News & Views » News Feature

Whole lotta money, not so many jobs

Atlanta's Empowerment Zone gets little bang for taxpayer buck

by

comment
In the five years since its inception, the Atlanta Empowerment Zone's Business Development Fund -- designed to encourage job growth in some of the city's bleakest neighborhoods -- has loaned out $8 million.

But that money has gone to just three businesses. What's more, those firms have hired only 14 people as a result. Total cost per job? $570,000.

While it's too soon to declare the program a failure, an examination of financial statements, correspondence and loan documents shows that the program has seen little return on its investment. In one case, a company that received a loan in June 2000 still hasn't moved into its building and probably won't until next year. And in another case, an 18-month loan procedure actually endangered the company it was designed to help.

Meanwhile, as legal fees for just two of the loans climbed past the $150,000 mark, it turns out that the lawyers who have profited have close ties to Bill Campbell who, besides being mayor of Atlanta, also chairs the Empowerment Zone board.

Long-term or long shot?

The Atlanta Empowerment Zone, shaped vaguely like a Y, stretches south to the Lakewood Freeway, northwest to Ashby Street and northeast to North Avenue.

In 1996, Atlanta, like other large cities, received $250 million in cash grants, loans and tax breaks to improve some of the country's most impoverished urban areas.

Of that $250 million, $12.8 million comprised the Atlanta Empowerment Zone's Business Development Fund.

Excellatron, a high-tech battery manufacturer, received its $3.9 million loan through the fund in June 2000. Excellatron's building at 263 Decatur St., near Grady Homes and underneath some MARTA tracks, still sits unoccupied. On a recent sunny afternoon, the 172,000-square-foot complex of office and warehouse space seemed abandoned save for a few buckets of paint remover and some pigeons fluttering in the rafters.

Excellatron's chief operating officer, Tony Pace, says his company, which was founded by the man who developed Super Soaker water guns, hopes to move into its new building by the first of next year.

Maybe the workers' absence was weather-related. "Might have been a picnic day," Pace jokes.

Quarterly reports for the Smyrna battery manufacturer indicate that Excellatron has hired four Empowerment Zone residents to help with renovating its Decatur Street site. (The quarterly reports for the second and third quarters of last year were turned in March 19 -- two days before Creative Loafing was scheduled to examine them.)

Pace says his hope is that Excellatron will eventually employ "a few hundred people." The original business plan predicts 30 jobs created by the end of 2000, 74 by December 2001 and 327 total jobs between 1999 and 2003. Pace says his company currently employs 22 people -- all in Smyrna. Revenue projections from 1999, also submitted to the AEZ, indicate expected earnings of $7.3 million in 2000 and $11.7 million this year.

Ron Diamond, interim director of the Atlanta Empowerment Zone, says structural problems have put the project slightly behind schedule.

With friends like these ...

Also last June, Empowerment Plastics Co. Inc. finally closed on its $1 million loan from the Atlanta Empowerment Zone. For the company, which recycles plastic into waterproof faux lumber for such things as playground equipment, the closing was the end of a two-year process.

"That would be an unusual time frame" to receive a standard commercial loan, says Karen Kitzmiller, spokeswoman for the First Union Corporation. Depending on how quickly the company is able to assemble its application, she says, it's usually only a couple of weeks between commitment and closing.

Besides the time involved, the loan process cost Empowerment Plastics $61,500 in legal fees, part of which went to Troutman Sanders, the law firm the zone has hired for its loan work.

One of the partners at Troutman Sanders is Michael Coleman, a former city attorney and currently one of the lawyers for the mayor. Coleman himself has worked on some of the Atlanta Empowerment Zone projects. He could not be reached for comment.

A report by Georgia's Department of Community Affairs states, "There is no documentation in the AEZC files indicating by whom, through what process, or why [Troutman Sanders] was selected for this work; in fact, there is no procurement documentation for any of the law firms involved in this project." In a faxed statement, Diamond says Troutman Sanders was already chosen as the AEZ attorneys when he joined in 1996.

As for the company itself, Dale Evans, Empowerment Plastics' executive vice president of administration, estimates her company has done about $300,000 in business since opening up six months ago and "trained" 38 Welfare to Work Program participants to gather recyclable materials from the Renewal Atlanta Clean-up Site. Twenty-nine other Welfare-to-Work Program participants were also trained in Empowerment Plastics own job training program on Empowerment Plastics machinery, Evans says. A few, she has heard, have gone on to get full-time jobs elsewhere.

Add a comment