c VC , 2 ; t / AN ANALYSIS OF ECONOMIC DEVELOPMENT ADMINISTRATION ACTIVITIES IN SIX CITIES OCTOBER, 1970 U.S. DEPARTMENT OF COMMERCE Economic Development Administration Digitized by the Internet Archive in 2012 with funding from LYRASIS Members and Sloan Foundation http://www.archive.org/details/analysisofeconomOOunit AN ANALYSIS OF ECONOMIC DEVELOPMENT ADMINISTRATION ACTIVITIES CHICAGO (STOCKYARDS) LOS ANGELES (WATTS) NEW YORK (BROOKLYN NAVY YARD) OAKLAND PITTSBURGH PROVIDENCE-PAWTUCKET OCTOBER, 1970 U.S. DEPARTMENT OF COMMERCE Maurice H. Stans, Secretary Rocco C. Siciliano, Under Secretary Robert A. Podesta, Assistant Secretary for Economic Development TABLE OF CONTENTS SECTION PAGE NUMBER I , EXECUTIVE SUMMARY 1 INTRODUCTION 3 COMPARATIVE ANALYSIS OF SIX CITIES ..... 4 Impacts 4 Findings 7 Conclusions 11 Recommendations ..... 12 V, CASE STUDIES Chicago (Stockyards) ...... 14 Los Angeles (Watts) ..... 24 New York (Brooklyn Navy Yard) ...... 43 Oakland 60 Pittsburgh ...... ..... 77 Providence-Pawtucket ..... 94 V, METHODOLOGY ......... Ill APPENDICES A. Current and Potential Employment . . . 112 B. Sample Interview Guide . 113 in I . EXECUTIVE SUMMARY The Economic Development Administration (EDA) has allocated $86 million to support development programs in New York (Brooklyn Navy Yard) , Chicago (Stockyards) , Los Angeles (Watts), Oakland, Pittsburgh, and in the Providence- Pawtucket area. These funds have created or saved approx- imately : 5,460 direct jobs, 6,438 indirect jobs, or 11,898 total jobs. When the presently funded projects are fully completed, employment benefits are expected to be: 26,400 direct jobs, 31,620 indirect jobs, or 58,020 total jobs. These potential employment benefits imply an EDA investment per job of $1,482 for the six cities. EDA activities also stimulated the economic development process in the cities through improvements in infrastructure, and through increased involvement of communities. Analysis of EDA experience leads to the following conclusions . EDA investments in urban areas generate employ- ment opportunities at reasonable costs. No universal approach to urban economic devel- opment is likely to be established in the near future . More emphasis upon training programs is required to prepare substantial numbers of unskilled persons for EDA-created jobs in most cities. Local development corporations seem to be a useful means of channeling EDA funds into large cities. Analysis of EDA experience also prompts the follow- ing recommendations. EDA should continue to shape its tools to the individual urban situation. Complementary training programs should be sought to gain full benefits from EDA job creation efforts. Local development groups should be used when- ever possible to channel EDA funds to the cities. II. INTRODUCTION This report was prepared by the Economic Development Administration (EDA) on the basis of a study conducted by Roy Littlejohn Associates, Inc., of Washington, D.C., under Contract Number 0-35066. This firm was engaged to perform a comprehensive analysis of EDA activities in six cities: Chicago (Stockyards), Los Angeles (Watts), New York (Brooklyn Navy Yard) , Oakland, Pittsburgh and the Providence-Pawtucket labor market. This report is based upon a draft report submitted by the Littlejohn firm on the basis of their field work in the winter of 1970. Section III contains a comparative analysis of the Agency's activities in the six cities. It includes a summary discussion of project impacts and find- ings, as well as a summary of conclusions and recommendations Section IV contains separate case analyses for each of the six cities. Each case analysis includes: a summary, a summary review of the Agency's impacts in the city, conclusions and recommendations as a result of the Agency's activities, a description of the scope of the Agency's activities in the city, and a detailed discussion of the Agency's activ- ities and impacts. Section V of this report contains a description of the methodology employed in the analysis of activities in the cities. Appendix A presents tabular data on current and potential employment. Appendix B is a sample interview guide . III. COMPARATIVE ANALYSIS OF SIX CITIES IMPACTS EDA has allocated $86 million to support development programs in New York (Brooklyn Navy Yard) , Chicago (Stock- yards) , Los Angeles (Watts) , Oakland, Pittsburgh, and in the Providence-Pawtucket area. Allocations and disburse- ments of EDA funds are presented in Table 1 below (incon- sistencies are due to rounding off of figures) . TABLE 1 - ALLOCATIONS AND DISBURSEMENTS IN CITIES CITY ALLOCATIONS ($ Millions) DISBURSEMENTS ($ Millions) PERCENTAGE OF FUNDS DISBURSED Chicago 18.3 6.3 34 Los Angeles 4.2 1.6 38 New York 14.9 1.0 7 Oakland 32.1 10.4 32 Pittsburgh 6.4 4.6 72 Providence- Pawtucket 12.9 12.8 99 TOTAL 88.8 36.6 41 These funds have created or saved approximately: 5,460 direct jobs, 6,438 indirect jobs, or 11,898 total jobs. When all projects are fully completed, employment benefits are expected to be : 26,400 direct jobs, 31,620 indirect jobs, or 58,020 total jobs. Employment figures by city are presented in detail in Appendix A- A summary table follows. TABLE 2 - EMPLOYMENT IMPACTS IN CITIES CITY CURRENT DIRECT CURRENT INDIRECT CURRENT TOTAL POTENTIAL TOTAL Chicago 1,000 1,300 2,300 11,500 Los Angeles 60 78 138 5,520 New York 1,300 1,690 2,990 17,250 Oakland 200 200 400 6,000 Pittsburgh 900 1,170 2,070 5,750 Providence -Pawtucket 2,000 2,000 4,000 12,000 TOTAL 5,460 6,438 11,898 58,020 The potential employment benefits imply an EDA invest- ment per job of $1,482 for the six cities. Clear distinction is drawn between new jobs created by EDA, and new jobs which would have developed without EDA involvement. Only the former are included in the table. Moreover, no seasonal, construction, or other temporary jobs are counted. There are indirect benefits associated with EDA efforts because newly created or saved jobs generate orders from other firms to supply these work- ers with materials, and because the new and retained workers purchase goods produced by other firms with their paychecks. The estimates of indirect employment used here were estab- lished using the appropriate Ullman-Dacey indirect job multiplier, which increases with city population, to account for the greater internalization of economic activity in large cities. The estimates of direct potential employment are uncertain. The achievement of future projections de- pends on many economic and social variables which are beyond the control of EDA. However, the estimates above represent reasonable expectations, rather than the maximum possible employment . Although harder to define or measure, the stimulation of the economic development process is also a goal of EDA. Funds were disbursed, and jobs were created or saved, with this goal in mind. Many EDA projects improved public ser- vices in the cities, thus adding to the infrastructure crucial to economic development. The West Oakland Health Center, the Pittsburgh water treatment plant, and the in- dustrial parks in New York, Los Angeles, Pittsburgh, Pro- vidence-Pawtucket , and Chicago are examples of such projects. They stimulate the economic development process in addition to generating employment opportunities. Human infrastructure is as necessary as physical in- frastructure to the development process. That is, the local population must become interested in the process and become qualified to maintain its advancement. Accordingly, local development groups with significant community representation were given responsibility for administering funds in Pittsburgh and New York. 1-E.J. Ullman and M.F. Dacey, "The Minimum Requirements Approach to Urban Economic Base," Proceedings of the 196 IGU Symposium. FINDINGS Depending upon the particular characteristics of the development program considered, different distinctions between the cities can be made. Criteria for Designation Criteria for designation are shown in Table 3. EDA became involved in New York and Chicago to meet problems caused by sudden rises in unemployment in concentrated areas. EDA entered Oakland and Los Angeles to respond to problems of minority groups. Pittsburgh and Providence- Pawtucket were designated under less immediate circumstances TABLE 3 - DESIGNATION CRITERIA YEAR OF CITY CRITERIA FOR DESIGNATION DESIGNATION Chicago Sudden rise in unemployment 1967 New York Sudden rise in unemployment 1966 • Los Angeles Special Impact Area 1 1968 Oakland City-wide unemployment rate 1966 Pittsburgh ARA carry over; dedesignated in 1966 1966 Providence- Pawtucket Most nearly qualified area 1966 Recognized as Special Impact Area in 1968, designated in 1970. Size of Target Area Again, three different groups are obtained, based upon different scopes of impact, relative to the city boundary, as shown in Table 4. TABLE 4 - SIZE OF TARGET AREA CITY SIZE OF TARGET AREA Chicago Less than city-wide Los Angeles Less than city-wide New York Less than city-wide • Oakland City-wide Pittsburgh City-wide (although four counties were originally designated) Providence- Pawtucket Greater part of state Organization for Job Linkages to Target Population In New York, Pittsburgh, and Los Angeles, the private economic development groups which EDA has funded, screen the applicants to insure that the industry coming into industrial parks will benefit the target population. Also, in New York and Oakland, clauses in contracts establish hiring requirements. Initially in Oakland, an Employment Review Board was set up to approve hiring plans, and to submit controversial ones to binding arbitration. This Board was finally dissolved because its function was assumed by an Equal Opportunity Officer. No screening policy exists in Providence-Pawtucket or in Chicago, although, of course, Certifications of Non-Discrimination are obtained, as in all other cities Table 5 illustrates these findings. TABLE 5 - MEANS OF LINKING JOBS TO POPULATION ORGANIZATION FOR JOB LINKAGES TO TARGET CITY POPULATION Los Angeles Screening of prospective firms New York Screening of prospective firms Pittsburgh Screening of prospective firms • Oakland Written lease agreements • Chicago Requirements for certification Providence- Pawtucket Requirements for certification Training Programs In Pittsbu poration (BJD) in small busine Similarly, in P the Opportuniti by EDA, has tra there is little persons and the rgh, the Business and Job Development Cor- has provided training to 2,12 individuals ss management, and management development, rovidence-Pawtucket , the local branch of es Industrialization Center (OIC) , supported ined between 5 00 and 6 00 persons. However, relationship between these newly trained jobs brought about by EDA efforts. In Chicago and New York, plans exist for training centers adjacent to the projects , but they have not been realized . In Oakland, the East Bay Skills Center has been funded to provide training assistance, but it has not proved its effectiveness because few job opportunities have, as yet, materialized. In Los Angeles, the Economic Resources Corporation (ERC) is totally dependent on the good faith of the tenants who occupy the park. Lockheed, for example, has established its own training program. Table 6 illus- trates these findings. TABLE 6 - TRAINING PROGRAM STATUS CITY STATUS OF TRAINING PROGRAMS Pittsburgh Successful, but EDA projects unrelated to other Providence- Successful, but unrelated to other Pawtucket EDA projects • Chicago Training center operational planned, but not New York Training center operational planned, but not Oakland Skills center ready to function • Los Angeles Depends on good faith of tenants 10 CONCLUSIONS Analysis of EDA experience leads to the following conclusions . It seems evident that EDA investments in urban areas are generating new employment opportunities at reasonable costs. It is not likely that a universal approach to urban economic development will be established in the near future. EDA's urban experience is derived from unique situations, requiring different types of development programs. Training programs have been proposed in each of the six cities, but their effec- tiveness in preparing workers for EDA- created jobs cannot be evaluated now, because none of the proposed efforts with this focus has been implemented. Local development corporations have had mixed success, but, on the whole, seem a useful means of channeling EDA funds into the cities. For example, the Commerce Labor Industry Corporation of Kings County (CLICK) , in New York has attracted 14 firms, with an associated employment of 1,300 persons, to the Brooklyn Navy Yard. 11 RECOMMENDATIONS Analysis of EDA's experience leads to the following recommendations . Because one of EDA's stated goals is stimulation of the development process, it is a good strategy to provide funding through local development groups, as in Pittsburgh and New York, whenever possible. These groups engage the com- munity in the process, and may achieve independent viability to carry on after the specific EDA program is completed. The Business and Job Development Cor- poration (BJD) , in Pittsburgh, worked to overcome the lack of well-trained minority businessmen and the inaccessib- ility of private capital to minority entrepreneurs . Regardless of the existing mechanisms to channel job benefits to the target population, it is desirable to initiate effective, complementary training pro- grams to match more closely EDA-created job opportunities with jobless and under- employed persons. EDA does not have the authority or the funds to provide training in association with its other investments. However, it can insist that firms receiving business loans indicate their training plans in detail, and it can encourage and help local devel- opment groups to explore ways of obtaining training assistance for the target group as an integral part of their programs. The merits of program versatility should be exploited in adapting EDA tools to the indi- vidual urban situation. A good example involves public works. In Pittsburgh, EDA public works assistance was used to establish an industrial park and improve the water system. This provided stim- ulation of a generally depressed, but not hopeless situation. In Oakland, however, 12 the problem lies in the ghetto, which totally lacks basic infrastructure. There, a successful public works project is the West Oakland Health Center. In addition to creating para-professional jobs, it provides much needed medical service to help prepare jobs seekers for employment. 13 IV. CASE STUDIES CHICAGO (stockyards area) SUMMARY A six square mile section of the near south side of Chicago was designated a "sudden rise" area by EDA in November 1967 , when the unemployment rate had risen to 20 percent, from 12.5 percent in 1960. This marked rise resulted from the closing of several firms in the Chicago Stockyards, located in a one square mile section within the designated area. EDA approached a variety of critical problems, and through a series of technical assistance projects, public works projects, and business loans, prompted a number of impressive results. Impacts of these projects, whose total funding was approximately $18 million, include » support of the Mayor's Committee on Economic and Cultural Development of Chicago, which enabled it to conduct mid-Chicago development efforts, public works improvements necessary for the industrial development of the central part of the stockyards area, substantial private investments in the stock- yards area, encouraged by $6 million in EDA business loans, and a successful start in helping the development efforts of other city, community, and private groups . MAJOR IMPACTS The Agency Historically, the Chicago Stockyards had been one of the nation's largest centers for the slaughtering and prep- aration of meat. However, starting in the 1950' s, changes in technology caused several major meat packing firms to leave the area. A loss of approximately 50,000 jobs re- sulted. Meat packing firms released 35,000 employees; an- other 15,000 were lost from related industries. About 70 percent of the 50,000 jobs were held by residents of the surrounding community, 90 percent of whom were black. 14 EDA has participated actively in the redevelopment of the stockyards area by providing more than $18 million. Funds approved for each program are listed below. Public Works Grants $11,318,000 Business Loans 6,031,000 Technical Assistance Grants 939 , 270 $18,288,270 Concern for the redevelopment of the stockyards area, as well as the rest of mid-Chicago, has brought together several interest groups representing the Federal and city government, as well as private business and community interests. The common goal has been to keep and attract industry. By the end of 1969, some 20 acres had been developed. By 1975, EDA's financial assistance is ex- pected to develop a total of 75 acres, creating 5,000 jobs. EDA has used three program tools in its development efforts. Business loans and public works grants have been provided for the redevelopment of the stockyards area; and technical assistance grants have been pro- vided for support of projects not only af- fecting the stockyards area, but also other critical parts of mid-Chicago. By using these program tools, EDA has been a major contributor of funds, providing groundwork for future development . PROGRAM TOOLS Technical Assistance Some of the major impacts of technical assistance projects are summarized below. The Mayor's Committee for Economic and Cultural Development has coordinated various projects and promoted the interaction of interest groups at all levels. Through referrals from the Mayor's Committee, 200 jobs have been filled. 15 Additional technical assistance to private, community, and city-sponsored organizations has led to coordinated community involvement Public Works Some of the major impacts of public works grants are summarized below. Roads, water, lighting, and sewer facilities have been provided for the stockyards area. The new public works facilities have enabled the development of Ashland Industrial Park. Since the redevelopment of the stockyards began, approximately 850 persons have been employed by the following firms: Number Employed United Exposition Service Co. 250 Cameo Container Corp. 200 Brodie Advertising Co. 125 Edsal Manufacturing Co. 150 Three small firms 120 Plans are being made for a skills center for the hardcore unemployed. This center would be located in the stockyards area to comple- ment development of the Ashland Industrial Park and the Morgan Industrial Park, The center is designed to accommodate 1,200 stu- dents. It will serve as a source of trained, skilled labor for new industry in the area, and will operate day and evening classes. Business Loans Some of the major impacts of business loans are sum- marized below. An estimated 620 to 820 jobs will be created and an additional 339 jobs will be saved as a direct result of EDA loan assistance . Most of these new employment opportunities should be available to surrounding area residents 16 CONCLUSIONS AND RECOMMENDATIONS EDA activities in the Chicago stockyards area lead to several conclusions. Grants for planning, staffing, and coordination of implementation efforts have figured prom- inently in the success of the mid-Chicago devel- opment efforts. The Chicago experience demon- strates the benefits that can be derived from investment in the planning stages of economic development projects. It emphasizes the impor- tance of this facet of EDA's role. EDA should urge the Mayor's Committee to broaden its community participation. A difficulty stems from the reluctance of some community groups and leaders to be closely identified with the Mayor's Committee because of its affiliation with city government. However, some community groups want more minority representation on the Mayor's Committee and staff. Efforts to develop the stockyards area should be continued. The Stockyards have yet to be trans- formed into the modern industrial area that the Mayor's Committee has envisaged as the model for other parts of Chicago as well as for other cities. Some cattlepens remain, old and unused buildings still stand, and more than 50 percent of the land is still unoccupied by new industry. Some of the difficulties being encountered are stated below. The current money market has limited financing alternatives . EDA's time period for application and approval of business loans tends to discourage some firms from following through with construction plans . Considering the relatively brief period of EDA involve- ment in Chicago, its projects have greatly aided Stockyards development. However, two important conditions are necessary for faster growth: 17 involvement of additional private financial institutions; and construction of a skills center to provide trained labor to Stockyards firms. SCOPE OF MID-CHICAGO ACTIVITIES EDA's efforts in Chicago have centered on an area of approximately six square miles, which is a special "sudden rise" district. This area contains the Stockyards, where the majority of grants and business loans have been made. With the partial funding of the Mayor's Committee through technical assistance, EDA has increased its scope of assistance to include a larger area of participation. These funds provided for initial planning of the redevel- opment of the entire mid-Chicago area, which is about one- third of the city's area. More than $650,000 has been spent for the Committee's programs, staff, and other administrative expenses. About $280,000 has been spent on other technical assistance ac- tivities to benefit disadvantaged residents of the stock- yards area. The largest EDA effort has been public works improve- ments in the stockyards area. Approximately $11 million has been allocated to two major projects. In addition, five firms have received EDA business loans totalling about $6 million. Exhibit 1 lists the EDA projects evaluated. 18 EXHIBIT 1. EDA PROJECTS EVALUATED PART A - TECHNICAL ASSISTANCE PROJECTS EVALUATED Recipient Mayor ' s Committee for Economic and Cultural Development Gran-Mothers Bakery Chicago Opportunities Industrialization Center Chicago Economic Develop- ment Corp. Minority Economic Develop- ment Systems Corp. Month Approved April, 1967 June, 1968 November, 1968 July, 1969 February, 1970 November, 19 67 December, 1967 November, 1968 February, 1970 February, 1969 December, 1969 April, 1970 Amount ($000) 240 227 30 11 150 4 20 100 75 65 3 15 PART B - PUBLIC WORKS GRANTS EVALUATED Recipient City of Chicago Public Building Commission of the City of Chicago Month Approved June, 1968 December, 1968 Amount ($000) 4,866 6,452 19 PART C - BUSINESS LOANS EVALUATED Firm Name Chilewich Brothers, Inc. (Processes meat) Edsal Manufacturing Co. (Manufactures steel shelving and shop equipment) City Foods (Processes meat) Berkshire Foods, Inc. (Processes butter in bulk) U.S. Manufacturing & Development Corp. (Manufactures corrugated boxes) Month Approved June, 1968 January, 1969 April, 1969 May, 197 Amount ($000) 2,438 846 101 2,240 May, 1970 406 ACTIVITIES AND IMPACTS The Mayor's Committee for Economic and Cultural Development Efforts to improve sections of Chicago that had ex- perienced severe unemployment conditions, especially among minority groups, resulted from a study funded by the Area Redevelopment Administration (ARA) and completed by the Mayor's Committee for Economic and Cultural Development and the Center for Urban Studies of the University of Chicago in 1964. Findings from the study showed a need for a comprehensive development and job-creation program to halt spreading blight and loss of population in a 48 square mile area of the near west and south sides of Chicago. The Mid-Chicago Project was conceived to conduct these efforts within the 48 square mile area. It is a long-term program, reaching into the late 1970's. 20 EDA's participation in the Mid-Chicago Project has included a broad scope of activities, programs, and uses of funds, directed mainly at the economic rehabilitation of the Chicago Stockyards. However, as part of this effort, EDA has provided technical assistance grants to the Mayor's Committee for Economic and Cultural Develop- ment, which focuses on all citywide development activities, in addition to those in the Chicago Stockyards. Initial efforts to improve the mid-Chicago area were made by Mayor Richard J. Daley, who created the Mayor's Committee in 1961 to help broaden the city's tax base. EDA's participation began in April, 1967, and enabled the Mayor's Committee to increase its efforts to redevelop the Stockyards and surrounding areas. The Mayor's Committee developed four major programs in conjunction with other volunteer and community organ- izations : Industrial Conservation - to keep industries in the city; Industrial Development - to create industrial parks; Commercial Development - to stimulate entre- preneur ship; and Manpower Development - to develop job skills- Highest priority has been given to industrial conser- vation. As a result, the Mayor's Committee first focused on manufacturing, the area's most important basic industry. Almost 4 percent of manufacturing employment in the metro- politan area was in the mid-Chicago area. No other part of the mid-Chicago area offered a better starting point for redevelopment than the Chicago Stock- yards. Although the yards were generally in a state of deterioration and required road and utility improvements, they were valuable for several reasons: a large supply of labor was located nearby; transportation to the stockyards area was favorable ; 21 the land was zoned for industrial use; and much land was available for any size or type of manufacturing or distributing oper- ation. The staff of the Mayor's Committee made an inventory of sites on which new industrial activity might be supported The staff then began to determine requirements for selling or developing these sites. The Mayor's Committee's activities include continuous liaison with manufacturers by interview, letter, and tele- phone. The Mayor's Committee performs a service for firms to help them approach the government on various matters. In addition, the Committee performs a similar function on behalf of community groups. The Mayor's Committee includes 175 persons, most of whom are businessmen. The Committee's 25-member profes- sional staff consists of 12 persons on the city payroll and 13 funded by the EDA Mid-Chicago Project. The part of the staff which is paid by the city concerns itself with economic development within the entire city. The part which is paid by the Mid-Chicago Project concerns it- self with economic development within the mid-Chicago area. The Mayor's Committee sees itself as an intermediary between industrialists and neighborhood residents. The Committee's major role is to persuade industrialists and Chicago neighborhood groups to work together to achieve shared goals. The Mid-Chicago Project has established eight indus- trial councils in project areas. The Mayor's Committee has often found it easier to get industrialists and resi- dents to work together than to get industrialists to work together . The Committee has not included some community groups in its activities. One of these is the Cosmopolitan Chamber of Commerce, the Chicago affiliate of the National Business League. EDA has funded, through the National Business League, a project director for the Chamber's activities. The Chamber is an interracial organization which has longstanding and keen interest in the economic welfare of the inner city. The Chamber was established in 1933 as the 22 Chicago Negro League. Over the last five years, 2,500 persons have graduated from its tuition-free business management course, which is offered at several colleges in the city. However, some community groups are not interested in association with the Mayor's Committee. For example, Operation Breadbasket does not wish to appear to be coor- dinated by a city agency. The latest EDA grant to the Mayor's Committee ($10,500) is to determine the feasibility of establishing a synthetic rug mill in the stockyards area. The study should be initiated during 1970, and made available to rug companies considering locations in the Stockyards. Other Citywide Organizations Two technical assistance grants, amounting to $24,000, were made to Gran-Mothers Bakery to help it acquire man- agerial assistance. Financial difficulties have subse- quently forced Gran-Mothers to merge with Silvercup Bakery. The Chicago Economic Development Corporation (CEDC) received $67,500 to help minority contractors. The CEDC is primarily a small business investment corporation, which processed loans totalling more than $2 million in 1968. Through the United Builders Association, the CEDC has assisted minority group contractors to improve their competitive position within the construction industry. It has helped the builders obtain bonding and assisted with union problems. It was instrumental in developing the Chicago plan for employment of minority persons in the construction trade. The CEDC considers EDA funding essen- tial for the United Builders Association project, although it is a relatively small part of the total CEDC budget. EDA has provided the Chicago Opportunities Industrial- ization Center (OIC) with $175,000 for programs to train the hardcore unemployed. The OIC was introduced to EDA funding by the Mayor's Committee, which has also helped recruit several firms for OIC programs. 23 LOS ANGELES (watts) SUMMARY Since the widely publicized disturbances of August, 1965, EDA has been actively engaged in development and rehabilitation of the Watts area of Los Angeles. Of $4.4 million which the Agency has approved for the greater Los Angeles area, about $4 million has been approved for Watts, a designated Special Impact Area. EDA has assisted Watts through a number of major public works and technical assistance projects. Results of these efforts have frequently been impressive, and include: creation and support of the Economic Resources Corporation (ERC) , a business-oriented organ- ization responsible for development of an industrial park and location of substantial job opportunities; necessary public works improvements for the development of the park; support of the South Central Improvement Action Committee (IMPAC) , a community-based group offering technical assistance and loan packaging aid to minority entrepreneurs; and support of several additional groups which have engaged in a number of activities in- cluding development planning, youth services and a variety of services for minority con- tractors . MAJOR IMPACTS The Agency Prior to the recognition of Watts as a Special Impact Area in 1968, the Agency's involvement was limited to tech- nical assistance projects. Subsequently, however, the Agency has also used public works loans to aid the area. Economic development is being pursued by providing assis- tance to private, minority-owned businesses and to community- owned enterprises. 24 After recognition, EDA and the Office of Economic Opportunity (0E0) each allocated $3.8 million to fund projects in Watts. Responsibility for administering a joint EDA/OEO development program was assumed by EDA. The Department of Labor agreed to participate with the other agencies by making available $1.5 to $2.0 million for training. As its "agent," EDA created the Economic Resources Corporation (ERC) , which was intended to be unique for its business expertise and technical capabilities. More than $3 million of EDA investments, approved or pending, are being coordinated through ERC, which has also dis- persed about $730 thousand in OEO loan funds to minority entrepreneurs . EDA is participating in the development of a 39.5 acre industrial park near Watts. Both technical assis- tance and public works funding have been instrumental in bringing to the park a plant of Lockheed Aircraft Cor- poration. It is expected that total employment within the park will be approximately 2,400 jobs when it is fully occupied. PROGRAM TOOLS Technical Assistance Some of the impacts of the technical assistance projects in Watts are summarized below. Establishment and continued support of the ERC has led to the development of a major industrial park. The only present tenant of this park is Lockheed Aircraft Corporation, which is expected to provide 300 jobs by early 1971. The ERC, which many people feel has little direct con- tact with the community, also has been involved in a number of additional activ- ities, including the packaging of loans for small businesses. The loan program has not been very successful. The South Central Improvement Action Council (IMPAC) , a local group composed of community representatives, has pre- pared a variety of loan applications 25 for small businesses which have, in total, generated about 50 jobs. Support was provided to two organizations to engage in development planning. A local office of the national Black Economic Union is beginning operations. An association of minority contractors has provided valuable aid to some of its members. Although the group has had serious administrative problems, some recent changes in regulations may permit more success in the future. Public Works Impacts of public works projects related to the devel- opment of ERC ' s industrial park are summarized below. Improvements to the park site, including access roads, site clearance and water and sewer serv- ice connections, will be completed in the near future. It is estimated that approximately 2,4 00 people will be employed in the park when it is fully occupied. Plans have been made for a child-care center for mothers who will work in the industrial park . Plans have been made for a community service center and ERC headquarters building. This building will contain centralized facilities, such as accounting services, for use by indus- trial park tenants. Initial steps have been taken to construct 30 modules within the park for rental to small minority enterprises. The ERC will provide information systems and employment counseling for firms who occupy these modules. 26 CONCLUSIONS AND RECOMMENDATIONS Because Watts was recognized quite recently, the ultimate effects of EDA's efforts can not be measured. The following preliminary conclusions are drawn. Grants for institutional development have been a major focus of the Agency's program in Watts. Los Angeles may provide EDA with the best possible test of the impact of institutional change and growth upon eco- nomic development. Watts activities also provide an excellent test of the consequences of community in- volvement because of the contrast between the operating modes of ERC and I MP AC . On the basis of the current study of Watts, the following recommendations are made. The Agency should continue a careful assess- ment of impacts of community involvement on the effectiveness of organizations such as ERC and IMP AC. Careful surveillance of the administrative and fiscal policies of the ERC and the Los Angeles Association of General, Specialty, and Sub-Contractors, Inc. should be con- tinued . The Agency should consider how best to pro- vide timely and beneficial management assis- tance to minority businessmen. One possib- ility would be to hire consulting firms on a retainer basis to provide assistance. This arrangement would help assisted firms to avoid serious management difficulties. The Agency should give great attention to the coordination of various Los Angeles projects with each other, and with projects of other Federal Government agencies. EDA should vigorously promote the interests of its clients with banks and other Federal agencies . 27 SCOPE OF WATTS ACTIVITIES Since the widely publicized disturbances of August, 1965, EDA has been actively engaged in development and rehabilitation of the Watts area of Los Angeles. This area reflects the typical inner city problems of high unemployment, low median income, high crime rate and a deteriorating physical plant. In 1968, EDA recognized Watts as a Special Impact Area. This was done under the terms of the 1967 Amendments to the 0E0 Act of 1964. These amendments provide that an area is eligible for Title II assistance under the Public Works and Economic Development Act of 1965. The area was formally desig- nated for a full range of EDA activities in 1970. Ex- hibit 1 contains a list of projects in this area which are discussed in this report. 28 EXHIBIT 1, EDA PROJECTS EVALUATED PART A - TECHNICAL ASSISTANCE PROJECTS EVALUATED Project Month Approved Amount ($000) Economic Resources Corp: Los Angeles Special Impact Program Economic Resources Corp: Los Angeles Market Feasibility Study Economic Resources Corp: Los Angeles Market Feasibility Study South Central Improvement Action Council: Los Angeles Economic Development Program South Central Improvement Action Council: U j ima Village Market Study South Central Improvement Action Council: Manufacturing development Citizens Crusade on Poverty: Training, technical assis- tance (source of funds for Watts Labor Action Council) Los Angeles Association of General, Specialty and Sub- Contractors, Inc.: Minority construction job development Black Economic Union July, 1968 December, 1968 September, 1969 September, 1968 November, 1968 October, 196: May, 196 9 June, 1968 February, 1968 June, 1968 30 91 345 115 123 154 (part of a national project) 29 PART B - PUBLIC WORKS PROJECTS EVALUATED Projects Month Approved Amount ($000)" Economic Resources Corp Industrial park site development Economic Resources Corp Construction of child care center February, 1969 October, 1969 February, 1969 755 (loan) 245 (supplement) 260 (loan) Economic Resources Corp Multipurpose service center February, 1969 808 (loan) Economic Resources Corp Commercial shell buildings February, 1969 1,000 (loan) ACTIVITIES AND IMPACTS Institutional Funding of Economic Resources Corporation The Watts area of Los Angeles was designated as a Special Impact Area under the Economic Opportunity Act of 1964. However, before 1968, EDA was limited to pro- viding technical assistance to the area. In 1966, the Critical Urban Problems Committee of the Los Angeles Federal Executive Board asked EDA to deter- mine the feasibility of industrial development of the South Central Area of Los Angeles, which includes Watts. As a first step, EDA retained two firms, Real Estate Research Corporation and Daniel, Mann, Johnson and Mendenhall, to recommend ways to help develop the South Central area. This analysis led to EDA's decision to establish the Eco- nomic Resources Corporation (ERC) to administer programs to be funded jointly by EDA and the Office of Economic Opportunity (OEO) . EDA provided an initial technical assistance grant of $30,000 to establish the ERC in August, 1968. Two additional grants were approved in December, 1968, and 30 September, 1969, respectively. EDA administrative sup- port to ERC has been approximately $4 65,000. The ERC staff was initially eight persons. It is now 20 per- sons, including 14 professional personnel. EDA selected a Board of Directors of ERC in 1968. Members of the Board were selected in consultation with persons in the business and social-action communities, and with Federal officials in Los Angeles. Most of the Board members were individuals who were not heavily in- volved in social-action projects, but were interested in playing a more active role in community improvement pro- grams. Three groups were given the power to veto Board candidates : Watts Labor Community Action Council (WLCAC) , South Central Improvement Action Council (IMP AC) , and Office of the Mayor of Los Angeles. EDA conceived ERC as an organization having a nucleus of business advisors, with little direct community par- ticipation. The community's role was to be as a benefi- ciary of the economic development process. EDA felt that this indirect approach would maximize the potential effec- tiveness of ERC by removing that Corporation from strife which might result from community participation. Critics of ERC claim that the organization should represent the interests of the community much more direct- ly. To support their doubts about the efficacy of the organization, these critics make a number of claims. Four of the ten members of the Board are black, but it is claimed that none of these four individuals specifically represents the interests of Watts. The Board has engaged a community relations officer, but only on a part-time basis. In its first report to EDA, the Board re- ported that it preferred to minimize its community relations activities. 31 Most of the ERC staff do not live in the impact area. The offices of ERC are located some distance from the impact area to avoid unorganized requests for information, money and miscel- laneous services. Some of this criticism of ERC may be alleviated when ERC moves its principal offices to a building close to the impact area which is presently under construction. The ERC land development and community relations staff recently moved into offices located in an industrial park built by ERC. The ERC administration has had a number of difficulties. On several occasions, ERC has submitted a report or an application to EDA, and the Agency has been required to request additional information. For example, an intra-office EDA memorandum dated October 23, 1968, pointed out seven deficiencies in information. The ERC has consistently ex- pended funds for unapproved purposes. For example, it provided raises for some of its employees at a higher per- centage than the agreed ceiling rate and for a total amount greater than the maximum which EDA had established. When EDA pointed this out, ERC said the action was necessary to retain those persons. Moreover, ERC expended technical assistance funds for costs which should have been met by the Corporation's own funds or by in-kind contributions. The ERC claimed that it had not received anticipated con- tributions and that the Internal Revenue Service had not granted the requested tax-free status. In addition, ERC failed to note in its progress report that several of its employees were no longer on its payroll. Because of the administrative problems discussed above, EDA considered an audit on several occasions. However, cognizant EDA officials describe ERC officers as persons of good intentions, but limited administrative ability, who defer to the ERC Board on all important matters. The ERC salary structure has not been sufficient to command highly experienced administrative talent in all management positions. Recent salary scale revisions will not signifi- cantly alter this condition. 32 The ERC has undertaken two principal programs for South Central Los Angeles and Watts: development of an industrial park; and administration of business loans with 0E0 special impact funding. These activities are discussed in the following two sections of this report. Economic Resources Corporation - Industrial Park Activities The ERC acquired about 40 acres of land for an indus- trial park in Lynwood Township, adjacent to Watts, at a cost of $3.1 million. By choosing this uninhabited land, which was zoned for commercial use , ERC avoided the dif- ficulties of condemnation proceedings and acquired the land at low cost. The choice of this site angered some Watts residents who contend that Lynwood is a community of white racism. Some people contend that Watts, or the Compton section, which have a number of black residents, should receive the tax revenues and jobs generated by the industrial park. On the other hand, others defending the site state that the park is located a short distance from Watts. The residents on the more accessible west side of the park are mostly blacks, with problems similar to impact area residents. Commercial and industrial establishments are situated to the east of the park site. The principal accomplishment of ERC has been building a plant for the Lockheed Aircraft Corporation in the indus- trial park. Although slightly behind schedule, the plant was dedicated on March 18, 1970, and employs 47 trainees and a small staff from its Burbank plant. Lockheed expects to employ 300 persons by early 1971, and an additional 300 a year later. The facility, which consists of 100,000 square feet on 6.5 acres, is an assembly plant for a new commercial aircraft. According to Lockheed, this plant will not be affected by financial problems arising from the. firm's military construction. Nearly all the senior management is black or Mexican-American, and nearly all the trainees are local black residents. Using a contract with the Department of Labor, Lockheed is conducting a 12- eeK training course for persons certified as "hard cor ? unemployed" individuals. So far, most of the trainees 33 have been individuals who live near the plant, but out- side of the impact area. They are from the same socio- economic groups as Watts 1 residents. The ERC should be aware of this, however, and should decide if it wants to encourage Lockheed to recruit and hire specifically from the impact area. Lockheed stands as a model of accomplishment in that a sizeable plant was made operational in less than two years. Arrangements have not been made with other firms. The ERC staff claims that it now requires tenants to have some degree of labor intensity, and to ensure training, job mobility and fair employment practices. The ERC estimates that 2,400 persons will ultimately be employed in the park. In addition, ERC expects 3,600 additional jobs to be created in the community, based on a conservative multiplier. The ERC estimates that the area will benefit by approximately $17 million annually from the park jobs and $26 million from spinoff jobs, based on a average salary of $7,200. In February, 1969, EDA approved four park-related projects to be coordinated by ERC: public works improvements for ERC ' s indus- trial park; construction of a child care center; construction of a multipurpose service center for the ERC staff; and construction of 30 industrial modules to be located in the park. All of these projects involved public works loans. The improvements for the park included grading, land- scaping and other general site improvements, as well as two access roads and water and sewer connections. The original cost estimate was $755,000. However, the low bid was $1,000,000. Thus, in October, 1969, EDA approved a $245,000 loan supplement for the cost overrun. Nearly all of the work has been completed. 34 The ERC claims substantial minority group partic- ipation in the construction work. According to ERC, both black and white architects planned the one build- ing constructed in the park since ERC ' s purchase of the land. However, ERC ' s recent verbal report to EDA stated that minorities comprised only about 10 percent of the work force on one part of the project and almost none on the other. The ERC plans to require better affirm- ative action plans on all future work and has added an employee responsible for equal opportunity hiring in both construction and tenant employment. Nevertheless, some ERC Board members seem reluctant to press beyond verbal agreements, especially with tenants. The second major ERC effort consisted of planning a day-care center. EDA approved a $260,000 loan for this purpose. The ERC is now unsure whether the day- care center will be located in the park or across the street on land that ERC plans to purchase soon. The concept of having such a center available, so that work- ing mothers can have a place to leave their children, is a good one. However, with only one tenant at the park, and a few trainees there, ERC does not know how many people will need these facilities. The ERC has demonstrated a lack of planning in determining the center's use. It is possible that ERC will never build the center. No money has been disbursed for the project An EDA public works loan of $808,000 was approved for a service center to assist community entrepreneurs. It will also include the offices of ERC. The proposed size of the building has changed from six stories to three or four. The ERC plans to include within this facility an auditorium and rooms suitable for lectures or seminars, primarily aimed at helping minority entrepreneurs. Serv- ices planned for the tenants of the industrial park are to be housed in this facility. These include central accounting (with electronic data processing), sales, marketing, and counseling services, and an emergency medical clinic. Commercial service establishments may also be opened. The target date for completion of the facility is in October, 1970, but money has not been dispursed by EDA for this project. The ERC still seems 35 uncertain about plans for the facility. Unfortunately, as in many other cases, only very limited information was available from ERC. The fourth ERC project related to the park involved an EDA public works loan of $1,000,000 to construct approximately 30 industrial modules, averaging 1,000 square feet, in the park. The function of these modules is to provide space for impact area entrepreneurs who are starting, expanding or moving their small businesses to the industrial park. Design plans have been completed and approved by EDA. Economic Resources Corporation - Business Loan Programs The business loan program of ERC has involved both loaning its own funds which it has received from Federal agencies and packaging of commercial bank loans. The program has been far less successful than its industrial park development activities. Thirteen loans, totaling about $730,000, have been approved. All of the loans were made to minority businessmen. Results vary, but the program has experienced a high failure rate . Of the twelve firms that have received loan disbursements, one has folded, two are in liquidation, a fourth is a personal business which the management does not expect to expand, and five other firms are experiencing serious problems. Only two of the remaining three firms hold some promise for the future. There are several reasons for the high failure rate. The ERC policy was to lend money to persons starting new manufacturing enterprises. Firms were undercapitalized. The ERC had no effective process of evaluating and processing loan applications and provided only a limited amount of technical assistance to borrowers. Commercial banks lent funds at high interest rates and administered the loans. The ERC had little power, other than to guarantee the loans. 36 The ERC is aware of these problems, and believes it has learned from experience. It is taking steps to correct these problems with its present and future loans. The ERC will lend money and provide technical assistance to existing businesses, but not to new businesses. It will take an equity position with the borrowing company to ensure closer obser- vation of the company's direction. It wishes to expand its staff to be better able to supervise and administer the entire loan application process. The ERC has changed its policy by making loans of smaller dollar amounts in order to spread risks. It is attempting to persuade banks to charge lower interest rates. Some of these changes are evident in the case of ERC ' s most recent borrower, Image, Inc. This firm will receive $100,000 of ERC capital, and $50,000 from each of five additional sources. According to an EDA Los Angeles Field Office Report, dated March 16, 1970, ERC imposed three conditions on Image. The firm was required to obtain cash from the other firms, to receive a contract for circuit boards from Western Electric, and to have a competent financial officer from the very beginning of its operations. Image has met the first condition and, according to ERC, is close to meeting the second. It has not met the third. In addition to providing business loans, ERC has performed business counseling. It has helped package four bank loan applications and three applications for Small Business Administration (SBA) loans. It is plan- ning to make greater use of the screening and packaging services of the Interracial Council for Business Oppor- tunities, a national group funded by EDA, and of the South Central Improvement Action Council, a group located in Los Angeles discussed subsequently in this report. 37 Additional Economic Development Projects in Watts Additional economic development groups that have received -EDA support include: South Central Improvement Action Council (IMP AC) , Watts Labor Community Action Council (WLCAC) , Citizens Crusade on Poverty (CCAP) , Black Economic Union (BEU) , and Los Angeles Association of General, Specialty, and Sub-Contractors, Inc. (LAAGSSC) . IMPAC is a community-based group, whose Board is composed of community representatives, business repre- sentatives and elected officials. Started in 1968, IMPAC has prepared 36 loan applications for submission to banks and to the SBA. Of the 36 loan applicants IMPAC has helped, 13 loans totaling $384,500 were granted by banks (most had SBA guarantees) and one $210,000 defaulted loan was renegotiated. These loans have resulted in 47 jobs. IMPAC has given technical assistance to 394 clients and has been trying to obtain a local business tenant for a sizeable vacant manufacturing plant that it is leasing at nominal cost. EDA has provided IMPAC with a technical assistance grant of $109,000, and about $3,000 for each of two feasibility studies. IMPAC is also offering technical assistance in devel- oping plans for a housing and commercial complex, Ujima Village. This is a non-profit community corporate venture, with about 2 5 community groups as members. Ujima Village is expected to house 600 families, employ 2,500 persons in one facility, and contain a five-acre shopping center, two elementary schools and recreational facilities. Ap- proval for financing by the Department of Housing and Urban Development (HUD) is pending. The site consists of 115 acres of vacant land in Watts. Ujima Village has an option to purchase the land in full or in part with stipulation on use of the rest of the property. 38 IMPAC has called on the business, financial and legal communities for donations of services. It has only six paid staff members, compared to ERC ' s twenty. However, IMPAC has been able to use four VISTA volun- teers full-time and 30 graduate students for 10 hours each week. These voluntary efforts, of course, are uncertain in their duration. Although IMPAC has community representation, it is business oriented. It has done some screening and packaging of loan applicants for ERC. Its office, most staff residences and U j ima Village are all located in the impact area, in contrast to the facilities of ERC. However, IMPAC ' s funding and accomplishments are on a smaller scale. The Watts Labor Community Action Council (WLCAC) is another group that EDA has assisted. Composed of twelve unions, WLCAC was founded in early 1965 as a community-oriented non-profit corporation. WLCAC has used Youth Opportunity Program funds for beautif ication projects by youngsters aged 14 to 21 in the Neighborhood Youth Corps. A Community Cadet Corps provides summer camp and other experiences for youngsters aged 7 to 13. WLCAC also operates a senior citizens' activities program involving 600 elderly persons, a credit union with 3,000 members, a chicken ranch 4 miles away, and some manpower training programs. Recently, it purchased a chain of four supermarkets for almost $1,000,000 to merge with its present small supermarket. It operates two service stations, and it is moving and renovating houses other- wise destined for destruction. Over the years, WLCAC has received about $6 million in Federal aid, in addition to substantial amounts from unions, the Ford and Rockefeller Foundations, the state and city governments and other private sources. Its staff has grown from 5 to 14 persons. EDA has had only a minor role in its development. In 1968, EDA awarded $123,000 to the Citizens Crusade on Poverty (CCOP) , a joint anti-poverty program. This money was divided between WLCAC and the East Los Angeles Community Action Council. With the portion designated for WLCAC use, CCOP paid the salaries for one year of two professional and two clerical employees to plan economic development ac- tivities for WLCAC. While these persons were helpful to 39 this program, which has recently made great strides, EDA did not renew its funds. WLCAC has been able to meet costs through foundation grants, but is disappointed that EDA support was terminated. EDA felt, however, that its task of providing an initial stimulus to economic development had been accomplished. The Black Economic Union (BEU) has also received EDA funds. A non-profit corporation founded in 1966 by Jim Brown and other professional athletes, BEU offers loan and business expertise similar to IMPAC services. The national office, located in Cleveland, has received $525,000 from the Ford Foundation to set up and staff national operations and to staff and develop its National Business Planning Team in New York City. EDA has provided BEU with two technical assistance grants, totaling about $500,000, to enable it to establish six local offices, including one in Los Angeles. This office has only one professional persons and one secretary. To render technical assistance, it relies on voluntary services of university and other professional personnel. Occasionally, BEU makes small loans to minority entre- preneurs. It has prepared loan applications for submission to banks and the SBA, with the assistance of feasibility studies performed principally by graduate students. How- ever, it has assisted only three clients in obtaining loans in a one-year period. The Los Angeles Association of General, Specialty, and Sub-Contractors, Inc. (LAAGSSC) is another organization that has received EDA assistance. This non-profit corpora- tion of minority contractors was started in mid-1968. A technical assistance grant for $154,000 was approved in June, 1968, to cover a period of 18 months. The Corporation, in its charter, states its primary goals as "to engage in programs which will raise the level of skills of general, sub, and specialty contractors and to promote the common interest of general, sub, and special- ty contractors in the Los Angeles area." EDA has summarized the Association's objectives more narrowly but probably more realistically, as seeking to gain more construction contracts from governmental and private sources and to provide professional and technical assistance for its members . 40 The membership of the Association includes 93 con- tractors of various types, including building suppliers, builders, and non-profit housing sponsors. Membership includes anyone who has ever paid dues, although only about one-quarter of the original members have maintained payment. Although precise information is not available, most of the members are black with only a few members from other ethnic groups. Most Mexican-Americans have joined the East Los Angeles Association which meets similar needs. LAAGSSC has engaged in several activities. With SBA and the City Board of Education, it has sponsored classes in business management. The Association has worked with members to improve their management practices. Particularly important is assistance to members in esti- mating and bidding, so that they may be awarded contracts and make a profit. Three additional services of interest to members are: bonding and financing, notification of possible contracts, and obtaining marketing assistance from the Association . The Association has been unable to find a source of funding to establish a revolving fund for the benefit of members. It hopes to gain such support from the National Urban Coalition. According to the Association, it has secured 15 bonds directly, and has positively influenced bonding decisions in 6 other cases, but all were bonds of fairly low amounts. Without sizeable net and secondary assets, neither the contractors nor the Association can successfully negotiate the large bonds necessary for major construction efforts. The Association says that it notifies listed members of all possible bidding opportunities. Those members who are not working on jobs are given the first opportunity to bid. In addition, a newsletter is mailed to members (and 400 others) which has listed 136 jobs that received 126 bids by members, although not necessarily as a result of the listings. 41 Although the Association views its activities as successful, some other reports and activities reflect otherwise. For example, at EDA's request, a study of the Association was performed by Professor Fred Schmidt in January, 1970.1 The study was requested because of the Association's problems, which has caused EDA to at least postpone renewed funding. One of the problems is inadequate record-keeping. The Association's final re- port to EDA was two and a half months late. The report, when submitted, was incomplete. Another problem that some persons feel has still not been solved is the con- flicts of interest by staff members, who also serve as board members and control policy and implementation, allowing potential favoritism to some members. EDA states that improvements have been made in the by-laws, but the Association did not take this action until funds were suspended. People in the community and in Government have alleged that some members have been assisted and informed of jobs to the neglect of others. It is further alleged by the same parties that the Association has provided little meaningful technical assistance to members and has done little to obtain contracts for them. 1 Fred H. Schmidt, Critique of the Technical Assistance of the EDA, U.S. Dept. of Commerce and the Los Angeles Sub, and Specialty Contractors, January 22, 1970. 42 NEW YORK (BROOKLYN NAVY YARD) SUMMARY The closing of the Brooklyn Navy Yard on July 1, 1966 caused a loss of almost 9,500 jobs, most of which were held by persons who did not live in the immediate vicinity, a decaying urban area. However, it was esti- mated that 4,000 to 8,000 jobs in local services, pro- fessional, and other industrial activities were adversely affected. In August, 1966, the Yard and 32 adjacent census tracts were designated a redevelopment area. To become directly involved, EDA provided financial support to the Commerce Labor Industry Corporation of Kings County (CLICK) , a representative board with members from business, labor, government, universities, and minority and civic groups. EDA has provided approximately $15 million in grants and loans for development of the Yard. Impacts of this effort are summarized below. CLICK has assumed responsibility for oper- ation and administration of the Yard. Fourteen firms employing almost 1,3 00 persons, a significant percentage of whom live in the immediate vicinity, have been attracted to the Yard. CLICK has become more aware of the need to involve and consider the community's ideas and plans in the redevelopment effort. Future progress, however, may depend on successful resolution of two issues. A viable training program to move the un- skilled residents into the available jobs must be established as soon as possible. CLICK must continue to assert its leader- ship in the program as the City of New York obtains legal possession of the Yard. 43 MAJOR IMPACTS The Agency The closing of the Brooklyn Navy Yard on July 1, 1966 caused a loss of almost 9,500 jobs. All employees holding these positions retired, resigned, were placed in other jobs, or were released with a firm job offer. However, it was estimated that 4,000 to 8,000 jobs in local services, professional, and other industrial ac- tivities were adversely affected. EDA supported indus- trial development, both to use the commercial value of the Navy pier and existing buildings, and to provide employment for local residents. On August 19, 1966, the Yard and 32 adjacent census tracts were designated a redevelopment area under Title IV of the Public Works and Economic Development Act of 1965, which qualifies areas where the unemployment rate is 5 percent or more above the national average because of the closing of a major source of employment. EDA became directly involved by funding a program administered by a board of repre- sentatives from business, labor, government, universities, and minority and civic groups, called the Commerce Labor Industry Corporation of Kings County (CLICK) . PROGRAM TOOLS Technical Assistance CLICK has used EDA technical assistance to: establish its responsibility as sole admin- istrator of Yard operations by assembling a staff, reopening the Yard, and operating a guard and maintenance force; conduct a survey of existing equipment and facilities; and complete a study of the best methods to recruit, train, and place workers. Public Works CLICK plans to use EDA public works assistance to convert and modify four buildings for industrial use. 44 Business Loans and Working Capital Loan Guarantees CLICK'S efforts to recruit firms have been assisted by EDA business loans and working capital loan guarantees made to : Seatrain Shipbuilding Corporation, which now employs 300 persons, and will eventually employ 3,000 people to build large ships, specialized container ships, and other highly modern vessels; and to Ecology, Inc., a company located just outside the Yard, which will employ unskilled labor in 90 percent of the jobs it creates to transform municipal garbage into organic fertilizer. Its facilities are nearly com- plete, and operations will begin in August or September of this year. As a result of these activities, almost 1,500 persons work for CLICK and 14 private firms located in the Yard. A significant number of these people live in the immediate area. The largest of these firms are Seatrain; Banner Manufacturing Company, presently employing 270 persons to manufacture auto interiors; Fancy Industries, Inc., employing 2 08 people to manufacture handbags and leather goods; and Rotodyne Manufacturing Corporation, employing 194 persons to manufacture metal works, heating equipment, and plastics. CONCLUSIONS AND RECOMMENDATIONS The analysis of EDA activity in the Yard leads to several conclusions and recommendations. Training opportunities for area residents must be made available without further delay. Otherwise, area residents are not likely to obtain skilled jobs at the Yard. CLICK has conducted training studies and made proposals for the training of thousands of employees. However, no skills-training programs are operational, and no facilities have been allocated for their implementation. 45 Without provision for training, EDA in- vestments will not generate significant new employment for the target groups. However, because the operations of the major employer, Seatrain, are still in early phases, it is possible to avoid such an outcome by starting a training program now. A viable follow-up program to maintain contact with employees should be consid- ered as a means of reducing labor turn- over . CLICK must be a full participant in the development of the Yard after the title transfer to the City. CLICK officials indicated in interviews that they were having problems with the City of New York. They feel that the City has been slow to act and that City policies and practices pose problems for CLICK. Some evidence indicates that the City wishes to give the development of the Yard a City-wide focus, thereby making it more difficult for CLICK to meet its commit- ment to provide jobs to the residents of the surrounding area. The City, on the other hand, is in the pro- cess of defining its role in the development of the Yard. It has increased its involve- ment and has assigned a liaison man to CLICK. While evidence is not complete at this time, it is reasonable to assume that the City intends to participate more fully in the development of the Yard after it has title to the land. Great care must be taken to see that the effort does not become in- volved in further controversy that can only further delay development. EDA should con- tinue to support CLICK so that it can fin- ish the task of developing the Yard. 46 The definition of the target area should be resolved to avoid community confusion. The Navy Yard and 32 surrounding census tracts, primarily in Williamsburg, con- stitute EDA's redevelopment area. How- ever, community groups in Fort Greene and Bedford-Stuyvesant became interested and sought participation. Consequently, CLICK expanded its Board of Directors. It no longer distinguishes carefully between residents of the redevelopment area and residents of the tri-community area. This obscuration of the EDA boundaries, though apparent, has not been legislated. To avoid community charges of insensitivity, it should be made very clear why the des- ignation exists as it is, or the designation should be changed to make the legal and target areas coincide. It is relatively easy to criticize CLICK for not having met all of its own, EDA's, or the community's expectations. But, it must be remembered that much has been accomplished by CLICK: a staff has been assembled, the Yard has reopened, a guard force and a maintenance force are operational, businesses have moved into the Yard, more than 1,300 jobs exist and the economic devel- opment process has been stimulated. These accomplishments take on added significance because they were obtained dur- ing a period when there was a substantial distrust of government and general confusion over how the Yard should be developed. More importantly, the accomplishments came about in a community atmosphere beset by strife. To state the proposition differently, CLICK and the community have been undergoing, and are continuing to undergo, a process of maturation. In addition, CLICK'S staff, like the City of New York, EDA's staff and the com- munity, have learned a great deal as a result of this experience. This body of experience, properly used, should further the development of the Yard. Accordingly, great emphasis should be placed upon further development and exploitation of this experience. This can best be done by allowing CLICK to play the principal role in the development of the Yard. 47 SCOPE OF NAVY YARD ACTIVITIES On November 20, 1964, the Navy declared the Brooklyn Navy Yard excess property. No qualified user could be found. Therefore, on July 1, 1966, it became surplus property. A profile of the Yard and its environment establishes a rationale for the ensuing redevelopment effort. The Yard contains 265.7 acres, about 160 of which is usable land,, across the East River from Manhattan. There are approximately 300 buildings, ranging from equipment sheds to huge structures with hundred-foot ceilings. Many are old, loft-style buildings, with poor elevators, and high heating costs. Because they were constructed as Federal buildings, exempt from City regulations, many do not meet the local building codes. Services like fire insurance are difficult to obtain. The Yard has advantages, however. It is a safe location, surrounded by brick walls and iron gates, and patrolled by security guards. There is a nearby surplus labor supply, potentially valuable, though com- posed largely of unskilled workers. A relatively good transportation network serves the Yard. Williamsburg, Bedford-Stuyvesant , and Fort Greene, the communities surrounding the Yard, exemplify the urban ghetto. The area is characterized by decay and dilapida- tion in physical facilities, inadequate city services, severe social problems, numerical decline of small serv- ice businesses and industrial firms, high unemployment, and low income. A Fordham University study, financed by EDA, of the effects of closing the Yard, revealed an unemployment rate of 13 percent, compared to 4 percent for the New York area as a whole. Most of the area's families had incomes under the poverty level. The com- position of the population compounded these two con- ditions; more than 72 percent are Puerto Ricans and blacks. In 1966, the Yard became available for some kind of development. Various options were open: the land could serve as a site for housing, recreation, a down- town comparable to a mini-Manhattan, or industry. EDA supported industrial development, motivated by the com- mercial value of the Navy pier and existing buildings, and the desire to provide employment for local residents. 48 Several feasibility studies preceded this decision. Initial aid from EDA was given to the Public Development Corporation. This agency was established by the Mayor to stimulate industrial development in the City. From the first, its presence was only to give the City token involvement. It immediately passed the funds to CLICK. Later, funds went directly to CLICK, and through that agency, EDA has committed itself to a substantial invest- ment in the development of the Yard. To date, approved EDA projects amount to approximately $15 million and include public works grants ($948,000), business loans ($7, 280, 000) , working capital loan guarantees ($5,850,000), and technical assistance grants ($924,000). EDA initially provided assistance to develop the organizational infra- structure at the Yard. Insight into EDA's direction of impact in the area may be gained by considering the Agency's projects shown in Exhibit 1 on the following page. 49 EXHIBIT 1. EDA PROJECTS EVALUATED PART A - PUBLIC WORKS GRANTS EVALUATED Project Month Approved Amount ($000) CLICK: Conversion of four June, 1969 949 buildings for industrial use PART B - BUSINESS LOANS EVALUATED Project Month Approved Amount ($000) Ecology, Inc. (formerly National Waste Conversion Corp.): Manufacture of May, 1968 1,430 organic fertilizer Seatrain Shipbuilding Corp: January, 1969 5,850 Build/Convert tankers PART C - WORKING CAPITAL LOAN GUARANTEES EVALUATED Project Month Approved Amount ($000) Manufacturers Hanover Trust Co. /Ecology, Inc. December, 1968 450 Chase Manhattan Bank/Seatrain Shipbuilding Corp. January, 1969 5,400 PART D ■ TECHNICAL ASSISTANCE PROJECTS EVALUATED Project Month Approved Amount ($000) Fordham University: Effect January, 1966 2 of yard closing (con't next page) 50 PART D - TECHNICAL ASSISTANCE PROJECTS EVALUATED (Con't) Project Month Approved Amount ($000) Richardson Wood: Develop- ment Potential Study NYC Public Development Corp Navy Yard Industry Study NYC Public Development Corp Brooklyn Navy Yard Plan CLICK: Navy Yard develop- ment *Pueblo Co-op: Retail Grocer Co-op Program *United Contractors: Minority Contractor Bond Program *Brooklyn Local Development Corporation: Business Development Program CLICK: Job Training/ Educational Program CLICK: Navy Yard develop- ment CLICK: Navy Yard survey Cutter Marine: Boat Build- ing Feasibility Study April, 1966 August, 1966 October, 1966 December, 1967 September, 1968 December, 1968 November, 1968 December, 1968 January, 1969 January, 196 9 June, 1969 59 142 165 137 129 73 25 184 2 3 These are oitywide projects, but with impact on the communities surrounding the Yard. 51 PROJECT ACTIVITIES AND IMPACTS Background Information on CLICK Because EDA impact in the Yard is heavily dependent on the effectiveness of the Commerce Labor Industry Cor- poration of Kings County (CLICK), a discussion of CLICK'S structure and operation is relevant. CLICK was incorporated in February, 1966. It is responsible for the planning and administration of the redevelopment program at the Yard. Its Board originally consisted of persons who represented government, business, labor, universities, and other elements of the community concerned with economic development. CLICK had a staff of 154 persons on January 3, 1970. Almost 65 of these people were community residents. Most of the staff consists of security guards, maintenance staff, and power plant employees. Only 17 people have management responsibility for planning, development and supervising the administration of the Yard. CLICK'S impact can be presented by examining six aspects of its operation. Community Relations - There was considerable discontent in the three communities of Bedford-Stuyvesant , Williams- burg, and Fort Greene because of insufficient repre- sentation. On CLICK'S Board in July, 1967, there were two representatives each from Bedford-Stuyvesant and Williamsburg, but none from Fort Greene. Accordingly, representation has now been increased so that there are five members of each community, selected by that community, on the 3 9-member Board. In addition to these 15 individ- uals, other members of the Board live in the communities. Some hostility from the encounters necessary to effect this change remains, and CLICK is suspected of being another program to maintain order. CLICK also has some difficulty keeping residents and agencies aware of all its activities. In fact, the vast majority of the residents are unaware of the existence of CLICK. However, CLICK does recognize the nature of its community relations problems. It is seeking greater community involvement and its community relations position has improved recently. 52 Unclear Ownership Status - In 1966, the General Services Administration (GSA) assumed responsibility for disposing of the surplus property. However, GSA has not accepted any purchase agreement proposed by the City to enable it to acquire that land which it does not yet own. As of June 10, 1970, the City still did not have full legal title. CLICK did receive Right of Possession in early 1969, but is prevented from negotiating meaningful long- term leases. It is anticipated, however, that the City's final effort to purchase the Yard for $22,482,965 will be successful in June, 1970. Yard Administration - CLICK maintains an armed guard force of 50 men. It also assumes responsibilities for most other aspects of the development and operation of the Yard, such as operation of the power plant. Tenant Recruitment - CLICK is responsible for attracting, screening, and selecting tenants for the Yard. This is a difficult problem for several reasons. Because of the need to generate initial cash flows to meet operational expenses, initial leases could not be limited to companies that had plans for long-term occupancy of the Yard, that were labor intensive, or that offered upwardly mobile job opportunities. Moreover, although CLICK wishes to estab- lish jobs for people now resident in the area, the majority of those people are not qualified for skilled and managerial positions . Employee Recruitment - CLICK has set itself up as an appeal board, and most leases between firms and CLICK have pro- visions for recruiting, compensation and upgrading employ- ees. A key provision gives CLICK the right to recommend job applicants to employers in the Yard. Through this device, CLICK hopes to channel significant numbers of local people to jobs in the Yard. Manpower Program Coordination - To initiate the manpower program, CLICK received technical assistance funding from EDA for $24,500. These funds were for a three-month study by a task force which was to submit its report by April 15, 1969. The report, which dealt with sources of funds for skill training in the area; the development of pro- grams for recruitment, selection, testing; and other re- lated matters, was submitted by the task force to CLICK on June 16, 1969. The report stated that CLICK should serve as coordinator of training and also that it should not have all direct 53 responsibility for training which is to take place in the Yard. The report recommended that in the coordination of activities, CLICK should avoid duplication of services now provided in the community. The training programs have run into two kinds of problems. The task of physically building a training center with EDA funds has been delayed because of administrative problems. The City bureaucracy and the structure of Department of Labor legislation, which requires requests for funds to come from employers and not from CLICK, has delayed fund- ing of training programs. Development of the Yard Fourteen firms with almost 1,300 employees were operating in the Yard by early 1970. These firms are listed below. Firms American Book Center, Inc. Banner Manufacturing Co. Fancy Industries, Inc. Pel-Rex Plastics Rotodyne Manufacturing Corp. S and F Warehouse Corp. Seatrain Shipbuilding Corp. Sona Labs Technautics Corp. Walman-Berman Container Warehouse and Trucking Corp. Marlyn Warehouse Corp. Active Fire Sprinkler Corp. Entel Manufacturing Number of Employe es 64 270 208 24 194 67 271 12 5 33 87 16 20 9 TOTAL 1,280 Adequate records of the places of residence of current Yard employees do not exist. Interviews with major firms in the Yard established that these firms generally brought many of their employees with them from their prior locations Recently, however, more employees are being hired from the tri-community area. Available data identifies communities of residence for the 121 persons employed through CLICK in January, 1970. Seventy-seven of these persons are resi- dents of Bedford-Stuyvesant , Fort Greene, and Williamsburg. 54 Although data on employment by race at the Yard are not available, data for several major firms indicate that minority persons are being hired for many sub- professional jobs. Background on some of these firms adds perspective to the statistics, and support to previous assertions. Seatrain Shipbuilding Corporation - The largest of the firms is the Seatrain Shipbuilding Corporation, which has leased almost half (45 percent) of the Yard. Seatrain received an EDA business loan of almost $6 million to finance the construction and equipment of a shipbuilding facility in the Yard. In addition, EDA has guaranteed 90 percent of Seatrain' s working capital loan of $6 million from the Chase Manhattan Bank. Seatrain will build large ships, specialized container ships, and other highly modern vessels. Notifying- its shareholders that it expects to build two giant tankers each year beginning in 1972, Seatrain stated its intentions of participating in a Federal job training program which will benefit thousands of workers who live in the area. "Our shipyard program represents, therefore, a combination of social benefits and potential profit- ability from which we expect significant future benefits." Seatrain 's work force, which increased from 126 to 227 persons in the last quarter of 1969 and rose to 271 em- ployees by the end of February, 1970, contained a number of individuals, particularly in management, who were brought in from outside the community. The majority of Seatrain 's non-professional workers are from the local community. Minority group members figure prominently in Seatrain ! s work force below the professional level. More than 87 percent of such employees are blacks and Puerto Ricans. Banner Manufacturing Company - Banner, which manufactures auto interiors, has created approximately 200 jobs in its present location. Almost one-half of these employees are from the tri-community area. The major problems which Banner's management sees at the Yard are CLICK'S employ- ment service referral of the unskilled for skilled jobs and the high cost of maintaining facilities at the Yard. Banner holds a five-year lease, contingent on the City obtaining title to the land. 55 Rotodyne Manufacturing Corporation - A manufacturer of metal works, heating equipment and plastics, Rotodyne hires many lower paid employees from the community. Rotodyne believes CLICK'S efforts have slowed training and hiring and resulted in Rotodyne having fewer persons to interview for jobs. Rotodyne suggests that CLICK must have steered many potential applicants to Seatrain. American Book Center, Incorporated - This firm has been in business for 25 years providing book distribution, warehousing, and computer center facilities. It located in the Yard in September, 1968, after Consolidated Edison occupied its former building. The current staffing level is 64 persons, including more that 30 employees from the firm's former location. The new staff is recruited through CLICK. There has been a 5 percent turnover within four months. The firm has applied through CLICK for a grant to train key punch operators. If skilled key punch operators, or a training grant to provide them, cannot be obtained through CLICK, the firm will advertise for this skill on a city-wide basis. Although major development emphasis has been placed on the Yard itself, several related activities are being conducted outside the Yard. For example, Ecology, Inc., located within one mile of the Yard, received, with CLICK endorsement, an EDA business loan of $1,430,000 and an EDA-guaranteed working capital loan of $450,000 from the Manufacturers Hanover Trust Company. Ecology will trans- form municipal garbage into organic fertilizer. This will help solve the garbage disposal problem in New York City, and provide employment and income benefits for Brooklyn residents. Ecology expects that 90 percent of its jobs will employ unskilled labor with an average salary of about $8,000. Three other EDA projects in New York City have impact partially on the area surrounding the Yard. The Association of United Contractors of America administers one program, jointly funded by EDA ($129,000) and the Ford Foundation ($100,000). This non-profit association of minority contractors, with about 30 firms in the tri- community target area, provides technical and financial assistance to its members and other contractors. Another program enables the Pueblo Co-op, Inc., to provide technical assistance and other services to minority group grocers, mostly Puerto Ricans. Assistance is offered 56 in merchandising, marketing, promotion, legal problems, purchasing, and advertising. To date, 68 grocers have been helped by the program. In addition to improving and expanding the businesses of minority grocers, Pueblo has influenced suppliers to hire more Spanish-surnamed persons . Finally, the Brooklyn Local Development Corporation, a board composed of local politicians, gives assistance to new firms. Sona Labs and Technautics Corporation were helped in this way. CLICK Employee Recruitment Efforts In developing the Yard, CLICK, according to its report of January, 1970, has interviewed 524 applicants, 309 of whom were from the tri-community area. Of the applicants interviewed, 226 applications were filed for future refer- ence. The following tables shows an analysis of the appli- cations submitted for employment. ] 7 Number Number Number Number Name of Company Referred Hired Rejected Pending American Book Center, Inc. 11 2 3 6 Banner Manufacturing Co. 33 26 1 6 CLICK 17 11 3 3 Fancy Industries, Inc. 12 10 2 Pel-Rex Plastics 11 9 2 Rotodyne Manufacturing Co. 32 11 5 16 S and F Warehouse Corp. 7 3 4 Seatrain Shipbuilding Corp. 96 46 18 32 Walman-Berman 2 10 1 Container Warehouse and Trucking Corp. 3 2 1 Sona Labs 2 2 TOTAL 226 121 32 73 "Number Rejected" includes unqualified applicants, applicants applying for filled positions, and applicants refusing positions 2 "Number Pending" includes applicants who failed to return referral slips, applicants who will be tested at a later date, and applicants in the process of a reference check. 57 CLICK recognizes some major hurdles to the accomplish- ment of its employee recruitment goals. The public, uninformed about CLICK, believed that the government had reopened the Yard and that the available jobs were with the Navy in shipbuilding. A large number of applicants were the un- skilled blacks and Puerto Ricans from the tri-community area. In an attempt to improve its performance, CLICK took several steps. It enrolled its Employment Inter- viewers in a four-week course at the New York Community College to enable them to better understand and meet the psychological problems which often interfere with inter- viewers and to help them make applicants more at ease during interviews. Another problem that CLICK has encountered regarding job placement has been the high number of terminations and resignations by employees of Yard firms. The reasons for termination include poor attendance, excessive tardi- ness, lack of interest in working, inability to handle the job, and disciplinary problems. Resignations were based on low salaries, non-learning job situations, working conditions, family problems, lack of funds to purchase work tools, and opportunities to gain better employment. Of the nine employers who hired persons between May and July of 1969, five either discharged or received resigna- tions from some of those employees. Of the 86 persons hired, 38 either resigned or were discharged. Foremost among the obstacles to CLICK'S effectiveness in job placement is the refusal of employers to deal with it in good faith. Noncompliance with the Firm Employment Profile is a factor that requires urgent attention. In some cases, it has been proven that the job breakdown analysis and schedule, submitted at the signing of the lease, does not in any way coincide or approximate the actual hiring or job descriptions used after occupancy. The conditions described below were found. Hiring was done at lower salaries than was originally agreed. 58 Exaggerated employment figures are often quoted as a guarantee to secure lease approval . Workers perform at a higher skill level that that at which they are hired without the deserved salary increase. 59 OAKLAND SUMMARY In the aftermath of the 1965 Watts disturbances and in response to a Federal Task Force's conclusion that Oakland was one of the nation's most explosive cities, EDA gave special focus to this major neighbor of San Francisco, which was eligible on the basis of high unem- ployment. During April, 1966, more than $23 million in public works grants and loans, business loans, and technical assistance funds were approved for EDA use in Oakland. Since that time, an additional $9 million has been desig- nated for Oakland projects. However, only $10 million of the $32 million approved has been disbursed, because the Agency has moved cautiously to ensure that objectives are fulfilled. In summary, the results of EDA projects in Oakland include : . creation of a unique health center, constructed, owned and operated by the minority community, which serves people who were formerly without medical care; initial and continued support to groups which have been active in training residents for employment opportunities; a non-profit minority contractors association, with 6 members, which has had impressive results in increasing the business volumes, bonding capacities and bidding capabilities of its members; and completion of several port facilities, which have increased port revenues, but have not provided additional employment opportunities for the target group. Some major projects that have been initiated recently hold distinct promise of direct impact on the target pop- ulation. It is expected that a major hotel-motel chain 60 will provide many jobs to minority residents when its new Oakland facility is completed with the aid of a business loan. Also, completion of the construction of a large hanger at the port, with EDA public works funds, is ex- pected to provide about 1,275 jobs. MAJOR IMPACTS The Agency In 1966, shortly after the passage of the Public Works and Economic Development Act, EDA focused on unem- ployment problems in Oakland. The city's relatively small size (population of about 400,000), high rate of unemployment (8.6 percent in 1965), and unsettled racial conditions made it an appropriate setting in which to test EDA's ability to help solve urban problems. A staff of persons from the various divisions of EDA was established It was responsible directly to the Assistant Secretary for Economic Development. EDA funds have been channeled through a variety of projects which have produced mixed results in the develop- ment of the area. PROGRAM TOOLS Technical Assistance The major impacts of technical assistance projects are summarized below. A non-profit minority contractors association, with 60 members, has had impressive results in increasing the business volumes, bonding capacities and bidding capabilities of its members. An affiliate of this firm performed most of the work on the West Oakland Health Center, which was funded by EDA. Initial and continued support to the Oakland Opportunities and Industrialization Center (OIC) has enabled that group to focus on man- power training needs of the target population. This group, and others funded by EDA, have been active in training residents for employment opportunities . 61 Plans for the development of a unique shopping center to be owned and operated by members of the Spanish-speaking community are being made. This project is expected to create job oppor- tunities, develop entrepreneurial skills and improve community morale. Young assistants, engaged with EDA funds, were successful in helping to double the size of the summer youth placement program. Public Works Some of the major impacts of the public works grants and loans in Oakland are summarized below. A unique health center has been constructed, owned and operated principally by members of minority groups. It provides out-patient medical services to many people who previously lacked such care. This project is regarded as a model of success in the community. Increases in container cargo handled princi- pally at a marine terminal constructed with EDA assistance have resulted in greater port revenues for the city. Business Loans The impact of the Business Loan Program is summarized below. Five of the six loans made in 1966 have not produced the results anticipated. It appears that pre-loan feasibility studies were inade- quate and that the firms suffered from lack of technical and management assistance after loan disbursal. One of the firms which received a loan in 1966 has received subsequent EDA support in the form of an additional loan and a working capital guarantee. This firm holds some promise for the future, but is having diffi- culties with cash flow. 62 The largest and the most recent loan was made to the Hyatt Corporation for a new facility in Oakland. Although building plans have been delayed, favorable impacts on the target groups are anticipated in the future . CONCLUSIONS AND RECOMMENDATIONS The reputation of EDA in Oakland has improved con- siderably during the past few years. The initial hap- hazard approach toward "saving Oakland from burning" led to great expectations which, because of the size and haste of the undertaking and the complexity of the urban problems, could not be met. The result was that EDA acquired an image of being unable to successfully launch development efforts and for funding projects that do not directly benefit minority groups or unemployed persons. However, visible results with the health center and contractors association and the recognition that other minority projects are now being funded directly, have improved EDA's image as a contributing factor to the development of the city. Recommendations for further EDA efforts in Oakland are given below. Support of local institutions should be continued, not only because EDA has proven to be an effective catalyst in development efforts, but also because further strenthen- ing of the infrastructure is required. Business loans to high risk enterprises should be abandoned in favor of loans to more established firms. EDA should attempt to ensure that employment plans which aid the target population are developed and enforced. Perhaps EDA should hire additional equal opportunity officers for closer surveillance of projects. SCOPE OF OAKLAND ACTIVITIES Oakland, California, mirrors the characteristics of many older urban areas. Situated on the east side of 63 San Francisco Bay, the city has usually taken second place to its more glamorous neighbor. Historically, Oakland has been a port of entry for low income house- holds, which in recent years have been predominantly Negro. Whereas the city's total population has decreased by about 20,000 people since 1950, its non-white popu- lation has increased by more than 60,000 persons. The city's population in 1968 was slightly more than one- third Negro. This proportion is approximately 70 percent in areas such as West Oakland, which is one of the target areas for poverty programs. High rates of unemployment prevail in Oakland, and are particularly acute among minority workers. Poverty is also prevalent. In 1960, almost one-fourth of all families in the city had incomes of less than $4,000. Two of every five non-white families were in this low income category. Particularly in the target areas, problems of ill-health, delinquency, poor schools, and inadequate housing are widespread. The city, plagued by a shrinking tax base and an aging capital plant, is unable to keep pace with its problems. Revenues are inadequate and needs compete for the scarce resources. In spite of extensive Federal aid, Oakland is in need of more funds. It has been designated as an EDA economic redevelopment area. It is one of the few cities in the country which meets the eligibility requirements . The objective of EDA's activity in Oakland was to initiate and coordinate large-scale projects aimed at creating training and job opportunities for chronically unemployed people. EDA was at a disadvantage in Oakland because of its inexperience with city-community-industry relations, and because the city had shown no interest in planning a program of redevelopment. The only group ready to proceed in early 1966 was the Port of Oakland, a major employer. With the influx of EDA funds, it was projected that the Port would develop and expand facilities, and in the process, hire and train members of the target population To insure this direction, the Employment Review Board was created by EDA to approve employment plans. It consisted of four target area representatives and one representative 64 each from business, labor, and EDA. The Board reviewed employment plans prior to approval, but there were no provisions for reviewing on-going projects. Projects funded by EDA in Oakland are listed in Exhibit 1 on the following page. 65 EXHIBIT 1, EDA PROJECTS EVALUATED PART A TECHNICAL ASSISTANCE PROJECT EVALUATED Project Month Approved Amount ($000) Oakland Educational Council: Attack unemployment EDA Oakland: Small job development City of Oakland: Hard core unemployment City of Oakland: Industrialization center Oakland Plastic Industry Commission: Plastic industry center Port of Oakland: Marine terminal Social Science Research and Development Corp: Development in Oakland City of Oakland: East Bay Job Fair City of Oakland: Community Employment Program City of Oakland: Analysis of Job Fair November, 196 5 March, 1966 March, 1966 April, 1966 April, 1966 April, 1966 June, 1966 September, 1966 December, 1966 January, 1968 February, 1967 72 10 15 40 400 28 31 (con't next page) 66 PART A - TECHNICAL ASSISTANCE PROJECTS EVALUATED (Con't) Project Month Approved Amount ($000) Opportunities Indus- trialization Center, Inc . : Train and retrain unemployed EDA Oakland Task Force April, 1967 April, 1968 June, 196 9 October, 1969 April, 1967 June, 1968 55 147 17 17 48 25 General and Special Contractors Assoc: Employ minority con- struction workers January, 1968 January, 197 75 75 City of Oakland: Youth Opportunity Program Bennies Candy Manufacturing Company: Marketing assistance February, 1968 April, 1969 June, 196 9 20 20 Trans-Trucking: Mange- ment assistance East Bay Spanish Speaking Citizens Foundation: Mexican- American economic development United Minority Economic Council: Technical assistance June, 1969 June, 196 9 October, 1969 February, 1970 1 1 91 67 PART B - PUBLIC WORKS PROJECTS EVALUATED Project Month Approved Amount ($000) Board of Port Commissioners: Seventh Street Marine Terminal Board of Port Commissioners: Block B Industrial Park Board of Port Commissioners: Airport facilities Board of Port Commissioners: Aircraft hangars Board of Port Commissioners: Air cargo terminal City of Oakland: Four-lane roadway Port of Oakland: Auxiliary airport tower West Oakland Health Council: Health center April, 1966 April, 1966 April, 1966 April, 1966 April, 1966 April, 1966 June, 196 6 February, 1967 June, 1966 February, 1967 April, 1966 February, 1967 February, 1967 June, 1968 June, 1968 September, 1968 September, 1968 September, 1969 September, 1969 6,075 4,050 1,260 840 6,390 4,260 76 76 244 184 414 134 89 650 650 100 100 15 15 grant) grant) grant) loan) grant) loan) grant) grant) grant) loan) grant) grant) loan) grant) loan) grant) grant) grant) loan) PART C - BUSINESS LOANS EVALUATED Project Month Approved Amount ($000) Berkeley Instruments : Electronic telemeters January, 1966 78 (con't next page) 68 PART C - BUSINESS LOANS EVALUATED (Con't) Project Columbo Baking Company: Bakery Rainbow Car Wash, Inc.: Car wash systems equipment Bennies Candy Manu- facturing Company: Candy making Sierra Cotton Mills, Inc.: Yarn for mops Value Engineering Company: Reclaim copper and tin cans Hyatt Corporation of Oakland: Hyatt House Hotel Month Approved April, 1966 September, 1966 October, 1966 May, 1968 November, 1966 July, 1967 Amount ($000) 42 3 135 55 9 241 280 June, 196 8 4,000 PART D - WORKING CAPITAL GUARANTEES EVALUATED Project Month Approved Bank of America: March, 1967 Sierra Cotton Mills, Inc. Wells Fargo Bank: Bennies Candy Manu- facturing Company December, 1968 Amount ($000) 135 69 PROJECT ACTIVITIES AND IMPACTS Technical Assistance Nearly all of the technical assistance applicants have been minority groups or groups concerned with programs for the unemployed. The most successful efforts concentrated on assisting community organizations. In 1966, technical assistance funds were principally allocated for feasibility studies, temporary services, and evaluations, including a Federal Executive Board Task Force study to develop a unified approach to unemployment and other minority group problems. Also during this year, the City of Oakland received funds to develop jobs, hold a job fair, and hire a small manpower staff. With EDA technical assistance money in the following two years, the city hired a Special Assistant to the Mayor, for Manpower, and a secretary for him. The Special Assis- tant's job involved the coordination of manpower programs and the organization and management of Summer Youth Oppor- tunity Programs, funded by technical assistance grants in 1968 and 1969. In 1968, with help from EDA, six "Youth Assistants" were hired. These needy high school graduates served in Youth Opportunity Centers. They helped the pro- gram to more than double in size, as 10,999 youths were placed in jobs in the summer of 1968. Only about 5,000 youths had been placed in 1967. The Mayor's Assistant led job development efforts, engaging the business and labor sectors heavily in planning and in carrying out the program. While studies and city manpower programs received re- newed funding, EDA initiated the institution building approach in 1967. One example of this approach is the EDA support of job training activities conducted by the Oppor- tunities Industrialization Center (OIC) . An EDA technical assistance grant of $15,200 helped to establish the OIC, which has subsequently received grants amounting to more than $200,000. The OIC focuses on a particular target population and area, and pays its local trainees small stipends. The Concentrated Employment Program refers individuals to OIC, a practice which the Mayor, who is interested in centralizing manpower programs, has opposed. The OIC has a reputation of successfully performing its training, counseling, and placement functions. 70 Another EDA-funded group which is directly involved with manpower training for the formerly unemployed is the East Bay Skills Center, which was formed to train the mechanics working at World Airways' new hangar. Presently, the Center gives pre-vocational , basic educational, and vocational training to unemployed persons referred by the State Employment Services. Training is approved by an advisory council, composed of industry, labor, and general representatives. The Center serves a larger geographic target group than does the OIC. It claims to have trained 375 persons in 1969, although plans to relate training to projects at the Port were not realized. Probably the most successful technical assistance project in Oakland has been the General and Specialty Contractors Association, Inc. (GSCA) . This group, a non- profit corporation, is composed of about 60 contractors and subcontractors from the six San Francisco East Bay counties. The majority of them are black, but there are also white, Japanese, Chinese, and Mexican-American members of the Association. Started in 1967 because of the small share of construction work performed by minority contractors and subcontractors, Association members look forward to more than doubling the $4.5 million in contracts performed in 1969. Some members have developed the capability to handle a job of $500,000, as opposed to $80,000 two years ago . EDA has approved two grants of $75,000 for the Asso- ciation. The Ford Foundation provided substantial addi- tional funding. The members are often without expertise in certain phases of the business, for which they call on the Association. An outgrowth of this project was the formation of Trans-Bay, a joint venture company formed by several members of the GSCA. Trans-Bay helps smaller companies with bonding, financing, and other problems. It did most of the work on the West Oakland Health Center, but it still must depend on money from major construction companies for large jobs. In both the minority community and throughout Oakland, Trans-Bay is regarded as a success- ful minority group experience. In the minority community, it is considered a model worthy of emulation. Project Upgrade, a non-profit corporation, is a joint project of the GSCA and the Labor Council designed to train youths in the construction trades. EDA has provided Project Upgrade with $31,000 to enable it to pay the salary of a supervisor and to pay some administrative costs of Project 71 Prep. This project is designed to allow youths who are training in various construction trades to renovate properties for families of low or moderate incomes. Youths can choose the trade they like best, depending on the job market. The OIC provides the classroom in- struction. Project Prep has placed seven of the first 25 trainees. Three or four additional placements are pending. Wages are generally in the range of $3.50 to $4.50 an hour. The Department of Labor has contributed $101,000 and the Department of Housing and Urban Develop- ment has contributed $360,000 for Project Prep. Project Upgrade's share of Project Prep is for materials. The East Bay Spanish Speaking Citizens Foundation, Inc. is the largest community group which has received technical assistance. With $91,000 from EDA, this organ- ization will pay for a market feasibility and location study for the proposed Miguel Hidalgo Plaza. The Plaza will be a shopping center with a "mercado" flavor, and will include specialty shops dealing in Spanish and Mexican items. The EDA funds will also provide for preliminary design of the Plaza, business development plans, and admin- istrative costs of the East Bay Spanish Speaking Citizens Foundation, Inc. This project is expected to create job opportunities, develop entrepreneurial skills and boost community morale. Public Works - West Oakland Health Center The West Oakland Health Center is one of the most unique and successful EDA public works project in the nation Built with EDA grants and loans totaling approximately $1,500,000, the Center was constructed by, is owned by, and serves the minority communities of Oakland, It primarily hires minority residents. Its staff consists of many former- ly "hard-core unemployed" individuals. The impact of the Center has been great. Construction provided a substantial amount of employment for minority contractors and subcontractors. Approximately 50 formerly unemployed residents have been trained and placed in jobs at the Center. The Center's staff of 140 persons consists of approximately 90 percent minority group members. It offers high quality comprehensive out-patient health care to a clientele that includes many persons who previously had no health care. Chiefly dependent on a U.S. Public 72 health Service (PHS) grant, it serves indigent patients, with many types of health services. The Center wishes to improve the quality of its services and thus attract more patients so that it can become self-sustaining when its PHS grant expires in 1973. It seeks to serve many patients with pre-paid medical insurance, similar to the Kaiser Plan. In summary, the Center stands as a model of success in the community, both in terms of being built by minority contractors and being operated successfully by a primarily minority staff. Center officials commend EDA for acting to ensure construction of the facility and to ensure the involvement of minority contractors in its construction. Additional Public Works Projects In 1966, approximately $23,500,000 was committed to public works projects located in the City of Oakland. This funding supported six projects: the Port of Oakland Com- missioners managed five projects, three of which were situated at the airport. The sixth was a city-operated activity. In the following year, another airport project, necessitated by an earlier action, was approved. (The eighth public works project in Oakland, the Health Center, was discussed in the preceding section.) One of the original port projects provided for the construction of the Seventh Street Marine Terminal . There are three sections to this container cargo terminal. Matson Lines completed its area in July, 1968. The port management sold revenue bonds and completed the second section in October of 1968. The EDA-assisted sector, after a few months work, is 3 percent completed. Thus far, approx- imately $803,000 of the $6,000,000 in EDA grants and $2,835,000 of the $4,050,000 in loans has been disbursed, the latter through bonds which EDA purchased. The container cargo handled by the port, principally at the new facility, has increased to 3 million tons in 1969, a figure three times the amount predicted for 1980, according to an estimate made in 1965. The benefits to unemployed and minority group residents are theoretically to be assured by the union which handles the cargo, the International Longshoremen and Warehousemen's Union. However, the union hiring hall is in San Francisco, and the port management has made no attempt to exercise author- ity over the union in fair hiring or in the hiring of 73 Oaklanders at the port's facilities. Under pressure by the black community, the port recently hired an equal employment officer. Furthermore, construction work on the marine terminal did provide jobs for minority resi- dents. As a result of EDA's supervision of the affirmative action plans of the contractors and subcontractors, several minority operating engineers and other skilled as well as unskilled workers were employed. EDA funds were also granted to the Port Commissioners to improve 30 acres of an industrial park which occupied a total of 300 acres. The port has sold 12 of the 30 acres and has purchasing agreements for almost six additional acres with the American Toy Company, a wholesale distributor with a 300,000 square foot warehouse facility. American Toy Company employs 30 persons year-round, plus five for seasonal business. Builder's Cabinet Company has purchased more than two additional acres of land and will soon begin building . The Oakland airport was the site of several EDA-funded projects directed by the port. One EDA grant and loan package paid for the construction of 2 T-hangars for small private aircraft. The intended impact of this project was the creation of approximately 20 jobs in the small businesses which service the planes. A second airport project is a 14,000 square foot air cargo terminal, which has just been completed. Universal Air Lines, a supplemental and contract air carrier, occupied the facility in April, 1970. A third project will enable the construction of a large aircraft hangar. For this prupose, EDA made a grant of $6,390,000 and a loan of $4,260,000 to the Port of Oak- land. The hangar is to be leased to World Airways, Inc., for maintaining and servicing large aircraft. Construction of the hangar necessitates another project, construction of an auxiliary tower, which is required because the new hangar will block the view from the main tower. Construction of the hangar and the auxiliary tower has been delayed as a result of redesign difficulties and World Airways' failure to present an employment plan acceptable to EDA. The large hangar is expected to provide 1,276 new jobs, but the auxiliary tower will be manned by Federal Aviation Admin- istration personnel . 74 An additional public works project is the construction of an access road to the new coliseum. This project was approved in 1966. EDA's funding of $414,000 represented 60 percent of the cost of the road. Although it provides easy access to the busy coliseum, it is doubtful whether businesses providing anticipated employment opportunities will locate along the road. Of the $24 million set aside by EDA in 1966 and 1967 for public works projects, $16.7 million has not been dis- bursed. Reasons for this difference include: designs have not been approved by EDA; projects were approved before designs and plans were firm; delay on the part of direct and indirect beneficiaries such as the Port and World Airways; and delay caused by third parties, e.g., the Alameda Naval Station's complaints that the Marine Terminal would interfere with the flight path of its airplanes. Business Loans EDA business loans in Oakland have met with a variety of unfortunate circumstances. Loans were made to seven firms, two of which also received working capital guarantees Of these seven, only two now seem at all likely to expand or create significant impacts on the economy. One of the two businesses which holds some promise is Bennies Candy Manufacturing Company. It is owned by a minority entrepreneur. He has been having difficulties with cash flow and complains that EDA has not forced the disburser of the funds, the SBA, to provide capital for use until after he has received bills, which forces him into unfavorable terms. Also, SBA did not wait for testing of equipment purchased by Bennies before paying the seller, leaving the company with faulty equipment to put in working order and no way of forcing the supplier to make good his commitment, except by suit. Without changes, this business will certainly not expand beyond its present six employees, including three family members. 75 A loan was recently approved for the Hyatt Corpo- ration to build a new motel in Oakland. The site location and development plans have shifted in the 21 months since the loan was approved. As a result, no work has begun, although construction plans have been completed again. Both EDA and the city administration look forward to Hyatt Corporation carrying through successfully with its build- ing plans and living up to its reputation of having an excellent fair hiring policy. The five additional business loans have not produced the desired results. Columbo Baking Company was able to increase its productivity, but additional jobs were not created. Eainbow Car Wash, Inc. operates the branch aided by EDA, which is in a minority group area of the city, only on weekends. Berkeley Instruments and Sierra Cotton Mills, Inc. are bankrupt. Value Engineering Company cancelled its loan request. 76 PITTSBURGH SUMMARY Pittsburgh ranked lowest among the 12 largest metro- politan areas in growth of personal income in the period of 1959-1967. Additional conditions included the fact that business was tightly controlled by a few interests, and the topography of the area, which makes efficient land use imperative. EDA approached a variety of specific problems in the area, through a group of technical assis- tance and public works projects which have had impressive results. Impacts of these projects, whose total funding was about $6,400,000, include: steps in providing the groundwork for sub- stantial economic development stemming from the efforts of two EDA-assisted groups which have worked together to significantly in- crease cooperation between business interests and the black community; through assistance to these groups, a con- tribution to the creation or salvage of approximately 730 jobs, the training of 2,120 people and assistance to minority enterprises in obtaining loans; construction of a new filtration plant, which was essential to meet the increased demands for water in the metropolitan area; construction of a major industrial park, which currently employs 900 people; and completion of a feasibility study concern- ing location of a distribution center which could provide an additional 1,600 jobs in this park in the future. MAJOR IMPACTS The Agency In 1967, Pittsburgh ranked lowest among the 12 largest standard metropolitan areas in per capita income. Pittsburgh 77 also had the smallest rate of growth in personal income in the previous eight-year period. From 1960 to 1964, the city's unemployment rate was much higher than that for the rest of the nation. Additional conditions in Pittsburgh included the fact that business was, by tra- dition, tightly controlled by major corporate interests, and the topography of the area, which leads to constant pressure to use all available land to its greatest po- tential. The city is in a four-county group, designated by EDA for one year as a "holdover area," to give a grace period to complete efforts begun under ARA. EDA used its tools of technical assistance grants and public works grants to approach some of the problems in this area. Some of the major findings are outlined in the following two sections of this report. PROGRAM TOOLS Technical Assistance Some of the major impacts of technical assistance grants in Pittsburgh are summarized below. A feasibility study conducted under a tech- nical assistance grant may lead to the establishment of a major wholesale food distribution center in an industrial park which received substantial EDA public works funding. Two active community organizations have been successful in providing jobs, and in generat- ing additional investments in the disadvantaged communities of Pittsburgh. The Business and Job Development Corporation (BJD) , which was directly funded by EDA in the years 1966 through 1969, and which received substantial financial support from other organizations, has been successful in dealing with the established business community. The United Black Front (UBF) , which was funded indirectly through BJD, has a high degree of credibility in the principal black area. The BJD and the UBF have cooperated in working to establish a major manufacturing facility in a principal ghetto area. This facility would be owned and operated by area residents. In the total span of its operations, BJD has created or saved approximately 730 jobs, some of which have been temporary. The or- ganization is involved in various ways in the development of several industrial prop- erties that may provide employment for many additional members of the black communitities The BJD has provided training to 2,120 people in small business management and in manage- ment development. The activities of the organization in business counseling have helped small minority entrepreneurs obtain loans . Public Works Some of the impacts of the public works grants in the Pittsburgh area are summarized below. A new filtration plant was constructed to meet the increased demands for water in the metropolitan area. Reclamation of the area occupied by the filter beds for the previous plant could yield employment opportunities for as many as 2,000 persons. Access roads, streets, water lines, sewer lines and railroad sidings were provided for a major industrial park to accommodate new and displaced businesses. At present, approx- imately 900 people are employed at the site. Ultimately, approximately 2,500 persons could be employed at the park. One plan for achiev- ing this goal involves establishment of the wholesale food distribution center discussed above . CONCLUSIONS AND RECOMMENDATIONS EDA activities in the Pittsburgh area lead to two conclusions stated below. EDA can effectively assist two community organizations which are somewhat competitive, although complementary in their primary focus 79 By working together and capitalizing on their respective strengths among business interests and in the black community, both groups have served as active catalysts in economic development. Benefits resulting from public works improve- ments necessary for the development of a major industrial park can be further enhanced by a feasibility study conducted under a technical assistance grant. The impacts of EDA activity in Pittsburgh have been impressive. The public works projects have been completed successfully. The groups partially supported by technical assistance grants may now be able to continue their activ- ities without financial assistance from the Agency. SCOPE OF PITTSBURGH ACTIVITIES Pittsburgh has a long tradition of leadership by senior executive levels of the business community. His- torically, the public fortunes of the city have been directed from the vantage point of the Duquesne Club. In recent years, this form of leadership has been replaced by an amalgamation of interests which have brought together the local government groups, the organized labor and the business and industrial community in a major effort to revitalize the city. Since 1950, most of the attention has been directed at the physical renovation of downtown Pittsburgh, and the reduction of air pollution. This significant mobilization of private resources, however, has not produced clear benefits for the target population. Before 1964, the unemployment rate in Pittsburgh was much higher than that in the rest of the country. Since 1965, however, Pittsburgh's unemployment rate has been relatively low. High employment was maintained through greater numbers of job opportunities in low productivity occupations and through expansion of output in low pro- ductivity industries. However, in March, 1969, the unem- ployment rate was almost 12 percent among the black pop- ulation . In 1967, Pittsburgh had the lowest per capita income of the 12 largest standard metropolitan areas in the United States. Pittsburgh also had the smallest rate of growth in personal income in the period from 1959 to 1967. 80 Pittsburgh is in Allegheny County, which is part of a four-county labor area designated under the Area Redevelopment Act. With respect to EDA, this was a "holdover area," providing a grace period to complete development efforts begun under ARA. The area did not qualify under new guidelines established by EDA. There- fore, it lost designation on June 30, 1966, making it ineligible for public works funds. However, the city continued to be eligible for technical assistance grants. Both ARA and EDA viewed the required redevelopment program as a regional task, not an urban one, in spite of Pittsburgh's position as the single large city in the area This evaluation is concerned only with projects funded by EDA, which capably addressed a number of major problems in the area through public works grants and technical assistance grants. Projects included in this evaluation are shown in Exhibit 1, on the following page. These activities, and their diverse impacts, are described in more detail in the following section of this report. 1 Also included are Beaver, Washington and Westmoreland Counties . 81 EXHIBIT 1. EDA PROJECTS EVALUATED PART A - TECHNICAL ASSISTANCE GRANTS EVALUATED Project Month Approved Amount ($000) business and Job Develop- ment Corp.: Investigate unemployment; training and counseling to small businesses Regional Economic Devel- opment Institute: Food distribution center April, 1966 December, 1966 July, 1967 March, 1968 June, 1968 January, 196 9 June, 196 6 127 179 8 178 94 110 165 PART B PUBLIC WORKS GRANTS EVALUATED Project Pittsburgh: Water treatment plant Pittsburgh: Develop industrial park Month Approved Amount ($000) June, 1966 4,100 June, 19 66 1,452 PROJECT ACTIVITIES AND IMPACTS Pittsburgh Water Treatment Plant The purpose of the largest EDA grant in the Pittsburgh area was to enable construction of a water filtration plant in Aspinwall. This public works grant for $4,100,000 was approved in June, 1966. A new plant was needed very much. Each year greater demands have been placed on the water filtration operation. 82 An increased supply of water is required by various expanding firms in Pittsburgh, by industrial and resid- ential accounts in the vicinity and to meet an anticipated increase in office employment. The plant is now operational Construction of the new plant permits discard of the old filter beds, which occupy about 125 acres. In was anticipated that it would be possible to recover 65 acres of this land for industrial and wholesaling uses, and this reclaimed area could provide employment opportunities for as many as 2,000 persons. In 1965, the city commissioned a study of the feasi- bility of using the beds which would no longer be required. The study concluded that occupancy could not be expected until late 1970, at the earliest. Business and Job Development Corporation and United Black Front Pittsburgh has four black communities which demand attention: the Hill, Homewood Brushton, Manchester, and Lawrenceville . Their relatively small size and geographic separation has made these communities less effective than their counterparts in other large northern cities. In 1966, EDA began supporting minority entrepreneur- ship in the city by funding the Business and Job Develop- ment Corporation (BJD) . Another group, the United Black Front (UBF) , was also funded through BJD in 1968. In 1963, the BJD was established as a private non- profit corporation to work for economic growth and devel- opment of the disadvantaged minorities in Pittsburgh. The BJD started as a Small Business Development Center under ARA. With EDA funding, starting in April, 1966, the BJD developed a more comprehensive approach to eco- nomic development. The BJD received a number of technical assistance grants. 2 The most recent grant was in January, 1969. A second group, the UBF, developed after the 1968 disorders which followed the death of Dr. Martin Luther King, Jr. Primarily a Hill district group, this organi- zation received a one-year EDA grant for $94,000 in June, 1968, which was channeled through the BJD. 2 See Exhibit 1 83 Since 1966, the total EDA investment in the BJD and UBF has been $^96,000. The type and amount of the con- tributions red ived from other public and private groups is indicative of the visability of the BJD and UBF, and hence possibly indicative of their potential impact on Pittsburgh's economic development. According to a recent BJD report, contributions and loans received from groups other than EDA have totaled $4,141,329. Of this total, 18 contributions or loans exceeding $25,000 were made by industrial firms, governmental of quasi-governmental agencies and other organizations. In addition, substan- tial donations of "in-kind" services were identified from 2 9 sources. The two groups have worked with the target population Their activities have had positive results. The initial Neighborhood Economic Development Report of the BJD stated the following goals: promote establishment of a bank to serve the Hill district; promote renovation of a large number of store fronts in the Hill district, engage in a program to increase parking facilities and promote commercial development in the dis- trict; help existing business organizations to com- bine their functions into a unified Board of Trade ; and promote industrial development in the Oakland area . The BJD successfully approached all of these objectives, and additional ones, as discussed in this section of the report. A bank serving the Hill district was organized. This bank has not yet been chartered by the Commonwealth, be- cause, in the Commonwealth's view, an acceptable chief executive officer has not been identified. Progress is being made in meeting the second goal. The Herron Avenue Complex, when completed, will provide 84 the only modern shopping and service facility in the Hill district. Major obstacles include the cost of land in this densely populated area. Work on the development of light manufacturing indus- tries is continuing. These projects depend heavily on the support of and cooperation from Federal, Commonwealth, and local governments, as well as the academic and financial communities. A significant stimulant has been the unemploy- ment rate, which has remained at a high value of about 24 percent among Hill district residents. The BJD organized a Board of Trade to service district residents. This organization was destroyed by the disorders in 1968, but the BJD is hopeful that it can be reestablished when there is a sufficient number of black merchants. Space is not available for industrial development in the Hill district. Therefore, the BJD decided to promote industrial development for light industries and service industries in the Oakland area, which would be close enough to provide employment opportunities for Hill residents. Recently, its efforts have shifted to the Homewood Brushton area, which is a black community about three miles from the Hill district. Land is available in the Homewood Brushton area. In 1968, the United Black Front received a one-year technical assistance grant for $94,000, which was channeled through the BJD. Other funds have been raised privately, with the Aluminum Company of America (ALCOA) as an impor- tant source. The UBF has pointed to the need for reorder- ing certain segments of society in order to make oppor- tunities available to black people. It proposes: the unification of more than 100 organizations which have fragmented the Hill district's effectiveness in organizing for development; and economic improvement among those strata of the black community not reached by the BJD. The UBF sees itself as a substantially different kind of organization than the BJD. The UBF perceives the BJD as being conservative and oriented to the establishment, and it regards itself as more responsive to the very poor 85 people, their immediate needs and their programs. This distinction, as perceived by the UBF, is reflected in the differences in the organizations' operational modes and in the solutions they propose. In some cities, problems have arisen in funding two community-based organizations which are partially com- peting. It is sometimes difficult to determine whether funding of two groups should continue. In the case of Pittsburgh, the two groups have some overlapping goals, but they have rather different constituencies and give indications of being able to work successfully together. The BJD has a more conservative reputation and is better equipped to deal with the business community. However, the UBF has credibility in the Hill district because of its more outspoken manner. The groups serve complementary functions . The UBF has purchased two properties as a part of its plan for black self-reliance. Fagan's Fish Market was purchased with aid from the Catholic Diocese. The UBF also purchased the Eisenstatdt property, which will be used as an athletic center, with assistance from the United Jewish Federation. The UBF has plans for purchas- ing several additional properties. The BJD and the UBF have worked together in the interest of jointly owning and operating a manufacturing plant. Starting in 1968, BJD and UBF were separately negotiating with ALCOA to help that firm become involved in Pittsburgh's depressed areas. Following a series of meetings, BJD and UBF made initial agreements to jointly sponsor an ALCOA manufacturing facility in the Hill dis- trict. It was anticipated that the facility would be owned and operated by Hill district residents, and ALCOA would purchase the plant's output. Legal arrangements are still being made. Also, evaluations of the facility's growth potential are con- tinuing. It is possible that the facility will be lo- cated in Lawrencevi.lle , rather than in the Hill district. The BJD and the UBF have served as catalysts by in- volving business in the development process. One example is the cooperation between the BJD and the Allegheny Conference, an association of more than 100 firms, with some union and other private representatives, which is 86 devoted to meeting civic needs. The Allegheny Conference and BJD assist minority businessmen in obtaining loans from banks. The success of BJD with the white industrial com- munity has been impressive. Cooperation between the Westinghouse Corporation and BJD is expected to lead to the creation of the Silver Lake industrial site in the Homewood Brushton section, near the current Hudson Place Westinghouse facility. In an additional project, BJD has cooperated with Westinghouse to establish a firm which manufactures mail- carts. The firm is located on an urban renewal tract that BJD obtained. The firm, which employs 50 people, is 50 percent community-owned. The remaining interest is held by Westinghouse, which pays a fee for the use of the land to BJD. In addition, Westinghouse has transferred title of the Sussite plant, a 145,000 square foot manufacturing facility that is in excellent condition, to BJD. This gift is valued at about $900,000. Presently, Westinghouse is the principal tenant of the Sussite facility. Westinghouse expects to move within a year, but replacement tenants are expected. At this location, BJD has started an industrial and entrepren- eurial training program. At the present time, training in figurine manufacturing is being given. Most trainees are placed in the Silvestri Brothers Corporation, a statuary manufacturer on the south side of Pittsburgh. In the Sussite facility, there are 19 trainees and a manager who received management training from BJD. The BJD started the PENNTAB , a small business man- agement program, in cooperation with Pennsylvania State University. The program was financed through the state Department of Commerce. In the past twelve months, the program has graduated about 24 students who have completed either the six-month management development program or the ten-week night course in basic accounting and related skills . In the total span of its operations, BJD has created or saved 730 jobs, which are summarized in Exhibit 2. 87 Some of these jobs were temporary, but management train- ing positions are not included. In addition, it has pro- vided training to: 2,100 individuals in small business manage- ment, and 2 individuals in management development. In conclusion, the impact of BJD and UBF in mobilizing community resources has been significant. Among black residents, UBF is well known in the Hill district. The BJD, with its city-wide outreach, is not as well known to black residents, but has recently embarked on a public relations campaign including brochures and television interviews . 88 EXHIBIT 2, JOBS CREATED OR SAVED BY THE BJD Westinghouse (Hudson Place) - 54 jobs 50 semi-skilled jobs 2 management 2 secretarial Sussite Building - 21 jobs 6 catering business 3 Penn Window office cleaning 1 maintenance supervisor 4 maintenance 2 semi-skilled laborers 1 carpenter 2 commercial haulers 2 elevator maintenance Silvestri Brothers - 30 jobs 20 trainees 2 casters 2 painters 1 packer 1 plant manager 1 research supervisor 2 program instructors 1 secretary/bookkeeper Bank - 21 jobs 1 fund raiser 16 surveyors 4 research analysts BJD Consumer Survey - 22 jobs 2 research analysts 2 surveyors Minority Entrepreneur Loan Program - 312 jobs (estimated) Community Consulting - 270 jobs with various organizations 89 Chartiers Valley Industrial Park A third major area of EDA activity in Pittsburgh involves development of the Chartiers Valley Industrial Park. A public works grant of $1,452,000 was approved in June, 1966, to assist in the development of 326 acres of land, access roads, streets, water and sewer lines, and railroad sidings for this site. In addition to providing space for new firms, the park was expected to provide space for firms being re- located as a result of redevelopment programs in the city. Therefore, also in June, 1966, the Regional Economic Development Institute received a technical assistance grant of $165,000 to determine the feasibility of locating wholesale food distributors in the park. The study indi- cated that it would be feasible to locate these distrib- utors in the park. The park is located in the most western section of Pittsburgh, a section called the Chartiers Valley area. This area has the fourth highest unemployment rate in the four-county labor area formerly designated under the Act. Development of the site is a joint effort by Federal, State and local agencies. EDA is involved in site prep- aration and planning, as well as counseling with potential tenants that may relocate from other areas. The Army Corps of Engineers has been active in flood control con- struction which is necessary for the park. The Pennsyl- vania Department of Highways has also been involved in the project. The involvement of a large number of groups has imposed 1-i ma tat icons on the ef f ffdfciveneSB of EDA support , because problems in implementation have occurred with some other agencies, and with labor unions. For example, a strike by operating engineers delayed the construction of an in- dustrial highway. However, in spite of the relatively small size of EDA's financial commitment, considerable initiative rests with the Agency's funds, which have provided a vehicle for development of the park. Major site development problems required new funding negotiations and approval cycles for the various groups involved. These increased overhead costs. For example, unforeseen problems of creek diversion and drainage beds were encountered. Also, additional time was required to negotiate changes in highway crossings and in location of railroad spurs. In large measure, these problems exemplify the need for a great deal of inter-agency cooperation in efforts of this type. 90 Work in preparing the park is almost completed. Five firms, listed in Exhibit 3, are now located there. They employ approximately 900 persons. EXHIBIT 3 EMPLOYMENT OF FIRMS IN CHARTIERS VALLEY INDUSTRIAL PARK Firm Name Joseph Home Co. Armour & Co . Childs Corp. D.H. Overmyer, Inc . Limbach Co. Description Warehouse of prestige depart- ment store Meatpacking, ware- housing and abattoir facilities Shoe manufacturing Electronic parts warehousing Construction of piping and heating equipment Space Occupied (acres) 24 27 5.5 14.5 3.4 TOTAL EMPLOYMENT Employment 200 447 125 50 80 902 Employment figures are generally below the original projections. With the exception of D.H. Overmyer, Inc., employment data was obtained on February 11, 1970, from the local EDA office. Employment data for the Overmyer firm was obtained on February 27, from the company. Local EDA officials estimate that total employment at the site will be about 2,500 people, after the food distribution facility is established. This is the goal set at the beginning of the project four years ago, but the date of completion of the wholesale food distribution center has not been established. One of the major objectives of the project was to save existing jobs by providing industrial space to pre- vent firms from leaving the Pittsburgh area. In most cases, the firms locating in the park were either obliged to move there from other Pittsburgh locations because of public programs, or they were attracted to the site as an alternative to leaving the region. Thus, the avail- ability of the land has forestalled the migration of industry. There was no evidence of major net additions to total employment in the Pittsburgh area as a result of the park. Development of the Wholesale Food Distribution Center entails: a feasibility study; physical design and implementation; identification of relocating firms; education of relocating firms on the mech- anics, advantages and disadvantages of the new marketing arrangement; and actual relocation. The first two tasks have been completed. Some potential occupants have been identified, but it has been difficult to persuade them to move. The wholesale food distributors have formed an organization which is seeking financial assistance for the move. Distributors relocating to another area have received no financial assistance, however. Some distributors have expressed displeasure at the distance from Chartiers Valley to their clients. Also, they mention "high overhead" at the park. Small family-owned 92 businesses, which are forced to move from other areas, maintain that the high overhead and long lease require- ments make it difficult for them to locate in the park. However, in considering these comments, it must be re- membered that the location of the park was chosen to be of greatest possible benefit to the entire area. The site was selected approximately five years ago when relocation needs of some specific downtown firms could not have been anticipated. Some distributors have expressed displeasure at the distance from Chartiers Valley to their clients. They claim that deliveries which now take a few hours would take all day in the new location. Also, high overhead at the park was frequently mentioned. Small family-owned businesses, which are forced to move from other areas, maintain that the high overhead and long lease requirements discriminate against them in favor of larger firms. 93 RHODE ISLAND (PROVIDENCE-PAWTUCKET LABOR MARKET) SUMMARY In the last two decades, many areas of Rhode Island have had severe economic stress because the state's two largest industries, textiles and jewelry manufacturing, sharply reduced operations. The EDA approached a variety of critical problems, and through a coordinated series of technical assistance and public works projects, had a number of impressive results. Impacts of these projects, whose total funding was less than $13,000,000, include: initial and continued funding of the most successful manpower training program in Providence, the state's largest city; increases in revenues produced by the Port of Providence, and greater stability in port employment ; extensive renovations and improvements in the water systems of Providence and surrounding cities, which were essential to retain and attract new industries ; and construction of industrial parks and shopping centers which currently employ more than 2,000 people and hold distinct promise of employing an additional 4,000 persons. MAJOR IMPACTS The Agency Since the end of World War II, Rhode Island has had severe economic stress because the state's two largest industries, textiles and jewelry manufacturing, sharply reduced operations in the state. By the time the Public Works and Economic Development Act of 1965 created EDA, the unemployment rate was close to the national average, but a major area of the state was designated for assistance under the provision that every state have at least one designated 94 area. Although the state does not have a large black population, there was need to approach a variety of critical deterents to economic growth, including antiquated water systems, lack of accommodations for modern industrial facilities, and a fairly large number of people who required training and assistance to obtain jobs. Through a number of carefully planned and diverse projects, EDA used its tools of technical assistance grants and public works grants to approach some of the critical economic problems. These activi- ties have had a substantial impact upon economic conditions. Some of the major findings are outlined in the following two sections of this report. PROGRAM TOOLS Technical Assistance Some of the major impacts of technical assistance grants in Rhode Island are summarized below. Providence was able to have a branch of the national Opportunities Industrialization Corporation (OIC) , which is generally acknowl- edged to have the most successful manpower training programs in the city. It has trained 500 to 600 persons and is now well on its way towards complete reliance on local financial support . Revenues produced by the Port of Providence have increased as a direct result of a study performed for the Chamber of Commerce . Three additional activities funded under technical assistance grants (one a continuation of an ARA project) have produced information of direct value in diversifying the economic base . Public Works Some of the impacts of the public works grants in Rhode 95 Island are summarized below. Extensive improvements in the Providence water system were obtained by providing new treatment facilities, a tunnel and an aqueduct. Because of these projects, and other direct EDA assistance, the nearby cities of Warwick and East Providence were connected to the Providence system, with vast improvements in deplorable water conditions which were causing major economic and population losses. Among the many specific impacts of the centralized water system is a new shopping mall, which employs 1750 people. An additional shopping center, also dependent on the system, will employ 1500 to 2000 people when it is completed. Improvements in other water systems, and construc- tion of access roads in Cranston, Burrillville , Woonsocket and Narragansett , have saved jobs in firms which were dependent upon improved facilities and have led to new jobs for several hundred persons . A major industrial park in Pawtucket, dependent upon EDA assistance for water, sewer, road and drainage facilities, shows good promise of pro- viding employment for 2,000 persons. 96 CONCLUSIONS AND RECOMMENDATIONS The unique nature of EDA's activities in this compact state leads to three interesting conclusions. The EDA is capable of providing the base for coordinated development of a large urbanized area through separate public works projects. Improvements in local water systems, and connections to a central system also renovated with EDA funding, are examples of effective integration of project-oriented funding to the benefit of residents of towns with distinct local governments. The EDA can make a substantial contribution in an area which does not qualify on the basis of high unemployment or low income. Even in an area of this type, there are frequently elements of economic decline and isolated groups which need training and improved job opportunities. The EDA efforts in Rhode Island have shown that, with insight, assistance can be directed at these groups. Although a large number of job opportunities have been created as a result of EDA activities in Rhode Island, most of the positions in the industrial parks and shopping centers were not filled by unemployed or underemployed persons. Perhaps, in the future, training programs con- ducted by groups assisted by technical assistance grants could be coordinated with such industrial development to influence the structural impact of employment opportunities. The impacts of EDA activity in Rhode Island, which are discussed in later sections of this report, have been impressive Most of the projects were approved more than three years ago, and most are now completed. Several groups which required EDA assistance to initiate and conduct their operations have now gained sufficient strength to be financially independent. The \gency can and should continue to phase-out activities in I node Island. 97 SCOPE OF RHODE ISLAND ACTIVITIES The Providence metropolitan area is considered to include most of Rhode Island, and a part of Massachusetts. In addition to the highly urbanized and adjacent cities of East Providence, Pawtucket, Cranston and Warwick, it includes a number of out- lying towns such as Burrillville, Woonsocket and Narragansett . Many people in the outlying northern towns work in Massachuetts and Connecticut, because wages are generally higher in these neighboring states. After World War II, unemployment was a major problem in Rhode Island. From 1947 to 1958, the unemployment rate was almost double that of the nation. This severe condition was caused by the fact that the state's two largest industries, textiles and jewelry manufacturing, sharply reduced their operations in the state during this period. By the time the Public Works and Economic Development Act of 1965 created EDA, Rhode Island's unemployment rate of 4.9 percent was close to the national level of 4.5 percent. Although the Area Redevelopment Administration funded some early projects in Rhode Island, this evaluation is concerned only with projects funded by EDA. Earlier projects are con- sidered only if EDA has extended the funding commitments. Rhode Island's eligibility stems from the provision of the EDA Act which allows a state without "substantial" unemployment to designate that area closest to qualifying. Thus, 32 cities and towns in Rhode Island, of 39 in the entire state, were designated as eligible for EDA assistance. This designated area is called the Providence-Pawtucket labor market. The southern part of the state, near Newport, and the southwestern part, near Westerly, are excluded. Rhode Island has no well defined target group in the sense of a large ghetto where minority persons live. To many residents of the state, the term "minority group" is likely to signify Italians or some other European ethnic group, because the state has a relatively large foreign-born popula- tion. The EDA has funded fourteen projects in Rhode Island. These projects are listed in the exhibit on the following page. Some of the projects were concerned with major improvements in deplorable water systems, including links to a central system in the City of Providence, which was also renovated and significantly expanded with EDA assistance. Many of the pro- jects were funded during the initial years of EDA operations. 98 EXHIBIT 1, EDA PROJECTS EVALUATED PART A - TECHNICAL ASSISTANCE GRANTS EVALUATED Project Month Approved Amount ($000) Community Study of Econo- mic Industrial Devel- opment in Rhode Island: Plan Economic Devel- opment Providence Chamber of Commerce: Study of potential port development Research Design Institute: Organize the Insti- tute (EDA portion only) Opportunities Industriali- zation Centers of Rhode Island, Inc. : Industrial center feeder training Arthur Kaufman Associates: Oceanarium Study November, 19 66 May, 1967 January, 1967 November, 1967 March, 1969 July, 1965 51 52 24 109 65 PART B PUBLIC WORKS GRANTS EVALUATED Project Providence/Scituate: Water facilities, tunnel and aqueduct Month Approved June, 19 6 6 Amount ($000) 7,250 99 PART B - PUBLIC WORKS GRANTS EVALUATED (CONT.) Project East Providence: Water system additions Pawtucket Industrial Development Foundation Water , sewer and road Cranston: Access road to industrial park Warwick: Waterline Pascoag Fire District: Expand water system Burrillville Industrial Foundation: Industrial parks and roads Woonsocket: Industrial park Narragansett: Water system Month Approved June, 19 66 April, 1968 June, 1966 March, 1966 June, 1967 June, 1967 June, 1966 September, 1966 Amount ($000) 3,657 382 58 79 100 24 656 398 100 PROJECT ACTIVITIES AND IMPACTS Statewide A basis for coordinated economic development of this compact state was clearly required. Recognizing this need, EDA approved a technical assistance grant in November, 1966/ for a "Study to Develop an Action Plan of Economic and Industrial Development in Rhode Island." A New York City consulting firm, Marcom, Inc. , performed the study in conjunc- tion with a special legislative group established by the State of Rhode Island. The study encompassed all aspects of industrial and economic development, including trends in employment which would affect future growth. Some of the significant conclusions of this study are summarized below: The state needs a balance between labor intensive and capital intensive industries, as well as between industries which primarily employ men and those which primarily employ women ; There is a predominance of the textile and costume jewelry industries, but the state can attract additional industries, such as tourism and environmental services; and One of the major attractions which the state offers to industry are wage rates which are far lower than the national average in almost every industry, and lower than those in nearly all of the New England states. Activities and impacts of the EDA in the various communities of Rhode Island are discussed in the following sections. Providence Population: 207,500 (1960) Area: 19 sq. mi. 187,100 (1965) Providence is the second largest city in New England. It dominates Rhode Island as the largest city, the capital, the chief employment area and the nucleus for educational and 101 cultural activities. About 21 percent of the state's popula- tion and 38 percent of its total employment are in this city. The chief industries have been, and continue to be, textiles and jewelry manufacturing. Providence has suffered the same problems as many centers of metropolitan areas. It has experienced a loss of industry, a deteriorating central city, a recent (although relatively small) growth in the number of minority persons and a loss in the young white population to suburban areas. In 1960, 22 percent of the families had incomes of less than $3,000. The median income was less than $5,000. The EDA approached the severe economic conditions in Providence with four grants: Construction of Providence-Scituate water treatment facilities, tunnel and aqueduct; Study of port development for Chamber of Commerce; Continuation of ARA support for the Research Design Institute; and Establishment and continuing support for the Opportunities Industrialization Centers of Rhode Island. In June, 1966, EDA approved a grant of $7,250,000 for major renovations to the antiquated water system serving the Providence metropolitan area. Improvements included a major pipeline connecting the large reservoir at Scituate with a point in the eastern section of Providence, for connection to new systems being constructed in East Providence and additional communities. The line crosses the southern part of Cranston and the City of Providence. In addition, an aqueduct and additional water treatment facilities were con- structed to accommodate the increased flow of water. The systems in Warwick and East Providence could not have been expanded without the significant improvements in the Providence system. (Impacts in these communities are discussed in subsequent sections of this report.) It is also expected that the town of Johnston will be able to have an industrial park because of water provided through the Providence system. 102 One of the three technical assistance grants was for a study of port development. EDA approved a $52,000 grant for this purpose in May, 1967. This study was performed by EBS Management Consultants (now Boise-Cascade Urban Systems, Inc.). It was completed in July, 1969. Prior to the study, the port was operating without proper management. The port agent, who retired in January, 1967, had no training in the commercial world and the position had little authority. The Mayor did not fill the job until the consultants submitted their recommendations regarding the future of the port. One of the major recommendations of the consultants' report was that a qualified port director be hired. A port director was hired. His office now employs ten persons. Although the port activity is about the same as it was before 1967, with lumber and oil being the major imports, the port director has been successful in renegotiating old leases and attracting new ones. From four renegotiated leases, $332,000 is collected annually. This amount exceeds the total revenues produced by the port in the previous year. Port fees were increased to make them in line with other major eastern ports. Longshoremen are working somewhat more steadily, although work demands are still erratic. A second technical assistance grant in Rhode Island was directed at helping various businesses improve their competitive position in various markets. The Research Design Institute (RDI) had been established, largely with ARA funds, to help small businessmen design products which would level seasonal employment patterns. In January, 1967, EDA continued the heavy support of ARA with an additional grant of $24,000. The RDI helped many small businessmen who did not have the financial resources to employ the services of a consulting firm. Many contacts were made outside of Rhode Island. The group is now financially independent of EDA and its goals have changed. The third and largest technical assistance project in the state was the Opportunities Industrialization Center (OIC) of Rhode Island. Because of EDA funding, Providence was able to have a branch of this national organization. In November, 1967, EDA approved a grant of $109,000. The OIC was able to raise an additional $92,000. In March, 1969, an additional EDA grant for $65,000 was approved. Although it was under- stood that this second grant would be the last, OIC has been unable to fully assume financial responsibility for its opera- tions. The EDA is now in the process of granting an additional $28,000 to maintain its very worthwhile activities. 103 The OIC has been getting partial support from the United Fund of Southeastern New England. In February, 1970, OIC was notified that the United Fund would attempt to support the entire OIC program by including its requirements in the 1970 Fund goal. It is generally acknowledged that the OIC has the most successful manpower training program in Providence. In 1969, OIC placed 68 persons in jobs and provided vocational training for 105 individuals. Since the start of its operations, it has trained between 500 and 600 persons. Most of the activities of the OIC are in South Providence, the major ghetto area of the city. This area has an unemploy- ment rate of 11 percent. About 54 percent of those trained by OIC have at least a ninth grade education, and about 17 percent have graduated from high school. However, 38 percent are earning less than $3,000 a year. About 80 percent of the persons trained are black. There is also a Spanish-speaking group, most of whom are Puerto Ricans who have recently arrived in the state. The OIC has held classes for these people. The OIC has trained nurses, telephone operators and electronic technicians. It has provided training in jewelry crafts, soldering and polishing skills, graphic arts and banking. In all cases, training has been linked with specific jobs or business concerns. East Providence Population: 42,000 (1960) Area: 13.9 sq. mi. (land) 44,900 (1965) 3.6 sq. mi. (water) East Providence is highly industrialized, with a substan- tial and increasing foreign-born population. The city's major problem has been the deplorable condition of the water supply. The capacity of the water system has been inadequate, and the quality of the water has been very low. The water is rusty because of pollution in the bay and because ground water contains excessive amounts of iron and magnesium. The most practical solution to the severe water problem seemed to be a link with the Providence system. An EDA grant was approved in June, 1966, for major renovations in the East Providence water system. These improve- ments included laying new trunk mains, replacing underside mains, and providing a cross-bay connection to connect with the Providence system. The total cost of this project was originally 104 estimated at $7,314,000. This amount was to be paid with an EDA grant of $3,657,000, and a matching bond issue which was approved by the voters. At the time of this evaluation, EDA has paid $3,291,300. The balance will be disbursed when the work is completed. The city is now experiencing a cost overrun because it did not recognize the need to clean old water pipes. The impact of the improved water system will be to retain firms, and encourage industrial expansion. Many firms have been spending a great deal of money on filters and other devices in an attempt to obtain clean water. Some firms, such as Rumford Chemical Works, a chemical and bleach plant with more than 10 employees, have already moved because they felt the water was detrimental to their production processes. A number of firms promise growth if they obtain the clean and efficient water supply essential to their operations. Examples include: Industrial Dyestuff Company, which hopes to expand in the next five years by 30 to 50 employees , Chemical Products Corporation, which planned to increase from 163 people in 1965 to 300 in 1975, Flynn Towel, Coat and Apron Supply, which employs 100 and hopes to double its staff, and The U. S. Oil Company, which has expressed willingness to expand from 51 workers to between 150 and 200. When the new water system is operational, these firms and others which have expressed similar concerns, will make substantial added contributions to the economy of East Provi- dence . Pawtucket Population: 81,000 77,500 (1960) (1965) Area: 8.6 sq. mi 0.4 sq . mi (land) (water) The City of Pawtucket has had considerable difficulty in rehabilitating its downtown area and in finding new space for 105 industrial development. To help expand its industrial base, the city is developing a former race track into an airpark industrial site. In April, 1968, EDA approved a grant of $382,000 to provide improvements to the industrial site. With these needed funds, the city is constructing water, sewer, road and drainage facilities. The city is also using the funds for grading 68 acres of the 250 acres in the site. The EDA funds represent about 50 percent of the total project cost. The EDA has paid $251,000, with the balance of $131,000 to be disbursed upon completion of the work. The land cannot be sold until development is complete. However, the Pawtucket Industrial Foundation, designated as owners of the airpark, has been quite successful in finding tenants for the first section, which was not built with EDA funds. Negotiations have already been conducted with about 18 firms who may occupy the portion developed with EDA funds. The "tight money" situation has not been helpful, but the Chamber of Commerce is now dealing actively with three companies, who are expansion minded. It is estimated that about 15 firms with approximately 2,000 employees will even- tually occupy the EDA-assisted section. Cranston Population: 66,800 (1960) Area: 28.6 sq. mi. (land) 71,900 (1965) 1.6 sq. mi. (water) Cranston is adjacent to Providence. Much of the community is suburban in character, with single family housing and a relatively high median income ($6,338 in 1960). The eastern section of the city, however, is commercial, industrial and densely populated. An urban redevelopment agency has been working actively to attract industry to this area. Through a $58,000 grant, EDA provided funds for extension of an access road to the Wellington Avenue Industrial Park, which is in the central-eastern section of the city. Approval was given in June, 1966, and construction was completed early in the next year. The access road, called the Wellington Avenue Extension, has greatly benefited the firms in the vicinity, and improved the Park's position in attracting new industry. Firms in the Park which now employ about 14 5 people were heavily dependent 106 upon the Extension. Additional firms have benefited from the road, but are not totally dependent upon it. For example , Tin Metals Corporation increased in size from 5 to 10 persons; personnel had to travel less distance to and from work because of the road. The Taylor Casting Company, Inc. has increased its business because of the extension, although it has not yet increased employment. Security Fence Company has greatly expanded its business volume and also has increased its work force. Employment at the Dayton Tire Distributors has increased from 6 persons to 2 5 persons. Its total truck mileage has been reduced by 50 miles a day because of the access road. The Artesani Painting Company doubled its staff of approximately 35 workers because the road enabled it to operate a new plant. Warwick Population: 68,500 (1960) Area: 38.0 sq. mi. (land) 77,600 (1965) 14.3 sq. mi. (water) Warwick has grown rapidly in the last twenty years; it is now the second most populous community in the state. Many firms have moved to Warwick from the old industrial areas of Providence. Sufficient land existed for several industrial parks . In March, 1966, EDA approved a $79,000 grant for construc- tion of a 16 inch pipeline for the Warwick water system. All EDA funds, which were matched by the city of Warwick, have been disbursed. The 16 inch pipeline which was partially financed by EDA was a key element in the overall renovation of the Warwick water system, which included a connection to the expanded Providence system. The 16 inch pipeline will serve two new shopping centers, Midland Mall and Warwick Mall, in addition to a restaurant, a manufacturing company, a bank, and an automobile dealer. It will serve a future unit of Rhode Island Junior College, which is expected to have 5,000 students. Midland Mall is wholly owned by Sears, Roebuck, and Co., its largest occupant. The water line was necessary for this center, which has about 1750 workers in 74 stores. Warwick Mall is currently under construction. When the center is completed, the occupant stores are expected to employ 1,500 to 2,000 persons. 107 Burrillville (Including Pascoag District) Population: 9,100 (1960) Area: 55.6 sq. mi. (land) 9,700 (1965) 1.8 sq. mi. (water) Burrillville is a sprawling country town in the north- western corner of Rhode Island. About 75 percent of its area is undeveloped. Pascoag is the name given to the business district, which has been decaying because of the loss of tex- tile plants. Many residents work in Massachusetts or Connecticut. Because of highway connections, it is easier to drive to these states than to other cities in Rhode Island. Also, wages tend to be higher in these neighboring states, except for specialized construction work. Burrillville Industrial Foundation, a non-profit corpora- tion, was established by the community to promote development. The EDA assisted in the development of an industrial park, which is managed by this Foundation. In June, 19 67, EDA approved two projects to assist the park developers. A grant of $100,000 was approved to enable the Pascoag Fire District to construct a water storage tank and water mains leading to the park. When this project was completed early in 1969, EDA 1 s actual share of 50 percent of the cost was $94,078. The EDA also approved a $24,000 grant to construct access roads to the park. This work has also been completed. At the present time, the only new employment has been in construction of the facilities. However, prospective tenants for the park have been identified. It is estimated that these firms will employ about 80 persons. Woonsocket Population: 47,100 (1960) Area: 8.6 sq. mi. (land) 46,700 (1965) 7.2 sq. mi. (water) At one time, Woonsocket had a large number of textile mills. The city has suffered economic and population losses as this industry has moved away. Almost one-half of the acreage is vacant, and because of hills, only 30 percent to 40 percent of this land is considered to have development potential. Other major problems were the deterioration of sections of the city and the need for water and sewer facilities to enable new industrial development. 108 In June, 1966, EDA approved a grant of $656,000 to provide Woonsocket with an industrial park water system, access roads, sewer facilities and associated site preparation. Construction activities began in April, 1968. The facilities were completed, on schedule, in 1969. To construct the park, the city established the Woonsocket Industrial Corporation. Under an agreement with EDA, the city retained ownership of the site until the work was completed. Some firms have already been attracted to the park. These firms employ about 60 persons. A few large firms have recently decided to move out of Woonsocket. These include Uniroyal, Inc., which employed nearly 900 people. While EDA has made a distinct contribution through assistance in developing the industrial park, the trend of business loss has been difficult to reverse. It is hoped that, in the future, the new industrial park will establish a trend which will help keep other industries in Woonsocket. Narragansett Population: 3,400 (1960) Area: 13.8 sq. mi. (land) 5,000 (1965) 3.1 sq. mi. (water) Narragansett is basically a summer coastal resort. The education level is high; about 51 percent of the population over 25 years old has completed high school. Many of the residents are retired. The economy of the town is not balanced because its principal source of income is from seasonal tourism. Some time ago, a group was formed which was interested in the potential of an oceanarium as a unique means of attracting additional tourists and providing employment for a substantial number of persons. An EDA technical assistance study for $5,000 was approved in July, 1965, to determine the impact of an oceanarium in North Narragansett, where additional oceanography facilities were located. The study was performed by Arthur Kaufman Associates, of Philadelphia, a firm which has studied oceanariums and aquariums throughout the world. The study con- cluded that the benefits expected from the oceanarium would not justify the costs. Late in 1966, EDA took an important step to help Narragan- sett diversify its economy. The northern part of the city consisted of semi-isolated farms, sparsely settled residential areas, and oceanography facilities of the University of 109 Rhode Island and the Federal government. This area, however, lacked a water system which would enable expansion and diversification of its economy beyond a few small industries. The EDA provided a grant of $398,000 for the needed public works. Completion of the system has led to approximately 100 jobs in businesses related to the oceanography facilities. An application is being submitted to EDA for the develop- ment of an industrial park in the same area. The site is ideal for oceanography institutes, since it is isolated from the rest of the town and is located on the shoreline bluffs. 110 V, METHODOLOGY The basic field work was performed by Roy Littlejohn Associates, Inc., in February and March of 1970. Repre- sentatives of that firm employed questionnaires they had developed to use as guides for interviewing the following persons : project applicants, employers , project employees and labor representatives, business and financial leaders, city officials, and community leaders and other residents. Appendix B is an example of one of the survey guides used in this field work. The Littlejohn firm submitted a draft report to the Agency :n April, 1970. Staff members of the Program Analysis Division, Office of Administration and Program Analysis, checked the consistency and accuracy of the draft report, and worked to improve its organization and format . This effort involved: reviews of material in the project files; numerous detailed discussions with members of the staffs of the Office of Technical Assistance and the Office of Public Works; and telephone conversations with grantees, em- ployers and other references in the six cities to verify the accuracy of data in the draft report and to obtain supplementary information This report was prepared at the conclusion of the above activities. Ill APPENDIX A. CURRENT AND POTENTIAL EMPLOYMENT CITY CURRENT DIRECT JOBS CURRENT INDIRECT JOBS POTENTIAL DIRECT JOBS POTENTIAL INDIRECT JOBS Chicago 1,000 1,300 5,000 6,500 Los Angeles 60 78 2,400 3,120 New York 1,300 1,690 7,500 9,750 Oakland 200 200 3,000 3,000 Pittsburgh 900 1,170 2,500 3,250 Providence- Pawtucket 2, 000 2,000 6,000 6,000 TOTAL 5,460 6,438 26,400 31,620 112 APPENDIX B. SAMPLE INTERVIEW GUIDE Commu nity Leader and C ommunity Res ide nt Que stionnai re Background 1. Name Age Address Occupation A. If Unemployed, when were you last employed? By whom ? 2 . To what community organization (s) do you belong ? A. What position (s) do you hold? B. In what principal area (s) does your organization (s) operate? C. How many members does your organization have? D. Has the organization (s) been involved in economic development activities? Yes No Connection with EDA Activities 3. Are you familiar with EDA projects in your community (public works , technical assistance t business loans)? Yes No 4. How did you come to know about EDA activity? 5. Do most people in your area know about this activity? Yes No 6. Do those who know about EDA activity approve of it? Yes No .7. Have you or members of your organization ever been associated with an EDA project in your area? Yes No If the answer to the above question is affirmative, A. What is the nature of the project? B. What was the nature of your association with the above project? Con d ition s in the Community Prior to EDA Activity 8. When did EDA activity begin in your community? 9. Before EDA activity began in the area, the community faced the following major economic and social problems: 113 A. Substantial unemployment. B. Substantial underemployment. C. Poor housing. D. Inadequate public services and facilities. E . Inadequate training facilities . F . Other IV. EDA A ctivity 10. When did EDA begin activity in your community? 11. What was the nature of the projects undertaken? 12. What were the objectives of the projects <.tV? 13. Did you or your organization participate in the planning of these projects ? _____ Yes No 14. Has the EDA project influenced the economic development of your area? Yes ______ No 15. Has the EDA project created more jobs? Yes No If yes, how many? What type jobs ? 16. Between the application date of the EDA project and the present, the local government's attitude toward the community's economic development has: A. Become more favorable. B. Become somewhat more favorable. C. Remained the same. D. Become less favorable. E . Do not know . 17. If the answer to Question 16 is A or B, in what ways have the government's attitude improved? 10. If your answer to Question 16 is D, in what ways have the government's attitud become less favorable? -^^ L9. Between the time when you became aware of the EDA project and the present , local planning for the physical development of the area has: A. Become much more extensive. B. Become somewhat more extensive. C. Remained the same. D. Become less extensive. E. Did not and does not exist. F. Do not know. 10. If the answer to Question 19 is A or B, in what ways have local planning for physical development expanded? 11. If the answer to Question 19 is D, in what ways have planning become less extensive ? 12. Between the time when you became aware of the EDA project and the present, the lending institutions have: A. Become much more active in development financing. B. Become somewhat more active in development financing. C. Remained the same. D. Become less active in development financing. ?.3 . If the answer to Question 22 is A or B, in what ways have lending institutions become more active in development, financing? 24. If the answer to Question 22 is D, in what ways have lending institutions be- come less active in development financing? 25. Between the time when you became aware of the EDA project and the present, the OFDP group (the group which is responsible for preparing and carrying out the overall Economic Development program of the area) has: A. Become much more active. B. Become somewhat more active C. Remained the same. D. Decreased its activity. E. Did not and does not exist. F . Do not know . 115 26. If the answer to the above question is A or B, in what ways have the OEDP group become more active ? 27. If the answer to question 25 is D, in what ways have the OEDP group decreased its activities ? 28. Between the time you became aware of EDA projects and the present, the number of other State and Federal programs in the community (Community Action, Housing Urban Renewal, etc.) has: A. Increased greatly. B. Increased somewhat. C. Remained the same. D. Decreased. E. Do not know. 29. If the answer to the above question was A or B, what was the nature of the increase? 30. If the answer to Question 2 8 was D, what was the nature of the decrease? 31. Between the time you became aware of the EDA project and the present, the areas' participation in the district program (Council of Governments Economic Develop- ment District, a rural development district, etc.) has: A. Increased gieatly. B. Increased somewhat. C. Decreased. D. Remained the same. E. Did not and does not exist . F . Do not know . 32. Between the application date of the EDA project and the present, the public facilities (i.e., schools, hospitals, sewers, police and fire protection, recreation, etc.) in the area have: A. Been greatly improved. B. Been somewhat .improved. C. Remained the same. D. Deteriorated. 116 E. Do not know. 3. If the answer to the above question is A or B, in what ways have public facilities improved? A. Why have they improved? 34. If the answer to Question 3 2 is D f in what ways have public facilities deteriorated? A. Why have public facilities deteriorated? 35. Between the time you became aware of EDA projects and the present, the local political leadership's concern for the poor and minority groups have: A. Increased greatly. B. Increased somewhat. C. Remained the same. D. Decreased. E. Do not know. 36. If the answer to Question 3 5 is A or B, in what ways have this increased con- cern been evidenced? 37. If the answer to Question 35 is D, in what ways have the decrease in concern been evidenced? 3 8. Between the time you became aware of EDA projects and the present, the quality of life of area residents has: A. Improved greatly. B. Improved somewhat. C. Remained the same. D. Deteriorated. E . Do not k i ow . 39. If the answer to Question 3 8 is A or B, in what ways have the quality of life improved? 117 A. What has been the effect of EDA on improving this quality of life? 40. If the answer to Question 3 8 is D, what ways have the quality of life for the area deteriorated? A. Have EDA programs caused problems in the community? 41. Between the time you became aware of the EDA projects and the present, the support of community development efforts by community groups (i.e. , labor, church groups, business organizations, service clubs) has: A. Increased greatly. B. Increased somewhat. C. Remained the same. D. Decreased. _____ E. Do not know. 42. If the answer to Question 41 is A or B, how has the support for community development efforts been evidenced? 43. If the answer to Question 41 is D, how has this decrease in support evidenced itself? A. Why is there a decrease in support for community development efforts? V • Pr ognosis 44. Assuming that the EDA project receives its present or projected funding, do you believe the project will: Improve the quality of life of area residents. Provide employment or income for area residents. Serve as a catalyst for community improvement. Be supported by community organizations and groups. Foster a sense of community. 118 Yes No Yes No Yes No Yes No Yes No 45. What additional steps, if any, should EDA take in your area to impact more effectively on the problem of jobs and income for residents in your area? I Documentation and Referrals 46. Do you or your organization have reports, documents or statistical data which will quantify any of the points discussed in this interview? (The interviewers will collect the documents and list them in the following sections) 47. Please provide us a list of persons whom you feel will provide additional infor- mation on EDA activity. Name Address Telephone No. Occupation Name of Interviewer * U. S. GOVERNMENT PRINTING OFFICE: 1 970— ^31 -993/1 56 119 PEN , N .?J ATE UNIVERSITY LIBRARIES IMIIIIIIIII ADQ0D712fl^lE0