EZ Does It?

The city hopes HUD Empowerment Zones will bring in money for East Austin.

East Austin Empowerment Zone, for which the city of Austin is seeking HUD funds
East Austin Empowerment Zone, for which the city of Austin is seeking HUD funds

The city of Austin is hoping to cash in on some of its disadvantaged neighborhoods by securing federal tax breaks and other incentives designed, in theory, to shore up the economic body and spirit of East Austin. With a grant application deadline of Sept. 28, city and business boosters are trying to round up input -- and blessings -- from a cross-section of voices from those who live or do business within the proposed "Empowerment Zone" (EZ) where the tax breaks and incentives (administered by the U.S. Dept. of Housing and Urban Development) would apply.

The EZ boundaries, which the City Council approved Monday morning before tackling the budget issues of the day, encloses a sizable area, bounded roughly on the north and south by Manor Road and Ben White Boulevard, and east and west by U.S. 183 and I-35.

The local EZ effort carries the backing of the Greater Austin, Hispanic, and Capital City African-American chambers of commerce, and other like-minded business organizations and individuals. They're touting a grocery list of benefits available for EZ areas, including: employment tax credits for businesses for each employee who lives and works in the EZ; welfare-to-work tax breaks for businesses hiring in an EZ; environmental cleanup cost deductions; and special capital gains tax exclusions, among other perks.

The EZ agenda made its debut in 1994, during the Clinton Administration, when Austin applied for the special designation but was rejected. Another round of EZ funding opened in 1998, but the city didn't apply. This time around, Austin is beating a path to HUD's door with application in hand. Currently, there are 53 urban EZs across the country -- five of them in the Texas cities of San Antonio, Dallas, Houston, Waco, and El Paso.

Although the city is obviously hoping for a neighborhood economic kick-start, not all Empowerment Zones carry compelling success stories. El Paso, which suffered a huge financial hit when NAFTA kicked off in 1994, secured an EZ designation in 1998. Officials there had hoped to secure enough financial aid to help resuscitate the city's struggling South Central neighborhoods, devastated by jobs moving across the border. Given the generous $100 million individual block grants awarded to EZ cities in 1994, El Paso leaders had hoped to receive something close to that amount, according to published reports. But El Paso got only a small fraction of the funding it had expected, and now is struggling to implement revitalization programs with what little it's received thus far -- $3 million the first year, $3.6 million the second year, and somewhere between $5 million and $12 million expected by the end this year.

According to press reports, Empowerment Zones elsewhere have also delivered mixed results. The Houston Chronicle, for instance, quoted HUD officials advising cities to scale back their expectations in light of the funding drops that occurred on Clinton's watch between 1994 and 1998. Even less EZ funding is expected from the Bush White House, especially following the recent large tax cuts.

But something would be a lot more than what East Austin has now, said Susan Dawson, chairwoman of the Greater Austin Chamber. "The total economic benefit, if we take advantage of it, could be huge. These incentives ... do not dictate what we will do in our communities; they are merely financial tools that we can apply to our current neighborhood plans, individual companies, and organizations to support workforce development, housing revitalization, schools, and other community needs."

It's true that while many in Austin shamelessly savored the prosperity wrought by the last decade, others had little reason to celebrate then and even fewer reasons to kick up their heels today. In fact, Dawson pointed out, "there are more people living in poverty in Austin today than there were a decade ago, and the affordability gap is growing. So now is a more important time than ever to address disadvantaged areas."

A community meeting on the EZ will take place at 5:30pm Monday, Sept. 17, at the Rosewood-Zaragosa Neighborhood Center, 2802 Webberville. Call 322-5665 for more information.

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Empowerment Zones, East Austin, Housing and Urban Development, HUD, City Council, Chamber of Commerce, Clinton Administration, El Paso, Houston, Houston Chronicle, Susan Dawson

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