Archive for the ‘Real Estate Development’ Category

Another use for $500,000 in Trenton money

Our city council recently agreed to give the money-losing Trenton Marriott another $500,000 to satisfy the demands of the very management company that made it money-losing in the first place.

This begs the question of whether this is the best way we could invest that kind of money.

We could pay for 5 police officers, but that would be for just one year and then we’d have to lay them off in 2013. A better idea is to make investments in our tax base and quality of life that will be permanent and predictable.

With $500,000 we could stimulate investment in 50 new homes for 50 new families in Trenton.

Our fundamental problem (and all but the lunatic fringe agree) is that we don’t have enough people with disposable income living in Trenton. For now and to make the math easy, I’ll define that as people who can afford a home that costs $200,000 or more.
A home like that yields approximately $4,400 city revenue given our current tax rate and the 60% discount on home value our tax office builds in to the appraisal.

What if we give $10,000 grants towards anyone who will buy a new $200,000 home in Trenton. Given our tax rate this would yield a 79% rate of return over 10 years and would be paid back in just over two years.

For $500K we could make 50 grants to 50 new Trentonians that will help the rest of us pay for our city government going forward. Those 50 homes would generate $220,000 a year in revenue to the city or $1,720,000 over 10 years.

This plan recognizes an inescapable fact that much of our property in Trenton now has negative value. That’s right, we’d have to pay someone to take it off our hands. Free isn’t good enough. This happens all the time around toxic waste dumps. High murder rates aren’t much different.

The good news is that by simply building on a lot and living there, the land value is increased. We create value by stimulating development of new neighborhoods populated with people who won’t stand for crime. The criminal element hates houses with people and lights.

MCCC needs to be better educated

In the October 15th Trenton Times, Carmen Cusido’s article “County College has plans to expand” explains Mercer County Community College’s plans to increase its downtown Trenton presence.

For most people this sounds like good news, and in general it is. The second most important thing a city can do to revitalize is to provide job training. So MCCC’s decision to increase classes in Trenton where they can be easily accessed by Trenton residents is a great thing.

So why in the world would a guy like me who does almost nothing but lobby for smart revitalization in Trenton complain?

Because, the school is making dumb revitalization claims. MCCC argues that in addition to promoting the benefits of education to Trentonians, it is also providing an economic stimulus. They are not.

By expanding their programs, the college claims that more students will be milling around downtown presumably buying things. Here’s where MCCC logic breaks down. They are arguing that by students shifting their spending from one part of Trenton to the downtown it will have a marked effect on our economy. Somebody at MCCC needs to retake Economics 101.

The second point MCCC makes is that they will be spending money on construction on the expansion. I should remind readers that MCCC is funded with taxpayer dollars and that the proposed expansion will be tax exempt. So even though over half of Trenton’s property is tax exempt we’re going to get even more at the expense of Mercer County taxpayers.

I’ll give a couple of examples of what’s happened in downtown Trenton. Several years ago I made an offer on a building that’s since become part of the Daylight Twilight School. I was outbid by the school system. My project would have paid taxes, the school does not. The same happens with MCCC, they will outbid private investors using taxpayer money and we’ll be left with no new revenue. We’re also building an expensive new County courthouse on Market Street and county officials have the nerve to call this revitalization as well. Trentonians need to stop drinking the Kool-Aid of government spending. We need to elect officials who understand this and will be skeptical to the point of being openly hostile to the idea of anymore tax exempt development in our city.

That said, job training is a still a good thing. However the article on MCCC points to unclear thinking about what is really important in Trenton’s revitalization. We can’t afford to be vague.

City’s Housing Director should be fired

I’ve been patient both on this blog, on Facebook, in private emails and in person trying to explain how low income housing projects can’t generate enough tax revenue to offset the cost of supporting the residents.  I’ve gone on to explain what level of market rate development Trenton needs to achieve self-sufficiency.  I’ve made specific recommendations.  I’ve even started a citizen’s budget group to work with the Mayor and City Council on the budget and revitalization. Read the rest of this entry »

“The State’s Role in Fixing Trenton (Part 2): Using the State’s Power to Re-invent Trenton”

  In Part 1 of “The State’s Role in Fixing Trenton” I argued that New Jersey should fund a portion of Trenton’s revenue and I presented a simple calculation for a fair funding level, $70M.  However, there are several big changes that only the state can make that will truly re-invent Trenton’s economy and potentially all of New Jersey’s urban centers.

Over the years, state and federal governments have adopted policies favoring the creation of suburbs:  most notably road building, tax advantaged mortgages for single family homes and electrification.  Technology also played an important role in making urban centers less important as telecommunications, trains, power generation and eventually container shipping spread manufacturing out of town. [1]

These policies and technologies, among others, led to urban decline over the last 50 years.  Urban renewal and the riots in the late 60s were just nails in the coffin.

These are powerful mega-trends but their influence is waning and new mega-trends are taking over: Read the rest of this entry »

The “Up” side for Trenton

As the new Citizen’s Budget Committee prepares to form its recommendations to the public and our elected officials, I pondered aloud to my committee, “what limits our pace of revitalization?”

I’ll get to the answer but first I’ll recap the problem and the solution.

Our economic problems are dangerous

Read the rest of this entry »

The Role of Eminent Domain in the Train Station Revelopment Plan

Economics is all about the choices humans make and in the aggregate human societies (micro economics and macro economics).  Negotiating can be thought of as a specific case of micro economics closely linked to the core concepts of marginal utility and marginal value.  Therefore, Reinvent Trenton is taking this opportunity to explain basic concepts in negotiation and the role of eminent domain in them. Read the rest of this entry »

An ill-conceived partial State takeover of Trenton

The Trenton Times reported in “A ‘Capital’ idea that may improve Trenton” that a state agency, the Capitol City Redevelopment Corporation (CCRC), is seeking the power to use taxpayer dollars through bonds and fees to become a developer in downtown Trenton.  Assemblywoman Bonnie Watson Coleman, is pushing this bill through the legislature.

Bill “S-3116” greatly expands the role of CCRC by Read the rest of this entry »

The chicken and egg of Trenton’s revitalization

One of the most maddening debates you can have in Trenton is about city investment in new business vs. residential living.

Almost, to a person, the political elite in Trenton will tell you that investment in business is the top priority. I’ve had this debate countless times and you can see it in the political rhetoric of our candidates. However, when pushed by the logic of residential development, they’ll eventually say, “well it’s really a chicken and egg” problem. Read the rest of this entry »

Trenton is committing revitalization suicide

Walking the streets of Trenton, just about the best sounds you can hear are that of nail guns, circular saws and drills. They’re the sounds of revitalization. There’s a hopeful tone to the noise and the sight of a crew, hard at work, means that someone is investing in our city.

You would think that we would do everything in our power to preserve the productive work of re-building Trenton. Yet, we’ve done exactly the opposite.

Read the rest of this entry »

Trenton- post housing slump

The current financial crisis and recent shock in oil prices will usher in a new era for the American lifestyle.

We’re going to be a more modest nation. We’ll buy what we need to live and be less concerned about fads and status.  We’ll be concerned about our exposure to fossil fuels and will seek out dense urban living for both the economy of heating and driving. Read the rest of this entry »