Collaborative Governance for Urban Revitalization: Lessons from Empowerment Zones

By Michael J. Rich and Robert P. Stoker

For more than one hundred years, governments have grappled with the complex problem of how to revitalize distressed urban areas. In 1995, the original urban Empowerment Zones (Atlanta, Baltimore, Chicago, Detroit, New York, and Philadelphia) each received a $100 million federal block grant and access to a variety of market-oriented policy tools to support the implementation of a ten-year strategic plan to increase economic opportunities and promote sustainable community development in high-poverty neighborhoods. In Collaborative Governance for Urban Revitalization, Michael J. Rich and Robert P. Stoker confront the puzzle of why the outcomes achieved by the original Empowerment Zones varied so widely given that each city had the same set of federal policy tools and resources and comparable neighborhood characteristics.

The authors’ analysis, based on more than ten years of field research in Atlanta and Baltimore and extensive empirical analysis of EZ processes and outcomes in all six cities shows that revitalization outcomes are best explained by the quality of local governance. Good local governance makes positive contributions to revitalization efforts, while poor local governance retards progress. While policy design and contextual factors are important, how cities craft and carry out their strategies are critical determinants of successful revitalization. Rich and Stoker find that good governance is often founded on public-private cooperation, a stance that argues against both the strongest critics of neoliberalism (who see private enterprise as dangerous in principle) and the strongest opponents of liberalism (who would like to reduce the role of government).

• Language: English
• Publisher: Cornell University Press
• Release date: May 29, 2014
• ISBN: 9780801470905

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Preface

As students of urban politics and federal policy implementation we began a collaborative effort more than a decade ago to examine the relationships among policy design, local governance, and neighborhood outcomes. Much of the urban literature has studied these topics from one of two approaches—case studies of the local politics of policy implementation or evaluations of the effects of federal interventions in urban communities. Few studies have connected process and outcomes.

This book is an effort to do just that, in the hope of improving the knowledge base that supports efforts to revitalize distressed neighborhoods. The Clinton Administration’s Empowerment Zones and Enterprise Communities initiative (EZ-EC), launched in 1994 as perhaps the federal government’s most ambitious effort to revitalize distressed neighborhoods, provides an opportunity to examine the connections between local processes and outcomes. Each of the original EZ cities (Atlanta, Baltimore, Chicago, Detroit, New York, and Philadelphia-Camden) received a $100 million block grant and access to a variety of federal policy tools that included federal tax incentives, private facility bonds, waivers of regulatory barriers, and preferential treatment for federal aid to assist in carrying out projects and programs to transform their most distressed neighborhoods.

From 1992–1994, Michael Rich served as the founding executive director of the Providence Plan, a new intermediary organization that led the city of Providence through the strategic planning process and prepared the city’s application for designation as an enterprise community, which the city received in 1994. In 1995, Rich, who had then joined the political science faculty at Emory University, and Robert Stoker of the George Washington University became field research associates for Atlanta and Baltimore, respectively, in the national evaluation of the EZ-EC initiative commissioned by the U.S. Department of Housing and Urban Development (HUD). We completed field research in our respective EZ cities for the Rockefeller Institute of Government’s Implementation Assessment (from 1995 through 1997) and continued in those roles in HUD’s second evaluation of the EZ-EC initiative, the Interim Outcomes Assessment (from 1998 through 2001), which was directed by Abt Associates and the Urban Institute.

As the Interim Outcomes Assessment wound down, we agreed to continue research in our respective cities and explored the possibilities of writing a summative evaluation of the six original urban EZs. After discussions with several publishers, we embarked on a book-length project that would use the experiences of the EZs to assess the efficacy of collaborative approaches to urban revitalization, paying particular attention to the linkages between policy design (tensions between market and government policy tools), policy implementation (breadth and depth of governance structures and processes and capacity to act), and neighborhood outcomes (what happened in distressed neighborhoods). However, in contrast to other evaluations of the EZ-EC initiative, our evaluation focused on local outcomes and processes. Rather than asking whether the EZ-EC initiative worked, we asked how and why it worked in some cities but not in others.

Many colleagues contributed to this project. Richard Nathan and David Wright of the Rockefeller Institute of Government directed the EZ-EC Implementation Assessment. Scott Hebert of Abt Associates and Avis Vidal of the Urban Institute directed the EZ-EC Interim Outcomes Assessment. Colleagues who served as field research associates in the other EZ cities were: Chicago (Charles Orlebeke), Detroit (Robin Boyle), New York (Elizabeth Mueller, Kian Tajbakhsk, and Brian Sahd) and Philadelphia-Camden (Robert Bailey). We gratefully acknowledge their contributions to our understanding of the EZ effort in their cities.

Support for the early rounds of the Atlanta field research was provided by Micheal Giles, who provided introductions to many of the city’s key government, business, civic, and community leaders, and Robert Brown, as well as a number of very capable graduate students who scheduled and summarized interviews, chased down numerous documents and reports from a variety of local groups and organizations, gathered an extensive inventory of newspaper articles on the Atlanta EZ effort, and compiled a comprehensive history of Atlanta Empowerment Zone meetings and events. These include Doug Alexander, Heather Dash, Virginia Hettinger, Gibbs Knotts, Elizabeth Stiles, Aristide Sechandice, and Laurel Parker West. A special note of thanks goes to Adrienne Smith, who did a superb job coding and reconciling expenditure data on the uses of EZ funds in the six EZ cities and compiling information on each city’s local governance structure.

We would also like to thank several people who provided valuable assistance, background and referrals on the EZ efforts in their cities. In Chicago, Chuck Orlebeke; in New York, John Mollenkopf; in Detroit, Robin Boyle; and in Philadelphia, David Bartelt, Eva Gladstein, Ira Harkavy, Deborah McColloch, and Wendell Pritchett.

Several scholars and practitioners provided valuable comments on the manuscript or conference papers that included material later incorporated into the manuscript. We appreciate the assistance of Henry Cisneros, Susan Clarke, Marvin Mandell, Karen Mossberger, Richard Nathan, Clarence Stone, and Chris Walker.

We are also grateful to colleagues at our home institutions. At Emory, Micheal Giles and Richard Doner offered very helpful comments and insights on the entire manuscript, and David Nugent and Moshe Haspel commented on selected chapters. In addition, Moshe Haspel provided assistance with data management and wrote Stata scripts that facilitated the analysis reported in chapter 5. At George Washington University, Jeffrey Henig, Paul Wahlbeck, and Harold Wolman provided valuable assistance and support.

We are also grateful to Michael Leo Owens and Thomas Remington, co-organizers of the conference A Global Look at Governance: The State-Market-Civic Nexus, sponsored by Emory’s Claus Halle Institute for Global Learning, for the opportunity to present a preliminary version of our analysis. We also wish to thank Barbara Haley of HUD for the opportunity to present a summary of our analysis to HUD staff and other researchers in the Washington, DC, area. In particular, we wish to thank Judson James from HUD’s Office of Policy Development and Research, and Bill Barnes, research director at the National League of Cities, for their helpful comments and observations at that gathering.

The empirical analysis of revitalization outcomes reported in chapter 5 evolved over the course of the project. We appreciate the comments and suggestions offered by several colleagues including Thomas Cook of Northwestern University, Michael Oakes of the University of Minnesota, and Kyle Beardsley David Davis, and Lance Waller from Emory University. We are especially grateful to Professor Oakes for his telephone and email consultations on the early phases of the analysis, his careful reading of various drafts of chapter 5, and his many helpful suggestions for creating a rigorous evaluation in a real world setting that posed challenges for conventional data analysis methods.

We also wish to express our appreciation to the two anonymous reviewers who provided excellent comments to Cornell University Press. The final manuscript is much improved due to their suggestions. We also thank Melissa Connor and Kathleen Hatfield at Plus One Media for their assistance in the composition of the maps and figures included in the book. We are especially grateful to Michael McGandy, our editor at Cornell University Press, for his enthusiastic support and assistance throughout the review and production processes, and to Karen Hwa for her superb copyediting.

Financial support for the field research conducted in Atlanta and Baltimore between 1995 and 2000 was provided by HUD through the Rockefeller Institute of Government at the State University of New York at Albany and Abt Associates. Support for additional field research in Atlanta and Baltimore, as well as data acquisition and analysis in all six cities, was provided by Emory University (Emory College and the Laney Graduate School of Arts and Sciences) and the George Washington University (Political Science Department).

Although many people and institutions contributed to this work, the comments, opinions, and conclusions presented here are ours and do not necessarily represent the views of HUD, the Rockefeller Institute of Government, Abt Associates, the Urban Institute, Emory University, or the George Washington University.

Finally, and most importantly, we wish to thank our families for their continued love, support, and encouragement throughout what often seemed to be a never-ending stream of late nights and weekends of research, writing, and editing: thanks to Amy Tozer and Aaron and Grace Tozer-Rich; thanks to Patricia, David, Gregory, and Katharine Stoker.

INTRODUCTION

For more than one hundred years the federal government has grappled with the complex problem of how to revitalize distressed urban areas. In 1892, Congress appropriated twenty thousand dollars to develop a plan to address the problems of slums in American cities (Willmann 1967). A century later, the Clinton administration launched the Empowerment Zones (EZ) and Enterprise Communities (EC) initiative—a multibillion-dollar community revitalization effort to create economic opportunity and promote sustainable community development in areas suffering from pervasive poverty, high unemployment, and physical or economic decline.

Although many federal urban programs were created and many more were proposed but never came to fruition in the years between these two events, the EZ-EC initiative was distinctive. Empowerment Zones ended more than a decade of gridlock in federal policymaking over the appropriate role of the federal government in addressing urban problems (Rich 1993b). Republicans lauded the virtues of free markets and maintained that government was the problem; the most effective way to promote prosperity in distressed inner-city neighborhoods was to get government out of the way by removing regulatory barriers, reducing or eliminating taxes, and fostering entrepreneurism. Democrats, on the other hand, favored continued support of a variety of federal grant-in-aid programs that provided cities with resources for affordable housing, economic development, public safety, job training, education, and services for low-income children and families. EZ designees, for the first time, got both; designated cities received federal tax and regulatory relief and a flexible federal social services block grant to support local programming and governance.

Another feature of the EZ-EC initiative was its emphasis on targeting federal resources. Unlike the Model Cities program, which was intended initially to target only a handful of model cities but dispersed federal grants to more than 150 cities, the EZ-EC legislation called for the creation of only six urban and three rural EZs. This concentration of federal urban assistance, within a limited number of neighborhoods in a small, select group of cities, was unprecedented, and at the time it was thought to be critical for attaining tangible evidence about the effectiveness of revitalization initiatives.

The EZ initiative was predicated on the assumption that city governments could advance neighborhood revitalization by embracing a comprehensive, collaborative, community-based approach. Such a transformation, however, would require not just a new toolkit and federal resources but a shift in the nature of local governance. The EZ-EC initiative encouraged cities to develop a strategic vision for change and back up that vision with a new style of collaborative governance focused on performance, adaptability, and learning. This reflected both the nascent community-building paradigm that was taking hold through foundation-funded pilot projects in several American cities in the late 1980s and the reinventing-government movement that was advanced during the Clinton administration.¹ The paradigm featured comprehensive, collaborative, community-based partnerships to address the needs of poor residents in distressed neighborhoods (Sharp and Beaudry 1994; Kingsley et al. 1997; Kubisch et al. 2010).

While the federal government had previously encouraged public-private partnerships to promote urban revitalization (Fosler and Berger 1982; Frieden and Sagalyn 1989), the EZ-EC application process mandated the development of a broad, inclusive partnership among all segments of the local community to develop a strategic plan. These participants were to be integrated into a collaborative problem-solving process that coordinated their actions by developing procedures to promote cooperation and manage conflict. Cities were encouraged to reinvent local governance by identifying goals and performance benchmarks, mobilizing participants from multiple sectors (government, business, and nonprofits), developing plans to achieve benchmarks, encouraging linkages across programs and projects to achieve a whole greater than the sum of its parts, and making midcourse corrections as new problems or opportunities emerged.

Finally, the EZ-EC initiative was one of the first federal urban policies to promote regionalism. The enabling legislation required that one of the original urban EZs include a metropolitan area located in different states, promoting the idea of regional solutions to urban distress. The initiative further promoted regionalism by encouraging cities to consider strategies to connect zone residents to regional economic opportunities, rather than focusing solely on efforts to bring jobs to zone neighborhoods. While not all elements of regionalism were successful, the EZ-EC initiative was a pathbreaking effort to promote regional strategies for revitalizing inner-city neighborhoods.²

The Original Urban EZs

The problems of persistent, concentrated poverty and neighborhood distress were decades in the making and their root causes generally extended well beyond neighborhood—and city—boundaries (Rusk 1995, 1999; Ferguson and Dickens 1999; Dreier et al. 2004). Thus, as Alice O’Connor (1999) observed, urban revitalization initiatives are swimming against the tide; with limited resources, urban policies struggle to counteract long-standing macroeconomic trends (such as deindustrialization and globalization), better-funded federal policy initiatives (such as transportation and housing policies that encourage suburban development), and severe social problems (such as limited educational achievement, idleness, dependency, and crime) that are often concentrated in inner-city neighborhoods.

The original urban EZs (in Atlanta, Baltimore, Chicago, Detroit, New York, and Philadelphia-Camden) were selected as the federal government’s first round of designations, in December 1994. Each EZ city received a $100 million federal block grant and was eligible for special federal tax incentives. Although other cities were later designated as EZs, the federal resources provided were less generous (Stoker and Rich 2006). The original EZs thus represent the high-water mark for federal support for urban revitalization that encouraged collaborative, performance-based local governance and broad community participation.

Based on demographic, social, and economic trends, the original urban EZs exhibited signs of distress that were common in many large American cities. All but New York experienced substantial population declines between 1970 and 1990, though the city also lost population during that period. All the EZ cities showed increasing concentrations of poverty and growth in the size of their poverty populations. As Paul Jargowsky (1997) reports, there was a national trend toward increased concentration of poverty in urban neighborhoods at this time. However, the EZ cities experienced this trend more intensely than did many other big cities. In addition, the geographic areas designated as EZs within these cities were substantially more disadvantaged than the city as a whole, with poverty and unemployment rates generally twice as high in zone neighborhoods as compared to citywide rates (Wright et al. 1996, 28–30).

The original EZ cities had extensive experience with other federal urban programs. All had large inventories of public housing and urban renewal programs dating to the 1950s and 1960s; all were participants in the Model Cities program (1966–1974); and all but Atlanta ranked high in the number of grants and amount of funds awarded through the Urban Development Action Grant program (1978–1989). All but New York had received at least one HOPE VI public housing transformation grant by the time of their EZ designation.

Many EZ cities also had experience with local community-building initiatives. In 1991 former president Jimmy Carter announced the creation of The Atlanta Project, a comprehensive effort designed to eliminate poverty (Giles 1993). At about the same time, the Transforming Community Program was under way in Baltimore’s Sandtown-Winchester neighborhood as the city worked in partnership with the Enterprise Foundation (Brown et al. 2001). And in New York, the Surdna Foundation was guiding the Comprehensive Community Revitalization Program (Miller and Burns 2006), a neighborhood revitalization effort in the South Bronx. Each of these cities drew from these experiences in crafting their EZ strategic plans.

Despite these similarities, there were important differences in how the original EZ cities designed their local programs and how they organized and operated local governance processes. In addition, there was substantial variation in what the original EZs accomplished (Rich and Stoker 2010). As a result, the primary puzzle we confront is this: Why were the outcomes achieved in the original EZs so different given that each city had the same set of federal policy tools and resources, and the characteristics of their zone neighborhoods were broadly comparable? Our analysis shows that differences in revitalization outcomes across the EZ cities are best explained by the quality of local governance.

Governance Matters

Our central claim is that governance matters—that is, the quality of local governance influences the prospects that urban revitalization efforts will be successful. The primary lesson suggested by the original urban EZs is that good local governance makes positive contributions to revitalization efforts, while poor local governance retards progress. Consequently, the key question is, How to govern? That is, how to develop and sustain a comprehensive strategy for advancing economic opportunity and community development in distressed urban neighborhoods?

By good governance, we mean more than the quality and effectiveness of the individuals and institutions that constitute local government. Although government is important, successful local governance is not solely about city government. Rather, as Gerry Stoker (2000, 93–94) explains, Governance involves working across boundaries within the public sector or between the public sector and private or voluntary sectors. It focuses attention on a set of actors that are drawn from but also beyond the formal institutions of government. Good local governance transcends local government by creating institutions that encourage key local stakeholders (inside and outside government) to make durable commitments to a revitalization agenda, creating a legacy that can outlast changes in local government leadership.

The fragmentary distribution of power in liberal democracies can hamstring local government and give rise to the need for local governance (Elkin 1987; Stone 1989; Gates 1991). Urban political power is fragmented because cities are embedded within a larger federal system; the policy tools and resources available to urban governments are limited (as in the case of taxing and spending authority derived from state governments) and subsidiary (as manifest in the strings—substantive and procedural—attached to federal grant-in-aid programs). In addition, the need to compete with other jurisdictions to attract and retain investment makes urban centers especially sensitive to capital mobility and the division of power between market and state (Peterson 1981). Consequently, the most elementary imperative of local governance is to generate and sustain the political momentum that is required to overcome this fragmentary distribution of power to create the capacity to solve important public problems (Stone 1989; Stone et al. 2001).

Our perspective on local governance is grounded in urban regime theory (Elkin 1987; Stone and Sanders 1987; Stone 1989; Ferman 1996). Regime theory examines institutionalized cooperation between power centers within a city to explain how and why a particular policy agenda is created, advanced, and sustained. By contrast, our concern with urban governance is the relationship between the quality of local governance and the ability of communities to solve problems related to distressed neighborhoods. A governance process is not as broad or stable as an urban regime. Regimes are durable political arrangements that structure urban politics for an extended period (Stone 1989, 3). By contrast, our notion of local governance refers to community problem solving for a specific issue—such as the revitalization of distressed neighborhoods. Governance processes typically operate within a particular policy domain and, thus, on a more limited scale than urban regimes. Although it is likely that governance processes reflect some of the key characteristics of the broader regime in which they are embedded, several different governance processes may be operating simultaneously within the same urban regime. Indeed as Susan Clarke (2007, 27) points out, New governance arrangements interact with the institutions in which they are embedded or, more tellingly, the institutions whose shortcomings gave rise to the governance arrangements themselves.

Good local governance creates or enhances the capacity to act in conditions of diffuse authority, interest conflict, and mutual dependency (Stoker 2000; Chaskin and Garg 1997; Stone 1989). Diffuse authority exists when the power to address important social problems is held in many hands. Because no one is in charge, no one can issue commands to marshal the resources that are necessary for effective problem solving. Conflicts of interest exist when there are benefits to be realized from cooperation and policy coordination, but there are differences of opinion about the ends or means of policy. Thus, steps must be taken to promote cooperation. Mutual dependency exists when the actions or inactions of each stakeholder have consequences for all. Thus, gains can be realized from cooperation and opportunity costs are imposed by a lack of cooperation. For example, efforts to deconcentrate poverty by redeveloping public housing may be delayed or derailed if residents protest in court. Cooperation can be encouraged by offering support services, enhancing financial incentives, and creating a right of return.

In the absence of good local governance, businesses, nonprofits, and government agencies make uncoordinated decisions. Consequently, the resources they control that could contribute to urban revitalization are not used effectively; their uncoordinated efforts may even work at cross-purposes. Good local governance allows a coordinated response to multiple, overlapping problems by orchestrating the efforts of numerous institutions and coordinating the resources the city can muster to address tough problems.

Good governance reflects three interrelated dimensions that our evidence suggests are critical to successful urban revitalization:

Local capacity. How do diverse urban communities create the capacity to act—that is, how do they come together to develop and sustain political support to advance an urban revitalization plan?

Community participation. How—if at all—is the community most directly affected by the revitalization agenda integrated into the governance process? What role—if any—do residents and community-based organizations play in planning, implementing, and evaluating urban initiatives?

Local program integrity. Does local governance make effective use of scarce resources? That is, do urban revitalization initiatives integrate problem solving, combat corruption, and reflect lessons learned from experience?

Critics may suggest that the outcomes achieved in the original urban EZs varied because social and economic conditions were different. That approach, however, does not explain the patterns of outcomes we observed. The two EZs that consistently produced positive results, Baltimore and Philadelphia, were among the most troubled cities in terms of market conditions and indicators of urban distress. On the other hand, Atlanta (the EZ with the weakest revitalization outcomes) was among the cities that were most advantaged in terms of social and economic trends and conditions. To be clear, our point is not that the social and economic context is irrelevant; our point is that poor local governance can squander a favorable context and good local governance can overcome a difficult context. This suggests that while contextual factors are important, what cities do in response to local context matters.

Governing Baltimore’s Empowerment Zone

The Baltimore EZ illustrates the contributions that good local governance can make, even when a city is disadvantaged by social and economic conditions. During the late 1990s, EZ officials in Baltimore negotiated numerous contracts to attract or expand businesses in the zone that exchanged financial support and other considerations for specific employment goals. This resulted in job creation that enhanced the employment and earnings prospects of zone residents (Rich and Stoker 2010; Jacob France Institute 2005). Thirty years earlier, the inability to negotiate similar agreements was a key component of the failure of the Economic Development Administration’s (EDA) Oakland initiative.

Jeffrey Pressman and Aaron Wildavsky’s (1973) analysis of the obstacles encountered by the EDA while implementing an urban redevelopment program in the late 1960s in Oakland shows the consequences of poor governance. The EDA launched an experimental initiative to encourage job creation through targeted business development in order to provide opportunities for Oakland’s long-term unemployed (mostly minority) residents. The expansion of the facilities operated by the Port of Oakland, including the construction of a new hangar for World Airways, was the largest component of the Oakland initiative. The EDA initially agreed to provide assistance to World Airways (in the form of low-interest loans and grants) to finance construction of the hangar. However, tensions emerged during contract negotiations when the EDA demanded that World Airways accept specific employment obligations in exchange for financial support.

The contract attempted to create a mutually beneficial exchange relationship: World Airways would receive financial benefits in exchange for providing jobs to Oakland’s long-term unemployed, helping the EDA to meet its employment goals. Although the initial contract negotiations indicated that there was room for agreement, the accord eventually collapsed (Stoker 1991). The EDA insisted that employment goals for World Airways should be included in the contractual agreement. Absent clear employment provisions, the EDA had to trust World Airways to make a serious effort to employ Oakland’s long-term unemployed residents. Placing employment provisions in the contract was a way to ensure that the financial support provided to World Airways would advance the EDA’s employment goals. However, the contract provisions that reassured the EDA brought conflicts with World Airways to the forefront. Contract negotiations collapsed; World Airways did not receive the EDA’s financial assistance and Oakland’s long-term unemployed residents did not get jobs.

Stephen David and Paul Kantor (1983) interpreted the EDA’s failure as a manifestation of systemic problems of federalism; by promoting job creation for the long-term unemployed, federal officials were promoting a redistributive policy, placing them in conflict with local businesses and officials who were interested in developmental policies. Baltimore’s EZ officials offered low-interest loans and training grants to businesses in exchange for employment guarantees. Although this arrangement seems to invite exactly the sort of conflict that David and Kantor suggest undermined the Oakland initiative, firms in Baltimore signed on. How did EZ officials overcome what was considered a systemic problem of federalism?

Baltimore’s local governance process created several companion programs to recruit and train zone residents to fill employment slots. This reduced the uncertainty and enhanced the rewards connected with cooperation to pursue employment goals, making it possible for business leaders and EZ officials to agree despite their conflicting interests (Stoker 1991). EZ officials in Baltimore developed a customized training program in conjunction with business partners to train workers for specific, emerging job opportunities in the zone. EZ residents who completed the training were assured that the skills they had developed through training would lead to a local job opportunity. EZ officials used customized training as one part of a larger package of economic incentives to attract business investment to encourage employment growth in the zone.

Consider how the actions of Baltimore’s EZ officials differed from those of EDA officials in Oakland. Rather than demanding that businesses accept responsibility for achieving employment goals (an uncertain and risky burden for any firm to accept), EZ officials partnered with the firms to expand business growth, create employment opportunities, and accomplish employment goals by recruiting and training zone residents. These partnerships were possible because of the local governance arrangement and processes within Baltimore’s zone.

The primary governance structure in Baltimore’s EZ was Empower Baltimore Management Corporation (EBMC). The EBMC board of directors was composed of the city’s business, philanthropic, nonprofit, and governmental elite along with members of zone communities who were included as representatives of six village centers (VCs). The VCs, community-based nonprofit corporations sponsored by EBMC, were vital participants in this process because they conducted outreach programs to recruit zone residents for job placement and preparation programs and prescreened applicants to assure that they were viable trainees for customized training slots. The community outreach activities orchestrated by the VCs created a pool of employable, trainable zone residents to satisfy the workforce needs of firms that were expanding in the zone. Consequently, EBMC was able to offer a package of benefits to recruit firms and create jobs in the zone using a variety of policy tools: Below-market loans and grants helped to finance business relocation or expansion; community outreach programs implemented in the VCs helped to satisfy the firms’ personnel needs by recruiting zone residents; job preparation programs implemented by the VCs in conjunction with local nonprofits helped to prepare more zone residents to enter the labor pool; customized training prepared zone residents for real employment opportunities and provided a trained workforce for firms; and, because the workforce was drawn from the EZ, firms enjoyed a tax credit for employing zone residents.

Although customized training did enhance the rewards of cooperation, the ability of business leaders and EZ officials to cooperate did not reflect an alignment of their interests and incentives. To the contrary, as David and Kantor observed, there is an inherent conflict in the implementation process when developmental policies promote redistributive goals. However, local EZ governance created a context in which it was possible for businesses and EZ officials to cooperate in spite of their conflicts (Stoker 1991). This was a result of good local governance: an institutionalized relationship between local businesses, nonprofits, economic development officials, philanthropies, local government agencies, community-based organizations, and zone residents that resolved conflicts and coordinated their collective efforts to enhance Baltimore’s EZ programs.

Study Design and Implications

Our analysis of the outcomes produced in the original urban EZs uses a mixed-methods approach that combines field research, secondary analysis of previous EZ studies, and quantitative analysis of the effects of local EZ programs. We have completed more than a decade of field research in Atlanta and Baltimore, including interviews with city officials, business executives, civic leaders, and a variety of neighborhood-based stakeholders, as well as analysis of EZ strategic plans, progress reports, budget documents, newspaper stories, and attendance at a variety of EZ meetings and events.³ The study also incorporates original and secondary research completed in the four other original EZ cities. Our quantitative analysis of local EZ outcomes is based on a quasi-experimental design that examines the effects of the EZ intervention across a variety of revitalization outcomes (jobs, poverty, unemployment, and housing and business investment) in EZ census tracts compared with a matched-pair set of comparable census tracts in each city.

By looking at local programs separately we are able to account for significant variation in the construct validity of the EZ initiative across cities (i.e., cities emphasized different goals, strategies, and programs) as opposed to studies that have pooled all the EZ cities into a single analysis (which assumes a consistent intervention in all EZ census tracts). In addition, by extending our analysis of EZ outcomes to include a variety of different components of neighborhood well-being we can better determine how—if at all—EZ effects vary by type of outcome, both within and across cities. These design choices in turn enhance our ability to detect variations in the relationships between local governance, EZ strategies, and neighborhood change across outcomes, treatments, and settings. As Andrew Jordan, Rüdiger Wurzel, and Anthony Zito (2005, 477) have observed, The governance ‘turn’ has generated much theorizing, but there is still surprisingly little comparative empirical work. There is, however, a growing appreciation of the need to move beyond theorizing and conduct more detailed empirical testing. By synthesizing research on process and outcomes using a mixed-methods approach, we are able to develop a more detailed understanding of the key determinants of successful urban revitalization.

Thus, although the foreground of our study focuses on the determinants of successful strategies for revitalizing distressed urban communities, the backdrop reflects concerns that have shaped the study of urban politics (who governs? and to what effect?),