incubator space, etc.,” which received ninety-three points. The second-highest-ranking priority, at sixty-five points, concerned increased funding for EZ-supported housing rehabilitation programs, followed by activities that scored in the range of twenty-five to thirtyfour points. The reallocation of remaining EZ funds included in the city’s integrated strategic plan (table 6.2) followed closely the citizen preferences expressed during the community input process with one notable exception. Although assistance for business development, primarily through increasing access to capital for existing and new businesses in the EZ, was the highest priority raised during the community input process, less than 10 percent of the remaining EZ funds were earmarked for those types of activities. The ACoRA, on the other hand, opted for a different approach for promoting economic development as almost half (46.8 percent) of the remaining EZ funds were allocated to support comprehensive, corridor-oriented neighborhood revitalization.

RC Implementation The ACoRA staff directed its efforts to aggressively marketing the tax incentives and increasing business awareness of the incentives and assistance available through the RC and EZ, as well as other state and local programs. The RC’s Integrated Strategic Plan (ISP) identified twenty-five activities that would be supported with the remaining EZ funds, including activities in each of the four strategic plan themes. Most of these activities were relatively small programs (typically in the thirty-thousand to seventy-thousand-dollar range) that were to be carried out by over three dozen community-based and nonprofit organizations, and as a

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TABLE 6.2 Atlanta renewal community EZ allocations and expenditures, 2005–2010 Dollar amounts in thousands PROPOSED ALLOCATIONS

PROGRAM AREA

ALLOCATION

PERCENT

ACTUAL EXPENDITURES

EXPENDITURES

PERCENT

PERCENT OF ALLOCATION EXPENDED

Promote Employment and Commercial Investment Opportunities

4,029

7.6

2,262

8.1

56.1

Promote Safe and Livable Communities

2,037

3.9

1,562

5.6

76.7

Increase Opportunities for Residents to Achieve Self-Sufficiency

3,168

6.0

2,503

8.9

79.0

Promote Adequate, Affordable Housing for All

12,829

24.3

2,813

10.0

21.9

Support Comprehensive, CorridorOriented Neighborhood Revitalization

24,732

46.8

12,517

44.7

50.6

Total Programmatic Allocation

46,795

88.6

21,657

77.3

46.3

6,039

11.4

6,366

22.7

105.4

52,834

100.0

28,023

100.0

53.0

Create an Efficient, Programmatic, and Fiscally Compliant Governance Structure Total All Allocated Title XX Funds

Sources: The Atlanta Renewal Commmunity CoRA Inc., Integrated Strategic Plan, revised August 3, 2005, and Georgia Department of Community Affairs, Office of Community Development, EZ Atlanta Project List, January 13, 2011.

result, generated a large administrative burden in terms of drafting and executing contracts and subgrantee agreements. More important, because the contracts with these organizations were written as reimbursement contracts, as opposed to grants, many of the recipient organizations did not have the financial capacity to undertake the work and then seek reimbursement. Those that were able to begin their programs often experienced significant delays in obtaining reimbursement, which dampened their enthusiasm for undertaking additional work. This problem was most pronounced for housing activities, which as table 6.2 shows, were only able to spend about 22 percent of the EZ funds awarded under the ISP.

Revitalization Outcomes In chapter 5 the effects of the EZ initiative on revitalization outcomes for each of the original EZ cities were analyzed. That analysis showed that Atlanta’s initiative

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fared worse than the efforts in the five other EZ cities. This section presents a microlevel view of revitalization outcomes in Atlanta’s EZ neighborhoods. Three questions are of particular interest: How uniform were the EZ effects (or lack of effects) across the zone area? Is there are any link between intervention and outcome? And were there any plausible alternative interventions that could also account for the outcomes observed? Figure 6.2 presents a theme map for census tracts in Atlanta’s EZ that illustrates the number of outcomes in which the EZ census tracts fared better than their matched-pair comparison tracts. Additional map overlays include selected EZ and RC investments and public housing revitalizations. Overall, almost half of Atlanta’s EZ census tracts (nine of twenty-two) fared worse than their matched-pair tract on four or more of the five revitalization outcome measures; seven EZ tracts (32 percent) fared better than their control tracts on two of the outcome measures, three EZ tracts (14 percent) fared better on three of the outcome indicators, and three EZ tracts (14 percent) did better on four outcome indicators.7 Closer inspection of figure 6.2 shows that one of the EZ tracts that fared best was located in the southernmost portion of the EZ, an area where significant EZ resources were invested in the Southside-Pryor Road corridor project ($12.4 million budgeted, $9.2 million spent). About $1.2 million in EZ funds were awarded in 1998 to support the acquisition and demolition of the Joyland Shopping Center, an underused and drug-infested commercial center (Hairston 1999). The investment was a catalytic project that spawned several additional projects along the Pryor Road corridor, including several new residential developments supported with city and federal housing funds and various public improvements. An additional $8.3 million in EZ funds were spent through the city’s EZ-RC integrated strategic plan; major activities included $1.2 million in support of the Atlanta Housing Authority’s HOPE VI revitalization (Villages at Carver), $2.2 million for the construction of a new YMCA (Villages at Carver), $2.0 million in support of redevelopment and expansion of Chosewood Park, and $1.5 million in sidewalk and street improvements. Atlanta’s other EZ-funded corridor projects had much less impact on their surrounding neighborhoods. Despite a $5 million grant of EZ funds to the developers of the North Yards Business Park to assist in the creation of a fifty-acre mixed-use development in the northwest quadrant of the EZ, the project went bankrupt and the land remains a vacant lot today. Similarly, the Butler-AuburnOld Fourth Ward neighborhood revitalization initiative in the zone’s eastern quadrant was very slow in launching and only a modest amount of funds had been expended by the end of the EZ effort. The Historic Westside Village project ($9.2 million awarded, $6.5 million spent) was initially envisioned as a $140 mixed-use development including townhomes, offices, shops, and restaurants to

75

85

1 4

7

3

2

Downtown 2 8 3

9

5

20

20 6

5 1

75

4

10

85

Legend

ID Corridor Projects

Census tracts Empowerment Zone Expressways Corridor Projects EZ Housing Programs EZ Business Assistance RC CRDs HOPE VI

No. of Outcomes

0

0 1 to 2 3 4 to 5 No matched pair .5 1 Miles

1.5

1 2 3 4 5

North Yards Business Park Historic Westside Village Butler-Auburn - Old Fourth Ward Southside - Pryor Road McDaniel Street - NPU V

ID HOPE VI/Mixed-Income Projects 1 2 3 4 5 6 7 8 9 10

Ashley Terrace at West End Auburn Pointe Capitol Gateway Centennial Place Collegetown at West End Columbia Mechanicsville Magnolia Park University Homes Village at Castleberry Hill Villages at Carver

FIGURE 6.2 Revitalization outcomes by EZ census tracts. Number of revitalization outcomes in which EZ tracts fared better than their matched-pair control tract.

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revitalize the city’s struggling neighborhoods adjacent to the Atlanta University Center (Clark University, Morehouse College, Morehouse School of Medicine, and Spelman College). However, project mismanagement and expectations that far outpaced what the market would support yielded only a small commercial shopping plaza. The major grocery chain that served as the anchor tenant left after a few years “because grand promises of development never came to fruition” (Suggs and Simon 2009).8 The fifth corridor project, McDaniel Street, added as part of the EZ-RC integrated strategic plan, spent about three hundred thousand dollars in public works improvements and another two hundred thousand dollars divided up among seven nonprofit agencies for programs and services. Although significant investments were made in Neighborhood Planning Unit V to support school reform and neighborhood revitalization efforts led by the Annenberg, Enterprise, and Casey Foundations, as well as a HOPE VI revitalization, these investments for the most part predated the EZ-RC initiative or had little connection to EZ activities. The two other census tracts with strong outcomes saw modest EZ-RC investment, primarily through the EZ’s mortgage assistance problem. The homes purchased (clustered in the Reynoldstown and Summerhill neighborhoods) were generally newly constructed homes developed without EZ assistance. Both census tracts also included neighborhoods (Grant Park, Cabbagetown) that began to gentrify in the late 1990s. Cabbagetown was also the site of the renovation of the Fulton Cotton Bag mill into loft housing, which was the recipient of a $1 million EZ business loan in 1996. As one AEZC board member commented, “There is a lot of interesting activity underway in the Empowerment Zone but it is largely happening by accident, that is, the AEZC has had nothing to do with it.”9

Market Strategies for Urban Revitalization The EZ tax incentives were used by the AEZC primarily as enticements for businesses considering relocation into the zone. Although Atlanta’s strategic plan contemplated both extensive investment in job training programs as well as using EZ funds to market the tax incentives, neither set of program activities gained traction during the implementation phase, which made it difficult for Atlanta economic development officials to package the two together as part of a comprehensive business development strategy. The EZ-EC national interim outcomes assessment (Hebert et al. 2001), for example, found that awareness and use of the tax incentives in Atlanta was well below the six-site EZ average: less than half (42 percent) of the Atlanta businesses

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surveyed were aware of the EZ Wage Tax Credit and less than 10 percent of surveyed businesses had used the credit; less than one-third of businesses knew of the Work Opportunity Tax Credit (31 percent, and only 5 percent had used it) and only about one in five businesses were aware of the Section 179 Expensing provisions (22 percent, 1 percent use). Unlike previous efforts by the AEZC, which had included benchmarks for marketing the tax provisions but did not follow through with this activity in any meaningful way, ACoRA made a concerted effort to promote the tax incentives available through the RC initiative. Although statistics on the actual use of the tax incentives in the EZ cities were not available for a number of reasons, data on the use of tax incentives during the RC years suggest that Atlanta’s efforts to promote the tax incentives did improve. About 23 percent of the businesses that responded to a mail survey ACoRA (2009, 9–10) administered in 2006 and 2007 indicated they had used one or more of the tax incentives available through the RC initiative. ACoRA was also very successful in promoting use of the Commercial Revitalization Deduction (CRD), the major RC tax incentive. Atlanta’s RC used nearly their full allotment ($12 million per year) of CRDs between 2004 and 2009, awarding nearly $62 million for 44 projects that yielded nearly $90 million in total investment. Almost half the CRD projects were located inside the boundaries of Atlanta’s EZ, and several of those projects were clustered in or near three of the corridor projects—Westside Village, Butler-Auburn-Old Fourth Ward, and McDaniel Street. ACoRA (2009, 12) estimates that approximately four hundred jobs were created as a result of the CRD-assisted projects. Interviews with state and local officials identified two barriers to greater use of the EZ tax incentives. The first was marketing and awareness. As we noted above, Atlanta’s efforts to market the tax incentives to the business community were very slow in getting off the ground, and though some businesses had a general awareness of the incentives through coverage of the EZ-EC initiative in the press or in specialized industry publications, most businesses did not know how to apply for the incentives, particularly the credit for wages and training paid to zone employees. A second barrier concerned the attractiveness of the incentives themselves. Several respondents we interviewed during our field research pointed out that the tax incentives were not significant enough to overcome the greater costs associated with doing business from inside the EZ. A similar view was expressed in the survey of business establishments in the Atlanta EZ included in the EZ-EC interim outcomes report, where nearly half the businesses surveyed (45 percent) cited crime and safety as one of the worst things about doing business in the EZ and 16 percent cited run-down property and poor appearance of the area as a negative aspect of the zone (Hebert et al. 2001, 3–15). Both these percentages for Atlanta EZ businesses were higher than the six-city EZ average.

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Conclusion Tangible benefits and outcomes aside, the EZ initiative was also about process and partnerships, and Atlanta’s strategic plan spoke boldly here: Consistent with the directives, intentions and spirit of the Clinton Administration’s Empowerment Zone guidelines, the City of Atlanta, Fulton County, the State of Georgia, many corporations, local universities, the Atlanta Project, the United Way and a host of agencies from the public and private sector found new ways to empower the people of the Zone neighborhoods through this process. Together, these entities and the people they serve created new channels of communication and cooperation, shaping in essence, a new model of partnership and self-determination in the heart of Atlanta. The impact of the Zone process has created a core of inspired innercity residents—working with a new network of leaders from their own ranks—more effectively partnered than ever with the agencies chartered to provide them services. (City of Atlanta 1994, introduction, vi) The reality, however, was quite different from the rhetoric. The county and state governments were noticeably absent from any meaningful engagement in Atlanta’s EZ initiative. Major corporations and business associations were also rare partners. Local universities on several occasions offered to assist, particularly in regard to program design and evaluation, but were rebuffed on each approach. TAP ceased operation in the early years of the EZ initiative and even when it was operational there was not much effort on the part of EZ officials to forge a partnership with TAP, financial or otherwise. The president of the United Way served on the original AEZC board but left the board, frustrated by bickering and the inability of the AEZC to get things done. The AHA was in the midst of a major public housing transformation during the same time period that the EZ initiative was active, yielding in some cases spectacular—albeit controversial—results regarding the emergence of mixed-income communities and poverty deconcentration (AHA 2011). Yet, despite the fact that the AHA’s executive director served on the AEZC board throughout the EZ effort, the AHA found it difficult to work collaboratively with the EZ around its public housing transformation activities, both in physical renewal (using EZ resources to support infrastructure and economic development activities in HOPE VI project areas) and human renewal (using EZ resources for job training and related human services to support the transition of public housing residents to self-sufficiency). Several CDCs and major nonprofit organizations were engaged in revitalization initiatives but most of those efforts did not receive any direct assistance or support from the EZ, and

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when assistance was provided, these agencies experienced long delays in obtaining reimbursement for their services. Sad as it is, the vast majority of the city’s private and nonprofit entities simply wrote off the EZ initiative as something to avoid. More than one stakeholder observed that the price to pay for pursuing financial assistance from the EZ was simply not worth the effort. Our analysis found little evidence that the EZ initiative dramatically changed the nature and extent of collaboration among government agencies, the private and nonprofit sectors, and zone residents and community-based organizations. In short, the EZ initiative did not become the focal point around which other revitalization efforts in Atlanta were centered, nor did it leave any meaningful legacy. To most stakeholders in Atlanta, the EZ initiative was just another federal program. This image was held not only by stakeholders outside city government but also by officials at the highest level of Atlanta government. As one AEZC board member noted, “About 80 percent of what we have done to date has been focused on city government and the Community Empowerment Board. We need to make a greater effort to reach out to our other partners, particularly the business community.”10 While revitalization activities in some of Atlanta’s distressed neighborhoods did show signs of improvement during the RC era, the city faced insurmountable obstacles in translating its unspent EZ dollars into tangible activities. As one RC official summed up, “Once we got the contract it took us a year to build the infrastructure, which essentially left us with three years [out of a seven-year authorization] to implement the program.”11 In the end, Atlanta simply ran out of timeouts. Game over. Opportunity lost. Atlanta’s EZ/RC outcomes (or lack thereof) were not random or idiosyncratic or tied to the unique peculiarities and lust for power of Mayor Campbell. Rather, they reflect the influence of the key determinants of successful revitalization initiatives noted in our introductory chapter—local governance processes and arrangements (including community participation), local capacity, and program integrity. In Atlanta, not only did all those factors play an important role in determining EZ outcomes; they also were intricately intertwined with one another and generated an interactive effect that proved to be an even more powerful force that tempered revitalization outcomes.

Governance Structure and Processes To say that the governance structure and processes Atlanta adopted for its EZ (and later RC) initiative were complex is a monumental understatement. The participants themselves had a difficult time of figuring out roles, responsibilities, and processes, let alone how onerous it was for the businesses, nonprofits, and

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community-based organizations seeking assistance. There were multiple levels of review, often with no clear understanding of the sequence of approvals or the necessity of review (and approval) by various actors. These decision points involved both public and community institutions and ranged from individual neighborhoods to the federal government. They included neighborhood (NPUs, Community Empowerment Advisory Board), AEZC (subcommittees and full board, AEZC staff), city (multiple city agencies, notably planning and development and finance), state (Department of Community Affairs), and federal (HUD and HHS) entities. The conflict, delay, and frequent inaction that resulted should surprise no one. Indeed, to paraphrase Jeffrey Pressman and Aaron Wildavsky’s (1984) pathbreaking study of the implementation efforts of the EDA’s economic development programs in Oakland, it was amazing that the EZ effort in Atlanta worked at all.

Local Capacity One local respondent observed in frustration, “There was a lack of capacity at every level—community, city, state, feds.”12 The lack of capacity was not unique to the EZ effort—it had plagued previous urban revitalization efforts in Atlanta and was certainly present in related policy domains such as job training and workforce development—nor was it something that could easily be remedied through training and capacity-building workshops, especially given that, when such workshops were held, Atlanta EZ officials generally chose not to participate. First, the city had a relatively weak community development industry compared with those of comparably sized cities. The Urban Institute (Walker and Weinheimer 1998) issued a series of reports in the early 1990s that benchmarked the community development systems in the twenty-one cities that participated in the National Community Development Initiative. At that time, Atlanta had very few CDCs and those it did have were relatively new, inexperienced, and their work was predominantly confined to housing. On most dimensions— production, support, collaboration—Atlanta’s community development system ranked near the lower end of the distribution of NCDI cities. The lack of capacity in the community-based and nonprofit sector was not limited to housing and community development. It was especially weak in the area of job training, workforce development, and human services delivery. Indeed, one could argue that one of the reasons why Atlanta’s EZ-funded activities in the area of Lifting Youth and Families Out of Poverty, particularly the employment and training programs and the concept of the multipurpose one-stop human services centers, struggled to get under way was the dearth of nonprofit agencies capable of playing a leadership role in translating the ideas in the strategic plan

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into operational programs and, most important, with the capacity to administer those programs at the scale envisioned in the strategic plan. Second, city government capacity was also weak. Unlike many cities where the tools of revitalization were added to city agencies over time as they evolved, expanding their portfolio of strategies and activities and building a core of experienced staff knowledgeable about new tools and practices (Clarke and Gaile 1998), Atlanta failed to build a corps of experienced professionals for two reasons. First, agencies came and went, generally with each new initiative, making it difficult to build expertise, institutional memory, and develop effective working relationships. Second, much of the planning and administrative work involved in revitalizing urban neighborhoods in Atlanta was given to consultants and contractors, again making it difficult to develop native capacity. The EZ and RC initiatives illustrate this pattern. The AEZC was a brand-new agency, initially staffed by consultants. Following the hiring of a permanent executive director, staff size expanded rapidly though their tenure was short-lived as nearly the entire staff was terminated approximately two years into the initiative because the AEZC had run out of cash, depleting the EZ administrative funds that had been earmarked for administration over the ten-year project period. Third, the staff that was built up at the AEZC (and then had to be dismissed) was not a good fit for the task at hand. Rather than build an organizational unit that could function as an intermediary institution facilitating the implementation of Atlanta’s strategic plan, one with the skill sets and competencies to excel at building partnerships and collaborations, the AEZC instead tried to become a development agency, with its own in-house capacity for making deals and implementing economic development projects. Despite those intentions, the AEZC struggled to get projects up and running. Revolving loan funds for business assistance and housing rehabilitation were by no means rocket science in community development. Most cities had been engaged in such activities for twenty years or more, dating back to the early days of the CDBG program, or earlier. Yet the AEZC struggled in its effort to make these programs operational and eventually ended up transferring responsibility for the administration of the housing programs to the city’s bureau of housing. In the case of the RC initiative, the AEZC was dissolved and replaced by ACoRA, which consisted of a seven-person governing board, but one with no staff. Instead, the city opted to contract with a third-party organization. Mayor Franklin’s initial choice—the Atlanta Neighborhood Development Partnership— set off a storm of controversy and after nearly three years of discussions and negotiations the city eventually extended the contract to the Atlanta office of the Enterprise Foundation. At the expiration of the Renewal Community initiative, the Enterprise RC team was let go and moved on to seek other opportunities.

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At the state level, the city and the Georgia Department of Community Affairs (DCA) got off to a very rocky start, largely because of differing perceptions of the state’s role, and were never able to move beyond that. The city viewed DCA as a pass-through and DCA took its role as auditor and guardian of the EZ funds very seriously. When DCA tried to provide technical assistance or play a more substantive role, the city generally ignored its offers. Other state agencies—and there were several that could have played an important substantive role in moving Atlanta’s strategic plan forward, agencies such as Labor, Human Services, Education, and Adult and Technical Education—were accustomed to working at the county level and generally had no idea how to work at the city or neighborhood level. The AEZC, on the other hand, made little effort to reach out to those agencies. Finally, at the federal level there was frequently ambiguity on the roles and relationships between HUD, which was charged with administering the urban portion of the EZ-EC initiative, and Health and Human Services (HHS), which was the federal agency that provided the EZ funds through its Social Services Block Grant program. Seeking guidance or clearance from the feds frequently meant having to obtain opinions from both departments, and where there were differences of opinion between the two, allowing additional time to find consensus. This proved especially problematic near the end of Atlanta’s Renewal Community initiative when, as one Enterprise Foundation staffer noted, “The Feds forgot how they were doing things and would not give an answer. As EZ and RC moved to the close-out phase and federal staff were reassigned to other responsibilities, the feds were no longer answering offline questions, which meant we lost our informal lines of communication. It would frequently take as long as ten months or more to get decisions approved.”13 The staffer added that one example concerned the ACoRA board’s authority to reprogram funds: “As the time crunch for spending the remaining EZ funds hit, reprogramming became essential. The state was uncertain on their ability to approve reprogramming and asked HHS for guidance. It took eight months to get an answer, and by then it was too late for many activities to get the funds committed and spent.”14

Program Integrity Throughout the chapter, we noted several instances where local political culture strongly influenced the framing of governance institutions and processes. A number of examples were rooted in the deep distrust citizens held toward city government and other neighborhood-oriented initiatives such as TAP. The style of politics this culture sustained was largely one Stone (1989, 229) classified as “power over” as opposed to “power to.” However, because of the fragmented

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nature of power in Atlanta and the complex governing arrangements and processes put in place for the EZ initiative, the CEAB representatives were occasionally able to gather the power to block items from moving forward (or at least slow them down), but rarely were they able to amass the power to get things done. The cultural dynamic was not confined to the lack of trust that residents held for their city officials. There was also considerable distrust held by state officials toward the city and by the city toward community-based organizations. These culture clashes between city and state officials were very similar in nature and outcome to what Jeffrey Pressman (1975) identified in his analysis of federalcity relations in Oakland during the heyday of federal categorical programs. Pressman observed that these differing perceptions were institutionalized in the rules, regulations, and restrictions that were structured into federal grant-in-aid programs. So, too, was the case in Atlanta with the EZ effort, as illustrated by the terms and conditions the DCA required the city to meet before agreeing to release any EZ funds to the city for programmatic use. State and federal oversight of the Atlanta EZ effort, on the other hand, only seemed to provide evidence of a pervasive culture of city officials squandering federal resources and at times using federal funds for personal gain. For example, a monitoring visit by the Georgia Department of Community Affairs (DCA 1997) uncovered numerous findings, including problems relating to travel and entertainment expenses, excessive use of cellular phones, and concerns about conflict of interest in the awarding of EZ funds for certain activities. An audit by HUD’s inspector general (1998a, 5–6) found that more than $1.5 million in EZ funds had been improperly used. A subsequent HUD audit on the Historic Westside Village corridor revitalization (HUD 2003), one of the city’s major EZ initiatives, found the city “did not adequately manage and control the project . . . allow[ing] significant violations of HUD requirements to occur without early detection or prompt corrective action.” As a result of the audit, the city was required to repay $1.5 million in HUD Section 108 and Economic Development Initiative funds associated with the project to compensate for ineligible costs or undocumented expenditures. State and federal audits of Atlanta’s job training programs found a number of instances of impropriety and mismanagement, including charges that two job training agency workers were campaigning for Mayor Campbell’s reelection on city time and that contracts were steered to campaign contributors (Hairston 1998; Teegardin 1998). In the end, these practices were illustrative of the corruption charges brought against the Campbell administration. The city’s chief operating officer (Larry Wallace), deputy chief operating officer and former AEZC executive director (Joseph Reid), and Mayor Bill Campbell himself all were indicted on various corruption charges, convicted, and served prison terms.15 Although Atlanta’s EZ

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initiative was not directly implicated in these charges, all three men were intimately involved with the EZ effort which was implemented under the dark cloud of questionable ethics at the highest levels of the Campbell administration. Despite the struggles Atlanta faced in moving its revitalization strategy from planning to action, conditions in a few EZ neighborhoods did improve. Although these improvements were more often the exception than the rule, they do suggest that in those instances where the strategic concepts undergirding the EZ approach were realized—rare as that was in Atlanta—neighborhoods were improved. South Atlanta (Southside/Pryor Road corridor project) provides the best evidence. On the other hand, the neighborhoods where EZ efforts failed to get off the ground or were weakly implemented—English Avenue/Vine City, the neighborhoods around the Atlanta University Center (Historic Westside Village), most of the NPU V neighborhoods, and the MLK Historic District—fared the worst. This evidence, in our view, strongly suggests that it was not the EZ theory that was flawed or failed, as most national evaluations have concluded, but its local application. Even in Atlanta, the city with the weakest overall EZ performance, there was evidence that distressed neighborhoods could be transformed through the application of EZ principles when all the stars were aligned. The challenge for Atlanta is how to build off those successes so they become the norm and not the exception. The biggest question for Atlanta’s political, business, and civic elites, as well as its neighborhood leaders, however, is whether the city will learn from its disappointing history of revitalization efforts—recent and distant. Will Atlanta reset by emphasizing good local governance or will it simply rewind and replay, leaving low-income communities with yet another “sobering scorecard” and diminished opportunities for a chance to try again?

Appendix: Personal Interviews * Subject interviewed on multiple occasions. Appelbaum, Alec E., manager, fund development and governmental affairs, Atlanta Neighborhood Development Partnership* Axam, Clara, the Enterprise Foundation, Atlanta office Beasely, Joe, English Avenue Development Corporation* Boazman, Derrick, councilmember, Atlanta City Council Bond, Michael, councilmember, Atlanta City Council* Bray, John, Atlanta Urban League* Brown, Jerry, chair, Neighborhood Planning Unit T Brown, Louis, president, Winter Group of Companies*

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Brown, Sheila, councilmember, Atlanta City Council* Burgess, Tim, director, State of Georgia Office of Planning and Budgeting; AEZC board member* Collins, Sharon, chair, Neighborhood Planning Unit V Costa, Fernando, director, City of Atlanta Bureau of Planning* Cowser, Marie, EZ resident, AEZC board member, CEAB member* Daniel, Sallie Adams, Georgia community relations manager, NationsBank; AEZC board member * Danner, Ernest, CEAB member Davis, Kathy, EZ resident, AEZC board member, CEAB member Dean, Douglas; Summerhill Neighborhood Incorporated* DeMent, Fred, resource coordinator, The Atlanta Project* Diamond, Ron, interim director, AEZC* Dodd, Herbert, economic development (job training) specialist, AEZC* Dorsey, Hattie, president and chief executive officer, Atlanta Neighborhood Development Partnership* Dorsey, Joyce, president, Fulton/Atlanta Community Action Authority Eaton, Reka, executive director, Atlanta Center for Employment and Training, Mayor’s Office of Citizen Employment and Training* Feltus, Mickey, director, Safe and Livable Communities, AEZC* German, Michael; director, City of Atlanta Office of Grants Development* Gibson, Davey; director, Region IV, U.S. Department of Housing and Urban Development* Glover, Renee, president and chief executive officer, Atlanta Housing Authority; AEZC board member* Guera, Jeannie, executive director, Atlanta Center for Homeownership* Harper, Peggy, CEAB member* Hart, Susan, program manager, EZ-EC, Georgia Department of Community Affairs* Hawthorne, Greg, executive director, Vine City Housing Ministry* Hayley, Peter, Atlanta Development Authority Henderson, Valena, EZ resident, AEZC board member, CEAB member* Higdon, Jim, commissioner, Georgia Department of Community Affairs* Hillsman, Otis, executive director, Support to Employment Program (STEP)* Holliday, Lori, executive director, Atlanta One-Stop Capital Shop* Hughley, Young, Reynoldstown Revitalization Corporation, CEAB member* Hutchins, Crystal, executive director, Community Empowerment Advisory Board* Jackson, Wallace, EZ resident; vice chair, AEZC board; chair, CEAB*

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Jenkins, Elbert, acting executive director, AEZC Johnson, Matt, Associated Training and Education Corporation Johnson, Yolanda, EZ/EC consultant, Georgia Department of Community Affairs* Jones, Brenda, interim president, Atlanta Area Technical School Jordan, Linda, mayor’s designee as AEZC board chair Kirkland, Linda, executive director, English Avenue Community Development Corporation* Kuniansky, Raymond, chief operating officer, Atlanta Neighborhood Development Partnership* Ledbetter, James; commissioner, Georgia Department of Human Resources* Lientz, James, president, NationsBank; AEZC board member* Mahdi, Sulaiman; UJAMAA Urban Village, CEAB member* Malcolm, Lonnie, EZ resident, AEZC board member, CEAB member* Mangham, Gina, president, Atlanta Housing Association of Neighborhoodbased Developers* Marietta, Chuck, EZ resident, AEZC board member, CEAB member* Matthews, Chantal, director, Office of Financial Assistance, Georgia Department of Community Affairs* McFarland, William, Peoplestown Revitalization Corporation; director, ACoRA* Melton, Keith, vice president, Atlanta Economic Development Corporation Mensah, Thomas, president, Georgia Manufacturing Association Mitchell, Davetta Johnson, councilmember, Atlanta City Council Neeley, Major D. M., Atlanta Police Department Nyarko, Nana, CEAB member O’Connell, Mark, president, United Way of Metropolitan Atlanta; AEZC board member* Palmer, Jim, executive director, Opportunities Industrialization Center* Pinado, Alan, interim executive director, University Community Development Corporation* Porter, Mary, EZ resident, AEZC board member, CEAB member* Reid, Joseph, empowerment zone coordinator (March 1994–January 1995); acting executive director, AEZC (February 1995–December 1995); special assistant to the mayor (January 1996–June 1998); executive director, AEZC (July 1998–March 2000)* Regus, Robert, county manager, Fulton County; AEZC board member* Richardson, Charisse, executive director, AEZC Richardson, Charles, SUMMECH Community Development Corporation* Robinson, Dawn, executive director, Community Affairs Ministering Program Incorporated*

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Rutledge, Cecilia, director, Atlanta Center for Homeownership Smith, Jane, executive director, The Atlanta Project; AEZC board member* Solomon, Melvin, director, One Stop Capital Shop Springer, William, operations manager, Atlanta Center for Employment and Training Stoney, Winnie, director, housing and operations, AEZC* Starnes, Debi, councilmember, Atlanta City Council; AEZC board member* Taylor, Linda, assistant to the director, AEZC* Trammel, Ella Heard, CEAB member Van Dyck, Fred, Georgia Department of Community Affairs* White, Bob, executive director, Westside Public Development Authority* White, Paul, executive director, Atlanta Empowerment Zone Corporation* Whitfield, Al, development officer, special projects, Atlanta Empowerment Zone Corporation* Winslow, Cleta, councilmember, Atlanta City Council* Yamini, Hakim, EZ resident; chair, CEAB; vice chair, AEZC board*

7 BALTIMORE’S EMPOWERMENT ZONE

Baltimore made a spectacle of delivering its EZ application. Mayor Kurt Schmoke traveled to HUD headquarters with busloads of supporters, featuring a marching band with baton twirlers and dancers (Gamerman 1994). The band played and the crowd cheered as Schmoke delivered Baltimore’s application to HUD secretary Henry Cisneros. Less striking, though perhaps more important, was the presence of members of Maryland’s congressional delegation, including Senator Barbara Mikulski (who chaired the subcommittee that had oversight of HUD’s budget) and Representative Kweisi Mfume (an influential member of the Congressional Black Caucus). Despite the hoopla, Baltimore was regarded by many as a long shot for EZ designation, being one of several cities competing furiously for one or two “uncommitted” slots.1 Intensive lobbying by Mayor Schmoke and the congressional delegation paid off when Baltimore was designated as one of the original urban EZs. The public explanation for the decision cited Baltimore’s history of innovation and successful use of federal grants for urban revitalization.2 However, it was also true that Maryland’s congressional delegation was well-positioned and actively engaged in the selection process and Schmoke had been an early, ardent supporter of Bill Clinton’s presidential bid (Fletcher 1994). In this chapter we present our case analysis of Baltimore’s EZ. Although similarities between Baltimore’s and Atlanta’s strategic plans were evident (such as creating urban villages that would foster an integrated approach to neighborhood revitalization, a comprehensive neighborhood-centered human services 164

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system, and an emphasis on business development to create economic opportunities for zone residents), the two cities took dramatically different paths in translating their visions into tangible programs and activities, and they ended up at opposite ends of the EZ performance continuum. The sharpest contrast between Baltimore and Atlanta was the quality of local governance. Baltimore developed an effective set of governance institutions and processes, reflecting a strong capacity to act—both in developing support for a revitalization agenda and in translating those ideas into action at the neighborhood level. Baltimore’s EZ initiative was exemplary for its use of collaborative, cross-sector partnerships to create and sustain capacity by engaging the city’s political, business, civic, and nonprofit elites. Baltimore also invested in neighborhood capacity to ensure that plans were executed in a fashion that was responsive to neighborhood concerns. By contrast, Atlanta had weak leadership and institutions, and it never achieved the breadth and depth of engagement of key stakeholders found in Baltimore.

Governance Structure and Process Unlike many cities where the strategic planning process generated drama and tension, the planning phase in Baltimore took place without major controversies. Strategic planning was initiated by Mayor Schmoke and involved a broad group of stakeholders (including the business community, local foundations, government agencies, nonprofits, and community-based organizations). An eighty-member advisory council was formed to guide the process and organized itself into a series of committees and working groups to solicit community input. Overall, more than five hundred people contributed ideas. Staff support during the planning phase was provided by the Baltimore Development Corporation, the city’s redevelopment agency. Baltimore’s EZ initiative was implemented outside city government in a set of quasi-public corporations. This decision reflects two concerns that shaped local EZ governance: how to engage the city’s business, nonprofit, and civic elites and how to activate and include representatives of zone neighborhoods. The governance process balanced these concerns by creating Empower Baltimore Management Corporation (EBMC), with a board and committee structure that was dominated by business and civic elites, and six village centers (VCs), neighborhood-based organizations that were to serve as vehicles for community capacity building and citizen participation. EBMC was governed by a thirty-member board that included nine community representatives, two representatives of the mayor, two appointees of the governor,

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and seventeen members appointed by the mayor. The board’s final composition included fewer zone residents than was proposed in the strategic plan and some EZ residents claimed that they had to fight even for minority representation on the board.3 To encourage community participation, EBMC created an advisory council. Half of the fifty-member council was elected from the VCs. The other half was appointed by the mayor and included representatives of foundations, city agencies, state agencies, businesses, and citizen advocacy groups. EBMC was scheduled to go out of business after five years (reflecting Mayor Schmoke’s view of the EZ program as a five-year effort). However, the termination date was consistently delayed and EBMC oversaw Baltimore’s program throughout its tenyear life and has been continued in a slimmed-down form since the program’s official completion in December 2004. The use of quasi-public corporations to implement local initiatives, especially economic development efforts, is a well-established feature of local politics in Baltimore (Stoker 1987). There is a widespread belief among Baltimore’s civic and economic elites that economic development programs are best managed in institutions that avoid city “politics” (a reference to the well-established patronage traditions within the city that are now intertwined with issues relating to race). In designing the governance process, political leaders were concerned about the credibility the zone would have with business, foundation, and nonprofit elites because their participation was seen as vital to the program’s success. The dominant thinking in Baltimore at the time was that a strategy that targeted resources from different sources would be needed to effectively revitalize the city’s distressed neighborhoods. Sandtown/Winchester, where the city was working with foundations to implement a comprehensive community development strategy, was a positive model reflecting this belief (Miller and Burns 2006). To gain the elite cooperation, zone governance was insulated from city politics through the creation of a quasi-public corporation with limited participation by elected officials (including “arm’s-length” participation by the mayor). With their strong desire to avoid city politics satisfied, nonprofit, business, and foundation elites became key participants in zone governance.4 EBMC sponsored the creation of six community-based VCs: East Harbor, Harlem Park, Historic East Baltimore Community Action Coalition (HEBCAC), Poppleton, Self-Motivated Community People, and Washington Village– Pigtown. VCs planned and implemented zone initiatives in social services, public safety, land use, and job training. In addition, each VC had a representative on EBMC’s board. EBMC solicited applications for VCs and provided technical assistance to those who expressed interest. Only one VC was formed by an existing community-based organization (HEBCAC).

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Once the applications were accepted, VCs were chartered by EBMC (each was a separate, nonprofit corporation governed by its own board composed of community-level stakeholders). The decision to require this composition of VC governing boards pushed the problems of resolving community conflict down to the VC level and, in some cases, this delayed VC development. When conflicts had been resolved and EBMC was satisfied that VC administrative processes were sufficiently developed, an administrative agreement was signed. These agreements were annually renewable contracts that specified the geographic coverage, budget, governance process, and service plans for each VC. With administrative agreements in place, VCs became eligible for financial support from EBMC. EBMC further shaped the VCs with additional requirements and processes. First, the VCs were designed to reflect the zone’s geography. Second, by imposing a common organizational structure and mission, the VCs were effectively subordinated to EBMC. That was not the vision of some key contributors to Baltimore’s strategic plan who contend that the original vision of VCs was lost during the implementation process. Michael Seipp, the primary author of Baltimore’s strategic plan, conceived of VCs as vehicles for advancing existing community-based organizations and specific communities of interest. For example, a group of business leaders could band together to organize a VC to promote their interests in local infrastructure improvements and business service initiatives. Elsewhere, groups of residents could band together to address specific local problems, such as crime or enhancing the quality of neighborhood schools. Other residents could organize to improve housing. In addition, Seipp’s vision implied that the items in the strategic plan were a list of options for each VC to consider, not a list of required programs that would be re-created in each local community.5 Although the VCs did have some latitude to influence program design by emphasizing selected preapproved components from EBMC’s lists, the effect of these requirements was to homogenize the VCs and make them serve the primary function as conduits for the implementation of EBMC programs to serve zone residents. Initially, Mayor Schmoke was skeptical about VCs.6 After he left office, Schmoke reflected on the decision and commented, “If HUD had given me $100 million, I would have taken it, but you never would have seen a village center.” His concern was that the VCs would create a balkanized politics that would embroil EBMC in disputes between local factions. In addition, Schmoke was concerned about the time it would take to mobilize the community; he also thought the operating expenses of the VCs would not be sustainable when the EZ grant was exhausted. However, he eventually came to see the VCs as an important part of Baltimore’s program.7

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The combination of EBMC and the VCs created a two-tiered governance process that enjoyed the support of the city’s elites while creating opportunities for community participation. EBMC empowered local business and civic elites with seats on the board, giving them a substantial stake in the success of Baltimore’s program. EBMC also devoted significant resources to VC development, achieving mixed success: some of the VCs became capable community-based organizations; others did not.

Early Controversies Although Baltimore eventually developed an effective process, EZ governance was initially a source of controversy. Claude Hitchcock, an attorney with close ties to Schmoke, was appointed as the first president of “Empower Baltimore!” (the original name for EBMC). His tenure was short-lived and controversial because of the decisions the board made about zone priorities and because Hitchcock proposed to hold private meetings in his law offices, excluding the community. The community protested and soon Hitchcock had been replaced on an interim basis by Diane Bell, another close associate of Mayor Schmoke.8 Her appointment as president of EBMC was made permanent in January 1996 and she continued in that capacity until the completion of Baltimore’s program. Members of the community welcomed Bell’s appointment and expressed optimism that she would be an effective leader because of her experience, her ability to listen, her knowledge of the community, and her interest in including the community in the zone governance process. Bell held EBMC board meetings around the city, most often in school cafeterias or church basements, and invited the public to attend.

Revitalization Strategies and Programs Baltimore’s EZ was composed of three noncontiguous areas (termed East Side, West Side, and Fairfield) that contained twenty-five census tracts covering 6.8 square miles with a population of seventy-three thousand residents. The East Side and West Side were primarily residential but also contained commercial areas. Fairfield was primarily an industrial area with fewer than one thousand residents. Reflecting federal guidelines, the zone neighborhoods were distressed relative to citywide conditions. However, not all areas were equally distressed. Federal guidelines also suggested that EZs should contain areas with market potential. Fairfield was seen as a potential growth area for industrial employment. The West Side included the University of Maryland at Baltimore (UMB) campus, home of the university’s professional schools, and the University of Maryland

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Medical Center. The East Side contained the Johns Hopkins medical campus and its affiliated hospital. In addition, the East Side included undeveloped waterfront property near Fells Point, a popular entertainment district. Baltimore’s vision was to create “neighborhoods of choice,” by transforming zone neighborhoods into desirable places to live, work, and do business. Although more than six hundred people contributed their ideas, Baltimore’s strategic plan was written primarily by Michael Seipp, then a vice president with the Baltimore Development Corporation (Baltimore Sun 1994b). Seipp contended that 60 to 70 percent of the plan reflected community input.9 The plan emphasized three principles: • Economic opportunity. The EZ program aimed to connect zone residents to the mainstream economy by providing educational, training, social, and health services. In addition, this aspect of the program was intended to stimulate business development through financing and technical assistance programs. • Sustainable community development. The EZ program proposed to create an integrated and comprehensive approach to problem solving at the community level. • Community-based partnerships. The EZ program sought to mobilize the community to participate extensively in problem solving. The list of local EZ programs (called action items) was organized into four categories: job creation, workforce development, quality of life, and community capacity building.10 Job creation programs emphasized business development by encouraging the creation, expansion, or relocation of businesses to enhance employment opportunities in the zone. Workforce development programs prepared zone residents for work. Quality of life focused on health, housing, youth, and public safety programs to serve zone residents and make the zone a more attractive place in which to live and work. Community capacity-building programs encouraged the creation and development of community-based nonprofit organizations to serve as the village centers to mobilize community participation and foster an integrated, neighborhood-based approach to problem solving. The best indicator of Baltimore’s EZ priorities is the allocation of its Title XX funds. Table 7.1 provides an overview of Baltimore’s strategic planning budget and EBMC’s pattern of expenditures. The largest share of Title XX funds (35.4 percent, slightly more than budgeted in the strategic plan) was spent on workforce development. The emphasis on workforce development was a distinct element of Baltimore’s EZ, as none of the other original EZs made it a major priority. The largest action items in this category were the family support and career centers ($12.4 million), customized training ($9.4 million), substance

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TABLE 7.1 EZ allocations and expenditures Dollar amounts in thousands ALLOCATION IN THE STRATEGIC PLAN CATEGORY OF EXPENDITURE

DOLLARS

FINAL AMOUNT EXPENDED

PERCENT

DOLLARS

PERCENT

Job Creation

21,300

21.3

26,691

26.7

Workforce Development

32,375

32.4

35,410

35.4

Quality of Life

13.4

33,460

33.5

13,156

Community Capacity

7,865

7.9

8,665

8.7

Administration

5,000

5.0

16,082

16.1

Total

100,000

100,004

Source: Authors’ analysis of EBMC’s financial reports and Baltimore’s strategic plan.

abuse ($4.0 million), occupational skills training ($4.0 million), and reverse commuting ($1.2 million). Family support and career centers were operated by the VCs and offered an array of job readiness services. Customized training was a series of specific training contracts that prepared zone residents for job opportunities within the zone; this training was often part of an incentive package used to encourage businesses to expand or relocate within the zone. Job creation efforts composed 26.7 percent of Title XX expenditures (a notable increase beyond the budget in the plan). The primary job creation action items were business finance programs ($10.5 million), subsidies for specific projects ($6.1 million), and business services such as planning, marketing, and financial advice through the Business Empowerment Center ($3.8 million). Quality of life action items initially focused on three primary areas: health and family development ($25.8 million), housing ($4.2 million), and public safety ($3.5 million), though this category of expenditure changed dramatically from what was proposed in the strategic plan. The budget in the strategic plan allocated about one-third of the city’s EZ grant for quality of life initiatives (33.5 percent), the highest percentage allocated among the four program categories. However, the amount expended was less than half of what was proposed (13.4 percent). Housing programs were the largest expenditures in this category: the Housing Venture Fund ($4.7 million) subsidized home purchases, lead paint remediation ($2.1 million) mitigated a serious environmental hazard in the zone’s housing stock, and the Exterior Repair Grant and Loan Fund ($1.2 million) financed home improvements. Community capacity building was another distinctive element of Baltimore’s plan. Baltimore made a significant investment to mobilize and include the community in the zone’s policy development and implementation processes through

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support of the VCs. Most of the funds were for VC administration ($5.9 million), VC technical assistance ($1.2 million), and VC transitional capacity building ($968,000). The amount expended in this category was slightly greater than what was proposed in the strategic plan.

Changing Priorities EBMC had significant influence over the zone’s priorities. EBMC president Diane Bell often said that EBMC had three priorities: “jobs, jobs, and jobs.” EBMC’s priorities were business development for job creation and preparing zone residents for work and these priorities were advanced at the expense of the other elements of the strategic plan. Explaining the need to establish priorities, Mathias DeVito, founding chair of the EBMC board, said, “We can’t choose too many things. The board is putting a circle around the big things that matter” (Baltimore Sun 1995a). Members of the board also expressed skepticism about the value of social programs that were popular within the community. Bernard Siegel, a founding member of the board, indicated that social programs were a low priority because spending EZ money in that way would have little effect: “The most we could spend would be a drop in the bucket compared to what’s being spent now” (Baltimore Sun 1995b). Social programs, therefore, were marginalized unless they were reframed as complements to job readiness, one of EBMC’s top priorities. For example, Baltimore’s strategic plan outlined an ambitious community health agenda that would have enhanced access to comprehensive care for zone residents. The board resisted the health initiative but finally agreed to pay for physical exams to ensure that zone residents were job ready. Another example was the after-school program. The board’s initial resistance was overcome when the program was reframed as a means to teach the responsibilities required to prepare youths for the job market. Other programs from the strategic plan were dropped altogether. A comparison of the percentage figures in table 7.1 shows increased expenditures for job creation, workforce development, and community capacity building and a large increase in administrative costs. On the other hand, there is a significant reduction in the funds allocated for quality of life initiatives (33.5 to 13.4 percent). James Shea, who served many years as chair of the EBMC board, explained the rationale for the change in priorities: Business development was a source of local tax revenue. Beyond this, the shift to finance business loans was sustainable, as loan funds that were repaid could be used again to finance new projects to create jobs. Consequently, the changes the board made to emphasize business finance for job creation were expected to generate sustainable flows of tax revenue and sustainable opportunities for job growth.11

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One change that cries out for explanation is the dramatic increase in administrative expenses from 5 percent in the strategic plan’s budget to 16.1 percent of the final expenditures. In part, the increase in administrative expenses is a consequence of the decision to extend the life of EBMC. Beyond this, much of the increase can be attributed to a misunderstanding about federal management of the Title XX grant. Baltimore's plan was to finance administrative costs by investing the $100 million EZ block grant. However, EZ funds were provided gradually to each local site on a reimbursement basis; it was necessary for all the original EZs to plan their activities and gradually draw down the funds as needed. This procedure precluded the possibility of earning a return on the grant that could finance administrative costs, as the city had originally intended, and Title XX funds were subsequently reallocated for that purpose.12 Although the changing allocations clearly indicate a shift in EZ priorities, EBMC’s leaders contend that these changes did not reflect a lack of respect for the strategic plan. Legitimacy is a significant problem for a quasi-public organization such as EBMC. Since the strategic plan was developed with substantial input from Baltimore’s residents and zone governance was supposed to be an open process that offered numerous opportunities for the public to participate (and possibly) protest, EBMC’s leadership did pay attention to how priorities were changed. The process that changed Baltimore’s EZ priorities was gradual, open, and direct. Although EBMC board members were quick to express their skepticism about the value of social programs, no immediate move was made to eliminate them. Rather, EBMC’s budget presented the Title XX allocations for approved action items and a residual category for action items that were still being developed (as late as the end of 1999, this residual category held more than $19 million). This approach delayed final decisions about which action items from the strategic plan would be abandoned; for a long time they were simply not advanced. Delay, however, can be an element of effective governance because over time the context in which decisions are made can change, as relationships develop between participants in the governance process, creating shared perspectives and trust (Stoker 1991). While selected action items were in limbo, leading members of the EBMC board consistently asserted their priorities—job creation and job readiness—in multiple public forums. For example, Robert Embry Jr., chair of EBMC’s Workforce Development Committee, asked a question repeatedly about proposed action items: “What does this have to do with jobs?” Eventually, members of the community started to reflect this view. At one advisory council meeting, an outspoken community participant listened carefully to a presentation about a proposed action item and then said, “I don’t see what this has to do with

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jobs.”13 Leading members of the EBMC board had patiently framed decisions about zone priorities, blunting opposition to changes that favored job creation and job readiness. Trust between EBMC’s leaders and the community was also an important part of the process of changing priorities. Trust was encouraged by the openness with which decisions about reprogramming EZ funds were eventually made. Changes were initiated by an explicit, written proposal to remove funding from one or more action items and reallocate those funds to other activities. For example, at the March 2000 meeting, the board adopted a resolution abolishing five quality of life action items and reallocating more than $4 million in Title XX funds. The resolution listed the action items that were being abolished and the amount that had been initially budgeted for each. At the same meeting, a subsequent resolution reallocated part of the pool of funding that was created by the program terminations to provide additional resources to support the Housing Venture Fund, technical assistance for the village centers, and safe neighborhood design. The authority to develop action items rested in EBMC’s committee structure. Each committee had jurisdiction over its program category and, with the assistance of EBMC staff, developed and advanced action items through the corporation’s decision processes. Members of the public were welcome to attend the committee meetings (though it was rare for them to do so). In each case, when priorities were changed, a clear, explicit statement of what was being changed was reviewed within several committees and presented at the advisory council before the matter was considered by EBMC’s board. Objections to the proposed changes were entertained and answered (usually by EBMC president Bell, appearing before the advisory council). It is noteworthy that although changing priorities was a flashpoint for community opposition in Atlanta, in Baltimore the shift in priorities, due largely to the transparency of the process and the opportunity for community input, did not engender widespread opposition.

Reinventing Local Program Management One of the federal government’s objectives for the EZ initiative was to advance reinventions of local government, and on that score Baltimore did not disappoint. Almost all of EBMC’s initiatives were implemented through partnership agreements. The partnerships were managed by results-oriented contracting that made extensive use of performance indicators. The VCs practiced integrated problem solving that coordinated the use of different services to make zone residents job ready. EBMC reallocated resources to support customized training to bridge the gap between job creation and job readiness.

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EBMC’s leadership evaluated action items, focused on outcomes, and deployed their resources to reflect evidence of effectiveness. For example, in 1999, EBMC initiated a comprehensive evaluation of its action items. Each of EBMC’s standing committees reviewed its items and made recommendations on termination or expansion of action items and reallocations of the budget. Each action item was scored on a performance scale and action items that received higher scores were continued and typically received increased Title XX resource allocations. By the end of the review, EBMC had trimmed action items that had been part of the strategic plan but were not making satisfactory progress to focus on the items that were consistent with the board’s objectives that had a demonstrated record of effectiveness. EZ funds were gradually redistributed over time to reflect these changes. EBMC also emphasized partnership and accountability in program management. With the exception of the Business Empowerment Center, EBMC was a contracting agency, not a direct provider of services.14 In many ways EBMC operated like a foundation. It developed partners and relationships to pursue its programmatic agenda and it expected demonstrable results in exchange for the money it invested. Although EBMC had many fruitful partnerships, its relationship with selected city government agencies was a continuing source of tensions. Although Mayor Schmoke had organized a subcabinet on the EZ to facilitate interorganizational cooperation, EBMC president Bell observed that city agencies are large, complex organizations and it takes time for them to align the commitments from the top with actions at the bottom.15 For example, EBMC wanted to work with the Mayor’s Office of Employment Development (MOED) to provide job placement services for zone residents. However, federal regulations required that people served by EZ programs live in the zone, a task that required a change of routine for MOED. When MOED was slow to accommodate their needs, EBMC paid to place its own dedicated person in the organization; for several years EBMC paid for a dedicated MOED staffer. The usual way EBMC did business was to create program guidelines and requirements and solicit bids from service providers. This allowed it to select qualified vendors and to contract for their services only for as long as they were needed. EBMC staff also created program guidelines that focused on the community-based job and family assistance programs that each VC was to design and implement, shaping the VCs’ agendas and ensuring that detailed plans (with goals, budgets, and benchmarks) were in place before EBMC committed resources to community-based programs. EBMC fostered a culture of accountability and promoted performance management practices. Concerns about accountability structured EBMC’s relationship with the VCs. EBMC wanted to ensure that all federal funds were properly

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accounted for and to avoid liability for VC actions. To some extent, these concerns worked at cross-purposes. To minimize legal liability, VCs were established as separate corporate entities with contractual relationships to EBMC. However, this limited the ability of EBMC to control and oversee VC expenditures. This tension was resolved by making VC administrative support contingent on periodic financial reporting. When problems or potential irregularities were discovered, EBMC would halt administrative support and conduct an audit. Once the VC had a clean bill of health, administrative support was resumed. As a result of these accountability concerns the VCs that survived developed as independent corporate entities with an in-house capacity for financial management and a record of clean bookkeeping. Specific performance goals were created for each action item and EBMC board members were regularly briefed on the progress made toward satisfying these goals. For example, job creation and job placement were key goals. At each board meeting, an updated job creation count was reported. Job placement was an important VC responsibility. As each VC established its career center (the community-based services offered to support zone residents looking for work) and applied for support from EBMC, a contract was developed which specified the number of zone residents the VC’s program was required to assist in order to achieve satisfactory performance. EBMC’s Workforce Development Committee developed elaborate guidelines for processes and outcomes. Process requirements included the development of individual employment plans and referrals to training programs. Outcomes were linked to placement credits that were distinguished on the basis of the wage earned (hourly wages of $6.50 were required for a placement to be credited to the VC, but jobs with hourly wages at $8.00 or above were counted as 1.5 placements); the period of retention (1/2 point for 90 days of retention and an additional 1/2 point for 180 days); and whether the placement was full-time (part-time placements received half credit).16 The EBMC board received regular reports and the achievement of this goal was an important basis for evaluating each VC’s performance and continuing eligibility for administrative support. When two of the village centers, Self-Motivated Community People and Harlem Park, were unsuccessful career center implementers, EBMC terminated their administrative support (Anft 2000). All the standing committees’ initiatives passed through an executive committee composed of leading members of the board, including the chairs of the standing committees. By the time proposals reached the EBMC board they had been thoroughly vetted in the committee system and discussed at advisory council meetings; this process developed a broad consensus in favor of proposals considered

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by the board; discussion required for board approval was normally quite brief and motions before the board typically passed with few dissenting votes.

Service Integration Service integration was an important element of Baltimore’s strategy. A common criticism of government programs is that they are “stove-piped” into distinct programmatic domains so that there is too little coordination in problem solving. A core function of each VC was to design and operate a career center and deploy family support strategies in a manner that integrated problem solving. EBMC structured the community-based programs by developing a menu of suggested services, preapproving service providers, and proposing specific benchmarks each VC was required to achieve. The VCs designed programs to meet the needs of their community and to satisfy EBMC’s job placement and retention goals. To some extent, each of the VC’s strategies had distinctive, community-based designs. Although many of the VCs integrated job readiness and placement, the sometimes tenuous relationship between job readiness services and business development initiatives was a tension point. Some business services were managed through the Business Empowerment Center, but job creation or retention initiatives were often developed on an ad hoc basis by EBMC, usually working in concert with the Baltimore Development Corporation or financial institutions that managed EZ business loan programs. Several mechanisms were in place to enhance the coordination of job readiness and job placement efforts. For example, VCs were required to sign off on loans that were negotiated for business development within their communities. In addition, VC representatives served on committees that considered and approved small-business loans. Despite these efforts, the processes of business development and job readiness were often disconnected. Many of the jobs created weren’t appropriate for zone residents. One attempt to bridge this gap was the customized training program, which provided training for a specific job within the zone. Because the training was connected to an emerging job opportunity within the zone, it was more effective in terms of placement, retention, and income gains. A study of EBMC’s workforce development programs showed that customized training tended to attract zone residents with work experience (Jacob France Institute 2005). After they completed training, 91 percent were employed and quarterly income gains were $1,515. Customized training was also seen as a relatively efficient way to improve the job and income prospects of zone residents. With an annual income gain of $6,060 and direct training costs per resident of $3,888, the benefit-cost ratio for the program was much higher than those of the other EZ training and placement initiatives.

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Community Participation There were two primary vehicles for community participation in zone governance—the advisory council and the VCs. The normal practice of EBMC’s leadership was to inform the advisory council about matters of business before they were considered by the EBMC board so that the community could offer its thoughts and opinions. In this way, EBMC was a primary influence on the advisory council’s agenda. EBMC’s leadership listened respectfully to the advice it received and EBMC’s board routinely provided time for the advisory council president to report at meetings.17 Although action items were adjusted in response to suggestions from the council, the details of action items, policies, and plans were worked out by leading EBMC board members and staff in EBMC’s committees without significant input from the council. At best, the advisory council reacted on the margins to the agenda established by the board. However, the advisory council was an important vehicle for community participation in spite of its limitations. Its primary virtue was that it provided an opportunity for EBMC’s leadership to preempt the community’s objections to action items the board hoped to advance. By listening and responding to the concerns voiced by the advisory council, EBMC’s leadership effectively diffused issues that otherwise might have been more controversial. Thus, the advisory council made a key contribution to effective local governance; it helped to create the capacity to act by preventing controversies from erupting into uncontrollable conflict between EBMC and the community. Although many of the original EZs included advisory groups in their governance process, the VCs in Baltimore represented a more direct and intensive effort to integrate the community into zone governance. The process of developing the VCs was arduous, costly, and time consuming. However, VCs were fully integrated into the governance process because they participated in the design and implementation of community-oriented programs. Although VCs represented a strong commitment to community participation, Michael Seipp observed that the EBMC board was concerned that the VC development process would become chaotic and asserted control over the process. Seipp suggested that this desire for control reflected the tension between the “downtown, quasi-public” model of governance and a model rooted in community control.18 EBMC sponsored an assessment of the VCs as vehicles for community capacity building in 1998. Although a survey of the VCs noted that all of them described having a “good or excellent” relationship with EBMC, three concerns were voiced. One was that EBMC staff provided too little notice of upcoming meetings. The second was frustration with “the ‘bureaucracy’ of EBMC.” Some VC representatives suggested that EBMC was slow to respond to their inquiries

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and required incredible amounts of paperwork to make anything happen (for example, one group of VC representatives observed that even an appeal for technical assistance from EBMC required “a grant request”). The third was the perception that accountability concerns were excessive and more important to EBMC than producing quality services for the community. Without question, the factor that most limited community participation was community capacity. Resource constraints (in particular, the end of EZ financial support for community mobilization efforts) limited continuing community participation. Baltimore’s African American community enjoys a significant bank of social capital, including churches, political clubs, newspapers, radio stations, and educational institutions (McDougall 1993; Orr 1999). However, many of the city’s most distressed neighborhoods lacked civic infrastructure, the institutions and leading citizens that stabilize and organize the community and make things work. EBMC invested considerable time and resources in developing the VCs and provided substantial training and technical assistance to help them get organized. Although EBMC’s leadership was steadfast in its commitment to resident participation in zone governance, all did not go smoothly. There were conflicts about the distribution of resources to support VC administration and programs. Two factors contributed to this difficulty. First, VCs represented different numbers of people. The original vision was to create eight VCs to serve approximately equal-sized populations. However, the decision by the HEBCAC to become a VC representing more than one-third of zone residents scuttled that plan. In the end HEBCAC was by far the largest VC in terms of population served. Second, there was a perception among zone residents that HEBCAC enjoyed an advantage over other VCs because it had the Johns Hopkins hospital as a patron. Community representatives outside HEBCAC thought that EBMC resource allocations should help to reduce this perceived inequity. These conditions created a recurring conflict about distribution of resources. Typically, representatives of HEBCAC argued that EZ monies should be distributed to the VCs on the basis of the size of the population each served. Representatives of other VCs argued that money should be divided “equally” (meaning the total sum available should be divided by six) or distributed on the basis of the “barriers” that face each local community (these were unspecified but implied that HEBCAC faced fewer barriers because of the support they enjoyed from Hopkins). A compromise was struck that provided a larger allocation to HEBCAC but not so much as would have been provided by a population-based distribution (HEBCAC received three hundred thousand dollars and the other five VCs received two hundred thousand dollars each). However, that compromise did not end the disputes. It was common for the VCs to bargain about resource allocations as action items were developed or circumstances changed.

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Despite receiving technical assistance, two VCs had serious, ongoing problems. In Harlem Park and Self-Motivated Community People, third parties eventually were contracted to manage the career centers. The VCs entered these partnerships, forced marriages engineered by EBMC, when they were unable to manage the programs on their own. In addition, the Poppleton VC subcontracted management of its career center to a local nonprofit. Finally, the Self-Motivated Community People’s VC experienced unstable leadership and administrative problems over the years, including a minor financial scandal (Green 1996). After several interventions, EBMC suspended financial support and the VC was closed. The VCs were an important part of Baltimore’s strategy to sustain improvements in zone neighborhoods. However, few of the VCs were able to survive without financial support from EZ resources. EBMC officials anticipated this problem and provided training and technical assistance to assist the VCs in developing survival strategies. In particular, EBMC encouraged the VCs to become community development corporations and to use their influence to gain equity positions in development initiatives in their communities. However, in the end only HEBCAC and Washington Village–Pigtown survived as functional organizations. At present HEBCAC has a variety of active programs, including substance abuse treatment, GED and career training, commercial strip improvements, computer access and training, public safety, neighborhood cleanup, and block parties. The Washington Village–Pigtown VC has morphed into the Washington Village/Pigtown Neighborhood Planning Council. Reflecting the emphasis on service integration that was central to its role as a VC, Washington Village–Pigtown provides “a comprehensive ‘one stop shop’ approach to workforce development, family support, economic development, community mobilization and public safety.”19

HOPE in the Zone A key contextual factor to consider when assessing the outcomes produced by Baltimore’s EZ program is the influence of the city’s numerous HOPE VI projects (Cisneros and Engdahl 2009). Baltimore’s HOPE VI projects typically replaced public housing units with mixed-income developments that blended public housing with market-rate rental units, units set aside for low-income purchasers, and market-rate units for sale. Some of the projects included alternative land use for retail or office space. HOPE VI projects have the potential to affect the zone in several ways: • Poverty and unemployment rates may change as the composition of the population that resides in zone communities changes.

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• Rates of home ownership may change as public housing projects shift from high-rise rentals to mixed-income communities that include both renters and home owners. • Business investment and job creation may be influenced by changing land uses and the deconcentration of poverty. However, as the evidence shows, there is no reason to assume that all the influences of HOPE VI projects were beneficial for Baltimore’s EZ neighborhoods. The Lafayette Courts public housing project was demolished in August 1995 and redeveloped as Pleasant View Gardens. Although Lafayette Courts was located just outside the EZ, the project did influence the zone. Some thirty-three households from Lafayette Courts were relocated to Douglass Homes, within in the EZ. Between 1990 and 2000, Douglass Homes saw a population increase of more than 21 percent; between 1990 and 2000 the number of female-headed households with children more than doubled; and there was dramatic growth in the unemployment rate from 13 percent in 1990 to 45 percent in 2000 (Newman 2002). The redevelopment of Broadway Homes (renamed Broadway Overlook) relocated an existing public housing project within the zone. The move was undertaken to accommodate the Johns Hopkins medical campus, which proposed to swap the original site of Broadway Homes (which was adjacent to the campus grounds) with a nearby site. Broadway Overlook had a positive effect on average housing values in the surrounding community (Castells 2010). However, the primary effect was to shift a distressed population within the zone. The HOPE VI project for the Flag House Courts public housing project demolished 509 units in February 2001. Flag House Courts was within the EZ just north of Little Italy, a popular, stable neighborhood, and just south of Jonestown, one of the city’s most historic neighborhoods, with several museums and historic attractions. Although the distressed population was dispersed from Flag House, many of the families relocated to other parts of the EZ (Newman 2002). The HOPE VI project for Hollander Ridge may have had a slight deleterious effect on conditions in the zone. In contrast to the other projects that were located in or near the EZ, Hollander Ridge was located far from the zone on the city’s eastern border. As was true in the other cases, the primary effect of the project was to disperse what had been a pocket of concentrated poverty. However, in several cases residents moving out of Hollander Ridge transferred to other public housing units closer to or within the EZ, especially on the East Side (Newman 2002). The demolition of Lexington Terrace and the construction of the Townes at the Terraces certainly changed zone conditions. Lexington Terrace was in the Poppleton neighborhood. The project was altered by a lawsuit filed by the American Civil Liberties Union charging the Housing Authority of Baltimore City with

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discrimination and segregation (Thompson vs. HUD). A consent decree settled the suit and put in place a stronger relocation plan (Urban Land Institute 2002). The demolition of Lexington Terrace resulted in a substantial population decline in Poppleton between 1990 and 2000 (Newman 2002). In addition, homeownership increased between 1990 and 2000 in East Poppleton and “most of this increase is probably attributable to the homeownership units in The Terraces,” that is, the new mixture of housing that was built to replace Lexington Terrace (Newman 2002, 76). In the end, there were several positive economic effects of the Lexington Terrace project: New home ownership opportunities were created; new retail and office spaces were created, enhancing employment opportunities; much of the distressed population that resided in Lexington Terrace was displaced out of the zone; and new opportunities for business investment and job creation were realized.

Major Redevelopment Projects The story of Baltimore’s EZ initiative is incomplete without mention of three major redevelopment projects that are changing the face of zone neighborhoods. On the West Side, the University of Maryland, Baltimore (UMB) has created the BioPark. On the East Side, two projects are under way: a biotech center is being developed adjacent to the Johns Hopkins medical school and hospital complex and in East Harbor underused harbor front property was redeveloped into an upscale retail and residential area. Although these projects were not completed prior to the end of Baltimore’s EZ initiative, they reflect the influence of the EZ in different ways. The EZ program was instrumental in advancing the UMB BioPark and the East Harbor redevelopment. However, the biotech center near Hopkins was little influenced by the EZ, which was seen as too little, too late to make a major contribution to the project.

BioPark in Poppleton The Poppleton neighborhood is the home of the UMB BioPark. Baltimore received a HOPE VI grant to demolish public housing and seized property in Poppleton to consolidate approximately thirteen acres of land for redevelopment adjacent to the UMB campus.20 The redevelopment effort is anchored by several buildings housing biotechnology firms that are being constructed on approximately ten acres of land. Half the land was owned by the city and was sold for one dollar to the nonprofit corporation that the university created to manage the project. The corporation later acquired five additional acres of land from a

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variety of private land holders. The city has committed $100 million to the effort to create a mix of market-rate and affordable housing and retail space adjacent to the BioPark, though progress on the housing and retail construction has been delayed by the economic downturn. Although some residents were displaced and the city’s plan to condemn and demolish homes in the neighborhood was controversial, community opposition did not derail the plan. The decision to construct the BioPark within the Poppleton neighborhood was unexpected. The university’s original plan was to build in the Westside Renaissance area, another city-sponsored revitalization initiative closer to the central business district. Although UMB had purchased property within the Westside Renaissance target area, officials were concerned that the available parcels were too small for the scope of the project they hoped to create.21 Baltimore’s EZ initiative influenced the BioPark in several ways. Groundwork for the development was done in the Poppleton VC land use plan. EBMC required all of the VCs to develop land use plans. Poppleton’s leadership had originally hoped that a school for the arts would be constructed on the site. However, there was concern about this plan among members of the school board because area schools were already underenrolled. The proposed school languished on the drawing board for several years while public support for the idea declined. As Poppleton’s land use plan evolved, it came to reflect the emphasis Baltimore’s EZ program placed on job creation. Poppleton “invited” UMB to develop the BioPark in the neighborhood because it was seen as a source of good jobs. The land use plan specifically called for the development of a biotech corridor. EBMC’s leadership nurtured the relationship between the Poppleton community and the university. A group of civic leaders that was convened to advance the BioPark included EBMC board member Robert Embry Jr., who suggested Poppleton as a location. EBMC president Diane Bell sponsored a series of meetings between UMB officials and VC leaders to forge a community benefits agreement. One benefit was partial ownership of property in the project by minorities. The other was a fund created from the BioPark’s revenue stream that provides approximately thirty thousand dollars per year per building for fifteen years to be used to benefit the community. Initially the fund was used to continue the operation of the workforce development programs in the VC. More recently, the fund underwrote some expenses of the expansion of the Baltimore Community College campus to offer biotechnology training programs to prepare residents for employment opportunities generated by the park.22 Doris Hall, a community leader in Poppleton, observed that without the EZ, “we never would have gotten past the politics of having them in the neighborhood” (Siegel 2004).

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East Baltimore Redevelopment The ongoing redevelopment project on the East Side of Baltimore is the most extensive currently underway in the city (Siegel 2001a). A multiuse biotech center is being developed (north of the Johns Hopkins medical complex) that will include office and laboratory space for biotechnology firms, retail space, and new housing. Eventually, the project is expected to transform eighty-eight acres with $1.8 billion in new investment.23 Although the biotech center is located within Baltimore’s EZ and enjoyed the support of key members of the EBMC board, and HEBCAC was implementing zone programs as part of a larger revitalization agenda for the neighborhood, Baltimore’s EZ initiative was not a major contributor to the project. By the time the biotech center was being actively advanced much of Baltimore’s EZ funds had been spent or committed (Siegel 2001b). In the end, EBMC provided a modest grant of $110,000 to support the project. East Baltimore Development Inc. (EBDI) was created in 2003 as a nonprofit partnership between the city, Hopkins, and several foundations to manage the project, which includes both economic development and human service components. In contrast to the role played by the Poppleton VC in the UMB BioPark, HEBCAC did not help to create a political context that advanced the EBDI project. The decision to create EBDI in part reflected a loss of confidence on the part of local elites, who thought the management of the redevelopment effort was beyond HEBCAC’s capacity. In addition, EBMC president Diane Bell observed that HEBCAC may have lacked credibility with the community because “everyone at HEBCAC is on Hopkins’ payroll” This is in fact true. Hopkins is not only HEBCAC’s primary patron; it also administers HEBCAC’s payroll system and the checks are written and paid by Hopkins.24 Town-gown tensions were certainly present regarding the Hopkins campus in East Baltimore. Consequently, community mobilization took place outside the VC and was centered on the Save Middle East Action Coalition (SMEAC), an advocacy group that voiced the community’s concerns relating to the project. SMEAC protested the original plan and gained concessions, including financial compensation and services for displaced residents. The decision of the Annie E. Casey Foundation was also important. When Casey agreed to participate in the project the emphasis shifted to “responsible relocation” as the foundation organized and financed multiple services for East Baltimore residents (Schachtel 2011). The services, plus generous resettlement terms initially quieted community opposition. However, other controversies, surrounding community participation in the ongoing planning process and the distribution of the benefits from employment and contracting opportunities, have continued.

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Inner Harbor East Several investments that helped to transform an unappealing East Harbor industrial area into one of Baltimore’s desirable addresses were linked to the EZ. In February 1997, Sylvan Learning Systems Inc. announced its intention to relocate their headquarters from Howard County, Maryland, to Baltimore’s EZ, as the anchor tenant in a $32 million office and apartment complex. Doug Becker, a Baltimore native and Sylvan CEO, cited the excitement and amenities of city life as motivating factors for the decision. Although he suggested that EZ designation was not the primary motivation, he did note that the opportunity to locate in the zone influenced the scope of the relocation: “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” (Pierce 1997). At the same time the EZ was focusing business development resources in East Harbor, Mayor Schmoke was pushing a controversial plan to construct a hotel nearby. When Baltimore’s convention center was completed there were plans to develop a hotel and retail complex to increase the city’s hotel capacity and create the opportunity to host larger conventions. The Baltimore Sun described Schmoke’s advocacy of the East Harbor site as “puzzling” because it was approximately a mile from the convention center. The decision was also controversial because the proposed site was owned by John Paterakis, a developer and “generous donor to Democratic causes” (Baltimore Sun 1997). Schmoke vigorously defended his proposal and cited the EZ location as one of its advantages. He also noted that when the Baltimore Development Corporation solicited bids for a hotel to be constructed on city-owned land closer to the convention center, it had received none. Schmoke said this was a “crucial” point: “When the city sought proposals for a new downtown hotel through an open bid process, not one major hotel developer, indeed not one developer of any kind, bid to build on the cityowned lots west of the Convention Center” (Schmoke 1997).

Local Outcomes in Baltimore’s EZ To complement the evaluation presented in chapter 5 (which concluded that Baltimore was one of the two cities with the strongest outcomes) this section presents a community-level assessment of the activities and outcomes Baltimore’s EZ produced. Where did Baltimore’s local EZ program take action and where did zone conditions improve? A community-level evaluation can help to explain how and why Baltimore produced positive outcomes and enhance our confidence that observed outcomes are results produced by the local EZ program.

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The community-level analysis focuses on three outcomes—the trajectory of business investment over the period 1996–2006, change in the number of jobs between 1996 and 2004, and the trajectory of housing investment over the period 1994–2006 (see the appendix to chapter 5 for definitions and data sources). In contrast to the evaluation method used in chapter 5, unemployment and poverty outcomes are not examined at the community level for two reasons. First, there is the classic conundrum in urban policy of the distinction between people and place. We are focusing on place-based outcomes because people who were assisted by EZ programs may have subsequently exited the zone. Second, unlike other elements of the local program that can be linked to specific locales within the zone, EBMC permitted zone residents to seek assistance (in terms of communitybased career and family support centers) from any VC, further straining the link between place and these outcomes at the community level.

Village Center Characteristics The community-level context in which the VCs operated varied widely, which is an important matter to consider when assessing community-level outcomes. EBMC compared conditions in the VCs based on 1990 and 2000 census data.25 The analysis revealed that there were significant differences in the characteristics of the VCs in terms of urban distress. Two VCs, East Harbor and Washington Village–Pigtown, stand out as relatively advantaged areas within the EZ. East Harbor had smaller population declines, a majority-white population, high initial levels of labor force participation, gains in labor force participation, and higher household income. Washington Village–Pigtown had smaller population declines, a majority-white population, relatively low poverty rates, relatively low unemployment rates, higher median income, and a stronger residential real estate market. Although population declined in all six VCs between 1990 and 2000 (reflecting citywide trends), the population decline in the EZ exceeded the overall citywide rate. The biggest population losses were in HEBCAC and Harlem Park, which experienced declines of more than 30 percent. Of course, Baltimore has been a majority African American city for several decades and the EZ is even more so. In three VCs (Harlem Park, HEBCAC, and Self-Motivated Community People), African Americans composed more than 90 percent of the population. Poverty declined in all the VCs between 1990 and 2000 with the exception of HEBCAC. The largest decline in poverty occurred in Poppleton and reflects (at least in part) the demolition of the Lexington Terrace housing project. Labor force participation declined in all the VCs between 1990 and 2000 with the exceptions of East Harbor and Poppleton. East Harbor and Washington Village– Pigtown had substantially higher levels of labor force participation during the

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entire period. Washington Village–Pigtown had the lowest unemployment rate in 1990. East Harbor showed the greatest decline in unemployment between 1990 and 2000, halving their rate from 16 to 8 percent. The highest household incomes in 1990s were in East Harbor and Washington Village–Pigtown. East Harbor also had the highest household income in 2000. Conditions also varied in residential real estate markets surrounding the VCs. Washington Village–Pigtown had home ownership rates that roughly doubled the next best VC. Washington Village–Pigtown also had the lowest housing vacancy rates, though vacancy rates did climb between 1990 and 2000. A real estate market survey commissioned by EBMC indicated that residential real estate values were increasing in Washington Village–Pigtown, Poppleton, and East Harbor (HEBCAC was not included in the market survey).

Business Investment EBMC’s principal business development activities were loan programs and subsidies, though the distribution of loans and subsidies was uneven across the VCs. East Harbor and Washington Village–Pigtown dominated the activities related to business assistance programs. Table 7.2 shows that 109 business loans valued at $16.3 million were originated by EBMC’s business finance programs between 1996 and 2004. The loans originated in East Harbor and Washington Village– Pigtown composed 83 percent of the loans and 87 percent of the dollar value of the loans.26 Figure 7.1 shows the trajectory of total business loans over the period 1996– 2006 based on data available through the Community Reinvestment Act by census tract.27 Census tracts with darker shading indicate areas where EZ census TABLE 7.2 EBMC Business finance activities across the village centers and Fairfield Dollar amounts in thousands VILLAGE CENTER

NUMBER OF LOANS

PERCENT OF TOTAL

DOLLAR VALUE OF LOANS

PERCENT OF TOTAL

East Harbor

56

51.4

9,821

60.2

Washington Village–Pigtown

34

31.2

4,439

27.2

Poppleton

6

5.5

597

3.7

Fairfield (not a village center)

4

3.7

505

3.1

Self-Motivated Community People

4

3.7

427

2.6

HEBCAC

3

2.8

277

1.7

Harlem Park

2

1.8

258

1.6

109

100.0

16,326

100.0

Totals

Source: Jacob France Institute, 2005. Totals may not sum to 100 because of rounding.

1

Self Motivated Community People HEBCAC

Harlem Park

West Baltimore

3

2

5

Poppleton

1

3

4 4 5

Downtown

2

East Baltimore

East Harbor

Washington Village/Pigtown

Baltimore Harbor

Fairfield

0

Baltimore Harbor Census tracts Village Centers Sandtown-Winchester Anchor Institutions HOPE VI Projects EZ Outcome Worse Better No matched pair .5 1 1.5 Miles

ID Anchor Institutions 1 2 3 4 5

Coppin State University Johns Hopkins Medical Center Sojourner-Douglas College University of Maryland-Baltimore University of Maryland Medical Ctr.

ID HOPE VI Projects 1 2 3 4 5

Broadway Homes Flag House Courts Lafayette Courts Lexington Terrace Murphy Homes

FIGURE 7.1 Business investment, 1996–2006, by EZ census tracts. Revitalization outcomes in EZ tracts compared to their matched-pair control tract.

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tracts had better outcomes related to business loan activity than their matchedpair census tracts. Although to a significant extent the map corresponds to the history of EZ business development activities reported in table 7.2, there are noteworthy exceptions. The map suggests several important observations about the pattern of business investment at the community level. First, community-level market strength matters for attracting business investment. Although overall Baltimore is a weak market city, community-level market conditions varied across the VCs. Much of the growth in business investment occurred in areas that were relatively advantaged (around the East Harbor and Washington Village–Pigtown VCs) that were located closer to the central business district, professional sports stadiums, or Inner Harbor attractions.28 Second, the importance of Ed & Med anchors is evident (Gurwitt 2008). Most of the EZ census tracts that included or were adjacent to the city’s major educational and medical institutions outperformed their matched pair tracts. Part of this pattern is likely to be an indication of the growth trajectories of these institutions. As we noted in the discussion above, the EZ made important contributions to the UMB BioPark, but was not a major factor in the biotechnology initiative adjacent to Hopkins. A striking feature of the map is the investment growth in the areas in which EBMC was most active in providing access to business capital. For example, Bank One received several EZ benefits, including a grant/loan for property acquisition and a customized training grant to entice the firm to relocate to the East Harbor area of the zone. The EZ also financed a number of smaller firms and restaurants in this area. In addition, EBMC played a major role in relocating Sylvan Learning Systems and the development of a major hotel and retail complex in the East Harbor. Investments such as these helped transform an unappealing industrial area in the East Harbor into one of Baltimore’s desirable neighborhoods. Another pocket of business investment within the zone is found in the Washington Village–Pigtown VC, another relatively advantaged area within the EZ, with one of the most capable community-based organizations in the zone. The EZ had several significant projects in that area that contributed to the outcome, including the Montgomery Park office center (which received a $4.0 million loan for property acquisition) and the Marriott International Hotel (which received a $674,537 customized-training grant). A somewhat anomalous pattern is found in the northwest part of the EZ, where business investment gains are evident in areas that were served by Harlem Park and the Self-Motivated Community People’s VCs. These were two of the most troubled VCs and table 7.2 indicates that these were not locations that received intensive intervention from EBMC in business finance and development. Consequently, it is implausible to suggest that EZ business development

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activities were responsible for the outcomes indicated on the map. Three points may account for this anomaly. First, the Sandtown/Winchester community is the area in which the Enterprise Foundation had been working on a comprehensive community development initiative since the early 1990s. Although there was little cooperation between the EZ and the enterprise initiative (to the disappointment of Mayor Schmoke),29 it is possible that the pattern of business investment reflects gains from the foundation’s community development effort. Second, Coppin State University is located in that area. Although Coppin does not have the resources of UMB or Hopkins, it is an institutional anchor that provides an economic engine for the surrounding area. Finally, Fairfield experienced growth in business investment (with the second-highest average business investment over the course of the EZ program, based on our analysis of the Community Reinvestment Act business lending data) and performed better than its comparison tract on job growth (though overall, employment growth in the area was modest).

Employment Gains Figure 7.2 shows community-level outcomes for employment change between 1996 and 2004 and highlights several facets of the dynamics of employment change over the course of the EZ initiative. First, the importance of the investment and job creation engines in the Ed & Med sector are evident. On the East Side there is a pattern of job gains surrounding the Hopkins hospital and medical campus; the tract north of the area more than doubled its employment (128 percent) between 1996 and 2004, the largest gain reported among the city’s EZ census tracts. On the West Side there is substantial job growth in and around the UMB campus and the University of Maryland Medical Center, and in the Sandtown-Winchester area. Although the tracts in Washington Village–Pigtown also show that the EZ tracts did better than their comparison tracts, the tracts in this area outperformed their comparison tracts by losing jobs more slowly. The data also suggest that employment gains were stronger in the areas where the EZ invested heavily in business development. East Harbor showed substantial employment gains and was one of the areas noted above where EZ business development investment was most concentrated.30 Also of note are the relatively weak employment gains in the Fairfield area. Although the tract outperformed its matched-pair counterpart, employment was relatively flat between 1996 and 2004 (2.6 percent). This also suggests that despite the overall level of business investment in Fairfield over the course of the EZ initiative, it did not stimulate resurgence in the city’s industrial employment base.31

1

Self Motivated Community People HEBCAC

Harlem Park

3 2

5

West Baltimore

Poppleton

1

3

4 4 5 Downtown

2

East Baltimore

East Harbor

Washington Village/Pigtown

Baltimore Harbor

Fairfield

0

Baltimore Harbor Census tracts Village Centers Sandtown-Winchester Anchor Institutions HOPE VI Projects EZ Outcome Worse Better No matched pair Other .5 1 1.5 Miles

ID Anchor Institutions 1 2 3 4 5

Coppin State University Johns Hopkins Medical Center Sojourner-Douglas College University of Maryland-Baltimore University of Maryland Medical Ctr.

ID HOPE VI Projects 1 2 3 4 5

Broadway Homes Flag House Courts Lafayette Courts Lexington Terrace Murphy Homes

FIGURE 7.2 Employment change, 1996–2004, by EZ census tracts. Revitalization outcomes in EZ tracts compared to their matched-pair control tract.

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Housing Investment Table 7.3 reports on the transactions sponsored by the Housing Venture Fund, EBMC’s primary program to encourage home ownership. The data indicate that the most active location for Housing Venture Fund transactions was Washington Village–Pigtown. Approximately 40 percent of the transactions and the dollar value of transactions took place in that single VC. This is consistent with EBMC’s analysis of community housing markets, which showed that VC had the most robust residential market. This suggests that the Housing Venture Fund had the effect of complementing market strength that already existed in the neighborhood. On the other hand, the incentives of the Housing Venture Fund were apparently inadequate in East Harbor, Harlem Park, and Poppleton; all three of these VCs returned unused funds to EBMC (Jacob France Institute 2005). Figure 7.3 presents home mortgage loan trajectories from 1994–2006.32 The positive outcomes produced in the zone are concentrated in two VCs, Washington Village–Pigtown and East Harbor. Given the pattern of activity for the Housing Venture Fund reported in table 7.3, the intensity of activity in Washington Village–Pigtown is expected. The anomaly in the results is that there was substantial mortgage activity in East Harbor despite a lack of substantial transactions from the Housing Venture Fund.33 This discrepancy probably reflects the fact that the housing transactions in East Harbor did not involve participants who qualified for EBMC’s housing assistance, which was means tested. Other census tracts with notable gains in home mortgage investment over their matched pair controls included tracts in the Self-Motivated Community People’s, Harlem Park, and HEBCAC VCs. Overall, the results suggest that the Housing Venture Fund did enhance home ownership opportunities, and that this program encouraged home ownership in the zone, especially where community-level residential real

TABLE 7.3 Housing Venture Fund transactions by village center Dollar amounts in thousands. VILLAGE CENTER

East Harbor HEBCAC Harlem Park

NUMBER OF TRANSACTIONS

PERCENT OF TOTAL

DOLLAR VALUE OF TRANSACTIONS

PERCENT OF TOTAL

57

7.0

269

7.8

119

14.6

494

14.4

31

3.8

128

3.7

Poppleton

140

17.2

542

15.3

Self-Motivated Community

142

17.4

614

17.9

Washington Village—Pigtown

324

39.9

1,385

40.3

Totals

813

Source: Jacob France Institute, 2005.

3,438

1 Self Motivated Community People HEBCAC

Harlem Park

West Baltimore

1

3

4 Poppleton

2

3

5

4 5 Downtown

East Baltimore

2 East Harbor

Washington Village/Pigtown

Baltimore Harbor

Fairfield

0

Baltimore Harbor Census tracts Village Centers Sandtown-Winchester Anchor Institutions HOPE VI Projects EZ Outcome Worse Better No matched pair .5 1 1.5 Miles

ID Anchor Institutions 1 2 3 4 5

Coppin State University Johns Hopkins Medical Center Sojourner-Douglas College University of Maryland-Baltimore University of Maryland Medical Ctr.

ID HOPE VI Projects 1 2 3 4 5

Broadway Homes Flag House Courts Lafayette Courts Lexington Terrace Murphy Homes

FIGURE 7.3 Housing investment, 1994–2006, by EZ census tracts. Revitalization outcomes in EZ tracts compared to their matched-pair control tract.

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193

estate market conditions were favorable. The impact of the program, however, fell short of EBMC’s ambitious goal of increasing home ownership in the zone to 50 percent. The community-level evaluation provides additional insights into what was and was not accomplished by Baltimore’s EZ program. One clear implication of the analysis is that local outcomes reflected community-level market conditions. This was evident in the business investment and job growth that surrounded the Ed & Med anchors. In addition, market conditions were important to the redevelopment of the underdeveloped waterfront on the East Side of the zone. However, the evaluation evidence also shows the important role local programming played by encouraging and supporting these developments. Second, housing investment reflected market trends; the EZ’s housing programs were most effective where community-level residential real estate markets were healthy. Finally, the business development that did occur within the zone did not reverse the long-standing trend toward deindustrialization in Baltimore. This suggests that the principle role of the local initiatives supported through Baltimore’s EZ effort was to complement and enhance trends that were already established within local markets.

Good Governance in Baltimore In the opening chapter we presented a case vignette to illustrate the importance of good local governance. We conclude our Baltimore case by comparing the Economic Development Administration (EDA) Oakland initiative with Baltimore’s EZ program in greater depth to emphasize the benefits of good local governance. In Oakland, the EDA tried to minimize the role of local governance (and local government) by creating direct contracting relationships with potential employers. By contrast, the EZ initiative encouraged localities to establish effective local governance processes. The policy tools don’t distinguish these cases (tax breaks, subsidies, employment training programs); what distinguishes them is the effectiveness of the local governance process in Baltimore. The cooperation that was made possible by good governance in Baltimore also created synergy that enhanced the effectiveness of economic incentives and local EZ programs. The details of EBMC’s relationship with Bank One further illustrate how effective local governance made a difference. EBMC was not alone in supporting the deal that brought Bank One to the EZ; state and city economic development authorities also contributed to the incentive package. EBMC leveraged its resources by partnering with others. Beyond this, the agreement between EBMC and Bank One (and other state and local development entities)

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was exactly the sort of deal the EDA had been unable to conclude in Oakland; Bank One agreed to create four hundred permanent, full-time jobs in exchange for public incentives. Decatur Miller, a leading member of the EBMC board and head of the corporation’s Business Development for Job Creation Committee, noted this about the Bank One deal: the agreement had teeth; it was “very strategic, very important . . . the grant would convert to a loan unless they (Bank One) met the employment goals.”34 Customized training grants reduced the risk of agreeing to a contract with employment guarantees by assuring Bank One that qualified and job-ready workers could be found and trained. Beyond this, customized training can create job opportunities for zone residents. A firm that is considering locating within the EZ may or may not be planning to employ zone residents. However, when the company seeks advice about the incentives that are available to firms that locate in the zone, customized training can be added to the mix. This may induce firms to consider how to create jobs for zone residents in order to maximize EZ benefits by reducing recruitment and training costs. Using the grant, Bank One could design a job training program to prepare zone residents for specific jobs the firm needed to fill. This made zone residents a valuable commodity that the VCs supplied through their career development and family support centers. The VCs conducted outreach programs to recruit zone residents for job placement and job preparation programs and prescreened applicants to ensure that they were viable participants for the customized training slots. The community outreach activities orchestrated by the VCs created a pool of employable, trainable zone residents to satisfy the workforce needs of zone firms. Consequently, EBMC (working with partners in state and local government) was able to offer an incentive package to recruit firms and create jobs in the zone using multiple policy tools: below-market loans and grants helped to finance business relocation or expansion; community outreach programs implemented in the VCs helped to satisfy the firms’ manpower needs by recruiting zone residents; job preparation programs implemented by the VCs in conjunction with proven local nonprofits helped to prepare more zone residents to enter the personnel pool; customized training prepared zone residents for real employment opportunities and provided a trained workforce for firms; and, because the workforce was drawn from the EZ, firms enjoyed a tax credit for employing zone residents. This is effective local governance enhancing the value of market-based policies. EZ outcomes in Baltimore were strong because of the quality of local governance. Baltimore created a set of quasi-public, nonprofit corporations to implement its EZ program. The primary local governance body, EBMC, provided an institutional base in which business, foundation, and nonprofit elites could participate in the EZ while avoiding city “politics.” The board took controversial steps to change the emphasis and priorities of the city’s strategic plan, sparking

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community protests. However, Baltimore was able to move ahead to implement its program, including the changes advocated by the board, primarily because EBMC leadership and staff valued community participation and made significant investments (in time and resources) to encourage it. Zone residents and community-based organizations had numerous opportunities to influence policy decisions. Committee meetings were open to the public and members of the community were welcome to attend, though few did. When detailed proposals had been developed by the EBMC board committees, EBMC’s president Diane Bell would present their ideas to the advisory council. Proposals were often modified to reflect the community’s concerns. When a proposal finally arrived at an EBMC board meeting, community representatives rarely objected because their concerns had been heard and were reflected in the final product. The strength of EBMC’s committee system and the refusal of the board to consider proposals that had not been thoroughly vetted by the committees and the advisory council ensured community participation and prevented the community from organizing as a blocking coalition. Even more significant, many programs designed to serve zone residents were implemented through the VCs. This was a risky and genuinely innovative governance strategy. By placing members of the community in key positions to design and implement zone programs, officials in Baltimore risked the possibility that limited community capacity might undermine their program. However, by placing significant responsibility in the VCs and devoting time and resources to develop and support them, EBMC created the possibility for genuine empowerment. The priorities for the city’s EZ programs were clearly influenced by elites on the EBMC board. In this sense, the community participation and the development of the VCs was paternalistic. Like their counterparts in Atlanta, EBMC’s leaders downplayed the significance of many social programs that were favored by the community. But in contrast to Atlanta, EBMC’s leaders kept zone programs at arm’s length from the mayor’s office and provided meaningful participation for zone residents. Thus, although the city’s elites at EBMC were firmly in control of the agenda, the community’s role in the development and implementation of zone programs represented a significant form of citizen participation and empowerment.

Appendix: People Interviewed in Baltimore * Subject interviewed on multiple occasions. Austin, Douglass, HUD “generalist” (Baltimore field representative), later deputy commissioner of housing, city of Baltimore* Bannister, Craig, EZ resident; chair, EBMC Advisory Council

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Bell, Diane (now Bell-McKoy), president and later board chair, EBMC* Bostic, Ann, EBMC staff Brown, Barry, EBMC staff Butler, Clara, VC representative* Butterfield, Sam, EZ resident Clay, Lenny, VC representative Davis, Steven, EBMC staff, finance officer Edds, Rachael, EBMC staff, detailed from Baltimore Planning Department* Embry, Robert, Abell Foundation president, EBMC board member, committee chair* English, Sister Bobby, director, Julie Community Center; EBMC board member; committee chair* Escoffery, Shawn, EBMC staff Fielder, James, director, Maryland Department of Business and Economic Development Hall, Doris, VC representative Harris, Linda, EBMC board member, Mayor’s Office of Employment Development Harrison, Hattie, EBMC board member, delegate to Maryland General Assembly Henson, Daniel, EBMC board member, Baltimore commissioner of Housing and Community Development Hill, R. Howard, VC representative Howard, Joseph Jr., VC representative Janes, Ellen, Maryland Department of Housing and Community Development Killins, Sherri, EBMC staff Kline, Mary Lou, VC representative Lane, Kimberly, VC staff Lopez-Layton, Robert, VC representative Maddox, Constance, EZ resident chair, EBMC Advisory Council Miller, Decatur, EBMC board member, committee chair Miller, Luther, Maryland Department of Business and Economic Development Padden, Jeffrey, EBMC evaluation contractor Payne, Fambridge, VC staff Perlman, David, associate general counsel, Baltimore Gas and Electric Company Pillas, Jeffrey, Baltimore Development Corporation Preston, Michael, EBMC staff, communications director*

BALTIMORE’S EMPOWERMENT ZONE

Reed, Alethia, EBMC staff Rice, William, Business Empowerment Center Roberts, Brandon, EBMC evaluation contractor Salamacha, Larissa, Baltimore Development Corporation Samuels, Ron (via telephone), VC staff Schmoke, Honorable Kurt, former mayor of Baltimore Seipp, Michael, VC representative, author of Baltimore’s EZ application* Shaab, Jane, University of Maryland, Baltimore, BioPark Shea, James, chair, EBMC board * Singletary, Samuel, VC representative Stanley, Donna, EBMC board member Smith-Campbell, Jenny, EBMC staff Warren, Dwight, EZ resident, EBMC Advisory Council Wiley, William, EBMC staff Wilson-Gentry, Laura, faculty, University of Baltimore; EBMC evaluation contractor Focus Group Participants Corday, Raymond, EZ resident, VC representative Dugger, Genifer, EZ resident, VC representative Godwin, Doc, EZ resident, VC representative Howe, Charles, EZ resident, VC representative Jagus, Rose, EZ resident, VC representative Lydick, Patricia, EZ resident, VC representative Marker, Bill, EZ resident, VC representative Nelson, Edith, EZ resident, VC representative Robinson, Kimberly, EZ resident, VC representative Sloan, Joyce, EZ resident, VC representative Vadney, Matthew, EZ resident, VC representative

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Our central argument is that governance matters. That is, differences in revitalization outcomes achieved across the original urban EZs can best be explained by the quality of local governance. As we stated in chapter 2, local governance concerns more than just the performance of city government; governance is the set of local structures and processes that may create and sustain the capacity to act in conditions of diffuse authority, interest conflict, and mutual dependency (Stone 1989; Chaskin and Garg 1997; Stoker 1998). This chapter develops a better understanding of how and why cities vary in their capacity to solve important problems, such as revitalizing distressed inner-city neighborhoods. We ask, how can variation in revitalization outcomes achieved by the original six urban EZ cities be explained? To answer, we draw on our analysis of city and neighborhood conditions (from chapter 3), our descriptions of local governance and program implementation (from chapter 4), and our case analyses of Atlanta and Baltimore (from chapter 6 and 7, respectively) to identify the factors associated with successful neighborhood revitalization initiatives. Our analysis is organized around three central questions: What aspects of local governance structures and processes are associated with successful urban revitalization? Do socioeconomic trends and conditions explain changing conditions in EZ neighborhoods? Are revitalization outcomes dependent upon selecting the right mix of local programs and strategies? After reviewing the evidence, we conclude that differences in revitalization outcomes are most often associated with differences in the quality of local governance: Cities that practiced good 198

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governance achieved better outcomes in their EZ neighborhoods; cities that did not practice good governance had weaker outcomes in their zone neighborhoods. Overall, the strongest revitalization outcomes were achieved in Baltimore and Philadelphia, while the weakest outcomes were found in Atlanta. Baltimore and Philadelphia also received the highest scores for local governance quality; Atlanta received the lowest. Revitalization outcomes achieved and local governance quality in Chicago, Detroit, and New York were mixed, though the patterns varied across these cities.

Governance and Neighborhood Revitalization Although our evidence shows that the quality of local governance matters, we have not discovered a formula for good governance. The structural features of local governance were not associated with successful revitalization outcomes with the exception of the incorporation of community participation during the implementation process. This suggests that good local governance cannot be reduced to selecting the right type of local institutions to lead collaborative problem solving. However, we have identified several key characteristics of local processes that are associated with good governance. The baseline condition (which appears to be a necessary condition for good governance) is to create and sustain the capacity to act. Our indicator of local capacity was the strongest predictor of revitalization outcomes. The inclusion of the community as a meaningful participant in neighborhood revitalization policymaking was also a feature of good local governance that was present in the strongest-performing EZs. Finally, program integrity was associated with positive revitalization outcomes; the best local governance processes used resources effectively through integrated problem solving, continuous reconstruction of local support for revitalization plans, systematic learning, and recurring reconsideration of the means and ends of policymaking. Our analysis of the effects of local governance focuses on governance structure and the attributes of good governance we described in chapter 4. Table 8.1 summarizes that presentation to identify what was and what was not important about local governance. Panel I reports the type of organization that was the lead governance entity in each EZ city, the extent of representation of zone residents and community-based organizations in the EZ governance process, the degree of influence citizens had in the determination of the EZ strategic plan and its implementation, and a summary measure of the degree of community participation in the process. Panel II presents characteristics of local capacity based on an assessment of each city’s community development industry. For local governance

Low Low

– Collaboration/Partnerships

– CDC Capacity

Moderate Low Low

– Community Participation

– Program Integrity

– Overall Quality

Worse Same Worse Same

Business investment

Poverty

Unemployment

Housing Investment

Source: Authors’ analysis.

Worse

Jobs

IV. Revitalization Outcomes

Low

– Capacity to Act

III. Quality of Local Governance

High

– Strategies and Leadership

II. Local Community Development Industry

47% High/Low

Worse

Better

Better

Better

Better

High

High

High

High

High

High

Very high

Moderate/Moderate

40%

Two tiers

Citizen Influence during Planning/Implementation

Quasi-public

Single tier

BALTIMORE

Quasi-public

Citizen/CBO Representation on EZ Board

Lead governance entity

I. Local Governance Structure and Processes

ATLANTA

TABLE 8.1 Local governance and revitalization outcomes

Worse

Better

Better

Better

Worse

Moderate

Moderate

Low

Moderate

Very high

Low

Moderate

Moderate/Low

62%

Single tier

City

CHICAGO

Worse

Worse

Better

Better

Better

Moderate

Moderate

Moderate

Moderate

High

Low

Low

High/Moderate

52%

Single tier

Quasi-public

DETROIT

Worse

Worse

Better

Better

Better

Low

Low

Low

Moderate

Very high

Very high

High

Low/Low

22%

Two tiers

Quasi-public

NEW YORK

Same

Same

Better

Better

Better

High

High

High

High

High

Low

Moderate

Low/Moderate

54%

Two tiers

City

PHILADELPHIA

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quality, panel III reports three indicators—capacity, community participation, and program integrity—and our overall measure of local governance quality. Finally, the table (in panel IV) includes a summary of the revitalization outcomes reported in chapter 5.

Local Governance Structure and Process The revitalization of distressed inner-city neighborhoods is an extremely complex task that requires the engagement of a wide range of participants. Although city government elites and agencies are generally prominent participants in revitalization efforts, contemporary initiatives have increasingly engaged a wide range of nongovernmental stakeholders, including residents, businesses, neighborhood-based organizations and agencies, citywide nonprofits, and a variety of civic and philanthropic organizations. Developing structures and processes for incorporating these participants is critical for the success of revitalization efforts. As Robert Chaskin and Sunil Garg (1997, 632) observe, “Governance entails the creation or adoption of mechanisms and processes to guide planning, decision making, and implementation as well as to identify and organize accountability and responsibility for action undertaken. Thus governance is both process and structure; it attempts to structure action on the basis of the goals and assumptions of each initiative through the organized engagement of a range of participants both within and beyond the target neighborhood.” HUD required cities to identify governance structures and processes as a precondition for moving forward with local EZ program implementation. However, HUD allowed cities wide latitude in the design of local governance institutions, and as a result EZ cities took different approaches. Atlanta, Baltimore, Detroit, and New York opted to establish quasi-public corporations, which usually were new nonprofit, extragovernmental entities governed by a board of directors. Cities varied considerably in the role of local political elites (mayors, city council members) and the extent of their formal and informal participation and oversight of EZ affairs. Chicago and Philadelphia, on the other hand, chose to maintain authority and responsibility for the implementation of the EZ initiative primarily within the channels of city government, where local political elites had much greater roles. Cities also varied in whether they included only a single tier or two tiers in their governance processes. Baltimore, New York, and Philadelphia created two-tiered governance structures. Finally, cities differed in complex ways in the extent to which they included zone residents and community-based organizations in local governance, both in majority representation on EZ governing boards and in influence during planning and implementation.

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The structural characteristics of the local governance process, however, do not predict revitalization outcomes. Table 8.1 shows only a weak relationship between the type of EZ governance entity and revitalization outcomes. Of the two EZ cities that placed responsibility for implementation of the EZ initiative within city government, revitalization outcomes were strong in Philadelphia and mixed in Chicago. On the other hand, the four cities that created quasi-governmental entities achieved outcomes across the full spectrum of possibilities—strong (Baltimore), mixed (Detroit and New York), and weak (Atlanta). This suggests that there is no “one best way” to structure the local governance process; the key to effective local governance is found elsewhere. By contrast, having a tiered governance structure does seem to matter, but the nature of the tiers is a critical concern. When tiered governance incorporates zone interests and community-level participants, it is associated with successful outcomes. Among the three cities with two-tiered EZ governance structures, outcomes were strong in Baltimore and Philadelphia, but mixed in New York. However, New York was an exceptional case; New York created state and local tiers rather than city and community-level tiers (see chapter 4 for further discussion). Successful outcomes were achieved in Baltimore and Philadelphia, where tiered governance broadened community participation. However, it is difficult to separate tiered governance from inclusion of the community in the policymaking process (one indicator of good local governance). Tiered governance in Baltimore and Philadelphia appears to be the structural means by which neighborhood stakeholders were more fully included in local policymaking. Majority representation of zone residents and community-based organizations on EZ governing boards does not appear to make much difference. Table 8.1 shows that outcomes in the three cities where a majority of board seats on EZ governing entities were held by zone residents or community-based organizations were strong in Philadelphia and mixed in Chicago and Detroit. By contrast, in cities where zone interests did not hold a majority, revitalization outcomes were strong in Baltimore, mixed in New York, and weak in Atlanta. However, if we move beyond majority representation to follow the lead of Rufus Browning, Dale Marshall, and David Tabb (1984) in their assessment of community development outcomes by looking at the incorporation of zone interests and concerns in EZ governing structures (i.e., the extent of citizen influence during planning and implementation), there appears to be a stronger relationship between citizen participation and revitalization outcomes. Recall that as the EZ initiative moved from strategic planning to implementation, citizen influence waned in most cities (Wright et al. 1996; Gittell et al. 2001; Hebert et al. 2001). Table 8.1 shows that the three cities where citizen influence was strongest during EZ implementation included the two with strong revitalization outcomes (Baltimore and Philadelphia) and one with mixed

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outcomes (Detroit). On the other hand, the three cities with the lowest levels of citizen participation during implementation achieved weak (Atlanta) or mixed revitalization outcomes (Chicago and New York). In sum, while our analysis shows that many elements of the local governance structure were unrelated to revitalization outcomes, structures and processes that provided opportunities for resident input and influence were associated with more successful efforts. Better outcomes occurred more often and across a wider range of measures when cities included zone residents and community-based stakeholders in a second tier of EZ governance that provided continuing opportunities for them to be involved during implementation.

Quality of Local Governance We have maintained throughout our analysis that it is not simply the selection of particular governance features that matters but how the combination of certain characteristics of governance structure and process contribute to the overall quality of governance. Table 8.1 (panel III) provides a composite assessment of the quality of local governance in the six EZ cities, based on our indicators of capacity, community participation, and program integrity, which we described in chapter 4. The table shows strong relationships between our overall assessment of the quality of governance and revitalization outcomes. Good governance characteristics were often bundled locally. Although there were some exceptions, cities that created (or enhanced) capacity also were likely to integrate the community into the governance process and to operate their programs with integrity. By contrast, cities with weak capacity often failed to integrate the community into the process and struggled to maintain program integrity. Overall, Baltimore and Philadelphia achieved the highest ratings for local governance quality and the strongest revitalization outcomes. The two cities with the lowest overall governance ratings produced mixed (New York) or weak (Atlanta) outcomes. And the two cities with a moderate rating for local governance quality produced mixed outcomes (Chicago and Detroit). In sum, table 8.1 shows a strong association between the overall quality of local governance and revitalization outcomes; cities that practiced good governance produced better outcomes.

Capacity to Act Local capacity is a long-standing concern of urban scholars. In Regime Politics, Clarence Stone (1989, 179) noted that a critical element of an urban regime is “a

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capacity to do something.” According to Stone (1989, 229; emphasis in original), “What is at issue is not so much domination and subordination as a capacity to act and accomplish goals. The power struggle concerns, not control and resistance, but gaining and fusing a capacity to act—power to, not power over.” In Building Civic Capacity, Stone and colleagues (2001, 4) study the politics of urban school reform in eleven cities and find that civic capacity is a central ingredient in systemic school reform, noting, “Civic capacity is about various sectors of the community coming together in an effort to solve a major problem.” Civic capacity, in turn, is dependent upon civic mobilization or the active engagement of a broad cross-section of stakeholders in collective problem solving. Civic mobilization is likely to be higher when resources are committed to address the problem and when key stakeholders have a shared understanding of the problem and agreement on the scope and magnitude of the proposed solution. While our analysis reflects these concerns, we also believe that greater attention must be directed to understanding the capacities needed to execute the many tasks required for effective urban revitalization.1 In addition to mastering the tasks needed to spark neighborhood revitalization, a critically important task is the ability to foster collaboration among the diverse array of public, private, nonprofit, and faith-based agencies and organizations to ensure that their efforts are consistent with the strategic plan and yield an outcome that is greater than the sum of its parts. Most previous studies of urban revitalization, however, have focused on the power struggles manifest in convening a broad group of stakeholders and seeking consensus on a plan of action and have tended to attribute failure to the inability to craft consensus rather than to the lack of capacity of agents—public, private, nonprofit—to carry out the required tasks (see, for example, Sundquist and Davis 1969; Pressman and Wildavsky 1973; Frieden and Kaplan 1975). On assessing the quality of local governance, the evidence in table 8.1 clearly shows that capacity was a key determinant of successful outcomes. Our assessment of each city’s EZ capacity to act taps both the “top level” capacity to convene and mobilize key stakeholders and resources as well as the “bottom level” capacity to translate vision statements and strategic plans into tangible outputs such as new businesses, expanded employment opportunities, skilled workers, rehabilitated housing units, and the like. Our measure represents the capacity of EZ cities to translate their strategic plans into programs and activities and coordinate those activities in a manner conducive to attaining the goals and objectives of their strategic plans. Table 8.1 shows a stronger relationship between local capacity and revitalization outcomes than any other factor: the two cities with the highest capacity also produced the strongest outcomes (Baltimore and Philadelphia), the three cities with moderate capacity had mixed outcomes (Chicago,

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Detroit, and New York), and the city with the lowest level of capacity produced the weakest outcomes (Atlanta). Our case studies of Atlanta and Baltimore help to explain why local capacity is such a critical factor. As we discussed in chapter 7, Baltimore’s initiative was directed by a governing body that (following a rocky start) had consistent leadership and extensive breadth and depth in membership, while including a wide range of key, experienced stakeholders across a selection of sectors (e.g., public, private, nonprofit, civic, philanthropic, and community) and geography (citywide and community level). Day-to-day responsibility for EZ execution was vested in a newly created agency outside the formal channels of Baltimore city government that was eventually headed by an experienced director and a professional staff. And as we noted in chapter 4, EZ leaders in Baltimore were also able to tap an established network of local nonprofits and community development corporations (CDCs). Beyond this, EBMC invested substantial resources to build community-level capacity through the village centers (VCs). In Atlanta (as described in chapter 6), the EZ governing board had much less breadth, depth, and experience than Baltimore’s; and the quasi-governmental agency Atlanta created to execute its strategic plan had unstable leadership, with a rotating cast of directors (seven over the life of the EZ initiative). The agency was staffed largely by consultants, many of whom had little experience in fostering comprehensive neighborhood revitalization. In addition, because the Atlanta Empowerment Zone Corporation (AEZC) was not set up to directly carry out the tasks of revitalization, it was dependent on others to execute EZ programs and activities. Unlike Baltimore, however, Atlanta did not enjoy the advantage of being able to work with a capable set of local nonprofits and CDCs; and the AEZC did not invest in building community capacity. The AEZC struggled to find capable delegate agencies to carry out programs. For example, though workforce development was a central component of Atlanta’s strategic plan, the AEZC was never able to find an agency—public or nonprofit—that had the capacity and experience to carry out job training activities on the scale envisioned in the strategic plan. Allocations for job training in Atlanta, therefore, were either reprogrammed or left unspent. Atlanta also struggled with simple tasks, such as the creation and operation of revolving loan funds to support business development and housing rehabilitation—tasks that were routine in most cities, where these activities had been supported with Community Development Block Grant (CDBG) funds for nearly two decades. In the end, Baltimore was able to make full use of its EZ grant and several of the activities supported by the EZ program continue through the work of its partner agencies and organizations. Atlanta, on the other hand, returned $29 million in unspent EZ funds to the federal government, despite receiving a five-year extension of the deadline to complete their local program.

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Our indicators of local capacity also tap the broader context of the community development industry in the original EZ cities to further clarify the nature of local capacity Table 8.1 presents three indicators derived from an Urban Institute study of the community development industry in 21 cities (Walker and Weinheimer 1998) that we identified as the most relevant to local governance in the EZ cities: strategies and system leadership, leadership and collaboration, and CDC capacity. Overall, the characteristics of a city’s community development industry do not appear to be strongly associated with revitalization outcomes. For strategies and leadership, the data show that Baltimore ranked very high on this dimension and its revitalization outcomes were strong. However, the next-highest category on the strategies and leadership indicator includes New York, which achieved mixed outcomes, and Atlanta, where revitalization outcomes were weak. The two cities with moderate ratings for strategies and leadership included Philadelphia (strong revitalization outcomes) and Chicago (mixed outcomes), and the city with low strategies and leadership (Detroit) also had mixed outcomes. The design of the EZ initiative implied that collaboration and partnerships were critical elements for local program success. Again the data show only a weak relationship between the characteristics of a city’s community development industry on this dimension and its revitalization outcomes. New York, which was rated highest on collaboration and partnerships in the Urban Institute study, had mixed outcomes, and Baltimore, which ranked high on collaboration and partnerships, had strong outcomes. Cities determined by the Urban Institute study to have low collaboration and partnerships, however, were included in all three revitalization outcome categories—strong (Philadelphia), mixed (Chicago and Detroit), and weak (Atlanta). Table 8.1 also shows a nonlinear relationship between CDC capacity and revitalization outcomes. The two EZ cities that were rated very high on CDC capacity (Chicago and New York) had mixed outcomes; two of the three cities with high CDC capacity had strong outcomes (Baltimore and Philadelphia) and the other had mixed outcomes (Detroit); and Atlanta, the city with the weakest outcomes, was rated low on CDC capacity. While measures of a city’s community development industry strength are helpful to better understand the local context in which cities planned and implemented their EZ initiatives, it is apparent that CDC capacity does not fully capture the breadth and depth of local capacity needed to successfully revitalize distressed neighborhoods.2 The lack of a clear relationship between the quality of the local CDC industry and neighborhood outcomes reveals something important about the quality of local governance. Although we do not doubt that local governance quality can be enhanced by a stable of capable local nonprofits, it is

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also apparent that local governance capacity transcends the existing capacity of local CDCs. EZ programs that worked did more than simply channel additional resources to capable local intermediaries.3 CDC capacity, based on our analysis, appears to be a form of potential capacity that can be tapped by an effective local governance process but by itself is insufficient to turn neighborhoods around.

Community Participation Community participation also was related to successful revitalization outcomes in EZ neighborhoods. As table 8.1 shows, the two cities with the most extensive community participation (Baltimore and Philadelphia) achieved the strongest revitalization outcomes. Baltimore and Philadelphia achieved high rankings for community participation in part because they were the only two cities in which zone residents continued to be active during implementation. However, it is important to recall that there were significant differences in the ways in which these two cities included the community in the process. Baltimore seeded and supported community-based organizations, the VCs, making a substantial investment in community capacity to provide services to zone residents. By contrast, Philadelphia organized a set of community trust boards (CTBs) that proposed programs and plans to the mayor’s office, which in turn managed a selection and contracting process to secure qualified organizations to carry out CTB-identified programs and activities. Both Baltimore’s VCs and Philadelphia’s CTBs were vested with substantial discretion in setting priorities, identifying program needs, and determining funding distributions in order to fulfill their vision for sustainable neighborhoods. This suggests that there are many different ways to include the community as a constructive force in the policymaking process. However, what is even more important about these results is that widespread community participation was not a poison pill: The two most accomplished urban EZs featured the most extensive integration of the community into the policymaking process, and community involvement continued beyond strategic planning. Indeed, in both cities the capacity that was created and nurtured during the EZ initiative has continued well beyond the initiative’s end. Philadelphia pioneered the idea of using income generated from the repayment of EZ funds that had been previously awarded as loans for economic development projects to create permanent endowments—“Neighborhood Funding Streams”—to support future investments in the zone neighborhoods. Rather than use the repayment proceeds to generate additional loans, the CTBs have earmarked the repayment proceeds to create an endowment from which the CTBs draw on the income to support neighborhood projects. Created in 2004

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in partnership with the Philadelphia EZ, the city’s Neighborhood Transformation Initiative, the EZ’s CTBs, and the United Way of Southeastern Pennsylvania, the initial $8.75 million investment in the Neighborhood Funding Streams has now grown to more than $19 million, “through smart investing and loan repayments by responsible community members” (UWSP 2013). The initial round of community grants, awarded in 2006, provided $370,000 to twentyeight community-based organizations to support projects to improve the quality of life for children, youth, and families in the EZ neighborhoods. Subsequent funding rounds have supported issues related to violence prevention and public safety, energy conservation, economic development, and equitable community development (UWSP 2013). In addition to the Neighborhood Funding Streams, other legacies of the Philadelphia EZ initiative include the CTBs themselves, which continue to meet regularly and have become a permanent organizational fixture in their respective neighborhoods, and the Community Lending Institutions (CLIs), one in each zone neighborhood, that collectively manage nearly $24 million in revolving loan funds, initially capitalized with EZ funds, for business development, primarily in the form of small business loans and microloans. The CLIs have made more than 226 loans totaling $41.6 million, which has leveraged an additional $108 million in public and private investment in Philadelphia’s EZ neighborhoods (PEZ 2006, 8). In the other cities, the relationship between community participation and revitalization outcomes was more ambiguous. Atlanta and Detroit achieved moderate levels of community participation. Given their weak outcomes, the Atlanta case, in particular, requires additional comment. Atlanta’s EZ experience shows the potential dark side of community participation. While the community struggled to be heard, the governance process in Atlanta was unresponsive to its concerns; rather than contributing to the city’s capacity, community participation in Atlanta became a source of conflict between citizens and local political elites that weakened local capacity. The Atlanta case reminds us that community participation is a double-edged sword. Extensive citizen participation without responsiveness from the governance process can yield conflict that stifles program planning and implementation. On the other hand, meaningful participation in a process that is responsive to the community’s concerns is a hallmark of good local governance that can spark the capacity to act.

Program Integrity As we noted in our discussion in chapter 2, good governance uses scarce resources effectively by establishing integrated problem solving while limiting waste, corruption, and abuse. Program integrity is associated with four aspects of the

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policymaking process: the extent to which scarce resources are used effectively is indicated by integrated problem solving, keeping commitments by continuously reconstructing local support, the absence of corruption, and program improvements that reflect lessons learned from experience. Table 8.1 shows a strong relationship between program integrity and revitalization outcomes. Baltimore and Philadelphia scored highest on program integrity and also achieved the strongest revitalization outcomes. Most cities that scored in the moderate range on program integrity produced mixed outcomes (New York is the exception, scoring low on program integrity while producing mixed outcomes). Atlanta, which scored low on program integrity and produced weak revitalization outcomes, is also a case that is consistent with a strong relationship between the two. A comparison of Atlanta and Baltimore is once again instructive. In Atlanta, there was scant evidence of coordinated problem solving and no evidence of learning. Beyond this, the expenditure of EZ funds bore little resemblance to the priorities outlined in the city’s strategic plan, the governance process had little continuity or transparency, and financial integrity was frequently an issue. Atlanta’s EZ leaders did not embrace collaboration, partnerships, or the entrepreneurial approach to community problem solving that were central to the design and ethos of the EZ initiative because these practices were not embedded in the city’s culture and experience.4 Fulfilling the spirit of the EZ initiative required a new way of doing business, and the city’s leadership, particularly local political elites during the Campbell administration, was unwilling to embrace collaboration and performance management. As many respondents noted over the course of our Atlanta field research, the EZ was something to avoid rather than an opportunity to get things done in the neighborhoods that needed the most help. By contrast, the EZ governance process in Baltimore embraced the values central to the EZ initiative. EBMC and the village centers strived to coordinate policies across sectors (such as business finance with job training and placement, and family assistance with job readiness and transportation assistance). The EBMC board practiced performance management. Regular reports were produced to advise the board about the outcomes local programs were generating; resources were shifted away from projects that weren’t performing, toward those that were. Contractors were regularly evaluated to ensure they were performing and nonperforming contractors were dismissed. All this contributed to the creation of an outcome-oriented culture within Baltimore’s EZ.

Socioeconomic Trends and Conditions One rival explanation to our claims about good governance is that neighborhood fortunes are significantly influenced by socioeconomic trends and conditions.

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Early research in the 1920s and 1930s reflecting the work of urban sociologists at the University of Chicago identified the ecological characteristics of neighborhoods as the primary determinants of neighborhood change. As Kenneth Temkin and William Rohe (1996, 160) observed, according to the ecological perspective, “a neighborhood’s fate rests solely on its relative position within an urban hierarchy, as measured in terms of spatial or social characteristics such as the distance to ‘higher use’ commercial or industrial areas and the economic status of current residents.” Although later scholars significantly expanded our understanding of neighborhood change by introducing a greater appreciation for the range of decision makers that affect the vitality of urban neighborhoods, the mainstream perspective is still one in which market forces are identified as key drivers. Anthony Downs, for example, notes that neighborhoods change because of decisions made by a variety of people, including households living in the neighborhood; households interested in moving to the neighborhood; absentee owners of property in the neighborhood; neighborhood organizations; real estate brokers, agents, and appraisers; property managers; financial institutions, including both local lenders and intermediaries in the secondary mortgage market; local and national businesses located in or near the neighborhood; and government officials at all levels. Downs (1981, 62–63) observes, “The decisions of each of these actors create conditions affecting the decisions of the others, often reinforcing tendencies toward neighborhood change once they have begun.” Rolf Goetze identified a similar list of neighborhood decision makers and emphasized that many decision makers—in particular the local media— are responding not just to neighborhood conditions but to perceptions of the neighborhood. Furthermore, Goetze (1979, 105) notes the complexity underlying neighborhood change is not just a function of the gap between perception and reality; it also reflects the “variance in different participants’ perceptions” of the neighborhood. As William Pitkin (2001, 18) noted, “For the ecologists, neighborhood change results entirely from external forces, namely the urban real estate market. Residents can do little, if anything, to alter the processes of change in their neighborhoods, because these are part of a larger ecological process in the larger metropolitan area.” If the deterministic view of neighborhood change holds, we would expect to see one of two patterns in the urban EZs, depending on whether neighborhood or citywide conditions are more important: Either there would be little or no difference in the outcomes because (as we observed in chapter 3) all the EZ cities selected similarly distressed areas for their programs, or the greatest improvements in EZ neighborhoods would occur in those cities with the most favorable citywide conditions and trends.

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In chapter 3, we assessed socioeconomic conditions and trends in the original EZ cities by constructing three composite indexes: one measured the level of distress, one measured city-metropolitan disparities, and one measured the trajectory of urban change between 1990 and 2000. Table 8.2 summarizes our analysis of city and metropolitan conditions and trends as well as the preintervention context in each city’s EZ-designated neighborhoods; also included in the table are the revitalization outcomes reported in chapter 5.5 Table 8.2 shows a modest relationship between socioeconomic conditions and revitalization outcomes, but the relationship is not in the expected direction. Cities with more favorable conditions produced worse outcomes and cities with more disadvantaged conditions produced better outcomes in their EZ neighborhoods. Based on our analysis in chapter 3, we rated Atlanta, Chicago, and New York as sites where citywide conditions and trends were most advantageous. Our evaluation in chapter 5, however, showed that Atlanta had weak revitalization outcomes and Chicago and New York had mixed outcomes. By contrast, Baltimore and Philadelphia reported the strongest revitalization outcomes despite the fact that both cities were moderately disadvantaged compared with their EZ peers. Detroit, the most disadvantaged city, also reported mixed revitalization outcomes. A closer examination shows that the revitalization outcomes linked to improvements in EZ neighborhoods as places (employment change, business investment, and housing investment) were more favorable in the cities with higher levels of distress and less favorable in the cities with lower levels of distress. Similarly, four of the five unsuccessful people-oriented outcomes (for poverty and unemployment) were found in cities that were less distressed (Atlanta, Chicago, and New York). Chapter 3 reported that all the original EZ cities identified zone neighborhoods that were severely distressed in comparison to citywide conditions. Although there were some modest differences across the cities in zone demographics, table 8.2 shows that there were no distinctive patterns in revitalization outcomes that could be attributed to the preintervention characteristics of the EZs, such as population change, race and ethnicity, poverty, and unemployment. For each of these demographic characteristics there is no clear relationship between the level of need in the designated EZ areas and outcomes achieved. In sum, table 8.2 provides little evidence to suggest that favorable citywide or favorable neighborhood trends and conditions are necessary or sufficient to achieve successful revitalization outcomes. To the contrary, outcomes were more likely to be successful in more distressed cities and were unrelated to zone characteristics. However, this does not imply that unfavorable conditions are preferred; rather, our interpretation of the evidence is that cities that practiced good governance were able to overcome unfavorable trends and conditions, while cities that practiced poor governance squandered favorable trends and conditions.

Improving

Moderately

Trajectory of Change

Overall Summary

54.7

17.5

% Poverty, 1989

% Unemployed, 1990

Worse

Same

Worse

Same

Business Investment

Poverty

Unemployment

Housing Investment

Source: Authors’ analysis.

Worse

Jobs

Revitalization Outcomes

2.4

90.0

−14.7

% Hispanic, 1990

% Black, 1990

% Pop. Change, 1980–90

EZ Neighborhood Context

Very low

Metropolitan Disparity

advantaged

Very high

City Distress

City-Metro Context

ATLANTA

Worse

Better

Better

Better

Better

15.0

41.8

0.5

78.0

−10.0

disadvantaged

Moderately

Declining

Low

Very high

BALTIMORE

TABLE 8.2 Local conditions and revitalization outcomes

Worse

Better

Better

Better

Worse

24.6

49.1

24.2

71.5

−26.4

advantaged

Moderately

Stable

Low

High

CHICAGO

Worse

Worse

Better

Better

Better

28.9

47.9

10.2

67.4

−28.0

Most disadvantaged

Stable

Middle

Very high

DETROIT

Worse

Worse

Better

Better

Better

17.7

43.2

45.6

49.1

−1.3

Most advantaged

Declining

Middle

Middle

NEW YORK

Same

Same

Better

Better

Better

23.7

52.1

25.4

63.8

−15.4

disadvantaged

Moderately

Declining

Low

Very high

PHILADELPHIA

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213

Revitalization Strategies Local policy design is a second rival explanation. How do local decisions about strategies and programs affect our claims about good governance? Pitkin (2001, 16) notes that while the ecological perspective influenced our understanding of the dynamics of neighborhood change, it downplayed human agency. An alternative perspective is that neighborhood decline is not inevitable and that human agency can be invoked to tailor strategies to counter market forces. Several typologies for improving conditions in urban neighborhoods have been proposed. In Neighborhoods and Urban Development, Anthony Downs presented a five-stage continuum of neighborhood change, noting that it is important to determine not only which stage of the continuum best fits a residential neighborhood (stable and viable, minor decline, clear decline, heavily deteriorated, unhealthy and nonviable), but also what direction along the continuum a neighborhood may be moving (improving, declining, staying the same). Downs (1981, 66–67) concludes that “the effectiveness of specific policies is tremendously influenced by what stage a neighborhood is in whey they are applied” and that “to improve any neighborhood, policies must be tailored to fit conditions prevailing there.” Goetze and Colton (1980) developed a similar list of strategies tailored to neighborhood conditions. More recently, Allan Mallach (2010, x) compiled a comprehensive inventory of tools and strategies for addressing the problem of vacant land and abandoned properties as a means for helping communities “to build stronger, healthier neighborhoods, towns, and cities.” These approaches, however, focus on physical improvement of neighborhoods and though they often make the assumption that physical improvement can be a means for improving the well-being of neighborhood residents, people-oriented improvements such as the quality of local schools, workforce development, or neighborhood safety may be beyond the direct reach of such compilations of tools, strategies, and approaches.6 Indeed, as noted in chapter 1, the evolution of federal urban policy has been shaped by the tensions between the “bricks and mortar” approach and one more attuned to human capital needs. The rise of comprehensive community initiatives in the late 1980s and the EZ-EC initiative sought to foster a comprehensive approach for neighborhood change that links economic, physical, and human development activities. Robert Chaskin (1998), for example, reviewed twenty-five neighborhood-based initiatives that were supported by private philanthropies and found that while some of the initiatives had relatively narrow programmatic focuses that emphasized a specific strategic approach (e.g., housing, economic development, social service, education), the vast majority of these efforts encompassed multiple areas

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of focus and most emphasized both economic/physical development as well as human development.

Local Policy Choices The EZ initiative was a fusion of multiple policy tools. An important feature of the initiative’s design is that cities were able to customize their local programs, and our review of local programs in chapter 3 showed that cities made consequential choices about local goals and programs. While it is highly unlikely that there is a single recipe for success, the emphasis placed on local strategic planning makes it important to examine how the choices cities made in terms of specific strategies and programs affected revitalization outcomes. Table 8.3 shows the relationship between strategies and programs and revitalization outcomes. The top panel reports the percentage of EZ block grant funds that were invested in strategies and programs that supported business development, workforce development, human services, and housing. The middle panel shows business awareness and use of three of the most important tax incentives that were available in the EZs—a wage credit for businesses of up to three thousand dollars for each existing employee or new hire who lives and works within an EZ, a Work Opportunity Tax Credit of up to twenty-four hundred dollars for each new hire from groups with high unemployment rates or other special employment needs that live within an EZ, and an accelerated depreciation for investment in facilities or equipment. The bottom panel reports revitalization outcomes. Table 8.3 shows no clear relationship between local program choices and revitalization outcomes.7 Outcomes in the three cities with the greatest emphasis on business development (Atlanta, New York, and Philadelphia) varied widely; outcomes were weak in Atlanta, mixed in New York, and strong in Philadelphia. In workforce development, the city with the highest investment in this category (Baltimore) had strong outcomes; on the other hand, the cities with the least investment in this category (Atlanta and Philadelphia) included cities that ranked at both ends of the outcome continuum. Similarly, there was no clear relationship between investment in human services or in housing and revitalization outcomes. The same patterns (or rather, the lack of any clear patterns) hold when one moves from an assessment of overall revitalization outcomes to a more focused assessment of specific outcome indicators. For example, the only city where EZ neighborhoods fared worse on jobs and business investment was Atlanta, which devoted one of the highest percentages of EZ funds to business development. Two of the three cities that devoted the largest share of EZ funds to workforce

4.1

% Human Services

31/5 22/1

WOTC

Section 179

Worse Same Worse Same

Business Investment

Poverty

Unemployment

Housing Investment

Source: Authors’ analysis.

Worse

Jobs

III. Revitalization Outcomes

42/7

Wage Credit

II. Tax Incentives (% Aware / % Used)

26.9

0.5

% Workforce Development

% Housing

57.3

% Business Development

ATLANTA

Worse

Better

Better

Better

Better

33/4

40/6

61/12

9.7

9.1

36.8

31.5

BALTIMORE

Strategies, programs, and revitalization outcomes

I. Programmatic Focus

TABLE 8.3

Worse

Better

Better

Better

Worse

29/8

28/2

57/13

21.6

36.5

15.8

12.6

CHICAGO

Worse

Worse

Better

Better

Better

27/5

36/2

61/19

12.9

63.1

5.6

0.2

DETROIT

Worse

Worse

Better

Better

Better

28/2

23/3

38/7

2.3

2.9

6.9

67.4

NEW YORK

Same

Same

Better

Better

Better

39/4

39/3

58/9

9.3

9.2

0.7

65.7

PHILADELPHIA

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development (Baltimore and Chicago) ranked among the three cities that fared better on unemployment. However, the third city that showed improvement in unemployment was Philadelphia, which allocated less than one percent of their EZ funds for workforce development. The two cities with the largest share of EZ funds invested in human services (Chicago and Detroit) had mixed results on poverty and unemployment. The only two cities where EZ neighborhoods fared better on both the poverty and unemployment indicators were Baltimore and Philadelphia, with each city making only moderate investments in human services. Finally, the two cities with the highest share of EZ funds devoted to housing (Atlanta and Chicago) had weaker outcomes and the three cities that devoted the lowest shares of EZ funds to housing (Baltimore, New York, and Philadelphia) produced stronger housing outcomes. Table 8.3 also suggests there were no meaningful differences between EZ cities that took a more comprehensive approach to local program design (such as Baltimore and Chicago) versus those cities that used the majority of their EZ funds within a particular category of activity—Atlanta (57 percent business development), Detroit (63 percent human services), New York (67 percent business development), and Philadelphia (66 percent business development). Though EZ allocations in Baltimore and Chicago suggest a more comprehensive approach, Baltimore’s EZ produced strong outcomes, whereas Chicago’s EZ did better on only three of the five revitalization measures examined. Cities that specialized, on the other hand, generated the full spectrum of possible outcomes: Atlanta (weak), Detroit and New York (mixed), and Philadelphia (strong). The EZ initiative combined grant-funded programs with tax incentives. Thus, to fully assess the relationship between local strategies, programs, and outcomes, we must also consider how—if at all—the marketing and use of the EZ tax incentives were incorporated into city revitalization plans. As we explained in chapter 3, information on the use of the EZ tax incentives (particularly at the city level) is very limited. The figures we report in table 8.3 were derived from a survey of businesses in the six original EZ cities that were collected as part of the interim outcomes assessment (Hebert et al. 2001, chap. 3). The data, gathered during the summer of 2000, show a wide range of variation across the cities in business awareness and use of the tax incentives as well as variation in levels of awareness and use across the three tax incentives included in the analysis. However, generally speaking, cities that ranked highest on business awareness/use on one type of tax incentive also tended to rank high on the others. Overall Baltimore, Chicago, and Detroit achieved the highest use of the three tax incentives examined; Philadelphia recorded a moderate level; and Atlanta and New York had the lowest rates. In terms of the Wage Tax Credit (perhaps the most generous EZ tax incentive available), Baltimore and Detroit had the highest

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217

levels of business awareness and use followed by Philadelphia and Chicago, with Atlanta and New York bringing up the rear. These patterns suggest a modest relationship between tax incentives and outcomes: cities with high or moderate awareness and use of the EZ tax incentives included Baltimore and Philadelphia, the two cities with the strongest revitalization outcomes, and Chicago and Detroit, which produced mixed outcomes. Cities with low business awareness and use of the EZ tax incentives included Atlanta (weak outcomes) and New York (mixed outcomes). This relationship is further sharpened when one limits the analysis to the revitalization outcomes most likely to be directly affected by the EZ tax incentives (job growth, business investment, and unemployment); among cities with high or moderate business awareness and use of EZ tax incentives, eleven of the twelve outcomes for this group were better in the EZ neighborhoods, whereas in the two cities with the lowest levels of business awareness of the EZ tax incentives the EZ neighborhoods fared worse on four of the six revitalization indicators. This suggests that tax incentives are a useful tool to encourage neighborhood revitalization. However, the value of tax incentives is enhanced by factors—such as quality of local governance—other than simply market incentives. The strategic focus emphasized in local program design did not correspond with revitalization outcomes. No particular programmatic focus emerged as the key to effective revitalization. All the cities had multifaceted programs that aimed at somewhat different purposes. What distinguished the sites in effectiveness was the extent to which these initiatives were integrated. Thus, the process by which local programs were coordinated seems to have been more important than the particular choices made. Local process, not policy design, was the key to success. This finding implies that successful neighborhood revitalization requires more than the “right” mix of policy tools and making the “right” choices about local strategies and programming. Beyond this, the limited evidence that is available suggests that market-oriented policies by themselves should not be considered as an effective means to promote neighborhood revitalization. As we noted in chapter 2, one reason to favor market oriented policies is that they are thought to be largely self-implementing, eliminating (or at least significantly reducing) concerns about local government effectiveness. However, our results suggest that the quality of local governance, and particularly local capacity to package market-oriented tools with other local incentives and programs, can enhance the value of tax incentives. For example, one local EZ director in a round II EZ city told us that his city referred hundreds of people that were qualified for EZ employment tax credits to local employers, but only one was hired. When the director convened a roundtable to ask local employers why they were not more interested in receiving the tax credits, the employers explained that the people who were sent from the EZ needed services

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(such as drug treatment, transportation, child care, and job training).8 Tax incentives by themselves were not sufficient to connect low-income residents to economic opportunities. Tax incentives work better when they are complemented by effective local governance and programming that addresses the needs of residents in distressed communities.

Recipes for Action Successful neighborhood revitalization can follow many different pathways. As Charles Ragin (2008, 113–114) explains, “The challenge posed by configurational thinking is to see causal conditions not as adversaries in the struggle to explain variation in dependent variables but as potential collaborators in the production of outcomes. The key issue is not which variable is strongest (i.e., has the biggest effect) but how different conditions combine and whether there is only one combination or several different combinations of conditions (causal recipes) capable of generating the same outcome. Once these combinations are identified, it is possible to specify the contexts that enable or disable specific causes.” Table 8.4 presents the distribution of the EZ cases across causal conditions and by revitalization outcomes. The table shows that stronger outcomes were generated by different combinations of causal conditions, and by contrast, so were weaker and mixed outcomes. The evidence also shows, however, that the quality of local governance appears to be the critical factor that enables successful revitalization. As we have noted, Baltimore and Philadelphia produced the strongest outcomes. Although both cities were moderately disadvantaged, they pursued markedly different strategies, had different priorities regarding the allocation of EZ funds, and local businesses differed in their awareness and use of EZ tax incentives. Indeed, the evidence shows that the strategies, programs, and uses of EZ resources and policy tools in Baltimore and Philadelphia were not dramatically different from the approaches taken in the other EZ cities. This implies that what you decide to do is less important than how well you do it. We do not mean to suggest that local policy choices do not matter. Rather, we seek to diminish the attention that local program design receives because it does not distinguish the cases that achieved stronger revitalization outcomes. Baltimore and Philadelphia did not have more successful EZs because they made distinctive choices about local programs and strategies; they had more successful EZs because they did a better job of implementing programs and policies that were similar to what was being attempted in other cities. Compare Atlanta and Philadelphia in table 8.4; in many ways the paths Atlanta and Philadelphia took were quite similar—both focused their EZ program

Business Development Human Services

Low

Low

Program Emphasis

Awareness and Use of Tax Credits

Overall Quality of Governance

Source: Authors’ analysis.

Focused

Strategy

NEW YORK

MODERATE

Moderate

High

Focused

Balanced

Balanced

Moderately disadvantaged

BALTIMORE

Low

Low

Moderate

High

High

High

High

Moderate

Business Development

Focused

Moderately disadvantaged

PHILADELPHIA

STRONG

Business Development

Business Development Human Services Workforce and

Focused

Moderately advantaged

CHICAGO

EZ REVITALIZATION OUTCOMES

Most disadvantaged Most advantaged

Moderately advantaged

Local Conditions

DETROIT

ATLANTA

WEAK

Recipes for revitalization

FACTOR

TABLE 8.4

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predominantly on business development. Local conditions in Atlanta were more favorable than those in Philadelphia, leading one to expect that outcomes would be better in Atlanta. Although business awareness and use of the EZ tax incentives was lower in Atlanta than Philadelphia, this also may be an indirect indicator of the quality of local governance. But the limited effect of tax incentives that is well established in the literature suggests that tax incentives alone are unlikely to account for the differences in outcomes between the two cities. There were, however, sharp differences between Philadelphia and Atlanta in the quality of local governance, and those differences are a plausible explanation for the different accomplishments of the two cities. Compare Baltimore with Chicago and New York. Both Chicago and New York enjoyed more favorable local conditions. Chicago’s program emphasized human services, while New York’s emphasized business development; Baltimore combined workforce development and business development. Although there was substantial overlap in the programmatic emphases in the three cities (the notion of workforce development in Baltimore was expanded to include many human service programs through the family support centers in each village center) and Chicago and New York enjoyed advantageous conditions, outcomes were better in Baltimore. Although it is possible that the outcomes in Baltimore resulted from the distinctive combination of workforce development and business development programs, the quality of local governance also distinguishes the Baltimore case. Note, however, that Philadelphia accomplished outcomes similar to Baltimore’s but with a different strategy. Of course, given the limited number of cases and the many potential combinations of causal conditions, we are constrained in our ability to test all observable implications of the determinants of successful revitalization initiatives. Consequently, our findings are suggestive, not conclusive. The typical option recommended in situations such as this is to increase the number of cases included in the analysis. However, because of the distinctive nature of the EZ initiative— there were only six cities in the United States that received the “full” EZ treatment of $100 million in federal block grant funds and federal tax incentives—that is not a feasible option to pursue. As we explained in chapter 1, although areas in other cities were designated as EZs, the breadth and depth of federal assistance did not match that received by the original EZs. In our view, including the round II or round III EZs in the study would weaken the construct validity of the treatment (as we explained in chapter 5). An alternative strategy recommended by Gary King, Robert Keohane, and Sidney Verba (1994, 29) is to “increase our leverage over a research problem” by increasing “the number of observable implications of our hypothesis and seek confirmation of those implications” (see also George and Bennett 2005). Our

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case studies of Atlanta and Baltimore provided this opportunity. In both chapters 6 and 7 we observed that the effects of the EZ initiative were not uniform across all census tracts within each city’s zone. In Atlanta, despite a low overall quality of governance—at times it was downright dysfunctional—and weak revitalization outcomes achieved, there were clusters of contiguous census tracts in Atlanta that had moderate to strong revitalization outcomes and those tracts typically aligned with areas of the EZ where partnerships and collaborations, mobilization of resources, and capacity to act were highest. One such cluster included the neighborhoods of Joyland and South Atlanta, where EZ investments supported a major corridor project and complemented a nearby HOPE VI project. As noted in chapter 6, Atlanta spent a total of $17.5 million on the Southside-Pryor Road corridor project, which included the acquisition and demolition of an underused and drug-infested shopping center that spawned several new residential developments in the area that were supported with additional city and federal housing funds. In addition, EZ funds provided support for the Atlanta Housing Authority’s HOPE VI project (Villages at Carver), construction of a new YMCA, and park, sidewalk, and street improvements in the corridor. Although EZ investments were not as substantial in the Northeast quadrant of the Atlanta EZ, numerous homes were purchased with the assistance of the EZ-funded mortgage assistance program and a $1 million EZ business loan supported the conversion of a former industrial facility into one of the city’s first loft housing developments. As one local official acknowledged when informed of the spatial pattern of Atlanta’s EZ efforts, “That makes sense as those were the neighborhoods where we had capable partners and were able to get things done.”9 The community-level analysis in Baltimore provides additional evidence that the quality of local governance matters. Baltimore’s overall quality of governance was rated high and its revitalization outcomes were among the best. However, these effects were not uniform across all EZ census tracts. In Baltimore meaningful decision-making responsibilities resided at the community level. But planning and implementation did not go smoothly in all of the city’s village centers. As noted in chapter 7, two of the village centers had serious, ongoing problems and EBMC ultimately withdrew financial support when technical assistance and other reform efforts failed. The Baltimore case also shows that community-level market conditions were an important factor; outcomes were better in census tracts that had relatively advantaged socioeconomic conditions and capable community organizations. However, the pattern of outcomes—both citywide and at the village center level—is best explained by the quality of governance, citywide and at the community level. The strong outcomes that were observed in Baltimore tracked the quality of local governance all the way down to the community level.

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Philadelphia and New York, the other two cities that opted for a two-tiered governance structure, provide additional opportunities for testing the hypothesis that local governance is the critical enabling factor for revitalization outcomes. In Philadelphia, there was little variation in the spatial pattern of revitalization outcomes between the city’s three zone areas (see the map of revitalization outcomes in the online appendix). In New York, where overall EZ revitalization outcomes were mixed, we found substantial variation in EZ outcomes across the city’s two zone areas (see the online appendix). If we look below the zone level in New York to compare the outcomes produced in the zone’s two sectors, it is clear that the outcomes achieved in Harlem were better than the South Bronx. However, few urban neighborhoods were as vibrant as Harlem during the late 1990s and early 2000s (Maurrasse 2006). In Harlem, EZ governance was initially in the hands of the Harlem Urban Development Corporation (HUDC), which Derek Hyra (2008, 71–74) observes was “a bastion of patronage politics and was known as Harlem’s gatekeeper for development. During the 1980s, the organization developed an unsavory reputation by receiving sums of public money while producing very little tangible development.” The 1994 elections “destroyed the HUDC’s role as the EZ fiscal agent” as Republicans gained control of both the statehouse and city hall. Following an investigation of the HUDC’s operations by Governor Pataki, EZ funds were withdrawn and a new agency—the Upper Manhattan Empowerment Zone (UMEZ)—was created to oversee EZ activities in Harlem. Under the UMEZ, zone priorities shifted from social services to economic development, largely because of Republican control of the UMEZ board; the strategy for promoting economic redevelopment emphasized attracting large corporations, particularly retailers. One showcase project was Harlem USA, a retail and entertainment complex that received $11 million in EZ funds: “with the UMEZ’s assistance, Harlem business developments have become green-lined” (74). The defunding of the Harlem Urban Development Corporation and the creation of the Upper Manhattan Empowerment Zone Corporation signaled a shift in culture and strategy that enhanced local capacity in New York (Hyra 2008). Without the governance reform, it is unlikely that the synergy between EZ investments and market conditions would have yielded the strong revitalization outcomes that were evident in the Harlem sector of the EZ.10 The South Bronx zone is a more difficult case. Outcomes were weak in most of that sector of the zone—seven of ten census tracts included in the analysis fared better than their control group counterparts on only two or fewer revitalization outcomes. A straightforward inference of our analysis implies that EZ governance in the South Bronx must have been of lower quality than governance in Harlem. However, we do not believe that to be the case. Both the Rockefeller

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Institute reports (Wright et al. 1996) and the series of reports released by Marilyn Gittell and colleagues (1998 and 2001) noted that governance was somewhat better in the South Bronx than in Harlem. Both studies note a higher degree of citizen engagement in the South Bronx during strategic planning and Gittell and colleagues (2001, 82) note that the Bronx Overall Economic Development Corporation (BOEDC) “has seen success in industrial development and the attraction and expansion of mid-sized industrial firms, bringing manufacturing jobs to the three South Bronx industrial parks located in the EZ,” indicating that the BOEDC indeed had a track record of accomplishments. Our interpretation of the New York case is not that governance was weaker in the Bronx but rather that the virtues of the governance process in the Bronx were insufficient to overcome the weaker market conditions found there. While the South Bronx was noticeably improved at the start of the EZ initiative from where the neighborhood had been in the 1970s—one observer called the neighborhood “a synonym for disaster”—market conditions in the South Bronx were well below the “economic boom” that was sweeping Harlem in the 1990s and early 2000s, leading some observers to suggest “a new Harlem renaissance” (Hall 1999; Maurrasse 2006).

Conclusion After reviewing the evidence and considering rival explanations, we conclude that good local governance contributed to successful revitalization efforts in the original urban EZs, while poor local governance retarded progress. In particular, the evidence shows that local capacity mattered: local capacity was the best predictor of the revitalization outcomes achieved in the original urban EZs, and we maintain that creating and sustaining local capacity is a necessary condition for good governance. In sum, we conclude: • Governance matters. EZ cities that practiced good governance produced better outcomes; cities with poor governance produced worse outcomes. Local capacity, meaningful community participation, and program integrity are the elements of good governance. • Context is not fate. EZ cities that practiced good governance overcame unfavorable trends and conditions, while cities that practiced poor governance squandered favorable trends and conditions. Socioeconomic trends and conditions do not determine the success of revitalization policy. • Governance trumps policy design. Successful revitalization outcomes were associated with how well local initiatives were governed, not distinctive

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policy ideas. Successful revitalization initiatives require more than selecting the “right” mix of policies and programs; local initiatives must be effectively implemented, and good governance is essential for getting things done. If the quality of local governance is the key to successful urban revitalization, then the turn in federal urban policy over much of the past two decades is regrettable and wrong-headed (as support for local programming and governance was dropped in favor of market-oriented policies). To transform distressed, innercity neighborhoods we must recognize what was promising and successful about the original urban EZs and build on that foundation.

Appendix: Confounding Factors? An additional issue to consider is whether the relationship between governance and revitalization outcomes is confounded by other factors we have examined, such as local context, strategic approaches, and awareness/use of the EZ tax incentives. These questions are addressed in tables 8.A1 (on local context), 8.A2 (on programs and strategies), and 8.A3 (on tax incentives). The tables show that TABLE 8.A1 Local context and governance OVERALL QUALITY OF LOCAL GOVERNANCE LOCAL CONTEXT: SOCIO ECONOMIC CONDITIONS

LOW

MODERATE

Most Advantaged Moderately Advantaged

HIGH

New York Atlanta

Chicago

Moderately Disadvantaged

Baltimore Philadelphia

Most Disadvantaged

Detroit

Source: Authors’ analysis.

TABLE 8.A2 Programs, strategies, and governance OVERALL QUALITY OF LOCAL GOVERNANCE PROGRAMS AND STRATEGIES

LOW

Comprehensive/Holistic Focused—Business Development Focused—Human Services Source: Authors’ analysis.

MODERATE

HIGH

Chicago

Baltimore

New York Atlanta

Philadelphia Detroit

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225

TABLE 8.A3 Tax incentives and governance OVERALL QUALITY OF LOCAL GOVERNANCE USE AND AWARENESS OF TAX INCENTIVES

LOW

High

Moderate Low

MODERATE

HIGH

Chicago Detroit

Baltimore

Philadelphia Atlanta New York

Source: Authors’ analysis.

the quality of local governance appears to be largely independent of these factors (in each table the cases generally fall off the diagonal, indicating the lack of a clear linear relationship between governance and these factors). Because our measure of the quality of local governance does not covary with these other factors, our confidence in its independent influence on EZ outcomes is enhanced.

CONCLUSION

The quality of local governance distinguished the performance of the revitalization initiatives undertaken in the original urban EZs. Zone neighborhoods attained better outcomes than their matched-pair counterparts where good governance was consistently practiced over the course of the initiative. Although the literature evaluating the EZ initiative has separated questions about local governance from questions about local outcomes, we have joined these concerns. In this final chapter we explore the implications of our findings to draw more general lessons about revitalization programs and city politics. What do our claims about local governance imply for our knowledge of urban politics and federalism? What do our claims about the role of governance in the successes achieved in the original EZs imply about the future of urban policy? What lessons do we take from the EZ experience regarding how communities solve tough problems, such as urban revitalization?

Good Governance The EZ initiative was a multifaceted undertaking that required local agencies and organizations capable of executing tasks that included marketing tax incentives and business assistance programs; establishing revolving loan funds for business improvement and housing development; underwriting business and homeowner loans; securing qualified contractors to carry out the work; recruiting, training, 226

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and placing participants in workforce development programs; and adopting community policing strategies to secure neighborhoods. To connect and align the tasks of revitalization, governance is a critical concern. While we appreciate the virtues of collaboration (Gray 1989; Chrislip and Larson 1994; Fosler 2002), our research suggests that collaborative processes alone are not enough. Several of the original urban EZs created collaborative entities to implement their local programs with mixed results. We believe greater attention should be paid to understanding the capacities required to implement comprehensive community initiatives. John Donahue and Richard Zeckhauser (2011, 21) observe, “Perhaps the biggest reason why collaborative governance is underemployed and underperforms is that those in charge simply do not know how to do it. Too few people understand the critical importance of matching tasks with delivery models, and then calibrating the proper pattern of shared discretion for accomplishing a particular task.” The literatures in political science, public administration, and public policy contain numerous discussions of good governance (or effective governance) that include one or more of the elements (capacity, community participation, and program integrity) we highlighted as key features of good local EZ governance.1 As we noted in chapter 2, good governance is a common concern in the international development literature.2 Mark Bevir (2009) observes that although there is no agreed-on definition of good governance, much of the international development literature is composed of overlapping wish lists of governance reforms. Norms of democracy and efficacy are common features of these wish lists. Bevir (2009, 92) notes that there is a broad presumption that governance processes should be “responsible and accountable to stakeholders” and that poor governance (corruption, waste, incompetence, and unresponsiveness) is a significant barrier to economic growth. Beyond this, Bevir (41) asserts that two forms of state capacity are important: “Policy capacity is the state’s ability to make intelligent choices and set strategic agendas that optimally use its resources. Administrative capacity is the state’s ability to manage and implement its policy choices.” Collaborative governance—involving “non-governmental and non-traditional political actors” in the policymaking process—is, according to Bevir (47–48), a means to create capacity. An advantage of collaboration is that “new skills, expertise, and perspectives” are brought into the policymaking process. Bevir (119) notes that collaborative governance is a useful institutional means to enhance local governance capacity: “Local governance works through open networks. . . . It fosters cooperation among diverse governmental actors and even non-governmental actors.” A model of good governance emerges from this review that is consistent with our observations about local EZs. Good local governance creates capacity through collaboration. Good governance chooses

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sound strategies and executes those strategies. Good governance is democratic (accountable, representative, and responsive) and efficacious (effectively using resources while resisting and combating corruption). Xavier De Souza Briggs (2008) identifies a similar good governance profile in his global examination of civic capacity, democracy, and governance. Briggs links good governance to effective problem solving: democratic policymaking is not only about deciding; it is also about doing. Good governance blends concerns about openness and participation with concerns about the effectiveness of the process at accomplishing its policy objectives. Briggs (2008, 314) describes an “effective democracy” (an ideal form of governance) that has two characteristics, task efficacy—the capacity to get things done to address public problems—and high levels of inclusiveness in the decision-making process. Lesser forms of governance can deviate from this ideal either by being an “incompetent democracy” (which affords significant participation, but lacks task efficacy), or as an “effective autocracy” (which can make things happen, but without protections from domination). If democratic policymaking is about deciding and doing, the empirical link our research has established between effective local governance and revitalization outcomes reflects Brigg’s central claim. The best EZs were effective democracies that included a broad group of stakeholders—including zone residents and community-based organizations—in the policymaking process while still accomplishing the tasks of revitalization. Our findings demonstrate the real-world possibilities for Brigg’s ideal of effective democracy while providing additional details about how community representatives were included in the process and how local governance arrangements were able to mobilize resources and develop capacity. In addition, Briggs (2008, 298; emphasis in original) offers a significant insight that is consistent with our proposals for urban policy reform; it is possible to generate civic capacity—“civic capacity is producible, even against the odds, and transformable.” This implies that revitalization efforts can aspire to create civic capacity where it does not exist and to expand or transform it where it does.

Local Capacity Capacity is an important concept in the governance literature. Our view is that good local governance generates, channels, and sustains capacity so that energy is directed at problem solving. Robert Agranoff and Michael McGuire (2003, 185– 186) voice a similar view in their discussion of collaborative public management. They observe that collaboration is a strategy to enhance governance capacity. Although Agranoff and McGuire (2003, 25) regard local government as a critical participant, governance is an expansion beyond government “to contribute to a city’s capacity to govern. Governments must blend their capacities with those

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of various nongovernmental actors to be effective.” An important element of the effectiveness of local governance is the “selective activation” of participants. Being selective allows the local governance process to ensure that the right mix of participants, with the right resource endowments, are included in the process. However, governance may be undermined by “involving the wrong player or the wrong mix of resources” (Agranoff and McGuire 2003, 177). As a result, sound judgment about selective activation is an essential management skill. Robert Chaskin and colleagues (2001, 7) note that “community capacity, in a general sense, is what makes communities ‘work.’ ” They elaborate on this notion by pointing out that “community capacity is the interaction of human capital, organizational resources, and social capital existing with a given community that can be leveraged to solve collective problems and improve or maintain the wellbeing of that community. It may operate through informal social processes and/ or organized efforts by individuals, organizations, and social networks that exist among them and between them and the larger systems of which the community is a part.” In many ways, the rise of comprehensive community initiatives and the creation of the EZ initiative (which incorporated many of its key features) were efforts to increase community capacity, both in its ability to establish a collaborative process and to foster products that would transform neighborhoods. For example, a primary factor behind the Comprehensive Community Revitalization Program (CCRP) in the South Bronx was to increase the capacity of community development corporations to extend their task set beyond physical development to also include other elements thought to be critical for the revitalization of urban neighborhoods such as health care, education, workforce development, and related human services. A key goal of CCRP, according to the initiative’s architects, Anita Miller and Tom Burns (2006, 1), was to transform the six participating community development corporations (CDCs) into “neighborhood intermediaries,” “coordinating the planning, resource development and program implementation that would begin addressing the economic and social ills contributing to poverty in their communities.” Nancy Nye and Norman Glickman review several smaller-scale efforts in seven cities that involved partnerships between CDCs and foundations, corporations, and the public sector to increase local community development capacity. Nye and Glickman (2000, 165) note that a widely held belief among these collaborative efforts was that “by becoming more skilled, CDCs should be able to produce benefits for their neighborhoods.” Chicago’s New Communities Program (NCP) has further demonstrated that the neighborhood intermediary functions essential for the design and management of comprehensive community initiatives can be housed and effectively

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carried out by other types of community-based organizations as well (Greenberg et al. 2010, chap. 3). Interim findings from Chicago’s NCP, a ten-year, $47 million MacArthur Foundation initiative developed and managed by the Chicago office of the Local Initiatives Support Corporation, also underscored the contribution of effective intermediaries to good governance. Based on analysis of the early implementation experience and quality of life trends in six of the NCP’s fourteen focus neighborhoods, the interim report shows the critical role that neighborhood-level intermediaries can play in fostering revitalization.3 One lesson from the NCP experience is that “intermediary structures can be a good way to promote comprehensive community action by many different local groups.” The report adds, “Although intermediary structures worked to promote comprehensive work in many different contexts, this does not mean that NCP ‘works’ the same in all contexts. Accordingly, governance of community initiatives should take into consideration barriers of mistrust between organizations of different capacities and orientations” (Greenberg et al. 2010, 131). Other studies of comprehensive community initiatives and related poverty reduction strategies have emphasized the importance of capacity. A recent study designed to “gain a deeper understanding of the relationship between poverty, people, and place” conducted by the Federal Reserve System and the Brookings Institution’s Metropolitan Policy Program (Erickson et al. 2008, 184) concluded that one of the enduring factors contributing to deprivation in urban neighborhoods is the limited capacity of communities to “address the problems associated with concentrated poverty.” Weaknesses in the ability of local governments, nonprofit agencies, and community-based organizations to connect social services to neighborhood revitalization efforts were highlighted. The report concluded, “Across the case studies, capacity issues were apparent in three related areas: expertise, governance, and trust.” John Kania and Mark Kramer (2011, 36) recently introduced the notion of collective impact—“the commitment of a group of important actors from different sectors to a common agenda for solving a specific social problem.” Kania and Kramer (36–38) observe that what distinguishes collective impact strategies from collaborative initiatives is that, “unlike most collaborations, collective impact initiatives involve a centralized infrastructure, a dedicated staff, and a structured process that leads to a common agenda, shared measurement, continuous communication, and mutually reinforcing activities among all participants.” One of the keys to successful collective impact strategies is the existence of a backbone support organization—“a separate organization and staff with a very specific set of skills to serve as the backbone for the entire initiative. . . . The expectation that collaboration can occur without a supporting infrastructure is one of the most frequent reasons why it fails” (40).

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Our findings provide empirical support for the importance of local capacity. As we observed in chapter 8, local capacity was the factor most directly aligned with revitalization outcomes in the original urban EZs. However, we also noted that organizational capacity can take many forms. Consider the two EZs that practiced good governance. In Philadelphia, organizational capacity within city government was tapped to implement community-based plans. By contrast, in Baltimore a quasi-governmental corporation used contracting relationships with effective nonprofits to create capacity.

Community Participation Collaboration, civic mobilization, and selective activation raise the issue of community participation in local governance. However, since Daniel Patrick Moynihan published Maximum Feasible Misunderstanding, community participation in federal initiatives has been a source of controversy.4 Moynihan’s book was a scathing critique of the Community Action Program and, particularly, the expectation of “maximum feasible participation” by disadvantaged citizens. Since then citizen participation has often been viewed as an obstruction that delays and may derail implementation, leading local officials to shy away from meaningful citizen participation. Too often, citizen participation has become “routinized participation,” that is, opportunities for citizens to testify at structured public hearings as opposed to engaging in discussions around problem definition and policy design, and participating in the governance and implementation structures that drive the execution of public policies (Howard et al. 1994). The comprehensive community initiatives that emerged in the 1990s, on the other hand, were grounded in the belief that meaningful community participation was essential for successful neighborhood revitalization (Kubisch et al. 2010). That perspective was incorporated into the EZ initiative and was realized in most EZ cities during the strategic planning process, though citizen influence declined in most cities as the initiative moved from planning to implementation (Wright et al. 1996; Gittell et al. 2001; Hebert et al. 2001). Our view, which is that an effective local governance process will provide numerous, ongoing opportunities for citizens and community-based organizations to meaningfully participate in the policymaking process, is widely reflected in the literature. Jeffrey Berry, Kent Portney, and Ken Thompson (1993) contend that the quality of urban democracy depends on the breadth and depth of community participation. Participation creates stronger democracy when citizens enjoy numerous points of access and significant authority to affect policy decisions. Elaine Sharp (2003, 68) explicitly links political participation to the quality of governance. She observes that effective participation can “shape the quality of decision making

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in government” by conveying information about citizens’ “needs, concerns, and interests.” Beyond this, participation can directly contribute to effective policy implementation. Finally, political participation develops the habits of authentic citizenship that are essential for democracy. Indeed, Carmen Sirianni (2009, 2–3) argues that “government needs to become a much more strategic, systematic, and effective enabler of civic engagement for several reasons.” First, he notes that the capacities for collective problem solving are not likely to “simply bubble up from the wellsprings of civil society” nor are they likely to emerge from “the invisible hand of the market.” Second, “if government has become part of the problem,” then we need to explore how it can “become an energetic partner for renewal.” Finally, and perhaps most important, Siranni argues that “the costs of doing civic democracy well have continued to rise as a result of the increasing complexity of public problems, the diversity of publics and stakeholders, and heightened expectations for voice and inclusion among citizens.” However, there is also a broad consensus among urban analysts that the solution is not simply to encourage community participation but to empower the community to contribute responsibly to the public good (Berry et al. 1993; Warren 2001; Sirianni 2001; Fung 2004; Briggs 2008), which in turn increases effective community problem solving. For example, Archon Fung (2004) has identified five ways in which community participation contributes to capacity. First, localities are more likely to devise solutions that reflect local conditions and preferences. Second, local residents are a source of creative energy and ideas that can help to develop innovative solutions to urban problems. Third, members of the community may have specialized local knowledge that is lacking in urban agencies and bureaus. Fourth, extensive community participation can mobilize new sources of support (in the form of resources or expertise). Finally, public accountability is enhanced by broad community participation. There are, however, no guarantees that community engagement will yield effective problem solving. Problems that can be associated with community participation include corruption (Segal 2002), discrimination, domination by factions, and parochialism (Fung 2004; Warren 2001). Beyond this, it can be especially challenging to provide constructive opportunities for participation in communities that lack social capital (Fung 2004; Warren 2001; Wilson 1987; Saegert et al. 2005). Fung (2004, 8) has observed that successful participation in distressed communities is likely to require the “sensitive application of external guidance and constraint.” Our findings reflect the two faces of community participation. In some local EZs the governance process was open to broad community participation and the community did make constructive contributions. It is noteworthy that the EZs

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that enjoyed both high levels of community participation and of local capacity were cities in which citizens and community representatives were active during the implementation process (selecting and monitoring community-level programs, as in Philadelphia, or planning and implementing community-level projects, as in Baltimore). In other cities however, struggles over the breadth and depth of community participation undermined local capacity, resulting in delays and unending conflicts. This suggests that community participation must be carefully crafted to ensure that it contributes to local capacity. For example, at one point early in the Atlanta EZ process, when it appeared that conflicts between zone residents and city officials were delaying development of the city’s strategic plan, a senior HUD official told Atlanta EZ participants that “Atlanta was paying too much attention to citizen participation and needs to concentrate more on the substance of its plan.” The official added, “Atlanta has too much citizen participation; they need to start worrying about bringing the other partners to the table, particularly the business community.”5

Program Integrity Effective governance uses scarce resources effectively. This requires a governance process that is capable of forging a useful connection between means and ends. Actions should be linked to reasonable objectives and local governance entities should monitor progress toward achieving goals. Policy should be adjusted to reflect learning over time. Beyond this, scarce resources must not be wasted on corruption or patronage. Our findings link program integrity to the cultural factors that are embedded in the design and operation of governance institutions and practices. Although culture has frequently been employed as an explanatory factor in urban political analysis, it has been a relatively amorphous concept that has been difficult to operationalize and assess empirically. We concur with Stone and colleagues (2001, 75) when they observe that “communities differ in their abilities to interject new ways of thinking about education [or in our case, neighborhood revitalization] and in their abilities to bring together diverse interests from a broad segment of the community to solve problems collectively.” While Stone and colleagues refer to that ability as civic capacity, we believe that the ways communities think about the revitalization of distressed neighborhoods and their ability to bring together diverse interests is also embedded in the local culture, which in turn affects both the structures and processes that communities establish to solve problems, as well as the capacity of the community’s agents to carry out the tasks of revitalization. Two cultural elements seem especially important. The first is the community’s predisposition toward collaborative problem solving, which is shaped in

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part by its history and experience with previous efforts. Paul Mattessich, Barbara Monsey, and Corinna Roy (1997, 14), for example, reviewed more than five hundred studies of comprehensive community initiatives and found that the “ability to discuss, reach consensus, and cooperate” and “prior success with community building—communities with prior positive experience with community building efforts are more likely to succeed with new efforts” were among the critical factors associated with successful initiatives. The second is a community’s willingness to embrace and practice the principles of entrepreneurial governance, such as strategic planning, benchmarking, catalytic investments, and performance management. These were prominent features of the EZ’s policy design and intergovernmental management of the EZ initiative. Our assessment of local EZ programs reflects many elements of what David Osborne and Ted Gaebler (1992) termed “entrepreneurial governance,” and, more broadly, the concerns of the new public management (Barzelay 2001; Goldsmith and Eggers 2004). Bevir (2009, 141–142) notes that the “new public management” is a term that covers “a broad set of administrative reforms and ideas.” However, the central idea is to make the public sector more “dynamic and entrepreneurial.” The elements of the new public management, according to Bevir, include concerns about aligning accountability and responsibility, performance management, linking resource allocations to performance, disaggregation of the public sector (leading to smaller, more manageable units or to privatization), the use of competition in public production of goods and services, and “discipline and frugality” in the use of public resources. Applying Osborne and Gaebler’s (1992) elements of entrepreneurial governance in the EZ context would yield the following characteristics of local programs: (1) a comprehensive, integrated, holistic approach to neighborhood revitalization (as opposed to a series of ad hoc projects that have little relationship to one another and are scattered throughout the neighborhoods included in the city’s designated zone area); (2) articulation of clear goals and performance benchmarks as well as procedures and practices for tracking progress and making midcourse adjustments in the deployment of resources; (3) the empowerment of citizens by “pushing control out of the bureaucracy, into the community”; (4) decentralization of authority; (5) a preference for policy tools that incorporate “market mechanisms” as opposed to “bureaucratic mechanisms”; and (6) a catalytic approach to revitalization that focuses on mobilizing all sectors— public, private, nonprofit—“into action to solve their community’s problems” as opposed to simply completing a collection of activities that produce a product (rehabilitated housing) or provide a service (job training). Local EZs varied substantially in the extent to which they practiced entrepreneurial governance. The EZs in Atlanta, Chicago, and New York exhibited few

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such characteristics. In all three cities, EZ-funded activities were largely disconnected from one another, there was little evidence of adherence to the tenets of performance management, citizens were relatively “unempowered” (though they did have influence during the strategic planning process), and there was little progress in decentralizing authority. Indeed one could say that local political elites held the upper hand in EZ decision making throughout most of the initiative in these cities, the private sector maintained a relatively low profile (directly in their awareness and use of the tax incentives and indirectly in their overall engagement with the EZ initiative), and there was little evidence that the EZ initiative had a catalytic effect in any of these cities regarding their approach to revitalizing neighborhoods. In these cities, the EZ initiative was just a typical federal program. Detroit’s EZ exhibited more traits of entrepreneurial governance. The city’s EZ did engage the business community, indirectly in its high awareness and use of the EZ tax incentives, as well as directly, through the significant financial commitments (particularly the banks) to assist in carrying out the strategic plan. Detroit also had notable representation from the business community on its EZ governing board. Detroit exhibited the influence of entrepreneurial culture in its goals and performance benchmarks (e.g., the city’s two-volume strategic plan included ten-year performance benchmarks and identified lead implementing agencies and supporting partner agencies and organizations) and its efforts to empower citizens (particularly in terms of their influence on the content of the strategic plan). However, Detroit achieved little in program integration, did not decentralize authority, and had a relatively weak catalytic effect in transforming the city’s approach to neighborhood revitalization. By contrast, Philadelphia’s EZ exhibited many of the characteristics of entrepreneurial governance. Philadelphia’s strategic plan emphasized a holistic approach to revitalization, perhaps best manifest in its description of the proposed activities to be supported with EZ funds that included a crosswalk using a series of icons to illustrate how each activity intersected with the city’s twelve economic opportunity and sustainable community development strategies. Philadelphia decentralized significant decision-making authority to the zone level, where residents, businesses, and community organizations through their participation in the Community Trust Boards had the responsibility for overseeing the implementation of neighborhood activities included in the strategic plan, reviewing program progress, and determining (with concurrence from the mayor) the final financial allocations and, where necessary, reprogramming. Philadelphia’s use of market mechanisms (business awareness and use of the EZ tax incentives) was only moderate and business representation on the EZ governing board was low compared with other cities. However, unlike in most of the EZ cities that sought

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to engage prominent business leaders and focus on major corporations to generate economic opportunities for zone residents, the approach to business engagement in the Philadelphia EZ initiative focused on growing and strengthening neighborhood businesses, which were well represented and fully engaged in the work of the Community Trust Boards. The Philadelphia EZ initiative was also an important catalytic force in fostering neighborhood renewal in the zone neighborhoods. The city’s EZ strategy was extended citywide in 2001 with the launch of Mayor John Street’s Neighborhood Transformation Initiative (NTI). In 2005, the EZ and the NTI, which was supported with $250 million in general obligation bonds and an additional $45 million in federal, state, and local funds, were merged into a unified structure. Although the EZ initiative was scheduled to end in 2004, the federal government extended its designation and eligibility for use of the EZ tax incentives through 2009 (PEZ 2006). Baltimore’s EZ had the highest commitment to entrepreneurial governance. The EZ initiative featured a highly integrated set of programs and strategies, particularly the linkages crafted between business development and workforce development; the EBMC board embraced performance management principles and used recurring reports to track the progress of the overall effort as well as progress in each of the village centers (VCs); the city devolved substantial authority to zone neighborhoods and EBMC invested substantial resources and technical assistance to increase the capacity of the VCs; business engagement was extremely high, manifest in both business awareness and use of the tax incentives but also in their representation and participation on the EZ governing board; and perhaps most notably, the EZ initiative was catalytic as some of the VCs continued their operations after the EZ initiative formally ended and many of the business assistance programs continued with program income earned from EZ business loan repayments.

Future Urban Policy In chapter 8 we concluded that we must recognize the positive contributions of the EZ initiative and build on those lessons. What do our findings imply about the future of urban policy? The EZ initiative was a distinctive policy that combined an emphasis on creating economic opportunity with recognition of the importance of fostering sustainable community development. The initiative provided cities with block grants and federal tax incentives to support locally developed plans and encouraged broad participation from all segments of the community. Our findings suggest that the design of the original EZs was constructive but

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incomplete. Although federal urban policy started down a promising path by linking economic and community development, the EZ initiative did too little to foster effective local governance.

Urban Distress is Migrating The evolving nature of urban distress is yet another reason to emphasize good local governance. Future federal policy must recognize that urban distress is a dynamic problem and that important changes in the spatial distribution of poverty are occurring. As Elizabeth Kneebone and Alan Berube (2013, 2) point out in their recent study, “Today more Americans live below the poverty line in suburbs than in the nation’s big cities.” They add that while poverty rates in suburban communities are about half the level found in central cities and that poverty rates are rising among all different types of suburbs, “by the end of the 2000s more than one-third of the suburban poor population lived in neighborhoods with poverty rates of 20 percent or greater.”6 These changes present a fresh challenge to urban governance. As poverty moves to the suburbs (or emerges there), the vexing limitations imposed by local government jurisdictional boundaries and the lack of (or limited) capacity of public and nonprofit agencies in suburban communities are likely to be an important constraint on effective policymaking. The vast majority of suburban jurisdictions in metropolitan areas have lower levels of civic engagement among their low-income populations and weaker capacity among public, nonprofit, and civic organizations than what may typically be found in central city neighborhoods (Kneebone and Berube 2013; Reckhow and Weir 2011; Allard and Roth 2010). This is attributable largely to the fact that suburban communities have typically not had organizations advocating and providing services on behalf of low-income populations and most suburban municipalities have not had service responsibilities that require attention to the needs of the poor. As Kneebone and Berube (2013, 132–133) note, “Too few resources exist to address poverty community by community” and add that “it is time to rethink how $82 billion a year in federal place-based antipoverty spending could work much better for more people and more places.” They, among others, advocate for bringing to scale the collaborative, crosssector, community-based approach for comprehensive urban problem solving that has been evolving over the past twenty years (Kubisch et al. 2010; Fosler 2002; Gibson et al. 1997). This will require not only new thinking about leadership and institutions but also reconceptualizing the appropriate geographic scale for addressing poverty and creating opportunity. To advance the new paradigm, Kneebone and Berube (2013, 133) argue that federal antipoverty policy should

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embrace three elements found in innovative collaborative problem solving initiatives under way in communities across the country—“catalyzing reform, integrating by example, and elevating regional action.” The policy design for the EZ initiative attempted to incorporate all three of those elements. Of course, the attempt to promote regional cooperation in the original EZ initiative (the Philadelphia-Camden bistate zone) was unsuccessful, since the two cities split the Title XX money and essentially implemented separate EZ programs with little attention to regional dynamics and opportunities. The flaw in the original design was that it started with the most difficult case— interstate cooperation rather than regional cooperation within a single state. Regional cooperation need not be designed to include the additional complexity of interstate cooperation, though there are many metropolitan areas where this issue is likely to be salient (New York; Washington, DC; Boston; Kansas City; and St. Louis, to name but a few). However, the effort to transcend local boundaries does suggest a particular model of local governance—centered on local governmental institutions (such as mayors’ offices)—would be less effective than new, extragovernmental regional intermediaries that could coordinate and integrate services and solve problems across regional boundaries (see Kneebone and Berube 2013, 111). Empower Baltimore Management Corporation—a quasi-public, extragovernmental corporation working cooperatively with local governments—could be a model for regional collaborative governance.7 However, we are reluctant to embrace “the Baltimore way” too quickly.8 We have noted that Baltimore’s EZ had a praiseworthy local governance process and the EBMC was its core. The quasi-public, cross-sectoral organization enhanced local capacity by attracting key participants to the policymaking process, mobilized and included the community in program implementation, and effectively managed the local EZ program, investing in training, technical assistance, and capacity building where needed to strengthen the ability of the VCs to serve as neighborhood intermediaries. However, it is important to recall the early missteps in Baltimore’s EZ governance process. Initially, the city’s zone leadership tried to exploit the corporation’s quasi-public status to limit public access to information and constrain citizen participation.9 Unfortunately, there is a long, sad history of similar abuses by quasi-public corporations that have been active in Baltimore’s economic development and neighborhood policy domains (Stoker 1987). When considered in light of this history, EBMC is the exception, not the rule. EBMC is a model for regional collaborative governance not simply because it is structured as a quasi-public corporation but also because of effective leadership that valued community participation and an open, accessible process while emphasizing capacity building and community empowerment.

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Other models worthy of consideration for bringing good governance to the regional scale include the Living Cities Integration Initiative and HUD’s Sustainable Communities Initiative. The Living Cities Integration Initiative, a three-year effort launched in January 2011 by a collaborative of twenty-two of the world’s largest philanthropic and financial institutions, seeks to “improve the lives of low-income people and the communities where they live” in five metropolitan regions—Baltimore, Cleveland, Detroit, Newark, and Minneapolis–St. Paul— through the investment of $85 million in grants, loans, and program-related investments. In addition, the selected sites “also participate in an array of formal and informal partnership and knowledge exchange and technical assistance opportunities including one-on-one meetings, site visits, online collaboration tools, and cross-site convenings known as ‘Learning Communities’ ” (Living Cities 2012, 2). Each site is required to “incorporate four high-impact strategies into their work,” including a “one table approach where decision-makers from across sectors and jurisdictions can formally convene and work together to define and address complex social problems and change systems.”10 The Sustainable Communities Initiative is a collaborative effort between HUD, the U.S. Department of Transportation, and the U.S. Environmental Protection Agency to foster stronger connections between housing, transportation, and economic development initiatives in metropolitan regions to create green, energy-efficient economies that help families prosper. Two rounds of funding were offered in 2010 and 2011 that provided $240 million to support 152 initiatives in forty-eight states. These funds have leveraged an additional investment of $253 million from private and local public sources (HUD 2012, 3). The federal grants are being used to “help improve regional planning efforts that integrate housing and transportation decisions, and increase state, regional, and local capacity to incorporate livability, sustainability, and social equity values into land use plans and zoning.” A key element of the program is a consortium-based model that brings together numerous groups to craft a Regional Plan for Sustainable Development (RPSD). The selection criteria required applicants to describe “how the consortium plans to engage a broad cross-section of local communities in the regional visioning process, including low-income, minority, and economically disadvantaged communities, and what efforts will be made to ensure that such communities will have an effective role in developing the regional vision, and in participating in a sustained manner throughout implementation” (HUD 2011, slide 31). The selection criteria also required applicants to “detail the formal structure of the consortium, including its decision-making mechanisms and specific strategies to ensure that perspectives of diverse, traditionally underrepresented populations directly influence the development and implementation of the RPSD” (slide 33).

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Future revitalization efforts must squarely confront the difficulty of crafting effective local governance structures and processes. It is not enough to encourage (or require) cites to implement neighborhood revitalization programs in crosssectoral, extragovernmental, collaborative governance structures. What happens within those structures is also critically important. Attention must be paid to the details of good governance, attention that needs to come not only from the local community but also from federal oversight. The Atlanta experience, for example, suggests that the federal government may have given too much deference to local authority and that earlier, more prescriptive intervention and technical assistance may have aided in increasing the city’s capacity to act and, in turn, generated more positive revitalization outcomes in the city’s EZ neighborhoods. Our principal conclusion—that governance matters—suggests that the quality of local governance should be the priority for urban policy that aims to advance economic opportunity, reduce poverty, and revitalize neighborhoods. Future urban policy must encourage good local governance. Revitalization initiatives need to support meaningful citizen participation that includes all relevant stakeholders, develop the local capacity to translate the community’s strategic vision into action, and enhance program integrity to ensure that resources are effectively used. Our analysis also implies that the basic structure of the EZ initiative—federal grants combined with market-oriented tools—was a sensible foundation for federal urban policy. We have provided substantial evidence that this combination of factors can work to reduce urban distress when implemented in a good governance context. The challenge is to accompany policy design with technical assistance and support to strengthen local governance. For too long, federal urban policy has assumed that local communities had the governance structures and processes needed for implementing federal programs. As the EZ experience demonstrated, cities varied widely in the quality of their local governance and this in turn—not federal policy design—had a strong influence on local outcomes.

Federal Programs and Neighborhood Revitalization Two policy tools stand out for their ability to advance good local governance in support of neighborhood revitalization. One is competitive grants. Competition between localities to win resources fosters innovation and shapes the nature of the interventions local governments plan and implement. Competitive grants can be used by the federal government or by philanthropies to encourage good governance. The incentive to capture resources is a powerful motive to reform (Derthick 1970). Revitalization initiatives can link support to locally derived

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strategic plans, promoting reforms that enhance the quality of local governance that are likely to yield more efficacious outcomes. If local governments are expected to practice good governance, however, more time will be needed for strategic planning as well as greater investments in capacity building than was true for the original EZs. Federal policy or philanthropic organizations could initiate the planning process by distributing modest planning grants to stimulate local strategic planning processes; the best plans can then be selected from the planning grant recipients for additional assistance to help support the implementation of local programs. Such an approach allows time (and resources) for developing local governance arrangements and strategic plans as well as investing in capacity building prior to the deployment of resources to support implementation. One of the major challenges the EZ initiative faced is that the magnitude of resources awarded to the original urban EZs outpaced the capacity of many of the designated cities to effectively use them. Further, in many EZ cities the announcement of the EZ award escalated the local politics of distribution, setting off intense battles in some EZ cities to rework their strategic plans to accommodate new interests that emerged postaward and that had not participated in the original planning process. The second tool for enhancing local governance is program management. If good governance is a key determinant of successful neighborhood revitalization, local plans need to include more details on their intentions for creating and managing local governance structures and processes, and federal and philanthropic officials need to ensure that there is follow-through at the local level in honoring these intentions. These governance details will not only better aid officials in determining the extent of local readiness for implementation but also provide guidance on the types of training, technical assistance, and capacity building needed at the local level to ensure the effective implementation of local plans. The history of the EZ initiative suggests that these two tools can effectively change local culture and behavior in support of a good governance approach to neighborhood revitalization. To be competitive for EZ designation, local actors devised innovative strategies to mobilize the community to participate in the strategic planning process. All the cities noted extensive community participation in the development of local strategic plans. However, a striking feature of the original urban EZs was the tendency for community participation to drop off in most of the cities when the selection process was concluded. With Baltimore and Philadelphia as exceptions, community participation declined precipitously in the original EZs following strategic planning and designation. Looking back, federal program management may have contributed to this decline. Participation dropped off during the benchmarking process, when community participation was seen locally as a barrier to quickly obtaining EZ

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funds. As the lead implementing authority for the urban EZs at the federal level, HUD was not clear about the continuing importance of community participation during implementation, particularly around issues related to benchmarking and revisions to the strategic plan. As a result, the initial burst of innovation was dissipated quickly as many cities reverted to well-worn patterns of doing business. In retrospect, HUD’s decision to make the release of federal funds contingent on completing the benchmarking process—a process that most cities did not fully understand or have the capacity to execute—was a misstep. Through this action, HUD provided a powerful, but unintended, incentive for cities to marginalize community participants. In addition, HUD allowed cities to define their own benchmarks, including benchmarks related to the governance process. This was a missed opportunity. Our view is that more federal guidance and technical assistance regarding HUD’s expectations for local governance structures and processes—particularly the role of zone residents and organizations—would have been helpful in shoring up those structures and promoting transparency in local decision-making processes. In addition, some EZ cities could also have used additional assistance related to the many tasks critical to collaborative governance and implementation, such as a transparent contracting and procurement processes, communications among the various collaborative partners, and project management. One approach that may warrant further consideration in future initiatives is to reflect on HUD’s management of the Urban Development Action Grant program. As noted in chapter 1, UDAG was a competitive grant program designed to spark community and economic development in distressed communities. As a condition for receipt of their federal funds, jurisdictions that were awarded UDAGs were required to submit to HUD for approval grant agreements that included legally binding commitments that outlined the roles, responsibilities, and financial commitments being made by each of the project’s partners. A similar condition in the EZ initiative may have expedited implementation in several EZ cities (particularly those with strategic plans and benchmarks that did not directly identify partners and their roles) and perhaps enabled the federal government to intervene earlier and more directly to address the difficulties some cities (e.g., Atlanta) experienced in using its EZ resources.

Neighborhood Revitalization Initiative Phasing federal assistance for planning and implementation; increasing support for training, technical assistance, and capacity building; and providing stronger incentives for collaborative governance are all elements of the Obama administration’s urban policy, as manifest in its Neighborhood Revitalization

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Initiative (NRI). The NRI is the centerpiece of the new White House Office of Urban Affairs (2011, 1). According to its initial report, “The Neighborhood Revitalization Initiative is not a program, it is a strategy, a new way for the Federal government to engage and support communities.” The NRI is grounded in the belief that “interconnected challenges in high-poverty neighborhoods require interconnected solutions. . . . The initiative is a strategy to improve alignment among Federal departments that direct resources to neighborhoods in distress and support a variety of programs and policies that address poverty.” Five key elements, derived from promising neighborhood revitalization initiatives under way across the nation, provide the foundation for the NRI: providing for resident engagement and community leadership, developing strategic and accountable partnerships, maintaining a results focus supported by data, investing in building organizational capacity, and aligning resources to a unified and targeted impact strategy. Although branded as a “new approach to federal engagement in neighborhoods of concentrated poverty,” the NRI reflects many of the core principles of the EZ initiative: the NRI is interdisciplinary to foster a holistic approach; coordinated, to facilitate weaving together different funding streams; place based, to target resources to particular neighborhoods; data and results driven, to encourage performance management, midcourse adjustments, and learning what works; and flexible, to allow adaptations to changing conditions and emerging opportunities.11 To promote greater integration at the federal and local levels, and in intergovernmental relations, the NRI “reflects the collaborative planning necessary at the local level, and incentivizes localities to consider the interconnections between the problems they face in distressed neighborhoods, and the interrelationships of the solutions required to address those challenges” (White House Office of Urban Affairs 2011). However, unlike the EZ initiative, where federal commitments of $100 million in block grant funds and additional support through federal tax credits were made up front based on federal reviews of strategic plans that were hastily assembled to meet the submission deadline, the programs included under the NRI have taken a multiyear phased approach that includes planning and implementation grants. For example, for the Promise Neighborhoods initiative that is part of the NRI, the Department of Education announced a call for planning grants in April 2010 that attracted more than three hundred applications. In September 2010, twentyone nonprofit organizations and institutions of higher education received oneyear, $500,000 planning grants to support the work of a broad group of partner organizations in developing plans to provide cradle-to-career services to improve educational achievement and strengthen neighborhoods. In December 2011, the

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Obama administration announced the first round of Promise Neighborhoods implementation grants, awarded to five organizations, which each received a first-year grant of up to $6 million, with a potential allocation of up to $30 million over the five-year span of the grant. Another fifteen organizations received a second round of planning grants, making them, along with other first-round planning grant recipients, eligible to apply for implementation grants in subsequent years. A similar progression has been applied in another NRI initiative, the Choice Neighborhoods program. Seventeen communities received planning grants of up to $250,000 in March 2011 and, in January 2012, HUD announced that five cities would receive implementation grants of up to $30 million and an additional thirteen communities received second-round planning grants. The Obama administration has put in place the basic architecture for the initial step toward assisting cities in undertaking effective policymaking for comprehensive community revitalization—a competitive process to distribute planning grants to localities and implementation grants to support those cities with the most promising plans and evidence of effective local governance structures and processes. Our analysis implies that a promising next step would be to introduce more specific actions—federal, state, and local; public, private, and philanthrophic—to encourage the adoption and incorporation of good local governance practices. These might include, among others, practices to encourage broad-based participation, strategic planning to develop a shared vision for change, governance structures and processes to ensure broad-based engagement as the initiative moves from planning to implementation, technical assistance on best and promising practices for collaborative policymaking and data-driven decisionmaking. Although the Obama administration has embraced these elements of good governance, efforts to date have been limited in that they have been confined to a small number of cities, largely because of congressional opposition that has delayed efforts to provide federal resources on a scale that would permit a broader group of communities to undertake planning, implementation, technical assistance, and capacity building in pursuit of a more holistic approach to neighborhood revitalization. As was the case with Model Cities, EZs, and other previous efforts to more effectively package federal resources in support of holistic community development at the local level, the fragmented nature and jurisdictional authority of congressional committees has proved to be a formidable barrier toward more comprehensive urban policymaking. In addition, current partisan and ideological differences over the appropriate role (if any) for the federal government in urban affairs have further exacerbated efforts to craft federal initiatives that support locally derived collaborative approaches for neighborhood revitalization.

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For instance, a House Appropriations Subcommittee included language in its fiscal year 2012 HUD appropriation bill that prohibited HUD from using any of the funds made available under the Act for the Sustainable Communities program to promote good governance. According to the bill, HUD was prohibited from using appropriated funds to support “personnel, research, grant management, policy development, capacity building of grantees and potential applicants, and interagency coordination on livable communities or sustainable development” (HOR 2011).12 Federal urban policy is thus at a critical crossroads. At present, it is not clear whether it will continue down the constructive path toward promoting collaborative revitalization initiatives and enhancing the capacity of local communities to practice good governance or whether it will it fall back into the all-too-familiar patterns of partisan gridlock over the appropriate role of the federal government in urban affairs. If partisan gridlock continues in Washington, other stakeholders (state and local governments, national and local foundations, nonprofit organizations, and community-based groups) must develop alternative means to advance the cause of good governance. Indeed, as Katz and Bradley (2013, 5) have documented, “Cities and metros are taking control of their own destinies, becoming deliberate about their economic growth. Power is devolving to the places and people who are closest to the ground and oriented toward collaborative action.” They add, “For a nation paralyzed by hyper partisanship, the metropolitan model of collaboration offers a sensible counterpoint.” Thus, even if the federal government takes no significant action in the foreseeable future, our findings provide useful guidance for other stakeholders, inside and outside government, on why developing good governance strategies, programs, and institutions is an important foundation for promoting opportunity, reducing poverty, and revitalizing distressed neighborhoods. Indeed, we believe it is essential that states and communities invest their own resources in building and strengthing their capacities for collaborative problem solving to addresss these “wicked” problems.13

Conclusion The existing literature evaluating the EZ initiative has separated questions about effective local governance from questions about local program outcomes. By joining these concerns our work fuses evaluation research with long-standing theoretical concerns in the fields of political science, public administration, and public policy. Our evidence enlarges claims that can be made about the interrelations between urban politics, governance, and neighborhood revitalization by

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identifying good governance characteristics and demonstrating the relationship between the quality of local governance and revitalization outcomes. We conclude that good local governance advances neighborhood revitalization efforts. Good local governance creates and sustains local capacity. Community participation contributes to local capacity when residents and community-based organizations are engaged as constructive participants in policymaking. Good local governance makes effective use of its limited resources—making sound choices, learning from experience, and promoting transparency in decision making and the allocation of resources. On the other hand, poor governance plays a destructive role. When local governance is ineffective, efforts to resolve or ameliorate the problems of urban distress are too easily derailed and discredited, making it more difficult to generate the political will to act. When the community is excluded from local governance it is more likely to mobilize as a blocking coalition, making it impossible to advance any urban revitalization agenda. And when local governance lacks integrity, scarce resources are wasted (or not used at all) and the quality of urban life in distressed neighborhoods is further diminished. Constructive urban policy must advance the practice of good local governance. If the determinants of successful neighborhood revitalization are the factors we have identified above—local capacity, community participation, and program integrity—significant attention and investment to strengthen local governance is required. The federal government can play a role in advancing this effort, though by no means should it be the only player. State and local governments, foundations, and philanthropic organizations must also promote good local governance, particularly through efforts to build local capacity and promote civic engagement by nonprofit and community-based groups. By doing so, the promising path blazed by the EZ initiative can be widened and followed to a better end.

Notes

INTRODUCTION

1. Initiatives included the Rockefeller Foundation’s Community Planning and Action Programs (Boston, Cleveland, Denver, Oakland, San Antonio, and Washington, DC), the Ford Foundation’s Neighborhood and Family Initiative (Detroit, Hartford, Memphis, and Milwaukee), the Annie E. Casey Foundation’s New Futures Initiative (Dayton; Lawrence, MA; Little Rock; Pittsburgh; and Savannah), the Surdna Foundation’s Comprehensive Community Revitalization Project (South Bronx), The Atlanta Project, the Chicago Initiative, and The Austin Project. See Walsh 1996; Chaskin 1998; Meyer et al., 2000; Fiester 2007; Kubisch et al. 2010. 2. The regional zone was in Philadelphia and Camden, New Jersey. Rather than developing a regional strategy for inner city revitalization, the cities essentially divided the federal EZ grant and implemented separate programs. 3. The authors were field associates for Atlanta (Rich) and Baltimore (Stoker) in the federally funded assessments of the EZ initiative (Wright et al. 1996; Hebert et al. 2001). 1. FEDERAL AID AND THE CITIES

1. Heywood Sanders (1980, 107) points out that the “image of ‘Negro removal’ is not a completely accurate one.” Sanders reports that between 1950 and mid-1971 nearly 300,000 families and 160,000 individuals were relocated by local renewal authorities; among families, about 58 percent were blacks and nonwhites, about 37 percent were whites; about 5 percent were other minorities. Among relocated individuals, 56 percent were white; blacks totaled 41 percent. Sanders concludes that “while blacks bore a disproportionate burden of the costs of displacement, they were not its exclusive recipients.” 2. The service systems in a community’s comprehensive attack on poverty were to include education, child and family welfare, health services, housing, economic development, consumer information and credit, and legal services. See ACIR 1966, 27. 3. Sundquist and Davis (1969, 46) identified three types of CAAs, based on the latter’s public images: (1) the innocuous ones, “another specialized organization quietly administering a few programs designed in Washington” that did not challenge the institutions or the leadership of the local power structure that sponsored it; (2) the respected ones, “aggressive, even militant, but with a quality of leadership and administrative competence to match”; and (3) the outcasts, “those that had not been able to match their militancy with a leadership and competence that compelled respect.” 4. Nicholas Lemann (1991, 166–67) notes that “Mayor Daley [of Chicago] was by far the most important enemy of community action [and] he was regarded then as the essential Democratic mayor.” Lemann recounts a story told to him by Bill Moyers, then an assistant to President Johnson, about a call Moyers received from Daley, who complained about the community action program: “What in the hell are you people doing? Does the President know he’s putting M-O-N-E-Y in the hands of subversives? To poor people that aren’t part of the organization? Didn’t the President know they’d take that money to bring him down?” Moyers added that “the clearest picture Johnson got of the bad image of OEO

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was from Daley. . . . He really began to rage at Johnson. That began to form a dark cloud in Johnson’s mind.” 5. Sundquist and Davis (1969, 90). See also Part 3 (“City of Promise”) of the historical PBS documentary America’s War on Poverty, produced by Blackside, that tells the story of the competing political organizations in Newark seeking to control the city’s antipoverty initiatives. 6. New York City was able to spend only half its first-year Model Cities funds because purchasing a piece of equipment required 71 specific actions by 10 city agencies; hiring a person required 56 steps by 5 different agencies; and a contract could not be signed until 12 agencies had examined the papers in 17 different steps. See Frieden and Kaplan 1975, 229–30. 7. When Gerald R. Ford became president in August 1974 following Nixon’s resignation, he followed Nixon’s lead and continued to emphasize local discretion. 8. Under accounting practices in place at the time, most cities were already claiming 90 percent or more benefit to low- and moderate-income persons. Alternative methods, however, suggested that actual benefit levels were less than 30 percent in some communities. See Rich (1993a, chap. 8). 9. Rangel was able to convince the budget conferees to agree to shift $1 billion of revenue that would have supported tax incentives to direct federal outlays to support the EZ-EC initiative, and because of legislative technicalities, those funds ending up being authorized through the Title XX Social Services Block Grant program administered by the Department of Health and Human Services, which was under the jurisdiction of Rangel’s Ways and Means Committee, rather than through HUD, the federal agency designated to oversee the urban portion of the EZ-EC initiative. The move was, according to Richard Cowden, “the nearly unprecedented parliamentary equivalent of changing water into wine.” Quoted in Liebschutz 1995, 124. 10. The legislation prescribed that one of the six urban empowerment zones include a bistate zone. Two additional tiers of assistance were provided in round I. HUD awarded funding through its Economic Development Initiative (largely supported with unused UDAG funds) to designate Supplemental EZs in Los Angeles ($125 million) and Cleveland ($90 million), though the funds were more restricted in their use (limited to economic development activities) and the cities were not eligible for federal tax incentives. In addition, four Supplemental EZs were designated. Each received $25 million in federal funds—$22 million in HUD funds and $3 million in SSBG funds—and were not eligible for federal tax incentives. 2. GOOD GOVERNANCE

1. Neoliberalism may be a confusing term for several reasons. First, neoliberal has different meanings among different groups of scholars. For example, among international relations theorists, “neoliberal institutionalists” believe that many possibilities for international cooperation are unrealized and that international institutions can help to encourage cooperation. Second, the term is unfamiliar and counterintuitive to many U.S. readers. While Europeans are likely to associate neoliberalism with the retreat of government and the advance of the market most clearly illustrated by Thatcherism in the United Kingdom, Americans are more likely to think of Thatcherism as the conservative viewpoint in opposition to liberalism. Our use of the term is intended to represent a version of liberalism that celebrates the virtues of free market economics, laissez faire policies, limited government, and market-oriented urban revitalization policies (such as tax and regulatory relief). 2. On neoliberalism, see Jessop 2002. For a discussion of voting with your feet, see Tiebout 1956.

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3. There is controversy about whether neoliberalism is an alternative to collaborative governance or a form of collaboration. For a discussion of neoliberalism as collaboration, see Hackworth 2007. For an alternative perspective, see Clarke 1987. 4. For the list of policy recommendations that was the Washington Consensus, see Williamson 1990. 5. Some observers have argued that the policy advice in the Washington Consensus was sound when implemented in appropriate circumstances. See for example Srinivasan 2000. The World Bank defines governance as “the traditions and institutions by which authority in a country is exercised.” See the working paper by Daniel Kaufmann et al. (2009, 5). 6. Several “evils” are now associated with corruption: it is seen as a form of regressive taxation that dampens the prospects for development, misallocations of skill and personnel, adverse effects on the quality of goods and services produced, and threats to government’s legitimacy (Nwabuzor 2005). However, one study distinguished beneficial from detrimental corruption (Nas et al. 1986). 7. A recent analysis by Doucouliagos and Ulubasoglu (2008) found no direct link between democracy and economic growth. However, democracy did have significant indirect effects by encouraging human capital investment, economic freedom, and lower levels of inflation and political instability. 3. REVITALIZATION PROGRAMS AND STRATEGIES

1. The index is based on six indicators, with adjustments for variations in regional cost-of-living differences: unemployment (percent of population over age sixteen that is unemployed); dependency (percent of the population under age eighteen and over age sixty-four); education (percent of the population over age twenty-five that did not complete high school); per capita income; overcrowded housing (percent of occupied housing units with more than one person per room); and poverty (percent of people living below the federal poverty level). 2. Rich examined the construct validity of nine composite measures of urban hardship that were widely used in the 1980s to assess urban conditions and to target federal funds to needy cities. He found that although the Intercity Hardship Index had the highest correlations with social need among the nine indexes examined, it also had the lowest correlations with economic (r = .36) and fiscal need (r = .56). See Rich 1982. 3. Available at http://cfcp.emory.edu/our_work/research/ez.html. 4. The percentage share of eligible census tracts and population included in the other EZ cities were: Atlanta (21.9 percent of census tracts eligible for designation, 12.6 percent of city’s population resided in those tracts), Baltimore (23.4 percent, 21.3 percent), Chicago (21.8 percent, 15.8 percent), Detroit (15.8 percent, 10.5 percent), and Philadelphia (8.7 percent, 6.2 percent). Authors’ calculation based on figures provided in Wright et al. 1996, appendix II. 5. Personal interview, 17 January 2013. 6. Our assessment of local programs and activities is based on field research we conducted in Atlanta and Baltimore; information obtained and analyzed from the strategic plans and the PERMS reports from each EZ city; and our reading of reports from HUDsponsored and other evaluations of the EZ initiative. 7. Two qualifications are in order. First, the Government Accountability Office (GAO) evaluation of the EZ initiative reviewed program budgetary data and deemed the data to be unreliable. Its program descriptions were based on an activity count (see GAO 2006). However, our reading of the GAO report and our own observations suggest that an important distinction exists between the Title XX money and monies that were claimed as “leveraged” funds. Our impression, consistent with the concern expressed by the GAO, is that the data on leveraged funds are unreliable because of issues relating to poor accounting and

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credit claiming. Consequently, we have limited our analysis to the Title XX money. Second, New York had a distinctive financing arrangement in which the $100 million federal grant was matched by state and local grants of equal amounts. We have not included expenditures of the state and local funds in this analysis because with few exceptions, budgetary allocations in New York simply split the burden of program financing into three equal parts and drew the same amount from each of the three grants. Thus, accounting for the additional state and city grants would do little to change our conclusions about the relative priority of different activities in New York. 8. The president’s Community Enterprise Board was created in 1993 as an interagency council chaired by the vice president and composed of the heads of seventeen federal departments and agencies. The primary purpose of the board was to promote interagency coordination and cooperation to enable the federal government to more responsively address the needs and concerns of EZ and EC cities in implementing their strategic plans. See “Memorandum Establishing the President’s Community Enterprise Board,” Public Papers of the President, William J. Clinton, 9 September 1993.

4. LOCAL GOVERNANCE STRUCTURES AND PROCESSES

1. To describe local governance in Chicago, Detroit, New York, and Philadelphia we relied upon the PERMS reports and secondary sources (Wright et al. 1996; Chaskin and Peters 1997; Gittell et al. 2001; Hebert et al. 2001). Rich also conducted a series of interviews with participants in the Philadelphia zone. In Atlanta and Baltimore we also conducted extensive field research including participant observation, stakeholder interviews, focus groups, and document analysis, as well as consulting secondary sources, to assess local programs and governance processes in those cities. 2. For example, Atlanta’s strategic plan called for the creation of the Empowerment Zone Corporation, whose board would be composed of the mayor, who would serve as chair; one state representative; one Fulton County representative; two city officials; one Atlanta Housing Authority representative; one Atlanta Board of Education representative; six EZ residents; two business community representatives; and two human service agency representatives (City of Atlanta, 1994, “Implementation,” 3). 3. Although Mayor Campbell insisted on making these appointments, a compromise was reached. The Community Empowerment Advisory Board would submit recommendations to the mayor for the six community slots on the board and the mayor in turn would make the appointments from the list. 4. This was typical practice during the Campbell administration where the mayor chaired nearly all the local boards and commissions, including the Atlanta Development Authority. 5. The analysis was based on extensive field research in each NCDI city. According to the report, “We engaged experienced development practitioners and researchers to conduct field research in each NCDI city during 1996 and 1997. These teams worked closely with local community development experts, using a standard set of ‘system performance indicators’ to measure capacity in 1997 and assess progress since 1991. In addition to conducting field interviews, the assessment teams reviewed reports from community development intermediary organizations and financial and demographic data from public agencies and other sources.” See Walker and Weinheimer 1998, 4. 6. We focus on program implementation rather than strategic planning and benchmarking because, as Clarence Stone observed, it is easier to gain agreement on abstractions and principles. However, when these abstractions become concrete programs, the conflicts that were easily hidden during planning and policy development come to the forefront. See Stone 1980.

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7. This observation does not apply to the VCs. Only one of the VCs was an experienced nonprofit. Rather, the observation applies to the set of nonprofits that worked with EBMC and the VCs to provide services to zone residents. 5. WHAT HAPPENED IN EZ NEIGHBORHOODS?

Part of this chapter was originally published in Urban Affairs Review. Portions are reprinted with permission. See Rich and Stoker 2010. 1. In fiscal year 1995, CDBG entitlements to the other urban EZ cities were as follows: Atlanta, $13.5 million; Baltimore, $30.7 million; Detroit, $56.5 million; and Philadelphia, $72.9 million. 2. In addition to federal agencies (HUD, Health and Human Services) not requiring cities to report much detail on EZ-funded activities (e.g., how or where funds were spent), other data limitations included the fact that the Internal Revenue Service collected data on only some of the tax incentives, though none of the data collected could be linked to individual communities (inability to determine use of tax incentives by city) and there was very limited information available on the use of the tax-exempt bond benefit by EZ cities. See GAO 2004, 2006. 3. Other early studies of the EZ-EC initiative that focused on a similar set of process and governance questions were conducted by researchers at the Howard Samuels State Management and Policy Center (Gittell et al. 1998, 2001) and the Chapin Hall Center (Chaskin and Peters 1997). 4. The dates for collection of census data are not ideal for the purposes of evaluation. The six original EZ cities received their designation in December 1994 and most cities had their programs up and running in 1995 and continued their EZ activities through 2004. However, there were delays in local program development and implementation in several cities (for a discussion, see Wright et al. 1996). Consequently, most EZ programs were only at their midpoint when the 2000 census data were collected and several had only recently begun their programs and activities. In addition, because the EZ program was initiated after the 1990 census data were collected it is possible that local conditions changed between then and the start of EZ program activities. This data limitation may diminish measured program effects. The dates of the Claritas data (business employment) and data from the Federal Financial Institutions Examination Council (housing, business investment), however, more closely approximate the time period of the EZ initiative. 5. Even if the EZ interventions were randomized, the small number of census tracts in each EZ city would still leave the threat of confounding due to differences in the composition of the treatment and control groups. 6. Propensity scores match subjects in the treatment and control groups to ensure that the matched treatment-control subject pair consists of subjects that had the same probability of being exposed to the treatment when, in fact, one subject was assigned to the treatment group and the other was not. Given that the propensity score is based on a collection of covariates thought to influence the assignment process, this provides greater assurance that the treatment and control groups are comparable. This enables the use of the matched subject as a strong counterfactual to establish what would have happened had the treatment subject not participated in the program. The critical factor for making causal inferences in an observational study using propensity score matching is to ensure that there is overlap in the propensity scores for the two groups of subjects. If all the subjects in the treatment group have a high probability of exposure to the treatment and all the subjects in the control group have a low probability of exposure, there is no overlap and subjects are not exchangeable. See the online appendix at http://cfcp.emory. edu/our_work/research/ez.html for a set of graphs for each of the six EZ cities depicting the extent of overlap in propensity scores for the census tracts included in the analysis.

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7. Round I ECs received $3 million in block grants but no federal tax incentives. Round II EZs (1998) received approximately $25 million in block grant funds and federal tax incentives. Round III EZs and renewal communities (2001) received only federal tax incentives. 8. Given that round III EZs were designated in 2001, Krupka and Noonan (2009) note there would be no effect on their outcome measures (property values, neighborhood demographics, and housing stock) during the period from 1990 to 2000. 9. Oakes (2013, 3) points out that including subjects “with no theoretical chance of treatment or exposure violate the positivity criterion [for effect identification] and are thus literally uninformative to a given analysis.” 10. Postmatch statistically significant differences between EZ and control census tracts were found in Atlanta (percent residing in the same house as ten years ago, 1990; percent high school graduates, 1990; percent vacant housing, 1990), Chicago (housing density, 1990); and New York (percent of households without access to a private vehicle, 1990). See the online appendix for a complete list of all pre- and postmatch differences by city. 11. See the online appendix for a full description of the ATT findings. 12. Our analysis has weak statistical conclusion validity primarily because the matchedpair sample sizes are too small to detect program effects. A further complicating factor is the standard errors for most ATT estimates, even after culling out extreme outliers, were very large. Indeed, a power analysis indicates that based on the number of matched pairs in the EZ cities (which range from eight in Philadelphia to seventy-seven in Chicago), the size of the effect that would be required to attain statistical significance is well beyond what could reasonably be expected. For example, in Baltimore (Cohen’s d = .56) and Atlanta (d = .62), the effect sizes would need to exceed half a standard deviation to attain statistical significance, and in Philadelphia the effect size would have to be nearly one standard deviation (d = .88). While the interpretation of effect size is subjective and reflects the nature of the intervention and the state of knowledge about the program, the effect sizes required to attain statistical significance noted above are well beyond what most observers would consider reasonable. Based on Jacob Cohen’s (1988) classification, all six EZ cities would need to attain moderate (d  .5) to large (d  .8) effects to attain statistical significance, though it is highly likely federal policymakers, local officials, and EZ beneficiaries would accept smaller effects as substantively meaningful evidence of program success. 13. Estimates are reported in the chapter appendix, table 5.A1. 14. The number of census tracts included in the analysis for each EZ city was as follows: Philadelphia (n = 16), Atlanta (n = 29), Baltimore (n = 34), Detroit (n = 55), New York (n = 84), and Chicago (n = 133). See the online appendix summary results for further details on number of cases, means, and standard deviations by type of census tract for each EZ city. 15. See the online appendix for the results of these calculations. 16. By relaxing our criteria for how close the propensity score of an EZ tract needed to be to a control tract in order to consummate a match (using alternative caliper widths of .05, .075, .10, and .20), we were able to increase the total sample size from 351 to 368, adding fourteen EZ tracts and three control tracts, with only a modest decline in balance between the two groups. The number of covariates with statistically significant postmatch differences increased from five to eleven, though none of these were on any of our critical variables. See the online appendix for details on the sampling distribution in each EZ city along with graphs for selected indicators showing the bias between the EZ and control sample means at each caliper width. 17. Results from the sensitivity analysis are reported in the online appendix. 18. Both our ATT and fixed effects estimates for the poverty indicator in Atlanta were positive, indicating that EZ tracts fared worse (i.e., poverty increased or declined

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at a smaller rate in the EZ tracts compared with the control tracts) than the control tracts, though neither estimate was statistically significant, a finding consistent with the GAO study. Examination of the matched pair outcomes showed that ten pairs fared worse and nine fared better on the most restrictive sample (caliper width = .05) and twelve tracts fared better and ten fared worse on the larger sample (caliper width = .20), which led us to conclude there was no difference in poverty outcomes between EZ and control tracts. 19. Smyth and Schorr (2009, 5) define “What It Takes programs” as projects that “view people through an ecological lens that encompasses challenges, strengths, relationships, and community context, and they work to craft a response that are ‘of a piece’ with people’s lives.” The “flawed alternatives” reference is to a statement by economist Robison Hollister, who noted that randomized experiments are “like the nectar of the gods: once you’ve had a taste of the pure stuff it is hard to settle for the flawed alternatives” (Hollister and Hill 2005, quoted in Smyth and Schorr 2009, 12). 20. As Peter Hannan (2006) observed, “The test of the hypothesis that the intervention had an effect must compare variation at the condition level [treatment, control] against the variation at the unit level [cities]—not against the variation at the member [census tracts] level.” Hannan adds that the implication of testing the effect hypothesis with the residual error of the member units is larger F statistics (smaller p-values) where “ineffective interventions will be more likely to be declared worthwhile, and even effective interventions will be over-interpreted.” 21. These are the central questions asked in comparative effectiveness research. Consistency in treatment is one of the three primary requirements for effect identification. See Oakes 2013, 3. 22. PSMATCH2 was written by Edwin Leuven and Barbara Sianesi and is available for download via the Boston College Department of Economics website. 6. ATLANTA’S EMPOWERMENT ZONE

1. Personal interview, May 21, 1996. 2. City of Atlanta 1994, “Profile,” 4. 3. See the online appendix at http://cfcp.emory.edu/our_work/research/ez.html for a brief description of the four urban villages and the subsequent corridor projects that were supported with EZ funds. 4. Personal interview, May 16, 1996. 5. Personal interview, June 19, 1996. 6. Personal interview, July 18, 1996. 7. One EZ tract had no matched pair and was excluded from the analysis. 8. The Historic Westside Project’s management problems were manifest in a federal audit that required the city to repay more than $1.5 million in federal funds. The audit charged that “Atlanta gave land to private developers that should have been sold to pay off HUD loans, spent $1.35 million without competitive bids or contracts, couldn’t justify $800,000 in expenditures and paid above-market prices for 17 parcels of land” See Bennett 2003. 9. Personal interview, August 16, 2000. 10. Personal interview, May 20, 1996. 11. Personal interview, September 9, 2010. 12. Ibid. 13. Personal interview, September 9, 2010. 14. Ibid. 15. Wallace and Reid were sentenced in May 2003 for accepting bribes from city contractors and income tax fraud. Campbell was convicted in March 2006 on tax evasion charges but acquitted on racketeering charges and accepting thousands of dollars in bribes

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and illegal campaign contributions. All three men served time in federal prison (Whitt 2003 and Torpy et al. 2006). 7. BALTIMORE’S EMPOWERMENT ZONE

1. Chicago, Los Angeles, and New York were widely assumed to be selected as urban EZs and federal requirements disqualified Baltimore from the bistate zone. 2. Schmoke contended that Baltimore’s selection was based on the city’s track record in dealing with HUD. Personal interview with Kurt Schmoke, September 2000. 3. Group interview with Poppleton Village Center representatives: Dr. Doris Hall, Joseph Howard Jr., Samuel Singletary, Robert Lopez-Layton, and Lenny Clay, July 2000. 4. The desire of business and philanthropic elites for a quasi-public corporate governance structure was confirmed in a personal interview with Diane Bell and Rachael Edds, October 1997. The first chair of the EBMC board was Mathias DeVito, then president of the Enterprise Foundation and former CEO of the Rouse Corporation, which developed the Columbia, Maryland, new town and festival market places in Baltimore and other major cities. The Enterprise Foundation was also the city’s primary partner in Sandtown/ Winchester. Robert Embry Jr., president of the Abell Foundation, former director of the Baltimore Department of Housing and Community Development, and a former HUD official, and Timothy Armbruster, head of the Goldseker Foundation, also served on the board. Other key participants included James Shea and Decatur Miller, both partners in prominent downtown law firms and members of the local business elite; Sister Bobbie English, who coordinated various Catholic charities in Baltimore; and M. J. Brodie, a wellknown urban development expert and head of the Baltimore Development Corporation, the city’s economic development authority. 5. Personal interview with Michael Seipp, July 2000. 6. Community leaders in Poppleton suggested that Mathias DeVito was an important voice in favor of creating village centers. Group interview, July 2000, Poppleton Village Center. 7. Personal interview with Kurt Schmoke, September 2000. It is understandable that Schmoke would doubt the viability of continued financial support for the village centers, especially support from the city. In Baltimore, zone neighborhoods were seen as privileged (after all, they received EZ federal benefits others were not eligible to receive). There was no broad local constituency to continue focusing special attention on zone neighborhoods once the EZ money was gone. If anything, the imperatives of local politics suggested that other, equally distressed neighborhoods that were not included in the EZ should take precedence. 8. On the controversy surrounding Hitchcock’s leadership, see Siegel 1995a. On Bell’s interim appointment, see Siegel 1995b. Diane Bell is now Diane Bell-McKoy, president and CEO of Associated Black Charities in Baltimore. 9. Personal interview with Michael Seipp, July 2000. 10. See the online appendix at http://cfcp.emory.edu/our_work/research/ez.html for further details on the action items included in Baltimore’s strategic plan. 11. Personal interview with James Shea, July 2000. 12. Support for administration and overhead costs was also provided by other sources, including local foundations and city government employees who were temporarily “detailed” to work for EBMC. 13. Public statement witnessed by Stoker; the shift in perspective among members of the EBMC advisory council to emphasize jobs was also confirmed in a personal interview with Diane Bell and Rachel Edds, October 1997. 14. The Business Empowerment Center was originally an arm of EBMC. However, in 2002 the former was transferred to the Community Development Corporation of Harbor Bank. (See Jacob France Institute 2005.)

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15. Personal interview with Diane Bell, July 2000. 16. See the memorandum “Workforce Development Policy Modifications Clarification,” presented to the EBMC board meeting, September 29, 2001. 17. Constance Maddox, who also served as president of the advisory council, observed that members of the council saw their influence as programs were adjusted to reflect their concerns. Public statement by Constance Maddox at the EBMC board meeting, witnessed by Stoker, December 9, 2004. 18. Personal interview with Michael Seipp, July 2000. Seipp observed that the EBMC board was concerned that the VC development process would become chaotic and asserted control over the process. He suggested that this desire for control reflected the tension between the “downtown, quasi-public” model of governance and community control. 19. See the Washington Village–Pigtown Neighborhood Planning Council website, http://www.neighborhoodlink.com/Washington_Village-Pigtown_Neighborhood_Plan ning/home. 20. The role of HOPE VI in the University of Maryland’s decision to construct the biotech park in Poppleton is disputed. The Lexington Terrace project demolished twentyfive buildings containing 677 public housing units and dispersed almost two thousand residents; in its place a smaller mixed-use development was constructed. Newman (2002) reports that several community activists speculated that the redevelopment of Lexington Terrace was an important factor in UMB’s decision to develop the BioPark. University officials, however, were unwilling to confirm this claim. Personal interview with Jane Shaab, UMB senior vice president and executive director of the BioPark, January 2009. 21. Jane Shaab, personal interview, January 2009. Shaab explained that property in the Westside Renaissance area was appropriate as an “incubator” for some of UMB’s spinoffs, but that the area was too small for the scope of plans UMB had in mind. 22. Personal interview with Diane Bell-McKoy, July 2008. 23. The recession that began in 2008 has made realization of these plans difficult. With few investors interested in space in the biotechnology park, emphasis in the redevelopment effort has shifted to service-oriented businesses to provide for workers at the Hopkins hospital center and medical campus. See Aerts 2010. 24. Personal interview with Diane Bell-McKoy, July 2008. 25. EBMC analysis of census data presented at the September 2002 board meeting. 26. These totals increase to 90 percent of the total amount of business subsidy and loans provided by EBMC to create and retain jobs if one includes the $4.5 million subsidy to the Montgomery Office Park, which was located in Washington Village–Pigtown and treated as a separate action item. 27. Trend lines for each census tract were calculated based on three-year moving averages (in constant dollars) of all business loans reported under the provisions of the Community Reinvestment Act. See the appendix to chapter 5 for further details. 28. Census tract 203, the southernmost tract in the East Harbor area, was excluded from the matched-pair analysis because it was an extreme outlier on the business investment indicator and its inclusion in the analysis would have distorted the overall group mean for EZ tracts. Business investment in the tract, however, ranked fifth overall among the city’s twenty-five EZ tracts; all the top-ranking tracts on business investment were located either in the East Harbor or Washington Village–Pigtown VCs. Census tract 605, located just southwest of the Hopkins Medical Center area and south of Sojourner-Douglas College, was also excluded because it could not be matched with a control tract. Business investment in that tract was weak and ranked last among all EZ tracts. 29. Personal interview with former mayor Kurt Schmoke, September 2000. 30. Census tract 203, excluded from the matched-pair analysis because of its outlier status, also had strong employment gains between 1996 and 2004 (48.4 percent), which

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placed this tract in the top tier of employment growth. Employment was flat (0.1 percent) in the other excluded census tract (605). 31. According to the city’s strategic plan, 92 percent of the land area in Fairfield was zoned for heavy industry in 1994. 32. Trend lines for each census tract were calculated based on three-year moving averages (in constant dollars) of all home mortgage loans reported under the provisions of the Home Mortgage Disclosure Act. See the appendix to chapter 5 for further details. 33. Census tract 203 was excluded from the matched-pair analysis because of the extreme value of its housing investment during the period 1994–2006. This tract ranked first among all EZ tracts in the average value of mortgage originations over the study period— more than double the amount of the second-highest EZ tract—and second overall among all census tracts in the city of Baltimore. 34. The quote is from a public statement by Decatur Miller at the December 9, 2004 EBMC board meeting, witnessed by Stoker. 8. EXPLAINING REVITALIZATION OUTCOMES

1. On the critical role that task mastering plays in solving collective action problems see Doner 2009, chapter 3. 2. It is important to note that the study for which the community development industry measures were derived, was heavily oriented toward assessing the effects of CDCs on the production of affordable housing and related neighborhood improvements. By contrast, the EZ initiative was designed to foster a broader, more comprehensive effort, one that typically involved a greater emphasis on economic development, workforce development, and human services, and a wider cast of stakeholders. In addition, since the EZ initiative spanned a decade of implementation, a city’s capacity was likely to evolve over the course of the effort and measures taken in the early to mid-1990s may not accurately capture the extent of local capacity during the middle and end years of the EZ initiative. 3. This conclusion is especially important for Detroit, where the local EZ program most closely followed the model of trying to direct additional resource to capable local intermediaries. 4. Patsy Healey (2004, 93–94) notes that governance cultures “provide the implicit norms and values which legitimate (or not) what individual actors do and the way governance processes operate in any context.” These cultural assumptions, she argues, shape the range of acceptable governance arrangements and processes as well as the set of practices considered appropriate for addressing a collective action problem. 5. Note that the labels “advantaged” and “disadvantaged” reported in table 8.2 are relative terms and as used here refer primarily to a comparative assessment among the six EZ cities based on their rankings on the city and metropolitan well-being indexes noted above and described more fully in chapter 3. 6. Downs (1981, 171), for example, acknowledges that “many urban neighborhoods need improvements in their nonphysical characteristics even more than physical upgrading” and cites “the levels of crime and security” and “the quality of education available to local residents” as examples. He adds, however, that “it would be unreasonable to expect any city government to develop a completely comprehensive neighborhood strategy covering all aspects of life.” 7. We want to mention another implication of the evidence. The evidence suggests that the distinctive design of the EZ initiative—the combination of federal grants with market-oriented policies—did not predict success. If the design of the initiative were sufficient to produce successful outcomes we would expect to see consistent success across all six sites. However, our evaluation established that local outcomes varied. What the evidence does show is that the EZ initiative can be used successfully to create positive

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outcomes, but the key to producing positive outcomes cannot be reduced to the features of the EZ initiative’s design alone. 8. Personal interview, March 2012. 9. Personal interview, October 2011. 10. Hyra (2008, 74–77) points out, however, that not everyone would agree that revitalization outcomes in Harlem were strong. He describes the criticisms raised by many Harlem residents that the Upper Manhattan Empowerment Zone’s emphasis on attracting large corporations hurt the neighborhood’s small businesses. CONCLUSION

1. Recent reviews of this literature include Emerson, Nabatchi, and Balogh 2012; Donahue and Zeckhauser 2011; Bevir 2009; Agranoff and McGuire 2003; Heinrich and Lynn 2000. 2. The international development literature has focused extensively on the links between good governance and economic growth, largely at the nation-state level (though their focus has primarily been on the provision of basic services such as infrastructure, education, and primary health care). However, the links remain controversial. See, for example, Pritchett and Woolcock 2004; see also Kurtz and Schrank 2007 and the reply (in the same issue) by Kaufmann et al. 2007; see also Kaufman et al. 2002b. On the critical role that task mastering plays in solving collective action problems see Doner 2009, especially chapter 3. 3. The report focuses on the first six years of the initiative and “does not draw any ‘causal’ conclusions about the NCP initiative’s effect on the trends in community outcomes observed.” See Greenberg et al. 2010, ES-1. 4. Moynihan (1969, 191) argued that the advice provided by social scientists to design the Community Action Program was an example of “social science . . . at its weakest, at its worst” because the advice was beyond the bounds of existing knowledge. Moynihan also argued that the proper role for social scientists is program evaluation, looking back to determine “what does work” (193–194; emphasis in original). That was the goal of our EZ evaluation. Although our findings about community participation do not directly contradict Moynihan’s claim (we too have observed circumstances in which community participation was problematic), our research does challenge his central point. Community participation does not always undermine implementation and, when community participation is part of a larger process of good local government, it can be a substantial benefit. 5. Personal interview, May 21, 1996. 6. Kneebone and Berube (2013, 71–76) identify four types of suburban jurisdictions with rising poverty rates. The largest category consisted of distressed suburbs (belowaverage change in regional employment and below-average population growth) followed by rapid-growth suburbs. The latter group, generally perceived to be affluent, middle-class communities, saw their poverty populations increase 71 percent between 2000 and 2010 and had the highest poverty rate (12 percent) among all suburbs with rising poverty during the past decade. 7. Kneebone and Berube (2013) and Katz and Bradley (2013) provide several examples of locally originated efforts at fostering regional approaches to reducing poverty and increasing opportunity. Our discussion focuses on how federal policy design and incentives could be used to create effective regional intermediaries that are tailored to the local context. 8. Urban analysts use the expression “the Baltimore way” as shorthand to convey transferring authority and responsibility for the design and implementation of local policy to extragovernmental, quasi-public corporations. 9. A shift in attitude took place within EBMC when the initial leadership was replaced. See chapter 7 for a discussion.

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10. The other strategies are “moving beyond delivering programs to focusing on transforming systems,” “bringing disruptive innovations into the mainstream and redirecting funds away from obsolete approaches toward what works,” and “driving the private market to work on behalf of low-income people.” 11. The NRI initially focused on five programs in four federal agencies. Summaries of these programs, drawn from White House 2010 (3–4) include: (1) Choice Neighborhoods (HUD)—to support “efforts to transform distressed public and assisted housing into sustainable mixed-income housing, . . . to promote positive outcomes for families, and to transform neighborhoods of concentrated poverty into viable, mixed-income neighborhoods with access to key assets and services” (inspired by the HOPE VI program); (2) Promise Neighborhoods (Education)—to support “projects that are designed to create a comprehensive continuum of education programs and family and community supports, with great schools at the center, that will significantly improve the educational and developmental outcomes of children and youth, from birth through college and career, in the nation’s most distressed communities” (inspired by the Harlem Children’s Zone); (3) Byrne Criminal Justice Innovation (Justice)—“a new program proposed for FY 2011, . . . [this] community-based strategy aims to control and prevent violent crime, drug abuse, and gang activity in designated high-crime neighborhoods . . . [by] providing funding to support partnerships between law enforcement agencies and community-based organizations that balance targeted enforcement with prevention, intervention, and neighborhood restoration services” (inspired by the Weed and Seed program); (4) Community Health Centers (Health and Human Services)—“for more than four decades [Community Health Centers have] provided comprehensive high-quality preventive and primary health care to America’s most medically underserved urban and rural communities”; and (5) Behavioral Health Services (Health and Human Services)—“an HHS approach to services for mental and addiction disorders that coordinates a comprehensive array of home and community-based prevention, early identification and intervention, treatment and recovery services and supports, using an assets-based approach to developing a system of wraparound services for families with complex, multigenerational behavioral health needs that can be built at the community-level and anchored to a neighborhood-based infrastructure.” 12. See (HOR, 2011, 76). The House language was in the final appropriations bill, which provided funding for the Sustainable Communities Initiative. Illustration cited in keynote address by Erika Poethig, of HUD, at the conference “Getting It Done II: Building Strong Communities in a Changing World,” at the Institute for Comprehensive Community Development and LISC (Local Initiatives Support Corporation), Chicago, March 5, 2012. 13. Wicked problems, according to Perri 6 et al. (2002, 34), are those that “cross departmental boundaries and resist the solutions that are readily available through the action of one agency.” Bradford (2005, 4) adds that “sustainable solutions to today’s wicked problems require the combined insights and actions of multiple actors learning about what works in particular places, and how to make it happen ‘on the ground.’ ”

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Index

Abt Associates, 107 Adams, Charles, 54 Agency for International Development (USAID), 44 Agranoff, Robert, 228 American Civil Liberties Union, 180 Anderson, Martin, 15 Annie E. Casey Foundation, 143, 152, 183, 221, 247n1 Atlanta Atlanta Housing Association of Neighborhood-based Developers (AHAND), 134 Atlanta Neighborhood Development Partnership (ANDP), 157 community development industry in, 95 – 96, 156, 200, 206 Enterprise Foundation, 157 HOPE VI, 150 – 52, 154, 221 Model Cities, 131 – 32 NPU V, 152, 221 urban renewal, 131 Atlanta Empowerment Zone Atlanta Coordinating Responsible Authority (ACoRA), 146, 148, 153, 157 Atlanta Empowerment Zone Corporation (AEZC), 90, 97 – 98, 136, 140, 143, 153 – 57, 205 benchmarking, 141, 143 – 45 Butler Street/Auburn-Old Fourth Ward project, 144, 150, 153, 160 community development corporations (CDCs), 140, 154, 200, 206 – 7 Community Empowerment Advisory Board (CEAB), 90, 133, 140, 142, 156, 159 Community Empowerment Board (CEB), 63, 90, 134 – 35, 155 community participation, 62, 82 – 83, 90, 97 – 98, 200, 208, 233 conditions in, 54 – 37, 59, 136 – 37, 211 – 12, 224

Department of Community Affairs (DCA), Georgia, 141, 143, 156, 158 – 59 EZ boundaries, 63 – 64 EZ maps, 64, 147, 151 Enterprise Foundation, 157 – 58, 221 federal oversight, 158, 240 Historic Westside Village project, 99, 144, 150 – 53, 159 – 60, 253n8 HUD audit, 99, 159 integrated strategic plan, 148 leveraged investments, 79 – 80 local capacity, 95 – 96, 156 – 58 governance, 86 – 91, 155 – 60, 200 – 203, 205 – 6, 208 – 9, 224 – 25 McDaniel Street project, 151 – 53, 160 North Yards Business Park project, 144, 150 program implementation, 72 – 73, 140 – 45, 148 – 49 program integrity, 99, 158 – 60, 209 program outcomes, 115 – 23, 149 – 52, 155, 218 – 21 programs and strategies, 69 – 71, 75, 137 – 40, 143 – 45, 148 – 49, 214 – 17, 224 Renewal Community and, 145 – 49, 153, 157 Southside/Pryor Road project, 144, 150, 160 strategic plan, 70 – 73, 99 – 100, 137 – 45, 148 – 49, 154 strategic planning, 61 – 63, 83, 86, 90, 97 – 98, 133 – 36, 209 tax incentives, 76, 152 – 53, 215 – 17, 225 Atlanta Housing Authority, 131, 142, 150, 154 Atlanta Project, 4, 63, 132, 139, 154 Baltimore African American community in, 178 Baltimore Sun, 184 Broadway Homes, 180 Broadway Overlook, 180

275

276

INDEX

Baltimore (continued) community development industry in, 95 – 96, 200, 206 – 7 Douglass Homes, 180 East Baltimore Development Incorporated (EBDI), 183 Enterprise Foundation, 189 Fells Point, 169 Flag House Courts, 180 Hollander Ridge, 180 HOPE VI, 179 – 81 Housing Authority of Baltimore, 180–81 Johns Hopkins University, medical campus, 63, 169, 178, 180 – 81, 183, 188 – 89 Jonestown, 180 Lafayette Courts, 180 Lexington Terrace, 180 – 81, 185 Little Italy, 180 Living Cities Integration Initiative, 239 Marriott International Hotel, 188 Mayor’s Office of Employment Development (MOED), 174 Montgomery office park, 188 Pleasant View Gardens, 180 Sandtown-Winchester, 4, 63, 166, 189 Save Middle East Action Coalition (SMEAC), 183 Townes at the Terraces, 180 University of Maryland at Baltimore (UMB), 168, 181, 255n20 University of Maryland Medical Center, 63, 168 – 69, 189 Baltimore Community College, 182 Baltimore Development Corporation, 165, 169, 176, 184 Baltimore Empowerment Zone advisory council, 166, 173, 175, 177 Business Empowerment Center, 170, 174, 176, 254n14 business investment in, 186 – 90 changing priorities, 171 – 73 committees, 173, 177 community conflict, in, 167, 178 community participation, 82 – 83, 86, 91, 96 – 98, 165 – 68, 177 – 79, 195, 200, 233, 207, 241 conditions in, 54 – 58, 168 – 69, 185 – 86, 211 – 12, 224 customized training, 8 – 9, 176, 194 East Baltimore redevelopment, 183 (see also East Harbor VC; Baltimore

Empowerment Zone: Inner Harbor East) East Harbor VC, 166, 185 – 86, 188 – 89, 191 Empower Baltimore Management Corporation (EBMC), 8 – 9, 96, 101, 165 – 68, 171 – 79, 182 – 83, 188, 191, 193 – 95, 209, 221, 236, 238 employment gains in, 189 – 90 entrepreneurial governance, 173 – 76 EZ boundaries, 63, 65 EZ maps, 65, 187, 190, 192 Fairfield, 168, 189 good governance, 7 – 9, 193 – 95, 231, 238 governance, 8 – 9, 86 – 89, 91, 165 – 68, 177, 194, 200 – 203, 205 – 7, 224 – 25, 238 Harlem Park VC, 166, 175, 179, 185, 188, 191 Historic East Baltimore Community Action Coalition (HEBCAC) VC, 166, 178 – 79, 183, 185 – 86, 191 housing investment, 191 – 93 Housing Venture Fund, 173, 191 Inner Harbor East, 184, 188 – 89, 255n28 leveraged investments, 79 local capacity, 95 – 96 Poppleton VC, 166, 179, 181 – 83, 185 – 86, 191 program implementation, 73 program integrity, 101 – 2, 209 program outcomes, 115 – 22, 184 – 93, 218 – 21 programs and strategies, 70 – 72, 75, 169 – 73, 214 – 17, 225 redevelopment projects, 181 – 84 Self-Motivated Community People VC, 166, 175, 179, 185 – 86, 188, 191 service integration, 176 strategic plan, 70 – 73, 101, 168 – 74 strategic planning, 63, 83, 86, 91, 165 – 68 Sylvan Learning Systems Inc., 184, 188 tax incentives, 76, 215 – 17, 225 UMB BioPark, 181 – 83, 188, 255n20 Village centers (VC), 8 – 9, 91, 96, 101, 165 – 68, 170 – 71, 173 – 79, 185 – 86, 194 – 95, 207, 236, 238 Washington Village Neighborhood Planning Council, 179

INDEX

Washington Village-Pigtown VC, 166, 179, 185 – 86, 188 – 89, 191 Bank One (Baltimore), 188, 193 – 94 Becker, Doug, 184 Bell, Diane, 168, 171, 173 – 74, 182 – 83, 195 benchmarking, 85, 92, 98, 234, 241 – 42 Berry, Jeffrey, 231 Berube, Alan, 237 – 38, 257n6 Bevir, Mark, 46 – 47, 227, 234 Bloom, Howard, 125 Boston, 15 – 16, 22, 34, 238 Bradbury, Katherine, 53 Bradley, Jennifer, 11, 245 Briggs, Xavier De Souza, 228 Brintnall, Michael, 28 Brock, Thomas, 125 Bronx EZ. See New York City Empowerment Zone Brookings Metropolitan Policy Program, 230 Browning, Rufus, 202 Burns, Tom, 229 Bush, George H. W. (U.S. president), 13, 24, 29 Bush, George W. (U.S. president), 35 Busso, Matias, 109 – 12 Camden, NJ, 3, 34, 66, 76, 78, 111, 238 Campbell, Bill (Atlanta mayor), 63, 90, 97 – 99, 134 – 36, 141 – 43, 149, 155, 159, 253n15 Campbell, Donald, 103, 112, 124, 209 capacity, 5 – 6, 39, 51 – 52, 228 – 31, 233, 246 administrative, 133, 143, 157, 227 of CDCs, 67, 95 – 97, 199 – 200, 206 – 7 of a community, 24–25, 42, 68, 165, 169–71, 178, 195, 203, 205, 229–31, 245 of community-based organizations, 67, 91, 95 – 96, 101, 156, 163, 165, 169, 183, 205, 207, 236 – 37, 243 local, 6, 39, 46 – 47, 49 – 50, 52, 86, 94 – 96, 105, 156, 199, 206, 208, 217, 222 – 23, 228 – 31, 233, 238 – 39 policy, 26, 45, 48, 227 capital mobility, 5, 48 Carter, Jimmy (U.S. president), 4, 23, 26, 130, 132 Cavanagh, Jerome (Detroit mayor), 22 Chaskin, Robert, 201, 213, 229 Chicago City Council, 90, 92, 97

277

community development industry in, 95 – 96, 200, 206 Department of City Planning, 92 Chicago Empowerment Zone community participation, 62, 82 – 83, 91 – 92, 97 – 98, 200 conditions in, 54 – 60, 211 – 12, 224 Empowerment Zone Coordinating Council (EZCC), 63, 91 – 92 EZ boundaries, 63 – 64, 66 EZ map, 66 governance, 86 – 90, 200 – 204, 206, 224 – 25 HUD audit, 100 local capacity, 89, 95 – 96 program implementation, 74 program integrity, 99 – 100 program outcomes, 115 – 17, 119 – 22, 219 – 20 programs and strategies, 70 – 71, 75, 215 – 17, 224 strategic plan, 70 – 74 strategic planning process, 62 – 64, 83 tax incentives, 215 – 17, 225 Choice Neighborhoods, 11, 244 Cisneros, Henry (HUD secretary), 62, 164 citizen participation, 231 – 33 community action program and, 20 CDBG and, 25 Empowerment Zones and, 62 (see also individual EZ cities) good governance and, 50 – 51 Model Cities and, 20 – 21 UDAG and, 26 See also community participation Clarke, Susan, 5, 26 – 27 Cleveland, 34, 239 Clinton administration, 1 – 2, 61, Clinton, William J. (U.S. president), 14, 29 – 31, 164 Coe, Robert, 117 – 18 collaborative governance, 41 – 43, 227, 229 – 31, 238 – 40, 242 Committee for Economic Development, 30 Community Action Agencies (CAAs), 18 – 21 Community Action Program (CAP), 17 – 19, 231 community-based organizations capacity of, 68, 95, 159, 167 – 68, 188, 230

278

INDEX

community-based organizations (continued) community participation and, 6, 65, 73, 91, 92, 97, 165, 195, 207 – 8, 246 comprehensive revitalization and, 29, 34, 155 – 56, 208, 229 – 30 governance and, 9, 199, 201 – 2, 228, 231 See also nonprofit organizations community benefits agreement, 182 community building, 2, 30, 106 Community Development Block Grants (CDBG), 22 – 25 community development corporations (CDCs), 37, 92, 94 – 97, 229, 256n2 Community Foundation for Greater Atlanta, 143 community participation (in policymaking), 6, 41, 50 – 52, 85 – 88, 96 – 98, 231 – 33, 237, 246 in Atlanta, 62, 82 – 83, 90, 97 – 98, 200, 208, 233 in Baltimore, 82 – 83, 86, 91, 96 – 98, 165 – 68, 177 – 79, 195, 200, 233, 207, 241 in Chicago, 62, 82 – 83, 91 – 92, 97 – 98, 200 in Detroit, 82 – 83, 92, 97 – 98, 200, 208 in New York, 62, 82 – 83, 92 – 93, 97 – 98, 200 in Philadelphia, 82 – 83, 86 – 88, 93, 96 – 98, 200, 207 – 8, 233, 241 See also citizen participation Community Reinvestment Act, 186, 189 Community Renewal Tax Relief Act of 2000, 145 – 46 Community Trust Boards (Philadelphia), 93, 96, 101, 207 – 8, 235 – 36 comprehensive community development, 4, 14, 229 – 31, 237. See also comprehensive community initiatives comprehensive community initiatives, 29 – 30, 213 – 14, 231, 237 – 38, 247n1. See also community building Comprehensive Community Revitalization Program (New York), 4, 229 Comprehensive Employment and Training Act, 22 competition, inter-jurisdictional, 40 – 41 Coppin State University, 63, 189 corruption, 45 – 46, 49, 98, 232 – 33, 249n6 Cowden, Richard, 31, 248n9

Cuomo, Andrew (HUD assistant secretary), 33, 130 Daley, Richard M. (Chicago mayor), 63, 92 David, Stephen, 8 – 9 Davis, David, 19 – 21, 247n3 deindustrialization, 193 democracy, 47, 227 – 28, 231 – 32 Detroit community development industry in, 95 – 96, 200, 206 City Council, 90, 92 Living Cities Integration Initiative, 239 Detroit Empowerment Zone Empowerment Zone Development Corporation, 92, 97 benchmarking, 82 community development corporations, 97 community participation, 82 – 83, 92, 97 – 98, 200, 208 conditions in, 54 – 59, 211 – 12, 224 EZ boundaries, 65, 67 EZ map, 67 governance, 86 – 90, 92, 200 – 206, 208, 224 – 25 HUD audit, 100 leveraged investments, 79 local capacity, 95 – 96 program implementation, 72 program integrity and governance, 100 program outcomes, 115 – 17, 119 – 22 programs and strategies, 69 – 71, 75, 215 – 17, 224 strategic plan, 70 – 72 strategic planning, 65, 82 – 83, 86, 92, 97 tax incentives, 215 – 17, 225 DeVito, Mathias, 171 diffuse authority, 6, 41 Dinkins, David (New York City mayor), 62 distressed cities, neighborhoods, and urban areas, 3, 26, 27, 34, 53, 237 Dommel, Paul, 23 Donahue, John, 227 Downs, Anthony, 53, 210, 213, 256n6 Economic Development Administration (EDA), 7 – 9, 193 – 94 economic liberalism, 39 Economic Opportunity Act of 1964, 17

INDEX

Ed & Med anchors, 188 – 89, 193 effective democracy, 228 efficiency, market, 40 Embry, Robert, Jr., 172, 182 Empowerment Zone-Enterprise Community Initiative (EZ-EC), 2 – 3, 239 – 40 benchmarking, 80 – 82 bistate zone, 66, 238, 247n2, 248n10 community participation, 81 – 83, 86 – 93, 96 – 98, 207 – 8 conditions in EZ cities, 54 – 60, 209 – 12 evaluation and, 10, 107 – 14 EZ boundaries, 62 – 68 EZ maps, 64 – 69 federal assistance for designated cities, 32 – 33 federal monitoring and oversight, 81, 159, 240 leveraged investments, 78 – 80 local governance structures and processes, 86 – 93, 199 – 209 program design and legislative history, 30 – 33 program implementation, 72 – 74 program outcomes, evaluation of, 107 – 25 programs and strategies, 68 – 72, 214 – 18 Round II zones, 35, 111, 252n7 Round III zones, 35, 112, 252n7 strategic planning process, 60 – 68, 82 – 86, 89, 97 – 98, 234 – 36, 241, 243 tax incentives and, 33, 76 – 77, 214 – 18, 224 – 25, 251n2 waiver requests, 77 – 78 Enterprise Foundation, 4, 189 Enterprise Zones, 26 – 29 Great Britain and, 26 – 27 state enterprise zones, 27 – 29 entrepreneurial governance, 34 – 35, 51, 234 – 36 in Atlanta, 234 – 35 in Baltimore, 236 in Chicago, 234 – 35 in Detroit, 235 in New York, 234 – 35 in Philadelphia, 235 – 36 and policymaking, 51, 98 Environmental Protection Agency, U.S. (EPA), 239 Erickson, Rodney, 78

279

federal grants, 1, 14 – 26, 30 – 35, 239 – 40, 243 Federal Reserve, 230 federal urban policy, 14 – 36, 237 – 46 good governance and competition, 240 – 41, 244 guidance and technical assistance, 242 need for planning grants, 241 priority of good governance, 240 program management, 241 Ferrer, Fernando, 93 fiscal capacity, 48 fiscal federalism, 48 Fisher, Peter, 75 – 76 Fitzwater, Marlin, 13 Ford Foundation, 16 Fosler, Scott, 42 Franklin, Shirley (Atlanta mayor), 146 Frieden, Bernard, 21 – 22 Fung, Archon, 232 Gaebler, Ted, 34, 51, 234 Garg, Sunil, 201 Giles, Micheal, 132 Gittell, Marilyn, 61, 73 – 77, 83, 87, 89 – 90, 93, 97, 100, 223, 251n3 Giuliani, Rudolph (New York City mayor), 66, 93 Glass, Gene, 117 Glickman, Norman, 229 globalization, 3 Goetze, Rolf, 210, 213 good governance and effective governance, 4 – 7, 226 – 36, 246 community participation and, 6, 96 – 98, 207 – 8 conditions for, 6, 94 – 95 in Baltimore, 193 – 95, 231 indicators of, 44 – 45 in postindustrial democracy, 48 – 52 international development and, 44 – 48, 257n2 local capacity and, 6, 94 – 96, 203 – 7 in Philadelphia, 231 program integrity and, 6, 51, 98 – 101, 208 – 9, 233 – 36 revitalization success and, 4, 11, 42 summary assessment, 96 World Bank project, 44 Gore, Al (U.S. vice president), 32, 34

280

INDEX

governance, local as community problem-solving, 5 community participation and, 96 – 98, 207 – 8 local capacity and, 94 – 96, 203 – 7 neighborhood revitalization and, 199 – 20 program integrity and, 98 – 101, 208 – 9, 233 – 36 quality of, 4, 50, 94 – 102, 203 – 9 structure and processes, 201 – 3 governance and neighborhood revitalization, 199 – 201 government, distinctive role of, 42 – 43 Government Accountability Office, U.S. (GAO), 74 – 77, 80, 107, 109 – 13, 121 – 23, 249n7 Great Society, 13, 19 Green, Roy, 28 Grogan, Paul, 37 – 38, 100 Haar, Charles, 19 Hall, Doris, 182 Ham, John, 109 – 10, 112 Hannan, Peter, 253n20 Hanson, Andrew, 109 – 10, 112 Harmes, Adam, 40 – 41 Harrington, Michael, 16 Hayek, Friedrich von, 41 Healey, Patsy, 256n4 Hebert, Scott, 76 – 78, 83, 89, 107, 152 – 53, 216 Heritage Foundation, 27 Hitchcock, Claude, 168 HOME Investment Partnership Program, 24 HOPE VI, 4, 38 in Atlanta, 150 – 52, 154, 221 in Baltimore, 179 – 81 House Appropriations Subcommittee, 245 Housing and Urban Development, U.S. Department of (HUD) benchmarking, 81 – 82, 85, 93, 239, 242, 244 – 45 evaluation plans for EZ, 107 Office of the Inspector General, 99 – 101 PERMS reports, 69, 74 – 75, 250n1 Houston, 34 Howard, Christopher, 25 Howard County, MD, 184

Howe, Sir Geoffrey, 26 Hyra, Derek, 222, 257n10 interest, conflicts of, 6, 41 international development, 44 – 48 International Monetary Fund, 44 Jacobs, Jane, 15 Jackson, Maynard (Atlanta mayor), 63, 133 – 34 Jargowsky, Paul, 3 Johnson, Lyndon B. (U.S. president), 16 – 17 Johnson, Pamela, 114 Jordan, Andrew, 10 Kania, John, 230 Kansas City, 34, 238 Kantor, Paul, 8 – 9, 54 Kaplan, Marhsall, 21 – 22 Katz, Bruce, 11, 245 Kaufmann, Daniel, 44 – 45 Kemp, Jack (U.S. representative), 24, 27 Kemp-Garcia Bill (Urban Jobs and Enterprise Zone Act of 1981), 28, 32 Kennedy, John F. (U.S. president), 16 – 17 Keohane, Robert, 220 King, Gary, 220 Kline, Patrick, 109 – 12 Kneebone, Elizabeth, 237, 257n6 Kramer, Mark, 230 Kravitz, Sanford, 17 – 18 Krupka, Douglas, 109 – 12 Latin America, 47 learning communities, 239 Lemann, Nicholas, 247n4 Liebschutz, Sarah, 31 – 32 Lipsky, Michael, 25 Living Cities Integration Initiative, 239 local capacity. See capacity Local Initiatives Support Corporation (LISC), 230 Logue, Edward, 22 Los Angeles, 13, 28 – 29, 34 Lowe, Jeanne, 15 – 16 MacArthur Foundation, 230 Mallach, Allan, 213 market-enabling policy, 40 – 41 market-inhibiting policy, 40 – 42

INDEX

market-oriented policy, 35, 39 – 41, 75 – 80, 194, 217 – 18, 240 market potential, 39, 188, 193 market-preserving federalism, 40 Marshall, Dale Rogers, 25, 202 Mattessich, Paul, 234 maximum feasible participation, 19, 231 McGuire, Michael, 228 Meon, Peter-Guillaume, 46 methods, description of, 9 – 10 Mfume, Kweisi (U.S. representative), 164 Mikulski, Barbara (U.S. senator), 164 Millennium Challenge Account, 44 Miller, Anita, 229 Miller, Decatur, 194 Minneapolis, 239 Model Cities program, 2, 4, 19 – 22, 244 Monsey, Barbara, 234 Montiel, Lisa, 54 Moynihan, Daniel Patrick, 231, 257n4 multi-tiered governance, 87 – 88 mutual dependency, 6, 41 Naim, Moses, 44 Nathan, Richard, 54 National Community Development Initiative (NCDI), 94 – 95, 156, 250n5 National League of Cities, 32 Neighborhood revitalization, 2, 10, 24 – 25, 94, 98, 199, 204, 217 – 18, 230 – 31, 240 – 6. See also Neighborhood Revitalization Initiative Neighborhood Revitalization Initiative, White House, 11, 242 – 43, 258n11 Neighborhood Transformation Initiative (Philadelphia), 236 neoliberalism governance, 52 theory, 39 – 43, 248n1, 249n3 urban policy, 40 – 41, 43 networks, 47, 49, 227 Newark, 20, 239 New Communities Program (Chicago), 229 – 30 New Federalism, 22 New Haven, 16, 22 New York City community development industry in, 95 – 96, 200, 206

281

Comprehensive Community Revitalization Program (CCRP), 4, 229 corruption in school system, 49 regional cooperation, 238 New York City Empowerment Zone benchmarking, 82 Bronx Overall Economic Development Corporation (BOEDC), 93, 223 community participation, 62, 82 – 83, 92 – 93, 97 – 98, 200 conditions in, 54 – 60, 211 – 12, 224, 222 – 23 EZ boundaries, 66, 68 EZ map, 68 governance, 38, 86 – 89, 92 – 93, 200 – 206, 224 – 25 Harlem Urban Development Corporation, 222 HUD audit, 100 local capacity, 95 – 96 New York Empowerment Zone Corporation, 93 program implementation, 72 – 73 program integrity, 99 – 100 program outcomes, 115 – 17, 119 – 22, 219 – 20, programs and strategies, 38, 69 – 71, 75, 214 – 17, 224 South Bronx EZ, 4, 86 – 88, 92 – 93, 100 strategic plan, 70 – 73 strategic planning, 66 – 68, 83, 86 tax incentives, 76, 215 – 17, 224 Upper Manhattan EZ, 86 – 88, 92 – 93, 100 Upper Manhattan Empowerment Zone Development Corporation, 93, 97, 222 Nixon, Richard (U.S. president), 22 – 23 nonprofit organizations, 41, 49, 80, 101, 132, 137, 146, 148, 243, 245. See also community-based organizations Noonan, Douglas, 109 – 10, 112 Nye, Nancy, 229 Oakes, Michael, 114 Oakland Community Action Program, 20 EDA, 7 – 8, 156, 193 – 94 EZ-EC initiative, 34 federal programs, 22, 159

282

INDEX

Oakland (continued) Ford Foundation, 16 Rockefeller Foundation, 247n1 Oakley, Diedre, 74, 107, 109 – 13, 121 – 22 Obama administration, 11, 242 – 44 O’Connor, Alice, 3 Office of Economic Opportunity (OEO), 17 – 18, 20 Omnibus Budget Reconciliation Act (OBRA) of 1993, 31 Osbourne, David, 34, 51, 234 Pataki, George (New York governor), 66, 93, 222 Paterakis, John, 184 performance management, 34, 81, 234 – 36, 243 in Atlanta, 209, 235 in Baltimore, 174 – 75, 236 in Chicago, 235 in Detroit, 235 in New York, 235 in Philadelphia, 235 Peters, Alan, 75 – 76 Philadelphia community development industry in, 95, 200, 206 Ford Foundation, 16 Neighborhood Transformation Initiative, 208, 236 United Way of Southeastern Pennsylvania, 208 Philadelphia Empowerment Zone benchmarking, 82 community lending institutions (CLIs), 208 community participation, 82 – 83, 86 – 88, 93, 96 – 98, 200, 207 – 8, 233, 241 community trust boards (CTBs), 93, 96, 101, 207 – 8, 235 – 36 conditions in, 54 – 60, 211 – 12, 224 EZ boundaries, 66 – 67, 69 EZ map, 69 governance, 86 – 89, 93, 200 – 204, 206 – 8, 224 – 25, 231 local capacity, 95 – 96 Mayor’s Office of Community Services (MOCS), 93 Neighborhood Funding Streams, 208 program implementation, 72

program integrity, 100 – 101 program outcomes, 115 – 22, 218 – 20, 222 programs and strategies, 69 – 71, 75, 214 – 17, 224 strategic plan, 70 – 72, 101 strategic planning, 66 – 68, 83, 86 tax incentives, 76, 215 – 17, 225 philanthropies, 241, 246 Pitkin, William, 210, 213 Port Authority, of Oakland, 7 Portney, Kent, 231 postindustrial democracy, 48 poverty conditions in cities and neighborhoods, 37, 56 – 60, 237 EZ outcomes and, 108 – 10, 115 – 23, 128, 200, 211, 215 – 16 policy, 16 – 22, 30, 43 – 44, 48 – 49, 53, 243 power in local governance, 89 – 93 Pressman, Jeffrey, 7, 156, 159 Price Waterhouse, 79 – 80 program integrity and good governance, 6, 50 – 52, 98 – 101, 233 – 36, 246 Promise Neighborhoods, 11, 243 – 44 propensity score matching, 108, 112, 114, 251n6 Proscio, Tony, 37 – 38, 100 public-private partnership, 2, 47, 94 – 97 Ragin, Charles, 218 Rangel, Charles (U.S. representative), 32, 61 – 62, 66, 93, 248n9 Reagan, Ronald (U.S. president), 13, 23 – 27 regionalism, 2 – 3, 238 – 39 Regional Plan for Sustainable Development, 239 regulatory relief, 1 – 2, 28, 39, 77 – 78 Reid, Joseph, 135, 141, 143, 159, 253n15 reinventing government, 81 in Baltimore, 173 – 79 Rendell, Edward (Philadelphia mayor), 93 Renewal Communities, 35, 41, 145 – 46 representation in EZ governance, 88 – 89 responsible relocation, 183 Rich, Michael, 23 – 24, 26 Rockefeller Foundation, 247n1 Rockefeller Institute of Government, 61 – 62, 68, 107, 223 Rodriguez-Acosta, Cristina, 47

INDEX

Rohe, William, 210 Rosenbaum, Allan, 47 Rossi, Peter, 123 – 24 Roy, Corinna, 234 Save Middle East Action Coalition, 183 Sanders, Heywood, 247n1 Savitch, Hank, 54 Schmoke, Kurt (Baltimore mayor), 164 – 68, 174, 184, 189 school choice, 38 Schorr, Lisbeth, 124, 253n19 Segal, Lydia, 49 – 50 Seipp, Michael, 167, 169, 177 Sekkat, Kahlid, 46 service integration, 176 Sharp, Elaine, 231 Shea, James, 171 Siegel, Bernard, 171 single-tiered governance, 87 – 88 Sirianni, Carmen, 232 Small, Kenneth, 53 Smyth, Katya Fels, 124, 253n19 social capital, 39, 232 social safety net, 45 South Asia, 47 Stockman, David, 25 – 26 Stoker, Gerry, 5 Stone, Clarence, 158, 203 – 4, 233, 250n6 St. Louis, 238 St. Paul, 239 Street, John (Philadelphia mayor), 236 subnational governance, 46 Sundquist, James, 16 – 17, 19 – 21, 247n3 Surdna Foundation, 4 Sustainable Communities program, 11, 239, 245 Sylvan Learning Systems (Baltimore), 184, 188 Tabb, David, 202 tax incentives, 3, 9, 26 – 28, 30 – 35, 39, 75 – 77, 111, 146, 148, 152 – 53, 194, 214 – 18, 220, 224 – 25, 235 – 36, 248n9, 251 Teaford, Jon, 14

283

Temkin, Kenneth, 210 Thatcher, Margaret (U.K. prime minister), 27 Thompson, Ken, 231 Thompson vs. HUD, 181 Transforming Community Program, 4 Transportation, U.S. Department of, 239 Tsao, Hui-Shien, 74, 107, 109 – 13, 121 – 22 Upper Manhattan EZ. See New York City Empowerment Zone Urban Development Action Grants (UDAG), 4, 25 – 26, 242 Urban Institute, 94, 107, 156, 206 urban political machines, 45 urban policy, 14 – 35, 38 – 39, 42 – 44, 236 – 45 urban regime theory, 5 urban renaissance, 37 – 39, 51 urban renewal, 14 – 16, 19, 23 – 24, 131 Verba, Sidney, 220 Walker, Christopher, 94 – 95, 206, 250n5 Wallace, Larry, 159, 253n15 War on Poverty, 16 – 19 Washington, DC, 238 Washington Consensus, 44 – 45, 249n5 Weiss, Michael, 125 Weltner, Charles, 132 White House Office of Urban Affairs, 11, 243 Wildavsky, Aaron, 7, 156 Williamson, John, 45 Wilson, James, 15 Wofford, John, 18 – 19 Wolf, Michael, 28, 31 World Airways, 7 – 8 World Bank, 44 Worldwide Governance Indicators project, 44 Wright, David, 54, 61 – 62, 82 – 83, 87, 92, 107, 249n4 Wurzel, Rüdiger, 10 Zeckhauser, Richard, 227 Zito, Anthony, 10