Avis C. Vidal co-principal investigator of the evaluation of the Empowerment Zone and Enterprise Community program.

Principal Research Associate The Urban Institute Washington, D.C.

May 19, 1998 ...Second, the bill makes no provision for managing Renewal Communities-and good, entrepreneurial management costs money. This would not be a problem for Renewal Communities that are also Empowerment Zones, because they have Title XX funds (or local matching funds) to support the management entities they already have in place. It would be a problem for newly-designated zones, and for Renewal Communities that are also Enterprise Communities, since many will have no federal funding to support their zone management entities after the current fiscal year.

What, then, accounts for the limited number of successful zones pointed to by Erickson and Friedman and others? The weight of the available evidence indicates that "successful" zones have two characteristics:

Successful zones are good places to do business. Although the zones designated under state programs include residential areas that are experiencing some level of distress (most commonly measured in terms of high unemployment, high poverty rates, and low median income), they also include areas with genuine development potential, including a labor pool with good basic skills.

Successful zones are actively managed by individuals with entrepreneurial skills-people who (a) reach out to business owners in the zone to keep them informed about the benefits available to them and provide them with tax forms and specific information about exactly how to take advantage of the benefits; (b) market the zone and its advantages to firms outside the zone that seek new locations; and (c) represent zone businesses in seeking improvements, such as new infrastructure, to the zone.