It is 7 a.m. at the Washington Beef Co. on Fourth Street NE. While 85-pound hunks of prime beef swing from steel hooks on the loading dock, more than 100 meat cutters, warehouse workers, clerks and sales people are busy on four floors inside, preparing to deliver thousands of pounds of fresh and frozen meat by midday.
This multimillion-dollar business and all those jobs may be leaving the city soon, following a path to the suburbs taken by hundreds of city businesses in recent years.
The D.C. government, however, is preparing a new and untried weapon--the "enterprise zone," President Reagan's strategy for urban America--in its fight to get businesses like Washington Beef to remain in the city and expand.
Like many other cities around the country, Washington is preparing its own enterprise zone plan, a program that would both aid local businesses directly and allow the city to compete for additional federal help proposed by Reagan.
The battlefront--tentatively--would be the New York Avenue corridor in Northeast, long considered by the city as a prime tract for development and containing 40 percent of the city's industrially zoned land.
Grimy, vacant buildings and littered land along the corridor tell part of the story of growing urban unemployment: some 240 acres of vacant industrial land and at least 70 empty structures with an estimated 2.1 million square feet of space where food handlers, printers, warehouse workers, drivers and clerks once labored, earning paychecks that they often spent in the city.
Nearly 500 firms--including Washington Beef--remain here along the six-lane thoroughfare between North Capitol Street and the Maryland line, employing more than 10,400 workers in a patchwork of warehouses, factories, construction firms, motels, fast-food outlets, gas stations and more.
But an undetermined number of businesses have failed or fled to the suburbs, an industrial hemorrhage that the D.C. government has for years tried unsuccessfully to stop, or at least slow.
The Enterprise Zone Act of 1982, proposed last month by Reagan and currently being debated in Congress, is an experimental and somewhat controversial strategy that is the only new urban program offered by the administration.
The program basically relies on tax breaks, reduced regulations and other sweeteners to entice businesses to move into depressed areas they otherwise would shun.
Critics, including some businessmen, labor officials, and urban advocates, argue that enterprise zones won't work because tax breaks cannot work the magic that Reagan expects, especially in a slumping economy.
To revitalize depressed neighborhoods, these critics contend, it is necessary to pursue a traditional, broader urban policy that would expand job training and housing aid, as well as provide more money for businesses that need start-up capital to develop suitable sites with good parking, traffic flow and security.
D.C. officials, who have had an interagency task force studying enterprise zones for more than a year, are familiar with the criticisms, but are readying a $2-million-plus annual package of local tax incentives and investment credits as part of an effort to compete for one of 25 federal zone designations that would be awarded in the first year of the program.
The federal awards are to be based on how much local jurisdictions are willing to offer to make the zones succeed. If Washington wins a federal zone designation, new businesses would qualify for substantial federal tax breaks in addition to what the city offers.
Under current proposals, if the city fails to win the federal designation, Washington's own program would go forward anyway.
Mayor Marion Barry is expected to submit enterprise zone legislation to the City Council within a month. Baltimore has already developed an enterprise zone package and the Maryland legislature passed legislation this year to allow for the creation of zones.
The D.C. effort would be somewhat different from the Reagan vision because the local program would be geared as much to keeping existing businesses here as to attracting new ones.
"You can spend your time trying to attract General Motors," said Lawrence P. Schumake, director of the D.C. Office of Business and Economic Development (OBED). "But in the meantime you can lose so many other businesses you get a net loss" in jobs.
The thrust of the District's enterprise zone effort is, in part, to win the hearts and minds--and payrolls--of people like Robert Kolker, the 43-year-old vice president of Washington Beef. It is a battle that District officials acknowledge will be an uphill effort.
"We have got to move," Kolker said one recent morning on the loading dock, wiping his hands on his white apron and tilting back his cowboy hat, "and we are not looking at the District."
The 1940-era beef plant, located in the market area between New York and Florida avenues, is too small and poorly designed for a growing business that handles millions of pounds of meat yearly, he said. Instead of three cramped floors and a basement, the company needs to find or build a larger one-story facility where food-handling would be easier, quicker, and therefore cheaper, he said.
Why not stay in the District, near most of the hotels and restaurants he serves? "We'd love to," Kolker said.
But high land costs, high worker's compensation and other insurance premiums, high taxes, and "higher everything," he said, are forcing the firm to look at sites in the suburbs, where many market-area merchants have already gone.
Under proposed Reagan guidelines, five sections of the city with high unemployment, low incomes, and dwindling populations would probably qualify as zones, according to a study by OBED. Aside from New York Avenue, they are the 14th Street corridor NW, the H Street corridor NE, sections of Anacostia along Martin Luther King Avenue and Good Hope Road SE, and parts of far Northeast in Ward 7.
The New York Avenue corridor is the most logical place to use these incentives because of its concentration of land zoned for industrial use, according to Emily Durso, acting assistant director of OBED. The final decision on which land to designate as a Washington enterprise zone rests with the mayor and council.
Within the New York Avenue corridor, the Florida Avenue market area, the sprawling warehouse district that houses some 60 food-related firms with more than 1,000 workers, is a key potential target of the city's enterprise zone strategy, Durso said.
Opened in 1929 when the old Central Market was razed to make way for the National Archives, the Union Market off Florida Avenue was intended to have "the widest streets in the world" to accommodate the daily bustle of deliveries, recalled Fred Kolker, 79, president of Kolker Poultry and cousin of the beef Kolkers.
But 53 years later, the market is now woefully inadequate, according to many of the merchants. Some of them have recently formed a Florida Avenue merchants association, which is considering expansion and renovation plans. "When we first built this 50 years ago, who could have imagined we'd have these 45-foot trailers clogging up the streets?" asked Kolker.
Traffic and parking are "nightmares" for many merchants whose deliveries are slowed and whose businesses therefore suffer, according to Paul Pascal, vice president of the poultry firm and organizer of the merchants' association.
Those problems, plus inadequate warehouse space and rising crime and vandalism, have prompted some food wholesalers to move part or all of their operations to places like the regional market terminal in Jessup, Md., Pascal said.
Boris Ballard, who runs National Produce Co. and employs 35 people who store and haul everything from Idaho potatoes to Mexican garlic, complained that he could expand his business and work force if he weren't cramped in an outdated warehouse. "I'm trying to run a 1980s business in a 1930s building," he said.
Others, like Stanley Santorios, whose Quality Fruit Co. is the largest independent supplier of bananas in the region, have already moved part of their businesses to Jessup. "We are in Jessup to stay, but I don't know about here," he said. "Getting a car into this market area is a nightmare. Imagine getting a truck in here."
Food dealers hope to find a developer to build a major expansion of the market on vacant land nearby, as a site for business growth or for new firms, Pascal said. Many are willing to invest in staying in Washington, he said, but high land costs so far have made the project financially impossible.
Enter the enterprise zone. According to Durso, the package tentatively proposed by OBED is aimed at helping such construction or expansion, by offering local tax and investment incentives worth an estimated $2 million a year.
* Cash refunds of 5 to 10 percent of the total cost of new construction, expansion, and renovation within the zones.
* A freeze on tax assessments so those improvements would not be taxed for five years.
* For every D.C. resident hired, employers would receive a tax credit equal to 10 percent of the employe's salary (up to $15,000). For every "disadvantaged" city resident hired, the credit would be 20 percent.
* For the first time, the District would issue tax exemptions for industrial revenue bonds, to provide capital for development at below-market interest rates. (Such money has been available in many jurisdictions, but a defect in the city charter prevented issuance until Congress recently remedied the problem. Developers would be able to borrow from financial institutions at a still-undetermined lower interest rate.)
In addition, several million dollars worth of improvements would be made on streets, sewers, lights and other services within the zone. The city could target at least $4 million of already-budgeted public works money at the enterprise zones, Durso said.
She acknowledged that this part of the plan would drain money for improvements in other neighborhoods, and probably would spark some opposition.
Another key element of the plan would be a concerted effort to reduce red tape by assigning D.C. officials specifically to shepherd through the bureaucracy all the permit applications and licensing needed to do business inside the zones, Durso said. Businesses frequently and loudly complain about time and money wasted dealing with local government red tape.
Industrial revenue bonds and tax breaks could be of some help to a renovation project at the Florida Avenue Market, Pascal said, "but it will not be enough. It may take a little more than that."
He said the District has to find a way to reduce the high cost of land, but said he considers a government subsidy unlikely.
Indeed, Durso said, "we just can't afford to hand out millions of dollars," as many wealthier jurisdictions have done by forgiving all taxes for long periods, or selling land at extremely low prices.
"We will still be losing some businesses" without larger incentives, Durso said, "but I think we are offering a good package" that may draw others.
In the case of Washington Beef--the largest employer in the market district--Robert Kolker said he is highly doubtful that the enterprise zone strategy would keep him in the District.
"I am not saying enterprise zones won't work, but I am saying it is little late for us," he said, "The District would have to make it very attractive, to offset the higher costs here, and I doubt they could . . . . It's a shame, too. It's a great location for our business, but the costs are too hard to take."