Using economic development programs as tools for urban revitalization: A comparison of empowerment zones and new markets tax credits

This note examines the Empowerment Zones/Enterprise Communities (EZ/EC) and the New Markets Tax Credits (NMTC) and their reliance on tax incentives to revitalize economically distressed, low-income areas. After examining the history, purpose, program requirements, and projects resulting from the two market-based initiatives, the author concludes that the current tax incentives primarily benefit private interests. While the goal of both programs is to reduce poverty in low-income areas through economic growth, the programs are built on two distinct theoretical frameworks. The EZ/EC program is built on a "place-based people" policy that focuses on building the community as a method to help the local residents. The NMTC program, in contrast, adopts a "pure place strategy." This policy focuses on a specific geographical area rather than the economic needs of the area's residents. Ultimately, these programs fall short of economic revitalization goals because they do not effectively promote sustainable social change. Finally, the note proposes that the tax-incentive programs should shift their focus from place-based restrictions to the development of human capital within the inner-city residents. This direct investment of resources, which would include training programs, counseling services, and more direct residential involvement on project advisory boards, would ultimately create solid social structures within economically depressed areas and support the goal of the economic initiatives in present and future years.