Empowerment Zone program lifted hopes but fizzled out early

With a pledge for $100 million in federal funding in hand, Norfolk and Portsmouth leaders excitedly announced in 1999 that they had a solution for some of the cities' biggest problems.

The federal Empowerment Zone program, they said, would enhance child care, transportation and job training for low-income residents looking for work. It would improve economic development in some of the region's most troubled neighborhoods. It would help entrepreneurs and small businesses get started and stay successful.

Fast-forward to this week. On Monday, Empowerment 2010, the local office that administered the federal program, closed a year and a half before it was supposed to, and without fanfare.

So how did the once-promising program fade into early oblivion? And did it serve its purpose in Norfolk and Portsmouth?

Empowerment 2010 claimed some successes, such as helping to bring a long-sought market to Norfolk's Berkley area and funding the development of Victory Crossing shopping center in Portsmouth.

State Sen. Louise Lucas hopes to use tax-exempt financing that the federal program made available to build a hotel and conference center in Portsmouth.

Some said the program was hobbled by funding cuts. Locally, the program received only about a quarter of the $100 million promised by the federal government.

In 2006, about half the Empowerment 2010's funding was spent on salaries and benefits for staff.

Locally, leaders questioned the program's effectiveness and oversight.

Norfolk Councilman Paul R. Riddick, who served on the Empowerment 2010 board in its early years, said the agency suffered from a lack of leadership.

"It never benefited the people who were supposed to be helped," Riddick said. "You have as many people disadvantaged now as you did when it started."

But to Kevin Watson, the owner of a janitorial and office supply business, the agency was essential to growing his now-stable company, providing it with office space and resources beyond his initially small budget.

"It's going to leave a void in the community," he said. "It definitely helped."

On a Tuesday morning in June, two men removed the "Empowerment 2010" signs from the agency's closed administrative offices on Queen Street in Portsmouth.

Executive Director Landis Faulcon was inside but declined to be interviewed. Over the past several weeks, she did not return phone calls to her home and business. The agency's board chairwoman, Norfolk Councilwoman Daun S. Hester, also did not return phone calls asking for comment, and several other members of the board declined to speak on the record.

The physical boundaries of the Empowerment Zone encompassed about two dozen of Norfolk and Portsmouth's most distressed neighborhoods. The program was supposed to pump $10 million a year into the area for 10 years.

But only months after receiving the $100 million pledge, the federal funding was cut back. That trend continued until 2005, when that funding ceased.

"If everything had run as originally intended, it would have turned out completely different," said Portsmouth business owner Ed Forlines, one of the few board members who regularly attended Empowerment 2010 meetings in the last few years. "That was the downfall, the lack of follow-through on the part of the administration. They just let it die a slow and painful death."

According to the federal Housing and Urban Development department, the two cities received $25.9 million from 1999 through 2005. More recently, the agency has used other federal grants and funding from both cities to keep going.

The money provided 690 low-income residents with job-skills training and 153 with child care. According to Empowerment 2010's Web site, nearly 11,000 people received counseling, information or referrals from the agency's business center. The money also helped supplement programs at Westbury in Portsmouth and Broad Creek in Norfolk, and paid for infrastructure for residential redevelopment in Park Place and at Victory Center Shopping Mall in Portsmouth.

Leaders in both cities have called those projects successes, although they haven't been without problems.

For instance, Empowerment 2010 partnered with the Norfolk Redevelopment and Housing Authority to bring to Berkley the grocery store that residents had sought for decades. The new Farm Fresh opened in 2005, and has provided jobs to 88 local residents.

Financial struggles belied community successes.

Empowerment 2010 never repaid a $244,800 loan to the housing authority, prompting threat of a lawsuit. It has delayed legal action, said Shurl Montgomery, the housing authority's executive director.

"They assured us they would pay us the money when their building was sold," he said. "We're waiting."

Empowerment 2010 also spent significant amounts on salaries and administration, even as it cut its full-time employees from a high of 22 to seven.

In 2006, the most recent year for which its tax returns are available, the agency had income of nearly $1.5 million. Almost half of that went toward salaries and benefits, including more than $91,000 to pay Faulcon, who headed the agency since it began.

The group that year had a funding shortfall of $120,839, tax records show.

The true value of Empowerment 2010, many officials said, wasn't the job training or the federal cash.

It was a program that made $130 million in tax-free money available to companies looking to relocate or expand within areas of Norfolk and Portsmouth. The hope was that the construction funding would spark economic development in troubled areas and provide jobs to those needing them most.

A 2006 U.S. Government Accountability Office audit of the national Empowerment Zone program found that a lack of data and oversight made it impossible to determine whether "funds had been spent effectively or that the tax benefits had in fact been used as intended."

Locally, the bond funding has been used to build hotels in both Portsmouth and Norfolk, to expand maritime businesses and to redevelop Portsmouth's waterfront. Three building projects are complete, and three others - including Sen. Lucas' convention and hotel project in Portsmouth and Dr. Keith Newby's plans for a medical complex in the Fort Norfolk area - are in development.

Under the bond guidelines, companies that received the help had to hire at least 35 percent of their employees from within the Empowerment Zone. But only the new SpringHill Suites near Old Dominion University confirmed to The Pilot that it met those requirements.

Metro Machine received $15 million in 2002 through the program to expand its Norfolk shipyard. The company' president, John Strem, declined to comment on whether it had met the hiring requirement, saying the company's personnel information was proprietary.

Empowerment 2010 also approved $8 million in funding to Portsmouth's Ocean Marine Yacht Center. Managers there did not return calls from The Pilot. Portsmouth officials have long questioned whether hiring requirements were met there.

After that loan, the Empowerment 2010 board changed its record-keeping measures, requiring companies to report back on whether they had hired anyone from the Empowerment Zone.

In recent weeks, Norfolk assistant city manager Marcus Jones has inherited Empowerment 2010's files and financial records, with the job of making sure all accounts and programs are properly closed and accounted for.

Cherry Sivells, whose cleaning company had a contract to work at the Empowerment 2010 office until she was let go last year for lack of funding, said she hoped the training and small-business assistance could be continued by someone.

"They helped a lot of people," she said. "We need more places like that here."

Meghan Hoyer, (757) 446-2293, meghan.hoyer@pilotonline.com