Archive for May, 2017

Citizen response to Palmer and Prunetti’s Op-Ed on Trenton redevelopment

Jane Jacobs is perhaps the most influential writer on urban redevelopment in our time.   Her book, The Death and Life of Great American Cities, is a bible to many on what works and doesn’t in urban revitalization.   In it, she argues that the infusion of large sums of government money into revitalization projects is cataclysmic.  Instead, gradual money that ebbs and flows, fails and succeeds, is what is needed.

The very premise that a large infusion of government money into downtown Trenton will help, no matter how tempting, is fundamentally flawed.   We don’t have to re-read Jacobs to understand this.   Over $150,000,000 in government funds were spent in Trenton 20 years ago to build what Messer’s Palmer and Prunetti called the “Opportunity Triangle”:  The ballpark, the arena and the hotel.   The promise was that these large government investments (yes, our hotel was owned by the city) would stimulate other development in Trenton.


Palmer and Prunetti were wrong, way wrong.   They proved how wrong politicians can be at great public expense (the hotel went bankrupt). Bob Prunetti, defended another government project, Thomas Edison State College’s development of Glen Gairn Arms site, by claiming that the patrons at the ballpark were stimulating development as late as 2014.   There is no evidence of this at all.  He was making up a conclusion that was not founded in fact.   Palmer, as late as 2013 told me that he always wanted to sell the hotel to a private owner, yet he never did. After he left office, the hotel, that was built for $60,000,000, was sold in a fire sale for $5,000,000.   Trenton taxpayers lost millions.

So why is it that the Trentonian thinks these two should have an audience regarding the use of public funds in Trenton redevelopment?  (Guest Oped: Palmer and Prunetti: Trenton needs to follow successful examples from other cities)

They shouldn’t.

They had their chance and don’t have anything to show for it.  In the 90s, when they were in power, the country grew economically while Trenton slid backward.   They simply failed to position Trenton to ride the wave of growth that swept the country and  therefore set the city up for the current trend in urban re-population.

Even one of the examples of success they reference in their Op-Ed,  an expensive but uncompleted project in Atlantic City is dubious.   A project that hasn’t even been completed can’t, by definition, be called an economic development success story.  Spending money with no results isn’t success. Who would think otherwise?

Governor Christie’s plan for Trenton has already been roundly criticized by citizens that actually live and work in downtown Trenton.   It’s a tone-deaf proposal that Ms. Jacobs would have railed against.

Prunetti and Palmer propose to change the investment a bit and morph it in to different mixed use project.   However, this still represents a big, risky government directed project.  It’s fundamentally predisposed to have cataclysmic results like stifling streetscapes, crowding out other projects or simply failing (like the hotel).

Who knows why these two former politicians decided to pitch this specific plan.  Perhaps they are somehow connected to it?   Perhaps they haven’t learned the lessons of cataclysmic government money and really think this will work?   I don’t know.  What I do know, and all rational Trentonians should know, is that their track record has been disastrous for Trenton.   The Trentonian has done a disservice to Trenton in publishing their Op-Ed and giving it the credibility that comes with “print”.

Thoughts on the merits of a “State” bank in New Jersey?

I was asked to take a look at Phil Murphy’s “state bank” idea. So I did and here are my thoughts.
The general idea is that the State would create a bank that would service the State of NJ and then make loans to municipalities and possibly special classes of citizens, like students, at favorable terms.
I had three initial thoughts
  • By charging lower rates than commercial banks for the same amount of risk, taxpayers will bear the cost
  • What problem is this idea trying to solve?
  • Why would NJ, in 2017, model anything after North Dakota, in 1919 (as apples and oranges a banking environment as you can possibly get)?
I read the Politico article about this which was fairly in depth and came away even more confused.
It seems that the Murphy campaign is struggling to figure out how it can protect a State Bank from political corruption.   That’s good, because it would seem that a State controlled bank would be like a sandbox for malfeasance of one type or another.   You can just hear the back room bargains now for funding of this or that local infrastructure project in return for some sort of favor.
Meanwhile, the question that is NOT adequately addressed is “what problem are we fixing?”   The answer can NOT be that commercial banks are charging too much.   If that were the case then there are plenty of other banks that would charge citizens less if it were possible.  A State bank could only charge less if it were subsidized by taxpayers, which is exactly what will have to happen.   The public can be easily duped on this note because not many people understand the relationship between risk and cost.    Basically, a State bank could charge lower interest on loans if taxpayers guarantee the loans.   If loans go bad, it’s not the bank who takes the loss, it’s the taxpayer.
Presumably, we DO have a problem with corruption in our use of banking services.  Why wouldn’t we?  NJ politicians have found ways to corrupt all types of government contracting.   While a Public Bank could address this corruption, it seems like we would be simply shifting the corruption from one place to another.
We do a lot of dumb things in NJ.  As an example Trenton used public money ($65M in state and local funds) to build a publicly owned hotel back in 2000.   This happened because private money didn’t think there was a good business case for the hotel.   And there wasn’t.  So taxpayers were left holding the bag when the hotel went bankrupt.   This is what happens when we let politicians with big chunks of public money make investment decisions.   A New Jersey Public Bank would fund a field day for politically motivated bad investments.