Great Expectations (Page 1 of 6)

“Ten years into the 21st century, the Knoxville Empowerment Zone is thriving and self-sustaining, creation of new job opportunities, as well as retention and expansion of existing businesses, has fostered the rebirth of the Zone, thriving business parks have been created on formerly abandoned manufacturing sites, hundreds of millions of dollars have been leveraged through city and federal partnerships, a spirit of entrepreneurship and community capitalism emanates from the Zone, reversing the decline in inner-city business, programs to benefit youth have had a dramatic effect on the Zone, property values have increased, and pedestrians stroll leisurely in testament to the safety of the [area].”

This was the vision for the year 2010 in Knoxville’s Empowerment Zone, as described in the city’s 1998 application for the federal designation and accompanying Department of Housing and Urban Development funds.

Today, Knoxville’s low-income neighborhoods don’t necessarily reflect the revitalized utopia envisioned by city officials who sought the grant. Some of the program’s major initiatives, including the Five Points Village Plaza and a $4 million small business loan program, have suffered major setbacks. Several community organizations that operated successfully prior to the Zone’s creation have collapsed under the weight of contracts to administer its programs. Tensions and rumors have recently erupted amid allegations of racism in both the administration and allocation of Empowerment Zone funds under the city’s director of community development, Renee Kesler, and a potential shakeup in oversight of the program is looming, with the future of the program’s governance up in the air. Overlooked in much of the recent controversy are the people for whom the money was initially intended—residents of Knoxville’s lower-income neighborhoods like Vestal, Mechanicsville, Lonsdale and Five Points.

Eight years and $25.6 million later, has the Empowerment Zone actually empowered the residents of these communities or do the funds represent a tragically squandered opportunity?

Empowerment Zone History

The shortcomings of Knoxville’s Empowerment Zone program can be traced back almost to its inception, with the combination of a complicated oversight structure, federal regulations which changed between the planning and implementation stages, and a massive cut in project funds three years into the grant.

An initiative of the Clinton administration, the Empowerment Zone program administers federal grants through the Department of Housing and Urban Development (HUD) to create jobs and economic growth in impoverished areas across the United States. The first round of Empowerment Zones were established in 1994, and Knoxville was among 15 Round II Empowerment Zones designated in January 1999.

The designation originally qualified the city for $100 million over the 10-year life of the grant, plus $11 billion in tax incentives for businesses investing or locating in the Zone or employing Zone residents. The city’s Zone was defined within a 16-square-mile area “characterized by economic and social distress” that includes 19 census tracts and a population of more than 48,000 residents.     Neighborhoods located within the boundaries include Chilhowee Park and Five Points in East Knoxville; Fort Sanders, Old Sevier, and Riverfront in the Central city; Fourth and Gill, Parkridge, Christenberry Heights and Lincoln Park in North Knoxville; Vestal and Montgomery Village in South Knoxville, and Beaumont, Mechanicsville and Western Heights.

Partnership for Neighborhood Improvement (PNI), a coalition of business leaders and community residents that formed in 1989 to address patterns of discrimination in lending to inner-city residents and businesses, took the lead in applying for the grant with the backing of the city of Knoxville and Knox County. The city’s structure for Empowerment Zone oversight was one of the earliest factors leading to the troubles in the program today.

“The organizing model for the Empowerment Zone was way too complicated,” says Bob Becker. Becker is now a City Councilman representing the 5th district, and served on the board of the now-defunct Center for Neighborhood Development, a community group formerly involved in Empowerment Zone implementation.