It took years of work to get Knoxville's $100 million Empowerment Zone grant. Now comes the hard part—deciding how to use it.

by Jesse Fox Mayshark

When her boss told Jeanette Kelleher the news in mid-January, she thought he was kidding.

"Doug Berry came in and told me," Kelleher recalls, sitting at a small table in her City County Building office. "I said, 'Don't toy with me like that.'"

But Berry, Knoxville's director of development, said it was no joke—Knoxville had just been designated an "empowerment zone" by the federal department of Housing and Urban Development. The application that Kelleher and dozens of other people had sweated over for months had hit the jackpot: $100 million in federal funds over the next 10 years, one of only 15 cities selected out of more than 100 that applied. For Kelleher, Berry's community development administrator, disbelief gave way to jubilation and then something else—"Probably two days of complete shock in terms of, 'Now what?'"

It's a good question. One hundred million dollars is a lot of money, but the 16-square-mile area that makes up the empowerment zone has a lot of needs. From city blocks where drug dealers brazenly flag down passing cars to business district high-rises with boards on the windows, the zone comprises almost every urban plight imaginable. Its 12 percent unemployment rate is triple the rate for the county as a whole, and 40 percent of its residents live in poverty. At the same time, it includes all of downtown Knoxville, from Fort Sanders to Gay Street to Morningside—all of what makes the city a city. No one thinks it's going to be easy to balance all of those areas and prioritize their problems.

"It's going to be competitive, it's going to be messy, it's going to be hard," says Laurens Tullock, president of the Cornerstone Foundation and vice-chairman of the Partnership for Neighborhood Improvement, the group responsible for overseeing the empowerment zone.

But for the people charged with making it work, the looming challenges pale next to the potential pay-offs. Tullock is not alone when he says, "We're sitting in a position for this to be the most exciting 10 years in Knoxville's history."

How does the city get from here to there? That's what the myriad forces behind the empowerment zone are trying to figure out.

Eric Smith has never heard of an empowerment zone. But if Knoxville's getting a lot of money to improve its disadvantaged areas, he has plenty of ideas about what to do with it.

"For this to be a park, it's too dark around here," he says, gesturing across the street at Morningside Park. "And then they got to keep these drains clear."

Smith, a heavyset man in a black T-shirt, is standing on his lawn in unseasonably warm February sunshine. He says runoff from the street often overflows the drainage ditches during rainstorms. He also wonders why the much-hyped Alex Haley Heritage Square just up the hill doesn't offer anything for the neighborhood's many teenagers—no basketball or tennis courts, just slides and swings. "We didn't have a vote on it," he says. "They didn't ask us."

A friend of Smith's, a young man in a football jersey named Joey Holloway, perks up at the mention of $100 million. But his eyes narrow as he ponders the possibilities. "Are they going to come over here, or are they just going to take it from the police station and go that way?" he asks, pointing toward the morass of construction projects—the South Knoxville connector, the Women's Basketball Hall of Fame—that dot the landscape to the west. "I see a lot of work going on over there, but I don't see anything going on here."

Repeat those quotes to Laurens Tullock and he just nods his head. "The only way you overcome skepticism in Knoxville is to do things," he says. The former federal prosecutor-turned-community builder knows that as well as anyone. "The bottom line is, people should be skeptical until they see what's going on is real."

Knoxville's empowerment zone isn't quite real yet—at the moment, it's a couple of maps, an impressive 133-page proposal, and a promise of money that has yet to be appropriated. But, barring Congressional meddling, it will be real soon enough. On a city map, it's an odd-shaped area, something like a winged rabbit in profile, its nose reaching west across Pleasant Ridge Road, its hind foot crossing the river to take in Vestal and Montgomery Village. The neighborhoods it enfolds are Knoxville's oldest and most storied—Park Ridge, Mechanicsville, Burlington, and about 20 others. It also holds all of the city's public housing projects, including Austin Homes, Christenberry Heights, Lonsdale, and the new Hope VI development. All told, 30 percent of Knoxville's population lives in the zone.

Empowerment zones are a Clinton administration creation, aimed at providing federal funds and tax incentives to distressed urban and rural areas. There are also smaller grants for designated "enterprise communities." The money can be used for a range of things, from infrastructure to housing to education. The first round of EZs, as they're often called, came in 1994. All of the designated urban zones were in large cities: Atlanta, Baltimore, Chicago, Detroit, New York, Philadelphia (with Los Angeles and Cleveland added after the fact). Among the applications rejected in the first group was Knoxville's.

Tullock, who was the city's director of community development at the time, says the roots of that first application—and, ultimately, the second one as well—go back at least 10 years to the founding of the non-profit Partnership for Neighborhood Improvement. A collective of neighborhood groups, businesses, banks, and others, PNI initially came together to deal with complaints about "redlining" in minority neighborhoods—banks refusing to lend money in certain areas of the city.

"You had a group of activists saying, here is an area that is not being invested in at all," Tullock says.

Run at first entirely by volunteers, PNI in turn gave birth to two other organizations—the Center for Neighborhood Development, which helps neighborhood groups organize and identify problems and resources; and the Knox Housing Partnership, which coordinates affordable housing efforts. PNI struggled somewhat over the years to define its role and build connections between dozens of neighborhood groups and non-profit agencies, many of whom had common goals but little communication with each other. When HUD announced it was taking applications for the first empowerment zones, it seemed like a good way to draw some of those groups together.

Keith Richardson, who's been involved in housing issues for 25 years, helped write part of the 1994 application. He later became executive director of PNI and oversaw the entire 1998 application. "The process was what was valuable," he says of the first effort. "Even the [cities] that didn't get the funding got a lot out of it."

Tullock says the first set of EZ grants were politically rigged; most of them went to traditional Democratic strongholds, the kind of places likely to repay Washington largesse at election time. However the decisions were made, Richardson says Knoxville was lucky not to make the first cut. The 1994 application was broad and general, without the details needed to make it work.

"I think people with hindsight would be thankful we weren't funded the first time, because we weren't ready for it," he says. "Just as not having the resources there can hurt, having too many resources too early can hurt an effort too."

Some of the cities that got those grants have found that out the hard way. While there are success stories—Baltimore's EZ programs are widely praised—there have also been problems. A federal audit severely chastised Chicago's EZ efforts last November, saying the city "did not maintain adequate control over its empowerment zone program to assure efficient and effective use of the funds or accurate reporting of the program's accomplishments."

How can Knoxville avoid such bureaucratic pitfalls? Part of the answer is in Kelleher's office, down a hallway on the fifth floor of the City County Building, past handmade posters with titles like "Redevelopment of the Mechanicsville Area" and "Homemaker lots available for development." A friendly, slightly frazzled woman whom Richardson calls "the heart and soul" of the empowerment zone effort, Kelleher will be the city's first line of EZ accountability. The city is the "fiscal agent" for the EZ funding, responsible for tracking and reporting its achievements.

"I think the empowerment zone is really the opportunity to do the things that all of us got into this field to do," Kelleher says. "We've been working away with a very limited budget and making a difference wherever we can and seeing the hundred other places that work needs to be done."

One thing Knoxville has going for it is that $10 million a year for 10 years means a lot more in a mid-size city than in a huge metropolis. It's about four times the city's current annual block grant for community development.

"I think we need to be able to look back and say we invested this money wisely," Kelleher says.

The application spells out ways the $100 million can be used as seed money to bring forth more funding, estimating some $600 million in public money and $100 million in private investment over the next decade. Some of that money would be there anyway—it includes most of the city's ongoing economic development projects—but some of it, especially the private dollars, relies on using the EZ funds carefully.

Consider, for example, the concerns of Earnestine B. Harris. The "B." stands for "Bates," as in Bates Barber and Beauty Salon, the business on Martin Luther King Jr. Avenue she took over from her father ("Out of eight kids, seven of us were barbers," she says). Her shop is congenial and quiet but also easy to overlook—especially compared to the highly visible drug dealers working the midday traffic in vacant lots just down the street. Harris remembers when one of those lots held a Cas Walker grocery store. Now, she says, "The closest thing is Magnolia [Avenue]. The main stores we have to go to are way out west. Some of these people don't have cars and they have to get a cab." By the time they pay $5 each way, their grocery budget is limited.

And it's not just grocery stores. The doctors and dentists are gone too, the last remaining ones dying off over the past few years. "The closest health fitness center is on Clinton Highway. Everything is west," Harris says, repeating a complaint that is almost a mantra in the center city. "When I get off work I'd like to be able to go out and exercise, burn off some of this stress."

Federal money probably isn't going to build health clubs, Tullock acknowledges. But it can make it more likely someone else will. "Everybody's forever wanted inner city businesses and grocery stores and other job-creating places," he says. "Well, there are obstacles to that occurring. These monies should be used to remove those obstacles."

Harris has a fair idea what those obstacles are—run-down buildings, lingering miscreants, poorly maintained streets. And she thinks there are plenty of others like her who'd like their voices heard. "They need to have meetings, get more people's ideas," she says.

That's exactly what is supposed to happen under the EZ plan. Although it sets forth specific projects for the first two years of funding (see sidebar), Knoxville's application leaves most of the decisions in the following eight years up to a complex set of groups that are supposed to include as many grass-roots perspectives as possible.

A "governance committee" of PNI board members and neighborhood activists has already divided the empowerment zone up into six smaller zones. Some are relatively small and self-contained—Fourth and Gill, Old North Knoxville, and Park Ridge are bundled together, for example. Others sprawl, like the downtown district that runs from Fort Sanders east to Austin Homes and then across the river to the Old Sevier neighborhoods. Each zone will have a zone advisory council (ZACs, as the inevitable acronym has it) of up to 15 people from the community—who exactly will serve and how they will be selected is still being ironed out, but neighborhood groups will probably have representatives, as will business and church organizations. Each ZAC will put together proposals for its zone; then, a planning committee that will include members of each ZAC will review and prioritize all of the ideas. Final proposals will go to the PNI board of directors. (Additionally, any expenditure over $25,000 will then have to go to City Council for approval.) In the end, each decision will have come through as many as 100 different people.

Or that's the theory.

"It is intimidating," says Suzanne Rogers, the executive director of the Center for Neighborhood Development (CND). According to the plan, her non-profit agency—based in an unpresumptuous beige house along Fifth Avenue near Bill Meyer Stadium—will provide professional staff members to each ZAC to help them organize and stay focused. (The EZ funding will boost CND's full-time staff from three to 14.)

"CND has a history of working with neighborhood associations and helping them grow," Rogers says. "But now we're also looking at bringing in other stakeholders, which we haven't had as much experience in."

But she, like everyone involved in the EZ process, is hopeful. Because the effort to date has succeeded in bringing together so many different groups, Rogers thinks it has a solid foundation. "It's not like we're starting tomorrow saying, 'We need to get people involved,'" she says. "Knoxville, through PNI, has been trying for 10 years to get people involved."

That's what's so gratifying about the empowerment zone grant to a lot of the people involved—it's a validation of efforts that for the most part have been invisible to the broader community and have at times seemed either quixotic or incoherent.

"I've been in this business now for 12 years around the region, and I think Knoxville's really in a place to do some really notable things from a community development standpoint," says Tim Ledford, executive director of the Community Design Center, which is in charge of one of the first-year EZ projects (an inner-city computer network called Inner Net). "And it really has come from a lot of people collaborating and a lot of people working together."

Sustaining and strengthening that collaboration over the next decade is a challenge no one takes lightly.

"The question to me is not whether the theory is a good one, but whether all of us in practice can make it work," says Bill Murrah, a member of the Fourth and Gill Neighborhood Association and a former PNI board member. "It has lots of places where it could fall down if people are not acting in good will."

For example, he says, all six ZACs could decide they want to spend $200,000 apiece on building parks in a year when the planning committee decides there's only $400,000 in theparks budget.

"I think we can blend those things," he adds. "But it's going to take people who are committed to doing it."

Among those watching intently will be Mayor Victor Ashe, who lobbied hard for the EZ funding. "It's going to be fascinating to see how these ZACs work out," he says, sounding genuinely glad not to have to make all the decisions himself. "I don't think that's really sunk in on people. People who have not felt empowered before or included will have that opportunity—and in some cases may have to be implored to get involved."

Gwen Winfrey, president of both the Morningside Heights Homeowners Association and the Council of Involved Neighborhoods (as well as a PNI board member), has heard both interest and skepticism as she's talked to neighborhood groups about the EZ plan. On one hand, she's found some people convinced all the decisions have already been made in some back room. On the other hand, many others want to contribute their own ideas without understanding the work that's already gone into it. "It's telling people the plan was approved on the goals it was written for, and you can't just come in and create new goals," she says.

Additionally, the $100 million is more a promissory note than cold hard cash. Each year's installment will need Congressional approval; so far, only $3 million of the first year's amount has been appropriated.

Ultimately, Kelleher says, it doesn't matter whether anyone remembers the words "empowerment zone" in 10 years. What's important is what people see around them on their streets and in their neighborhoods.

"We said in the plan that we'll know we're a success if we would not qualify as an empowerment zone any more," she says.

Murrah is both optimistic about the EZ's potential and cautionary about missing the opportunities it provides. Ruminating over the phone one afternoon, he says, "The question is not whether or not we're going to run into obstacles. The question is what we're going to do with them. ...I think we have a chance if we're smart about this to see lives changed—our lives changed."

Murrah has a saying on the wall of his office at Knoxville Legal Aid that he thinks sums up the promise and perils. "It says, 'Any jackass can kick down a barn,' " he says, " 'but it takes a good carpenter to build one.' "