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In Focus

Can Yet Another Initiative Revive Business in Carroll-Camden?

By Michael Corbin | Posted 11/1/2000

Question: What has at least three of the following?

  • an incidence of poverty 150 percent of the national average.

  • a crime rate 150 percent of that of the surrounding area.

  • a commercial-property vacancy rate of at least a 20 percent.

  • an average unemployment rate that's 150 percent of the average for the state or the entire country, whichever is higher.

  • a percentage of substandard housing--housing without full plumbing in the kitchen or bathroom--that's at least double the statewide substandard-housing rate.
  • Answer: A "focus area."

    In the original draft of the Maryland General Assembly legislation creating focus areas, the regions were called urban "intensive care areas." When House Bill 877 passed in October 1999, they were labeled "focus areas." Last month, the Maryland Department of Business and Economic Development (DBED) discovered that part of Southwest Baltimore met at least three of these criteria (unemployment, poverty, and commercial vacancy), and Maryland designated the state's second official focus area (the other being in Prince George's County). The designation means that businesses that locate to the community are eligible for a package of tax breaks and incentives. Stretching out south and west from PSINet Stadium toward Carroll Park, bounded by Interstate 95, Washington Boulevard, and Monroe Street, the Carroll-Camden focus area is now open for business.

    It is not the first time this area has been targeted for government initiatives designed to make it more business-friendly. The Carroll-Camden focus area sits within the already established state-administered West Baltimore enterprise zone and the federally funded empowerment zone, both of which provide their own set of market incentives.

    "I think from the point of view of the [state] legislature, the enterprise zone was not sufficient to cause economic development," says Jerry Wade, chief administrator of tax-incentive programs for DBED. "I think that the [focus area] is an attempt to expand the already existing incentives without adding any administrative burden to the state."

    Adding a third layer of market-based incentives in an area such as Carroll-Camden raises the question of whether such programs--which have become urban-renewal orthodoxy--are really working.

    ""The incentives we have don't always make a difference," acknowledges Michael Preston, a spokesperson for Empower Baltimore Management Corp., which administers Baltimore's federal empowerment zone. "Or at least they don't make a difference right away."

    The "zone" approach to encouraging business investment in struggling urban communities has enjoyed bipartisan support in recent years. Maryland started designating enterprise zones in 1982. Conservatives under the leadership of then-U.S. Rep. Jack Kemp, a Republican who subsequently served as the secretary of Housing and Urban Development under President Bush, pushed enterprise zones nationally as a tenet of supply-side economics. Bill Clinton, identifying himself as "New Democrat," championed enterprise zones during his 1992 presidential bid. In the 1993 Budget Reconciliation Act, enterprise zones received their first federal funding. The federal enterprise zones were renamed empowerment zones by President Clinton; in 1994, Baltimore City became one of six empowerment-zone designees, receiving a million-dollar aid package and further incentives to add to the existing state initiatives. The state of Maryland has designated 35 enterprise zones to date, five of them in Baltimore City. "We don't miss an opportunity to get more enterprise zones in Baltimore," says Andy Frank, executive vice-president of the Baltimore Development Corp. (BDC), the quasipublic agency that serves as the local manager of the city's enterprise zones.

    With incentive programs already in place for years, how will one more make a difference in the city's efforts to attract businesses to Carroll-Camden? "The [focus-area designation] will strengthen a limited set of incentives that exist now," Frank says. "The [former] incentives were not sufficient to spur development. But we feel that added incentives, with some zoning changes and infrastructure development, will help realize the enormous potential of the area."

    The state legislation that created the "focus area" program also required the governor to establish a task force to study the effectiveness of Maryland's enterprise-zone program and how it compares to similar programs in other states. The subsequently created Enterprise Zone Task Force examined zones created in the state from 1982 to 1999, but reported that it had insufficient data to make a conclusion about the program's effectiveness locally. But a national study by Ingrid Gould Ellen and Amy Schwartz of the Wagner School of Public Service at New York University, published in the summer 2000 issue of The Brookings Review, a think-tank journal, found that "enterprise zones have yielded disappointing results" in spurring redevelopment in older cities.

    "Even in small zones, the subsidies tend to be too modest to alter business location decisions," Ellen and Schwartz wrote. "To the extent that they do, they typically draw firms that would have located nearby anyway, implying little increase in overall economic activity in a city, but instead a re-arrangement within it"

    To these criticisms, local advocates say that incentive packages vary too widely to be judged or even compared to other programs. "'Enterprise zone' is a name in search of a program," DBED's Wade says. "No two are really alike. From Maryland's viewpoint, it's just a tool to attract business."

    At minimum, the establishment of the Carroll-Camden focus area is an implicit acknowledgement that--so far anyway--the "zone" program of market incentives has not been working in Southwest Baltimore. This is made poignantly clear if you look at what a different kind of "enterprise zone"--a half-billion-dollar public investment--created for Carroll-Camden's immediate neighbors. Oriole Park and PSINet Stadium cozy up to the industrial brownfields and scattered hardscrabble residences of Carroll-Camden. The Ravens' stadium is the new focus area's most immediate neighbor, and, according to the Maryland Stadium Authority, events in 1998 at PSINet produced $201 million in local spending and $95 million in personal income and created 2,772 jobs. For all this economic impact, the stadium's neighbors across Russell Street benefited so little from the boom that they still qualified for state aid as a focus area.

    "With these new incentives," BDC's Frank says, "we think we can really help neighborhoods like Pigtown that historically haven't benefited from development like the Ravens' stadium or Camden Yards."

    Bruce Katz, director of the Center on Urban and Metropolitan Policy and editor of the summer Brookings Review, is less sanguine about such programs' prospects. "Over the past few decades, national 'urban' policy has been reduced to a small set of micro initiatives and marginal investments,." he writes in his introduction to the issue. "The buzz words--'empowerment zones,' 'community renewal'--come and go but the end effect remains the same. While some good is accomplished, few initiatives fundamentally change the growth (or decline) trajectory of older places."

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