Five Years In: Assessing the EZ/EC Program

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What impact has the Empowerment Zones and Enterprise Communities (EZ/EC) program had on distressed communities? Results have been mixed for the first 5 years of the program, according to HUD's Interim Assessment of the Empowerment Zones and Enterprise Communities (EZ/EC) Program: A Progress Report. The Federal Government designed the EZ/EC program to encourage comprehensive planning and investment aimed at the economic, physical, and social development of the most distressed U.S. communities. Seventy-two urban and 33 rural communities received EZ/EC designation in the first round of the program in 1994.

The EZ/EC program includes many innovative features and is built on lessons learned from earlier community revitalization efforts by the Federal Government, foundations, States, and localities. The initiative emphasizes local design, community participation, comprehensive revitalization, government reform, and building community capacity. Interim Assessment examines the urban EZ/EC sites' progress during the first 5 years of operation, from 1995 to 2000, and provides a progress report on their efforts.

The assessment provides preliminary insights into how EZ/EC activities are helping transform targeted neighborhoods. A definitive evaluation of the extent to which EZ/EC program activities contributed to outcomes is planned as the focus of a study to be conducted after 10 years of program operations.

Although the EZ/EC sites were free to pursue various activities, four key principles—economic opportunity, sustainable community development, community-based partnerships, and a strategic vision for change—were deemed essential for successful revitalization. HUD analyzed data from performance reports for all 72 first-round urban sites, detailed local analyses in a sample of EZ/EC sites, surveys of EZ businesses, and conducted a time series analysis of business activity indicators in six EZ sites in Atlanta, Baltimore, Chicago, Detroit, New York, and Philadelphia. Onsite visits to 18 EZ/EC study sites provided additional indepth information. Interim assessment findings were mixed. Among the positive findings:

• Job growth occurred in all six EZs and significantly in four.
• Job growth in the EZs increased faster than in contiguous and comparison areas.
• The number of EZ residents employed in EZ businesses increased. Employment by resident- and minority-owned businesses increased substantially across all six EZs.
• Business owners in the EZs reported an improved business climate.
• Workforce development activities assisted and placed thousands of EZ/EC residents in jobs both within and outside the EZ/ECs.
• The 18 intensive sites conducted various sustainable development activities, including human services and educational activities, physical improvement projects, housing and health initiatives, and public safety efforts.

Because there was a nationwide economic upturn during the study period (1995–2000), it is difficult to attribute business growth and development exclusively to the EZ/EC initiative. Businesses in the six EZs made little use of the program's Federal tax incentives, with only one-half of the businesses that used tax incentives indicating they were "important" or "somewhat important" in making business decisions. EZ/EC programs relied heavily on partnerships with nonprofits and private groups, which required significant time and effort.

Additional information about the EZ/EC sites, including local analysis methodology, partnership case studies, multivariate analysis of ownership and employment, and activities are available in a separate volume Interim Assessment of the Empowerment Zones and Enterprise Communities (EZ/EC) Program: A Progress Report, Appendices.

Both Interim Assessment of the Empowerment Zones and Enterprise Communities (EZ/EC) Program: A Progress Report and Interim Assessment of the Empowerment Zones and Enterprise Communities (EZ/EC) Program: A Progress Report, Appendices are available for $5 each from HUD USER. Please use the order form. Both volumes can be downloaded from the HUD USER website at www.huduser.gov.