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EZ Does It

Working in a delicate and contentious alliance, community activists and City Hall managed to win Chicago a federal empowerment zone. Now the issue of who's going to run the show could derail the whole process.

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Pat Dowell-Cerasoli had the stage to herself in the auditorium of Malcolm X College. Positioned at a microphone, the deputy commissioner of Chicago's planning department was offering a strategy for designing a federal "empowerment zone" application. An EZ would be a run-down urban area that the federal government would jump-start through a package of tax incentives, waivers, and cash. Time was scarce--it was now May 7, 1994, and the city's bid had to be received by the U.S. Department of Housing and Urban Development by June 30.

As she spoke, Dowell-Cerasoli noticed that some members of her audience, composed of community activists from the south and west sides and from Pilsen and Little Village, were getting up and gathering at the rear of the auditorium. Suddenly one of them came forward. Paul Ramey, a west-side activist, stepped up onstage and seized her microphone. "This whole thing has to be bottoms up," said the blunt-talking Ramey. "The community needs to be running this show." Next Angelo Rose, executive director of the Ahkenaton Community Development Corporation in the Grand Boulevard neighborhood, asked the city officials who were present and their consultants to leave the room so the activists could strategize among themselves.

Dowell-Cerasoli says she expected the revolt, but other City Hall representatives were upset as they sipped coffee and munched on leftover doughnuts in the hallway outside the auditorium. "Several of my staff were hurt because they felt we had a true partnership with the community," recalls Valerie Jarrett, commissioner of the Department of Planning and Development, "and now the neighborhood people were saying, "No, this isn't a partnership, and you should get out."' Jarrett's own reaction was more measured. "I thought, well, good luck, you go figure it out."

In the end, after all kinds of tumult, city officials and neighborhood leaders did come together in an unprecedented union that wrote and edited the application. The finished product ran to four volumes. It was full of ideas and full of passion, and it impressed Washington enough to win for Chicago one of the six designated urban empowerment zones.

Today, many observers doubt that this latest federal attack on the ghetto will have any more impact than its predecessors, notably the Model Cities program of the 1960s. And six months after the Chicago application was submitted, the good feelings that reigned last summer have faded, succeeded by jockeying for power. The tension that normally exists between city government and community is reasserting itself.

Yet hope survives that the EZ can somehow achieve the unimaginable, the revitalization of the city's worst and most intractable slums. "If we do this well, we will strike at the current high levels of homelessness and depression," says Angelo Rose, who is scrapping with the city over who should govern the zone. "We can rebuild America."

The EZ concept is rooted in the idea of the enterprise zone. In the mid-1970s the British government originated the mechanism, which granted tax and regulatory relief to businesses in sagging sections of Britain's cities. American conservatives, particularly Jack Kemp, then a U.S. congressman, started touting the concept in 1980. But while enterprise zones were set up by cities and states, there was never any action at the federal level. The Democrats were unenthusiastic, on the grounds it was a sop to business and nothing more, and the Republicans couldn't unite behind a version of their own. In 1988 President Reagan actually signed a bill authorizing the creation of 100 enterprise zones, but Kemp, by then HUD's secretary, thought the law was flawed and no zones were ever designated. In the wake of the '92 Los Angeles riots, President Bush embraced the concept of federal zones and the Democrats relaxed their opposition. Yet when a bill reached Bush's desk just after the 1992 election, he vetoed it. "I think he did it because the measure called for more taxes," says Richard Cowden, executive director of the American Association of Enterprise Zones, "and he wanted to be on record against tax increases. He also probably didn't want Kemp to get any credit for the thing."

When Clinton was running for president, he expressed some support for federal enterprise zones. Once in office, he organized a task force to come up with some new version of the idea. Among the body's more influential members were Paul Dimond, a former civil rights attorney who served as a White House aide on economic policy; HUD secretary Henry Cisneros, the former mayor of San Antonio; and Andrew Cuomo, an assistant HUD secretary and son of the then New York governor, who had come to prominence by building shelters for the homeless in New York City.

According to Andrew Cuomo, the Clinton administration found two flaws in the enterprise zone concept. "Businesses aren't going to come back to the inner city because of tax breaks," Cuomo says. "There's no security and no work force to speak of. And those businesses that do come back will build a wall around themselves. Employees come in from the suburbs, work, and then go back home. Without a more comprehensive plan nothing's going to happen."

This analysis yielded the empowerment zone--the entree on Clinton's urban policy menu. Where an urban enterprise zone would have entitled businesses to a break in capital gains taxes, the EZ promised firms a wage tax credit of up to $3,000 a year for any worker who lived within the zone's perimeter. Firms in the zone would get other tax incentives as well, plus the authority to float tax-exempt bonds, and businesses and residents both would receive the freedom to seek waivers of various state, local, and federal regulations.

The most marked change from the old enterprise zone concept was Washington's new financial commitment. The federal government now intended to spend millions of dollars on community projects designed to educate residents and get them jobs. In prior urban renewal efforts, financial aid had been spread widely among many cities, in order to garner support in Congress, but the Clinton planners decided to target the money narrowly. "When every city gets a little something, there isn't enough for any one city to make a difference," says Cuomo.

Clinton unveiled his EZ initiative in May 1993. Three months later he signed into law the necessary legislation--a bill authorizing roughly $2.5 billion in tax breaks and $1 billion in new social service grants over a ten-year period.

The import of this legislation was not lost on Chicagoans. Wanda White, the executive director of the Community Workshop on Economic Development (CWED), a small but influential citywide consortium, saw the EZ program as a potential boon to the neighborhoods, and she and her husband Doug Gills began to beat the drums. "This was an opportunity to get past victim bashing and attach ourselves to new conservative trends," says Gills, an official with the Kenwood-Oakland Community Organization and an active school reformer. White traveled to Washington to glean information about the EZ program, and she convened boosterish meetings at CWED's office on the near west side. (In December 1993, Roy Priest, director of HUD's economic development office, addressed the group's annual meeting.) Valerie Jarrett, in an EZ fervor herself, says she spent the fall of '93 "breathlessly waiting for the actual application."

In January of '94 Clinton announced plans to designate nine EZs--six urban and three rural--plus 95 so-called enterprise communities (ECs), pale reflections of the EZs that would receive the same regulatory waivers but much less money. When the numbers were broken down, each empowerment zone would get $100 million in funding and an estimated $250 million in wage tax credits over the decade; each enterprise community would receive a grant of $3 million.

"Somehow there needs to be a way of doing business in which we try to create the conditions in which people can seize opportunities for themselves," said Clinton in the White House.

Last February Vice President Al Gore, the tribune of "reinventing government," delivered a pep talk to midwesterners gathered at an EZ workshop in Chicago. The instructions for crafting an application, called a "strategic plan," were spare. Applicants, using a "bottoms up" process, had to enunciate a vision, show the probability of creating new businesses and jobs, and offer evidence that their effort was sustainable over time. An urban empowerment zone could consist of three noncontiguous areas, but it was limited to 20 square miles and 200,000 residents. In addition, the level of poverty had to be high: anywhere from 20 to 35 percent of the people living in the zone's census tracts must be impoverished.

"We want to give opportunity to people who have known too much failure and despair," said Mayor Daley on February 16, 1994, formally launching the city's drive to land an empowerment zone. He told a large crowd at the Harold Washington Library, "We want to reverse the tide of decay that has been washing over American cities for decades. We want to shatter the myth that community development cannot work." To coordinate the application process, Daley named a 30-person body called the Empowerment Zone and Enterprise Community Coordinating Council, its membership consisting of city officials, businessmen, and delegates from citywide not-for-profit groups.

When the coordinating council invited neighborhood organizations to contribute to the EZ application, activists in poor areas got busy. When leaders of west-side neighborhood organizations came together, they excluded Austin, largely on grounds of affluence. "Which perturbed us quite a little bit," says the Reverend Lewis Flowers, pastor of the Austin Community Baptist Church. "We demanded our neighborhood in." The west side's eventual proposal did include Austin, as well as the near west side, East and West Garfield Park, and North Lawndale, plus the Robert Taylor Homes and Cabrini-Green in other parts of the city. In total, the west side consortium laid claim to 17.8 square miles of Chicago containing 185,000 residents. These numbers put the west side's proposal in line to become the entire zone, a fact that irritated other aspirants. "They're hogs," complained a south-side leader.

Pilsen and Little Village, two predominantly Latino neighborhoods southwest of the Loop, hammered out a ten-page document that listed programs relating to economic resurgence, health care, affordable housing, and education. Along the south lakefront, two separate groups fashioned proposals, one a faction linked to the near- and mid-south neighborhoods Douglas, Grand Boulevard, Washington Park, and Kenwood-Oakland and the other representing Woodlawn and South Shore. Englewood and parts nearby held meetings at Kennedy-King College and came up with not only a proposal but an imposing new name--the New Englewood Village Collaborative. And residents of the Calumet region wrote a plea that leaned heavily on the prospects of generating jobs from the Ford Motor Company and the steel companies remaining in the area.

Over two days in April the coordinating council entertained these proposals in public sessions. In all, 33 proposals were submitted, many of them self-serving. Safe Haven, an obscure agency in Lakeview, argued for its antigraffiti, antidrug campaign. The Children's Place Association, a Humboldt Park organization that aids youngsters infected with HIV, outlined plans to open a new home on the west side for wards of the state. The presentations from the umbrella groups were more affecting. "We had real people, young people, testifying, not us big shots," says Doug Gills, whose stamp was all over the mid-south-side proposal. The west-side presentation began with a slide show, brought on Paul Ramey to detail the history of blacks in the area, and followed with Robert Steele, the son of Cook County commissioner Bobbie Steele, laying out the specifics. This piece of theater ended with a staged cheer.

Afterward, the coordinating council got down to identifying its EZ, not an easy job--the city of Chicago contained 1.2 million people eligible to be in a zone that under federal rules could contain only a sixth that many. Relying on census data and 11 proposals it deemed "most responsive," the council spent several intense weeks refining a map. Much of the proposed west-side cluster was incorporated, and west-side industrial tracts containing the E.J. Brach and Helene Curtis plants also made it in. Cabrini-Green didn't, and neither did most of Austin. "HUD already had a major plan to upgrade Cabrini," says Jarrett; besides, extending the west-side cluster to Cabrini would have pushed the EZ's population too high. On the south side, much of Douglas, Grand Boulevard, and Kenwood-Oakland made the zone, along with parts of Washington Park and Woodlawn and an industrial park southeast of Pershing and Western. South Shore, the Calumet area, and Englewood were excluded.

Among other things, the 12-square-mile Calumet area was too large for the EZ, and high-crime Englewood had too little industry. Pilsen-Little Village both had industry and provided a measure of ethnic diversity.

The coordinating council unveiled its final map on May 2. Arrayed in three clusters--west, south, and Pilsen-Little Village--the proposed EZ consisted of 14.3 square miles and was home to 199,933 people. Most of the affected community groups were content with the results, even those factored out. Says Steve Givhan, Calumet's coordinator of EZ efforts, "We felt good just being nominated." Only the Englewood contingent was visibly upset. "Englewood should have been put in the zone," insists the Reverend Kwane John Porter, a leader of the New Englewood Village Collaborative. "Our level of poverty was as deep as any other area's." Porter and others from Englewood felt that Mayor Daley had set out to demean a neighborhood that opposed him politically. "The next time the mayor wants to screw Englewood, tell him to ask us to lay down and say please!" one of Porter's allies screamed at the mapmakers.

Traditionally a city crafts a strategic plan by taking some design sketched out in advance, floating it before the public, then coming up with a final draft. That was how the city, under Valerie Jarrett's direction, more or less intended to complete its EZ application. "In the beginning we thought we would write the document, but with input," says Jarrett. Pat Dowell-Cerasoli says she argued for a more inclusive process but was vetoed, and so she "was ambivalent about what we were proposing" when she took the stage at Malcolm X. She described the EZ concept, said the application had to be in by June 30, and advised the audience that after lunch they'd be forming groups around issues like health care, human services, and economic development.

As Dowell-Cerasoli spoke on, "there was deep consternation," recollects Doug Gills, "a feeling that the community was getting shut out." Gills, Robert Steele, Paul Ramey, Angelo Rose, and Art Vazquez, then the executive director of Pilsen's 18th Street Development Corporation, huddled in the rear of the auditorium. Nearby was a brooding portrait of Malcolm X himself, executed in orange and purple. Whispering among themselves, the conspirators griped about what to them was the city's hauteur in not dealing them in as equal partners. "This can't go on," Gills said. "We'll be locked out. We've got to move."

That's when Paul Ramey seized the microphone. Out filed the city's people, along with their EZ consultants from Wendell Campbell Associates and Camiros Limited. Wendell Campbell, an architect and city planner who was jettisoned along with his daughter Susan, the vice president of his firm, saw the community uprising as risky. "Activists usually don't do," Campbell reflects. "Normally they're against something, which is an easier position to be in. Once they become for something, they have to take responsibility for making it work."

Doug Gills and Art Vazquez led a caucus that was enormously productive, given that it lasted only 45 minutes and that there were 200 people in the auditorium. Those assembled committed themselves to being responsive to the lowliest community members in whatever they did, to sticking together in any dispute with the city, and to sacking the existing coordinating council in favor of one that represented the three clusters. The caucus also decided to organize into planning groups not around issues but along geographic lines.

When the city's people returned, Jarrett and her staff agreed to the points in principle. "Whatever they suggested was fine," says Jarrett. Charles Howleit, a former chief of staff to Alderman Ed Smith and a member of the community cabal, supposes the city was just grateful. "They were in serious trouble because they were looking unresponsive," he says, "so they were appreciative of our ideas because it was a way out, and they hadn't even gotten beaten up bad."

Meetings continued over the next few Saturdays at Malcolm X in a more cooperative atmosphere. Ideas poured forth--lighted schoolhouses, extra GED classes, the redevelopment of polluted industrial sites--and were listed on ten-foot-long pieces of brown butcher block paper. The city consented to a recomposed coordinating council. Fifteen members would remain mayoral appointees. The other 15 would be chosen by and from a 60-person assembly consisting of representatives from each EZ cluster, plus Englewood, Calumet, and that part of the west side scissored out of the zone. The three rejected areas were going to apply separately to become enterprise communities.

When the map itself came before the City Council in May, some aldermen raised objections. Dorothy Tillman, complaining that she had deliberately been kept out of the EZ deliberations, demanded that more of her south side ward be sandwiched in. Daley forces in the council ignored her. Jesse Miller, the alderman from Lawndale, pursued a number of concessions, notably one entitling an EZ company that hired CHA residents to claim wage tax credits, whether they lived in the zone or not. This violation of the federal guidelines, and Miller's other desires, failed to make it into the enabling ordinance that passed, along with the map, on May 18.

By then Dowell-Cerasoli, who had directed the EZ process within the planning department, had quit to take a position with a nonprofit agency hyping the mid-south side. Prime responsibility for the zone was assumed by Beth White, an assistant to Jarrett. Drawing on the community proposals and on discussions taking place at the Saturday Malcolm X meetings, Virginia Sorrells, another city planner, began to compose a draft of the application. She lumped programs together under rubrics such as transportation and health care, and produced a 50-page document that was released to the reconstituted coordinating council early in June.

The council's community members were deeply offended. "That draft was miserable," recalls Angelo Rose. "It didn't have the words or the spirit of what we'd said." At the first coordinating council gathering after the draft was circulated, Sonia Silva-Alvarez, a member from Pilsen, couldn't find the preschool child care center she had advocated. "My program's missing!" she protested. "Where is my program?" In fact, Silva-Alvarez's program had been subsumed into a kind of one-stop social service agency.

A growing distrust of the city came to a head at a June 10 meeting of angry community leaders and city officials at the office of the Community Workshop for Economic Development. Cluster representatives such as Gills, Robert Steele, and Bill Velazquez, the young executive director of the Little Village Chamber of Commerce, said they were outraged that so much was missing from Sorrells's draft. The community will walk out, someone threatened. Angelo Rose, the head of the south-side cluster, lit into Beth White. "Angelo's contentious, vocal, the consummate outsider," says one of his friends. "His thing is attacking the power structure." But then White was getting a general savaging. "The sentiment was, let's beat up on Beth because she's the city," recalls a community figure who attended the meeting.

White, who previously had worked for Friends of the Chicago River and the city of Highland Park, was shocked at the anger directed at her, as well as at the general tumult. "Is doing a strategic plan always this bad?" she asked Les Pollock, the lead consultant for Camiros Limited. "No, this is nuts," replied Pollock, who had toiled in urban consulting for years and whose firm was helping prepare other EZ applications in Memphis, New Orleans, Fort Wayne, Indiana, and Racine, Wisconsin.

The city handed over a computer disk containing Sorrells's draft, and the leaders spent the weekend reworking the document. The new draft emerged with two overarching goals--reinventing government and alleviating poverty--and 140 more pages. The city's writing team, led now by Pollock, found the revision windy and redundant and took a whack at polishing it up, logging an all-nighter on June 16. At this point all the writing and rewriting was being done at Wendell Campbell's office at 13th and South Michigan Avenue, regarded as neutral turf both because it lay outside the Loop and because Campbell's work on black-oriented projects has earned him an enviable reputation among minorities.

For two weeks a writing team representing both the city and the clusters gathered at Campbell's place each morning and stayed the day. "The job now was to get the document produced, and everyone knew it," said Pierre Clark, a free-lance editor recruited by the clusters to work on the application. Campbell's conference room, thick with computers, old proposals, and parts of drafts, functioned as the war room, but the work spilled everywhere. The three cluster leaders--Steele, Rose, and Bill Velazquez--were obliged to get all the language approved by their communities; the trio shuttled in and out several times a day.

Says Pollack, "You'd put down something on paper, and the cluster people would say, "Well, you can't put that in before we clear it with our people.' Then the material was talked out all over again. Most of the stuff was ratified in the end, but some of it was changed. There was no time anymore to think about what was said, or about what someone thought was said. We were working and the community was caucusing, and there were caucuses on top of caucuses."

Fortunately, a bunkerlike camaraderie developed. "We all had our sleeves rolled up, and we came to see the roles each of us had to play," says Gills. "We respected what Beth and Sorrells were doing, and they respected us, or I think they did." Toward the end, even the harried Beth White found the breakneck writing and editing "lots of fun." Food was plentiful, beginning with the morning coffee and Danish and continuing with pasta, pizza, and fried chicken from a spot on Cermak Road. Bodies buzzed on caffeine. "The atmosphere became familial," says Sorrells. "I'd be furiously typing away, and something would happen and I'd turn around and scream--and feel perfectly comfortable about it. It was like being in a newsroom."

No one could remember a municipal plan ever being constructed in this way--out of a true if uneasy partnership between the city and traditionally suspicious neighborhood activists. "We'd done something that hadn't been done for a long time in this town, which was to build friendship across the lines of race and culture," says Angelo Rose. "I hesitate to say this was the second coming of Harold [Washington], but for a moment it seemed that way." To many eyes the application was graced enormously as a result. "It has a heartbeat," Doug Gills was heard to say as the deadline neared.

Empowering Chicago's Citizens, as the application is titled, runs to four volumes, but the crux of it is contained in volume one. The document focuses on seven themes, from youth to housing to public safety. The writing is turgid in many parts. "Capacity building is the ability of the community to take full advantage of its resources," reads one section, "especially those life skills that prepare the individuals to successfully participate in the social, economic, governmental and familial fabric of society." Volume one brims with maps, ideas, and time lines. Succinct it's not, but somehow the application manages to make its points.

The document presents the tripartite zone as barren turf. The residents--71 percent black, 24 percent Latino, 4 percent white--are so poor that only five census tracts have lower than a 25 percent level of poverty. The unemployment rate is more than twice the citywide average. High school diplomas are uncommon. Where the citywide population fell off 17 percent between 1970 and 1990, the population within the zone dropped 42 percent.

Yet the zone has assets, the application argues, prime among them the CTA green line, undergoing a $300 million renovation, three expressways, colleges and universities, parks, some surviving industry, and strapping community groups. The zone may be desolate, says the application, but a clever marshaling of programs and regulatory waivers can kick-start any number of existing businesses, attract new ones, and put the populace to work.

The application proposes a full 90 waivers--such as extending job training benefits to the unemployed, allowing small, federally funded construction projects to pay nonunion wages, and exempting CHA tenants from rent increases so they can build up their savings. "Our attitude was, let's shoot for just about everything," says Rosanna Marquez, Mayor Daley's program director and the principal author of the waiver section. The waivers go on and on, but then so do the programs. In all, 200 of them were put on the table, some quite novel. Let the checks of welfare recipients be reduced $1 for every $3 they manage to earn working, suggests the application. Train community members to mediate minor disputes such as petty vandalism and curfew violations. Set up a super chamber of commerce for the zone and one-stop service centers for jobs, mental health, and lending.

The lending center, called a "one-stop capital shop" by the application, is envisioned as a not-for-profit consultancy offering zone businesses advice on marketing and planning and winning loans. The idea originated with a panel of the original coordinating council that was led by Milton Davis, chairman of South Shore Bank. "At first we thought the capital shop would be one location," says Patrick Quinton, the bank staffer assigned to the panel, "but we took the idea and put it on wheels. Under our design the staff is meant to rove around the zone and meet with companies in need." (Of all the suggestions in the EZ application, the one-stop capital shop rankles the activists most, and that's because it wasn't theirs. "We never OK'd that one," carps Gills.)

Teeming with ideas, the application might have appeared scattershot, but the authors preferred to describe the document as a "toolbox" of remedies. "There are literally hundreds of ideas in the strategic plan," says Jarrett, "but in them you can see effort and vision. One person couldn't possibly have produced that plan. Ten people couldn't have done it. Maybe the document could be better written, but it wouldn't have as much energy."

As June drew to a close, the application, contained by now on one master computer disk, never left Wendell Campbell's office. A draft sat on Campbell's conference table, and cluster leaders drifted in and out, making last-minute changes. Jarrett and other city officials went through the document page by page. At the same time, shorter applications for the three enterprise communities were being completed in Campbell's office.

On June 27 the City Hall copy shop worked through the night printing 100 copies of every volume. The next day the mayor and Governor Edgar met at the Cultural Center to sign the applications, but not before a last-minute glitch. "We'd been asked downtown for the ceremony, but suddenly we realized we were just spectators," recounts Steele. "They had no intention of us signing. Well, we wouldn't stand for that." After speaking up, the community members added their signatures, and the final documents were rushed by overnight carrier to the city's Washington lobbying office.

"We put in a letter of support signed by Chicago's congressional delegation, and then we carried three copies of the applications over to HUD personally," says Edwin Rosado, a Chicago lobbyist. "We weren't leaving anything to chance."

"We talked about having a celebration, but we were all so exhausted we just went home to sleep," says Susan Campbell. Jarrett, who'd had ultimate responsibility for the application, crashed like the others, then got nervous: "You realized your document was now in somebody else's hands, and that you'd lost control of it. It was like you'd sent your kid off to college, and you couldn't help him anymore. I felt a little uneasy."

Jarrett had cause. HUD had received 214 applications for 65 urban enterprise communities and 78 applications for six empowerment zones. There were bids from just about every blighted city in America, from New York and Los Angeles to Gary, Indiana, and Passaic, New Jersey. Chicago was ineligible for two of the EZs--one was not to exceed 100,000 residents and another was for twin cities--so that limited the field to four. An interagency team of 100 federal officials would review the applications and then consult with the Community Enterprise Board (CEB), a body of Clinton administration heavyweights chaired by Vice President Gore. The announcement of the winners was promised before Christmas.

On a Friday in July Jarrett led a lobbying trip to Washington to test the waters. Along went some of the cluster leaders--Steele, Gills, Bill Velazquez, and others. (But not the antiauthoritarian Angelo Rose. "They figured I'd be negative baggage," says Rose. "They didn't buy me a plane ticket.") The visitors called on Chicago's congressmen, among them the embattled Dan Rostenkowski. Surprisingly, the activists got a special kick out of this quintessential old-style Democrat; everyone posed for pictures. "It was magnificent," remarks Robert Steele. "You saw decades of history in his office, and dignity in the man." Later the group met with Andrew Cuomo at HUD. Cuomo said community participation was a prime factor in rating the applications, and he advised the Chicagoans to further focus their application as to waivers, programs, and budgets.

Back home, the coordinating council took Cuomo's advice seriously and tried to bring the avalanche of programs in the EZ application under control. To run better--and to make itself look more rational to HUD on the application--the council established a committee structure, with panels on operations, marketing, plan development, and reinventing government. The reinventing government committee was charged with fleshing out the particulars of how the coordinating council would function if Chicago actually won a zone.

Some members of the council, such as Angelo Rose and Paul Ramey, objected to narrowing the application's focus by earmarking preferences, but they were overruled. The council identified 22 projects it deemed "prototypes"--that is, projects to be launched immediately after designation of the EZ and enterprise communities. Some prototypes were broad, like the buttressing of industry on the west side, and others were as particular as the reactivation of a closed neighborhood center in the Englewood enterprise community. The 22 projects were identified in an update Jarrett sent to HUD in early November.

Meanwhile, Chicago had budgeted $2 million in city funds for the EZ and the ECs, and the state of Illinois anted up $5 million. The Bank of America, wanting to appear public-spirited after acquiring Continental Bank, pledged to the EZ and ECs a large portion of the $1 billion in community-reinvestment loans it said it would be making over the next five years, and the First National Bank and the Local Initiatives Support Corporation (LISK), a loan fund created by the Ford Foundation, pledged smaller amounts.

There was some talk about how the coordinating council might implement the EZ proposals even without federal designation. In April, Robert Steele actually took a leave of absence from work to organize an office for the west-side cluster in donated space inside the old Sears headquarters on West Arthington. "Whether we get designated or not, we'll be out here trying to improve this area," he said.

Cecilia Butler, a neighborhood activist in Washington Park who'd been on the 60-person assembly from which the coordinating council was chosen, now spoke up. She contended throughout the summer and fall that the serious EZ planning had been done by established leaders, neglecting the "real people, the true bottoms up." Butler took it upon herself to host EZ informational meetings in libraries and field houses. But these were sparsely attended. "Most people in these [EZ] neighborhoods--the jobless, 16-year-olds having babies--are just trying to survive," said CWED's Wanda White, answering Butler's charges. "While we'd have liked their input, empowering the voiceless doesn't happen in a year, or in two years, by Cecilia or by anybody else."

As the federal interagency task force weighed EZ applications, the pressure on the administration grew intense. "Some of it was subtle, some of it overt," says Andrew Cuomo. According to a HUD spokesman, the state of Connecticut mounted a full-court press on behalf of the depressed city of Bridgeport. The city of Chicago lobbied ceaselessly.

"We called HUD regularly to follow up on technical questions," says Edwin Rosado. "Plus, we wanted to let them know we were here. We did as much as we could." Says Jarrett, "We have a strong congressional delegation, and they were talking up our application. The mayor, who's going to become the president of the U.S. Conference of Mayors in a couple years, has a strong relationship with the president, and he'd bring up the subject with Clinton and the vice president in every conversation. The White House was noncommittal. We had feedback from Cisneros that our application was outstanding, though he didn't go out of his way to flatter us."

On December 8 Jarrett met with Cisneros in Chicago on other matters. When the subject of the EZ arose, Cisneros said, "Look, your application is very strong, but you know that you have competition." Jarrett told Daley, who ordered more lobbying.

Jarrett was in a meeting in the mayor's office last December 20 when Daley stepped out to take a call from Clinton. You've won an empowerment zone, the president told the mayor, who informed Jarrett. "It was a great relief," she says. As the news filtered out, the reaction among the community activists was mixed. "I kind of expected that Chicago was going to win," says Robert Steele, "and so though there was some joy it wasn't total." Gills says he was pleased, though he adds, "I knew a second round of struggle was coming."

The next morning Clinton placed a ceremonial phone call to Daley. Onlookers basked in the news. Dorothy Tillman pushed for camera position, much to the annoyance of activists who had worked on the EZ application. Rostenkowski was in Daley's office, and Clinton took pains to address him. "I have a long memory," the president told the congressman, who'd been defeated for reelection and stood in danger of indictment. "You lobbied me long and hard on this."

Other cities receiving EZs were Atlanta, Baltimore, Detroit, New York, and the twin cities of Philadelphia and Camden, New Jersey. The administration awarded two "supplemental" zones--grant rich but without the regulatory waivers--to Los Angeles and Cleveland, and Los Angeles mayor Richard Riordan was angry at being a second-tier designee. Among the 99 enterprise communities were four cities that got $25 million in grants instead of the straight $3 million. In Illinois, both Springfield and East Saint Louis captured ECs, but Chicago lost out.

In hindsight, Cuomo rates Chicago's empowerment application as "impressive, and for several reasons: the extent of community participation, the emphasis on jobs, and stuff that's in there about ending the entitlement mentality. I'd also have to say that the great need of the area was a factor."

It remains to be seen what designation will accomplish.

Conservatives cling to the old concept of the enterprise zone. Stuart Butler, a British-born economist who long ago got Kemp interested in the concept, continues to feel the old mechanism makes the most sense. Give ghetto businesses a cut in their capital gains taxes and lift government regulations from their backs, and you'll see them prosper, insists Butler, now vice president and director of domestic policy studies at the Heritage Foundation in Washington. "Even the little repair shop will expand," he says.

The actual lesson to be learned from the old enterprise zones is a mixed one. According to the American Association of Enterprise Zones (AAEZ), there are now 800 enterprise zones at the state and local levels. Illinois has 91, including 6 in Chicago. For fiscal 1994, reports the Illinois Department of Commerce and Community Affairs, businesses in those zones made investments of $850 million, leading to the creation of 15,000 new jobs and the retention of nearly as many. But it's debated how much the enterprise zone entitlements (in Illinois they are principally tax advantages) influence investment decision making. "Being in an enterprise zone spurs companies to make investments because of the cost savings," says Thomas Henderson, who administers Illinois' enterprise zones. But others aren't so sure. "Tax and regulatory relief isn't enough by itself to cause the private sector to rethink its commitments," says Richard Cowden, the AAEZ's executive director.

Enterprise zones that have proved most valuable have added public involvement to the mix. For instance, New Jersey cut its sales tax in half inside its zones, earmarking the resulting revenues for improvements such as new fire trucks and storefront rehabilitation, Governing magazine reported last year. An enterprise zone in Elkhart, Indiana, sponsors job training for the chronically unemployed. "There is little question that enterprise zones have quietly strayed far beyond their original mission," concluded Governing, "and that it is the newer, broader concept that served as the engine for the Clinton proposal."

Yet conservatives object to the broader concept--the empowerment zone--feeling it breaks with the libertarian theory undergirding the enterprise zone. "When I look at the empowerment zone, it's going in the exact opposite direction," says Stuart Butler, who sees a "90s version of Model Cities." Making cities apply to Washington for designation and money means they'll be doing the government's bidding, he thinks. "As a result, what the applicant does becomes an outsider's view of things, not the view of people in the neighborhoods."

Other conservatives are equally negative. In testimony before Congress in 1993, Jack Kemp said the Clinton approach "reveals an administration with the most anticapitalist mentality in this century, maybe even in our nation's history. This is not the work of a "new Democrat.' It's a throwback to the top-down, paternalistic policies which have dominated the liberals' thinking on poverty since the Great Society." Gary Becker, the Nobel Prize-winning economist at the University of Chicago, criticizes the EZ approach as lame. Fixing the cities' broken schools is the only way to improve the business climate in the ghetto, Becker says. As for job training, "We have a lot already, and I don't see where all this community involvement they're calling for is going to affect that one way or another."

The most reasoned criticism of the EZ concept was offered by Nicholas Lemann, author of The Promised Land, the much-acclaimed study of southern blacks' migration to the north. Writing in the New York Times Magazine last winter, Lemann questioned whether the ghetto can be re- vived, whatever measures are taken. "It is . . . extremely difficult to find statistical evidence that any inner-city neighborhood has been economically revitalized," wrote Lemann. "One often hears anecdotal revitalization success stories, but they usually involve the building of a "festival marketplace,' like South Street Seaport in New York, or the shoring up of an area that is blue-collar rather than poor and residential, like South Shore in Chicago, which President Clinton often mentions in his speeches."

A creature like the EZ has found favor not because it will succeed, holds Lemann, but because it appeals to various interest groups--vote-hungry politicians, foundations with urban focuses, and businesses that are "glorified" for their devotion to the cities. Community groups fancy the EZ "because it puts them center stage as saviors of their neighborhoods," says Lemann. The White House is smitten because the zones are relatively cheap and "the dramatic-sounding option," according to Lemann.

Andrew Cuomo says Lemann reached his conclusions prematurely, before the economic development component of the EZ concept was worked out. "The $100 million we're giving to each zone is for housing and job training, things that should be effective," says Cuomo. "His [Lemann's] thesis is that nothing works. Well, if nothing works we should just pack up and go home. Let's retire and move to the beach." Cuomo argues that the empowerment zone is, in fact, a healthy combination of the libertarian enterprise zone and the best of what was urban renewal. "We're a proper hybrid," he says.

(Lemann took a more moderate view on National Public Radio the day the EZs were announced. "In policy terms they [empowerment zones] are like chicken soup," said Lemann. "They are not going to do any harm, and they might do some good, and I hope they do.")

Chicago's EZ participants see hope in various of the zone's provisions. Bill Velazquez of Little Village likes the $100 million for programs: "That means employees can be healthier, that kids can get day care, that adults can get their GEDs." To Doug Gills, the $100 million counts for less than the wage tax credits and waivers. "I'd like to see it that welfare entitlements would be tied to certain requirements, like you're finishing school or holding the family together," he says. Leveraging private investment into the zone "is the key here," says Jarrett, and for that she values the wage tax credits highly. "Waivers are also a critical piece," she says. "Take an average nonprofit agency, which may be paying 30 percent of its budget for administration. Well, when the red tape's gone that agency can whittle its administrative cost down to 10 percent and then start putting more into its programs."

Ultimately the zone will be transformed, EZ partisans predict, though they don't agree on how. "The physical nature of a zone will show some signs of improvement," predicts Cuomo, "but more important, people will benefit. They'll get jobs, and a lot of them will move to better neighborhoods or to the suburbs, so you won't see them anymore. That's natural, isn't it? If you do well enough to afford a half-million-dollar place in the suburbs, God bless you. We want to make these communities launching pads." But Jarrett foresees Chicago's newly successful residents settling into their EZ, not leaving. "There will be dollars invested," she says. "Existing companies will stay, and new ones will come in. You'll see more jobs, stores, day care, and people working. Some will leave, but many more will stay. Drive around these neighborhoods in the coming years and you will see positive physical change."

Jarrett, 38, is the granddaughter of Robert Taylor, the attorney and late Chicago Housing Authority chairman for whom that unesteemed project is named, and she embraces the zone as both a personal and professional mission. "My grandfather's real thinking was a lot more consistent with the empowerment zone than with anything that's happened in Chicago since his death," she says. "I feel the zone, yes. My hope is that it leads to more comprehensive approaches, not the same old thing. Nothing bothers me more"--taking aim at Gary Becker--"than those professors up in their ivory towers saying this won't work. We have to be optimistic. My job is to step up to the plate and make it work, and I have a strong commitment to doing that."

The community perspective is equally zealous. "The leadership in this is more indigenous than in other efforts," says Charles Howleit of the west-side cluster. "We're interested in working through coalitions to improve conditions. It's not the case of some guy from out of town saying what's going to happen. It's our turn, it's us--we have a true identification with the landscape. And that's why we could say back at Malcolm X, all those months ago, "Give us the microphone!' You can sit down and be with us, but we're going to drive this process."

Slowly Chicago has turned its attention to making the zone real. The west-side cluster started to elect representatives for its cluster board at a meeting at Malcolm X on January 4. "This a blessed day," said Robert Steele from the stage, "seeing so many people in one room dedicated to the same agenda." Leaders of the Calumet region and Englewood, rejected as enterprise communities, have pledged to fulfill their plans' visions regardless. The city is awaiting word on what waivers HUD will grant its EZ. Also slated to arrive is a "performance agreement," which when signed will trigger delivery of half the $100 million.

But the issue of who's going to dominate the ongoing process--the city or the community--is now threatening to upend the empowerment zone.

The city's own position on governance was contained in a proposal put forward last fall by Larry Gorski, director of the Mayor's Office for People With Disabilities and a member of the coordinating council. Under the Gorski plan, the coordinating council would consist of 33 members appointed by the mayor and approved by the City Council. The council would be dominated by city and business officials, with as few as nine members chosen from the ranks of the residents themselves. Under the city's design the council would enjoy no bonding authority, and its decisions would have to be ratified by the mayor and the City Council.

Furthermore, the city wanted community nominations to the coordinating council to be made by any citizen, not only by the politically powerful 60-person assembly of clusters. "There may be other people beyond the clusters who want to participate," says Jarrett. This could be seen--and was--as an attack on high-profile community activists such as Angelo Rose and Robert Steele.

The community has come back sharply. First off, Gills and Rose pressed for the city to recommend the creation of a separate authority, with bonding authority and independent decision-making powers, to administer the EZ. Rose argued that Chicago has been willing to give considerable hegemony to the Illinois Sports Facilities Authority, which built the new Comiskey Park, and to the Metropolitan Pier and Exposition Authority, which oversees Navy Pier and McCormick Place. At a meeting in November, Jarrett told Gills and Rose flatly and angrily that she was against the idea. Now she says the city isn't about to cede its EZ responsibilities to another unit of government with freewheeling powers; besides, Secretary Cisneros has told her repeatedly that HUD won't allow such an arrangement.

The clusters' own plan, unveiled in January and based on an outline contained in the original application, granted the City Council some review powers, but it clung to the idea of a separate authority. In addition, the clusters wanted 60 percent of the council members to be elected by the clusters and the enterprise community areas. This would deprive the mayor of the right of appointment, a right Daley deeply values.

Roundly rejecting Gorski's design, the coordinating council's reinventing government subcommittee refashioned the clusters' plan to give the clusters 66 percent control of the council. The issues of bonding authority and the council's connection with the mayor and the City Council were left up in the air. "The substance of this is nonnegotiable," Barbara Norman, the subcommittee's cochair and a community plan advocate, told a meeting of the full coordinating council on February 2. For two hours the council members argued the question of how autonomous and community dominated the coordinating council should be. Finally Randale Valenti, an administrator with the Illinois Department of Public Aid who's on the coordinating council, said the state would balk at relaying the $100 million to anyone but the mayor and the City Council. The community plan was sent back to the subcommittee for alterations.

Another dispute rippled the waters when Chicago was invited to send delegates to a two-day EZ workshop being held this week in New York City. Activists complained that the city set aside only one of ten delegate slots for a cluster leader. Bill Velazquez--but not the affronted Rose and Steele--joined Chicago's official party. "We wanted a broader representation," says planning department spokesman Greg Longhini. "The cluster leaders aren't the only ones involved here."

Jarrett takes heart from the fact that so far in the EZ process no one has yet bolted from the table. She acknowledges the community's innate suspicion of city motives. But she says, "In my mind you want a strong representation from the community and strong representation from the city. We could spend too much time arguing over the bureaucracy of all this. Look, it's in the best interests of the city to make this process work, not turn it into some kind of political game. At a certain point you have to compromise and move on." But Angelo Rose talks a hard line. "The community is serious here," he says. "We could just fold up and go home, and we may. This is the year of the strike, isn't it?"

Andrew Cuomo says HUD could live with any governance arrangement in Chicago "so long as it's consistent with the partnership expressed in the application." But all the parties to Chicago's EZ must at least agree on its administrative structure. "If they don't reach agreement, there will be no funding," says Cuomo. "The bottom line is that if there's not a good relationship in Chicago nothing proceeds, and that would be a shame."

Art accompanying story in printed newspaper (not available in this archive): Photos/Cynthia Howe.

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