Empowerment Zone is still awash in controversy after four years of experience
by Mike Gibson
Gatherings at downtown Knoxville's Partnership for Neighborhood Improvement are often lively, but this one is more spirited than most. The organization responsible for administering the city's federal Empowerment Zone grant, PNI is unveiling new funding priorities at its May board of directors meeting in hopes of achieving some consensus, of finding safe ground in the minefield of allocating precious federal appropriations.
But local community activist and PNI critic Umoja Abdul-Ahad is having none of it. A big man with densely-matted dreadlocks and garbed in a colorful tribal print, Abdul-Ahad unabashedly gives voice to his grievances from the front row of seats in the office conference room.
"This board is made up of seven people with power and seven people who can't pay their KUB bill," Abdul-Ahad interjects at one point, reiterating his long-standing complaint that PNI's 14-person board is dominated by the institutional and business interests which comprise half its membership.
"The people in the neighborhoods do not have on this board an advocate to step forward consistently," he says.
At one point, when someone questions his right to speak, Abdul-Ahad makes a point of demanding that PNI board chairman Rev. Joseph Smith acknowledge his prerogative, even after the battle is won and the other board members have ceded him the floor. Smith, a large man himself, shows admirable restraint, but he bristles palpably, his body drawn rigid save for the involuntary spasm that ripples through the heavy muscles of his arms, flexion readily visible through the full-to-bursting sleeves of his sport coat.
The net effect of Abdul-Ahad's display—other than pissing off the Rev. Smith—is negligible, however. Board member Laurens Tulloch of the Cornerstone Foundation admits that "people have questions about the make-up of this board that need to be addressed," but adds that discussion of its structure is unlikely to produce any changes in membership.
PNI officials proceed to outline plans for remaining EZ funds—about $12 million, all of which must be committed to various projects by June 2004. Some of the new funding priorities are more amenable to Abdul-Ahad and other like-minded empowerment zone residents. But none of the new priorities, he contends, address his fundamental criticisms of the process.
"Everyone said 'Don't worry about the first phases, you'll get your money later," Abdul-Ahad says of the EZ funding, which is now in danger of being cut out of the federal budget. "We said 'There may not be a later. Why don't you give us the money now?'"
The latter statement, more than any other, perhaps best encapsulates all of the problems and frustrations, the disillusionment and even outright bitterness that surrounds Knoxville's Empowerment Zone. Given the seemingly boundless promise of the empowerment grant just four years ago, community stakeholders hunger for something they can put in hand, some tangible evidence that EZ millions are trickling down to the needy inner-city residents the program is supposed to serve.
A Clinton administration effort to revitalize blighted urban areas, the EZ program was inaugurated in 1994 when eight cities nationwide were each granted $100 million with which to improve the qualify of life in their poorest neighborhoods.
Knoxville was among the cities which applied for an EZ grant in '94, and though the city's proposal was not among the chosen, it was reportedly well-received by federal Housing and Urban Development (HUD) officials.
When HUD prepared to a designate a second round of Empowerment Zone cities in 1998, local community development officials reapplied, and this time Knoxville was among the 15 (out of 100 applicants) cities selected to receive EZ funding.
Comprising 16 square miles of downtown and its environs, Knoxville's zone was home to 48,000 residents, 40 percent of whom were living in poverty at the time of the application. With the federal program promising up to $100 million over a 10-year period, people who lived and worked in the zone anticipated better days to come.
But something happened on the way to EZ street. At the federal level, many in Congress were displeased with perceived waste and inefficiency in cities that received the first wave of funding in '94. As a result, appropriations for round-two cities were doled out in crumbs rather than chunks, to date falling well short of a 10-year/$100 million schedule.
Of the roughly $25 million Knoxville has received so far, about $12 million remains uncommitted; the lack of an efficient allocations process remains troubling to EZ residents, local implementers and federal overseers alike. And those projects which have been funded have often served to underscore the differences between the institutions charged with implementing EZ plans and the constituencies they're supposed to serve.
"When the Empowerment Zone first came, there was lots of internal jockeying, a multitude of constituencies," says an EZ resident formerly associated with PNI. "You had older folks, residents who had grievances dating back to social programs of the 1960s. It was like they were trying to re-fight those battles. Some people would have had them just cut everybody in the zone a $479 check.
"On the other side, you had lots of well-intentioned but sometimes misguided people who thought 'We'll get it right this time.' There was gridlock, with rage on one side, and guilt on the other, and meetings with lots of people sitting around looking at each other uncomfortably."
Some remain harshly and relentlessly critical of the process. Zimbabwe Matavou, outspoken president of the local Black Business Contractors Association, charges that "the EZ money is going to people who already have money, not to the neighborhoods...it's going to administration and to idiotic projects."
But EZ implementers say the program resembles, as closely as could be hoped, the plan laid out in the prospectus which earned Knoxville's grant; the wrangling that attends it is simply part of the messy truth of Democracy in action.
"I'm not surprised something like this is so difficult to implement," says PNI Executive Director Terrence Carter. "That's what happens in a comprehensive participatory process.
"What's disheartening for me is to see people participate in the process, and then speak derogatorily about it when decisions don't benefit them or go the way they think they should," he continues, noting that both Matavou and Abdul-Ahad have participated in ZAC meetings, and that both men were associated with projects that were proposed but didn't receive funding.
"We have more consensus than we've ever had before. It's time to concentrate on what we can do to make this beneficial to everyone."
Knoxville's Prospectus for Empowerment created a basic program structure for the management of EZ funds. Though the city itself is the grantee, the Partnership for Neighborhood Improvement is its chief administrating agent. Below PNI are a handful of implementers, organizations to which PNI allocates the funds to administer individual EZ projects, including Pellissippi State College, Economic Ventures Incorporated, and the Knoxville Community Development Corporation (KCDC). In the case of the Pellissippi State Career Center project, the college is also charged with allocating smaller "mini-grants" to other neighborhood organizations that provide corollary services.
The roots of PNI go back 1988, when it was founded as a non-profit in response to perceived 'red-lining' by local banks—the practice of refusing loans to parties in less affluent neighborhoods. The organization first partnered with the city in seeking a round-one EZ grant in 1994.
Though a number of specific funding objectives were already outlined in the prospectus, it also created a mechanism for neighborhood input via Zone Advisory Councils, or ZACs. Knoxville's Empowerment Zone comprises six ZACs—North, South, East, West, Central and Northwest. Membership in a particular ZAC is open to anyone who lives, works, or worships within its geographic boundaries.
The governance of PNI itself includes a 14-member board of directors, seven of whom are so-called "resource" members, representatives drawn from banks, businesses, and non-profit organizations, and seven of whom are drawn from within the ZAC neighborhoods themselves.
But though that structure was supposed to ensure grassroots community participation, critics maintain that it merely swayed the balance of power heavily in favor of those entities which already had it.
"The PNI board was supposed to be the 'resource people'—which were the guys in suits—and the 'community people,'" says one former board member. "Sometimes I felt they had an unusual definition of 'community people.'"
Abdul-Ahad is more blunt, charging that some of the financial institutions that have been represented on the PNI board were the same banks accused of red-lining inner city communities in the first place.
Matavou adds, "The ZACs have spent years looking at problems and giving input, but their decisions are filtered through an evaluating committee, and through the PNI board—two superfluous, insulting levels of administration. The board is detached from what ZACs want and need."
The resulting discord extends to several EZ funding priorities. Most controversial has been the $2.3 million Brownfields I project, which provides for the rehabilitation of two former East-Knoxville industrial sites, including the Coster Shop, an old railyard off I-275 near Baxter Avenue.
The clean-up projects were ostensibly to prepare the sites for future development, and thus create new job opportunities for zone residents. Detractors saw them as boondoggles, ways to harness EZ cash for projects that had little to do with inner-city revitalization.
(Local development officials point out that the EZ fund has since been reimbursed by the city for the $1.5 million portion of the brownfields project that went to the Coster Shop. No such arrangement exists for the remainder of the brownfields expenditures, however.)
"I could make a case either way on the Brownfields I," Tulloch admits. "But it was part of the original plan, and it was a project that was ready to go when we started phase I."
And a $1.2 million allocation to Pellissippi State Technical Community College, for creating and staffing a Career Center on its Magnolia Avenue campus, was not well-received by smaller, less affluent inner-city non-profits which saw such community outreach as falling outside the college's core competencies.
An airy room in the single large building of the college's Magnolia outpost, the Career Center is well-stocked with 24 network computers, cubicles, desks, and a small library of career-related literature, from industry magazines to books on dressing for success.
But it's also sparsely staffed, somewhat forbiddingly located in the center of the campus, and Senior Career Specialist Jennifer Ridgeway admits the center was created "primarily to be a self-service facility. Nobody has the resources to hire staff to type resumes for people."
"They have tons of computers at the Career Center, but how can you look for job with them if you don't know how to turn one on?" asks Betty Blackman, executive director of the People Empowering People Project, also off Magnolia.
A four-year-old inner-city non-profit accessible through the rear of an old brick building a few blocks from the college, PEPP had to apply for a "mini-grant"—the equivalent of a sub-contract—from Pellissippi State to implement its own job recruitment program, a program intended to complement the Career Center offerings. Blackman says PEPP received only $30,000 out of the $90,000 it sought from Pellissippi in an itemized proposal, but the organization is nonetheless required to meet the same performance objectives set forth in its request.
While the Career Center boasts some 24 network computers, Blackman says PEPP's EZ mini-grant will fund only one new computer after other program needs are addressed. There are currently three computers on PEPP's faded premises, all of them out-dated, donated relics from years past.
"Only one of them works; the other two are just so we don't look so poor," Blackman says with a laugh.
"We expressed displeasure that they were not funding implementers within the community, the smaller, more needful community organizations," adds PEPP Program Director Sheri Carter.
It took two applications for Eric and Yolanda Curtis to qualify for the EZ small-business loan that enabled the expansion of their Curtis Cleaning Services. They received $50,000 (the maximum allowable in the program) in 2000, however, and in September of that same year moved the custodial service they formerly operated out of their home into a strip-mall office on Western Avenue.
The Curtises' attitude is one of ambivalence. Seated in the clean, comfortable blue-themed office that is now their company quarters, they're at once pleased to have received the loan that has kept their business afloat, yet soured by the bureaucratic inertia that prevented them from obtaining it two years earlier.
"We were told we weren't qualified the first time, with essentially the same proposal," Yolanda says. "That was a crusher; it put us two years behind.
"I had the impression they (Economic Ventures) were not prepared for what they saw when people started coming in for business loans. Finally, I think someone must have said 'Something is wrong; people aren't getting money.' They called us up and told us to resubmit, and approved us on the second go-through."
Curtis says some of the problems may have been linked to issues within Economic Ventures, the downtown non-profit entity in charge of administering the EZ loan program, which has seen changes in both its directorship and its loan administrator's chair since 1998, and even within PNI itself, where Carter replaced former director Sherry Kelley Marshall in 2001.
"I had suspicions that maybe the gatekeepers weren't keeping the gate like they should have," Curtis says of the early EZ administration. "I like what's going on now better. When T.C. (Carter) came on, a lot of things changed very visibly."
Curtis notes that a neighbor, a woman who ran small African-American clothing store next door to the cleaning service, was deemed ineligible for an EZ loan. "She's out of business now, and the only difference I saw between her and us was that loan," Curtis says.
EZ resident Gail Meglitsch also received a small business loan for her Studio 613 recording facility off Fifth Avenue. Operated through an informal musicians' cooperative over the years, the studio was upgraded to 24 tracks, and Meglitsch hired a full-time professional staff. The studio offers quality recording at affordable rates to local musicians, who Meglitsch calls "one of the most exploited groups of people in our society."
Meglitsch praises the staff at Economic Ventures, who she says were "extremely helpful...they really wanted to help small business."
But she also says qualifying for the EZ loan required a painstakingly rendered business plan. Meglitsch's previous professional experience allowed her to prepare it herself, but she still worked several months on the glossy 100-page document that was ultimately approved by Economic Ventures.
"It isn't very easy to get that money, frankly," she says. "I sensed they were faced with the problem that many inner city businesses that most needed funds were least able to show the paperwork. I think the difficulties involved with helping those businesses are the same difficulties that make it hard for them to succeed in the first place."
"The risk for recapturing these loan dollars is through the roof," says Economic Ventures Executive Director Allison Sousa, who took the reigns at EV only last year. Some 19 businesses have received loans since the $4 million program began, selected through an evaluation that weighs factors such as the business owner's debt, collateral, and credit rating.
"We try to give the business owners the benefit of the doubt," she explains. "Our criteria and our interest rates (about 7.5 to 9 percent) are much lower than what a bank would require. But there are some things we can't do.We have to be good stewards of these funds."
That disconnect between noble aims and fundable realities has been perhaps the single most troubling issue for everyone caught up in the politics of the EZ. The small business loans as well as other EZ programs come attached with tangled strings of federal guidelines, binding limitations that, in practice, are often at odds with the benevolent ideals that are supposed to be the heart of the program. And through no fault of their own, Knoxville and other round-two Empowerment Zone cities were destined to wrestle with more of those dichotomies than their predecessors.
Round-one cities received the whole of their $100 million grants within two years of designation. By most accounts, congressional overseers were less than pleased with the results.
"In some cities, the money just sort of disappeared," says a former PNI board member. "The fall-out was that there was more detail and cost-accounting required in the second round."
"The report on the first-round recipients was a bit of a mixed bag," admits HUD spokesman Brian Sullivan. "The analysis found a tremendous amount of uncommitted funds, adding fuel to the argument that grants were not the way to go.
"Unlike the first-round cities, the round-two cities were subject to an appropriations process, which is code for 'You'll get your money if and when Congress decides to give it.' Despite what some people may have been promising in speeches, the governing document for round-two cities did not promise a firm $100 million grant."
Consequently, while earlier EZs were given relatively free rein in administering their grants, round-two cities were required to submit an elaborate prospectus outlining the specifics of planned expenditures. Most of the controversial aspects of Knoxville's Empowerment Zone were detailed in some measure in its founding prospectus, including issues pertaining to its chosen implementers.
"People complain that we don't have any grassroots people as implementers, and that we're funding institutions that are already empowered," Carter says. "But what HUD had in mind was people who could hit the ground running in years one and two.
"The simple reality is that after the first plan was not approved, this is the type of feedback we got, to identify people locally who have the capacity to implement. It's a catch-22, to some extent."
Moreover, says Tulloch, the ongoing battles between a Democratic presidential administration and a Republican Congress resulted in a wholesale reordering of the Knoxville prospectus, even after it was approved.
"It was supposed to be 'Communities, tell us what you need to revitalize, then you'll get $10 million per year to implement very flexibly,'" Tulloch says. "But after Knoxville was selected, they decided money could only be used for purposes of economic development. All of a sudden, only two of six components of our EZ prospectus qualified."
Because those components were jettisoned, proposals such as a home ownership loan program for low-income residents were cut out of the city's phase-one expenditures. And some believe that without the tangible immediacy of those grassroots programs to provide balance, long-range institutional projects such as the brownfield clean-ups were more subject to critical scrutiny.
"If we had been able to go forward with housing loans and some other things, I don't think you'd hear so much about brownfields," Tulloch says. "I understand where those concerns came from."
"HUD was looking for a moving target, and there were a lot of conflicting signals coming out of Washington as to what was an appropriate use of funds," says one observer close to the process.
"Some of the locals weren't privy to that, so they didn't understand what they saw happening. It was frustrating for them."
Seemingly nothing has been simple for Knoxville's EZ. Tumult and turnover at local agencies have also impeded its progress. Former PNI director Marshall's tenure is a case in point; Depending on who you ask, her sudden departure was either the result of delicate northern sensibilities reacting combustibly with Knoxville's headstrong southern pugnacity, or the product of sometimes mean-spirited harassment by PNI critics who didn't hesitate to play the race card whenever the white former Cincinnati resident ran afoul of their own agenda.
And though officials from both camps downplay any notion of a conflict, there were rumblings that the city was less than pleased with PNI and the seemingly sluggish pace of local allocations. "There was a concern that things were moving more slowly than they should be," says Knoxville Assistant Community Development Administrator Diana Lobertini.
Owing to the perceived inefficiencies, the city enlisted the Knoxville Metropolitan Planning Commission to oversee the latest round of priority-setting with PNI board members. Matavou and several others saw this as a tacit acknowledgment that the board had been unresponsive to ZAC membership, and applauded the move.
But the question lingers: Will Knoxville's Empowerment Zone be successful in fomenting the sort of inner-city renaissance for which it was created? Tulloch and other board members are optimistic. "For the first time since it was started, I think we've got a plan that meets federal regulations and can be implemented," he says.
And to all appearances, many of the programs that should see EZ funding in the coming months seem to promise a more tangible community presence—a planned shopping mall development in the Lonsdale area (proposed $1 million funding), a grocery store project in Mechanicsville (proposed $1 million), and a new retail district in the West ZAC (proposed $1 million.)
Matavou admits those priorities "tend more toward what we've advocated the last three years. But it doesn't satisfy us." He is unrelenting in his call for a wholesale restructuring of the PNI board of directors.
"We need to put the supervision under the power of neighborhoods, which is the object of all this in the first place," he adds.
It's unlikely that Matavou's wish will come to pass. Whether his concerns are well-founded and this whole program has been just one more wrong-headed instance of bureaucratic paternalism, or whether Knoxville's Empowerment Zone will truly bring economic and spiritual reinvigoration to a disadvantaged population, only time and EZ residents will tell.
May 22, 2003 * Vol. 13, No. 21
© 2003 Metro Pulse
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