Secret Four:
Government Is Partnering
With Communities

"And there's something else we can do together.
We can reinvent government. We can switch from
red tape to results. We can put the days of
almighty, holier-than-thou, mister-know-it-all
Washington behind us. We can become partners."
- Vice President Al Gore,
Remarks to U.S. Conference of Mayors,
Austin, Texas, July 23, 1995

"Clinton and Gore are trying to change this huge bureaucracy. It's like climbing a three-mile-high mountain, and they've made it to mile post one. Nobody's ever gotten to the one-mile post before. But there's still a long way to go." So says a big city leader with a national reputation for straight talk -- a successful city government reinventor, Philadelphia's mayor, Ed Rendell.

"Most of our dealings with the federal government are with HUD" (Housing and Urban Development), Rendell explains. "HUD would get an A+ from me, across the board. Henry Cisneros is a great Secretary of HUD -- he's the embodiment of the Administration's policy to cut regulations and red tape, and to give local government the maximum amount of flexibility to use money most effectively."(1)

"Empowerment Zones are an example," says Rendell. Philadelphia and neighboring Camden, New Jersey, share one of 105 new flexible federal grants to revitalize both urban and rural communities. These communities were chosen from over 500 applicants, based on the strength of their strategic plans and community partnerships.

Grants of up to $100 million, along with tax breaks to attract new businesses, go to "Empowerment Zones" in six big cities and three rural areas; two more cities received grants of over $100 million without tax incentives. There are smaller grants and tax breaks for 94 other areas (64 urban, 30 rural) called "Enterprise Communities." All told, Washington is providing more than $1.5 billion in flexible grants and more than $2.5 billion in tax incentives. The communities also receive special assistance in removing red tape and regulatory barriers that prevent the innovative uses of federal funds.(2)

Deciding how to revitalize the community and get the most for their money was a grass-roots effort. To qualify, the community residents themselves, with help from city and county governments and local businesses, drew up plans to solve what they, not Washington, saw as their biggest problems. Most communities that got grants need more businesses, more jobs, and better low-cost housing, and they plan to stimulate all of that not with handouts, but with low-cost loans so the money will be replenished.

Rendell continues: "The Empowerment Zone really lets the people in the communities take control and be responsible for the outcome. But that was kind of easy for HUD to implement without lots of red tape, because the law itself had the right spirit. I'm more impressed with things like HUD's housing regulations. They've gotten rid of some of the most onerous, inflexible requirements on cities, like the one-for-one' rule on public housing. That rule said that if we tore down an abandoned high rise that had 580 units, we had to construct 580 new units, even though there hadn't been anybody living in there for five years. It was the same thing with single units. You can go to some blocks in Philadelphia where everybody's done a great job with their houses -- put money into rehabilitating their houses -- and right in the middle of the block there are two HUD scattered housing units that are terrible -- places for drug dealing, places where kids got into trouble, a big negative on the neighborhood. But in the past, we couldn't demolish them without plans to build two new ones. So they'd sit there without ever being demolished or rehabilitated, doing nobody any good. HUD's shown the common sense to eliminate that rule. So we've brought down a number of high-rises and scattered units." Philadelphia is not the only city that has been able to get rid of those high-rise nightmares. In the past few years, 30,000 units have been razed, more than in the previous 12 years. And President Clinton recently set a goal to tear down another 70,000 in the next four years -- a total of 100,000 urban eyesores gone.

Tearing down houses is not the ultimate goal. HUD has also created National Partners in Homeownership, comprising 58 national organizations representing lenders, real estate professionals, home builders, nonprofit housing providers, and federal, state, and local governments. The goal is to achieve an all-time high rate of homeownership -- 67 percent of all American households by the end of the year 2000, creating up to eight million additional homeowners. The partners are making headway. By the spring of 1996, the national homeownership rate was 65.1 percent, up from 64.2 percent at the end of 1994 (an increase of more than 1.5 million households). This is the highest rate since 1981, and the sharpest year-to-year increase in over three decades.

"HUD's made a wonderful change," according to Mayor Rendell. "And it's the same story on money for economic development. They've given us all kinds of flexibility to use that money most effectively. It's a night and day difference from the old way. They've done an excellent job. They haven't gotten rid of all the regs and all the burdens, but they've gotten rid of a tremendous share of them."

What about getting rid of all of them? Would the mayor welcome the kind of complete freedom some in Congress advocate in the form of block grants? "It's not freedom, it's baloney," says Rendell. "First of all, freedom from federal rules would have to be passed along to us by the state. And the state government is, if anything, less sympathetic to the cities than the feds are. So we'd never see all that freedom.

"But the main thing is that even if we got freedom from rules and red tape, we could only operate maybe 10 or 15 percent cheaper. They're talking about 25 percent cuts. You might be able to be just as effective if you had freedom and 10 percent less money. But no way are you going to be effective with 25 percent less. No way."

Rendell moved on to discuss the Environmental Protection Agency. "Under prior administrations, EPA was the single worst bureaucracy, promulgating regulations that avoided risks of one-in-a-trillion and had huge price tags to local governments. They've gone from that absurd starting point to . . . fair. For example, there's a scrap dealer here who handles old refrigerators. An EPA regulation says that you have to put a red tag on them certifying the safe disposal of freon. He employs a ton of people in jobs that pay $20 an hour, and they were about to fine him more than a million dollars, which would put him completely out of business, because he didn't have the tags right.(3) We argued it with them at the local level, the regional level, even the Washington level. I think we got it worked out, but they were going to put our guy out of business."

"But on the plus side, EPA's Brownfields effort makes a lot of sense," Rendell says. The Brownfields program is EPA's new way of getting abandoned industrial sites cleaned up and put back into the economy. The first success was in Cleveland, Ohio, at a 20-acre eyesore owned by Sunarhauserman, Inc. It had been sitting in Superfund limbo land for years, with prospective buyers and developers afraid to touch it, not so much because of the actual pollution but because the clean-up liability was unlimited. Now it is being cleaned up and houses four new businesses that contribute 180 new jobs and $1 million to the local tax base.(4) One of the latest Brownfields projects is right inside Philadelphia's American Street Empowerment Zone. EPA has agreed that the site of a small, abandoned gasoline tank farm can be sealed, paved over, and developed by businesses that are attracted by the Empowerment Zone's tax incentives and low-cost loans.

Here is a recent example from the West coast: The creosote-soaked site of the Wyckoff Company's wood treatment plant on Seattle's waterfront is about to become a world-class port facility for American President Lines. If EPA had not become a partner, the 1,000 jobs that are coming would have gone south -- literally -- and the land would have lain there oozing poison into the harbor while the lawyers wrangled in court for years. But EPA and the Port of Seattle worked out a common-sense deal that is good for everybody.

"Look, there's clearly plenty of work to do yet -- two more miles of mountain to climb," says Rendell, going back to his original metaphor. "But things are sure headed in the right direction."

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