Trenton currently has a per capita income of $17,066 per person according the US Census Bureau (2009 numbers). However, as we’re fond of saying in Trenton, “There’s always Camden”, which is $12,777. The average for all of New Jersey is $34,622 . Trenton’s per capita income is half that of the average for New Jersey. This is why we struggle as a city. There’s no money here.

To help clarify our revitalization mission here in Trenton I offer Clifton, NJ. Clifton is a “middle of the pack” city in New Jersey with a per capita income of $30,552. It also happens to be the same size as Trenton with a population of 85,000. Clifton is a great aspirational target in terms of economic activity.

Clifton is a quiet bedroom community for New York City with nice parks and good schools. It’s also quite diverse. Given Trenton’s history and location I’m sure that given the same income mix we’d be a much better place to live? “Go Trenton, Beat Clifton”.

Why focus on income as a measure anyway? Everything is tied to income: Housing values, student performance and even crime. There aren’t too many high income areas with run down houses, bad schools and rampant crime. Nobody hopes to revitalize their town by lowering the income.

Per capita income targets give us something at which to aim. How far should we go? Let’s be reasonable and assume that a city should be a diverse, after all we don’t want to be Princeton. Furthermore we’re starting from pretty far in the hole so let’s give ourselves a break and shoot for, say, $30,000. That’s a round number and about the same as Clifton, so when we make it, we’ll declare victory.

Furthermore, a city’s per capita income tells you whether the city is being subsidized by state, county and federal governments (i.e. is it a drain on society?). It tells you whether the tax rate is high and whether it can pay for the things that make a city nice: like parks, public art and libraries.

Make no mistake about it though, I don’t equate the $35,000,000 or so the state currently pays Trenton as “aid”. When you do the math on the State’s property in Trenton, they should be paying a PILOT (Payment in Lieu of Taxes) of about that amount. However, when we include our schools, it’s clear that the State is massively subsidizing us as they pay roughly 80% of the budget.

If our next Mayor and city council really want to focus on revitalization, they will worry less about attracting affordable housing and halfway houses and more about moving up the ranks of per capita income.

Sounds great but here’s the catch. Given Trenton’s current population of 85,000 people at an income of $17,066, we’ll need to add 79,000 people with a per capita income of $45,000. We’ll be a vibrant city of 164,000 people living in beautifully converted lofts, gleaming high-rises and restored 19th century homes.

To put this into real terms, to reach our goal, we would have to absorb 20 times the population of affluent Lambertville to move our average up to Clifton’s. Imagine that: Trenton will have to convince 79,000 Lambertville-like folks to leave their restored historic houses, fine eateries and antique shops to move to Trenton. That’s a lot of convincing but it’s what has to be done.

This goal has other implications. Remember that per capita means “per person”. Children that don’t earn $45,000 / year will bring down the average. This is a serious realization. It means that we need to work especially hard to attract childless adults who make at least $90,000 per couple. This is especially important when we realize that Trenton’s largest cost is support of children. In order to fix our economy and our budget we need to become an especially attractive place for singles, retirees, gay couples and young marrieds. This formula is a familiar platform in revitalized cities across America.

Every good platform needs planks and for revitalization there are only three that matter:

• Bring back the middle and upper class. Whenever a new proposal comes into city hall, department directors would have to ask themselves, “Will this get us to $30,000 per capita income?”. Let’s face it, the only proposal that will pass muster are ones that attract middle class and upper income to town or that provide high paying new jobs.
• Institute a pro-growth tax system – Our property taxes are not only highest in NJ but they also discourage development. A land-value tax would tax land at a very high rate but improvements at a very low rate. This encourages developers to build very dense and very expensive buildings. We want that.
• Reject new affordable housing projects. Affordable Housing programs like Leewood Village, HOPE VI and Mt. Laurel RCA contributions will be banned from Trenton. As evidenced by the Lamberton Historic Districts stance against these projects, Mill Hill, Berkley Sq. Cadwalder Heights, Glen Afton and Hiltonia have worked hard to raise their standard of living; other neighborhoods want the same success but just don’t want the city working against them.
• Listen to what the people want. Take to heart what your current middle and upper class citizens are telling you. They want Arts, Crime Prevention, Preservation and Clean Streets. They can’t be any clearer.

I don’t mean to suggest that taking this radical approach to revitalization will be easy for a political candidate. For years Trentonians have been misled to believe that affordable housing IS revitalization. Also, there is a large part of Trenton’s population that makes their living catering to the poor, either through state government or the various non-profits with offices in town. We’re practically a company town for the underclass. However, to “Beat Clifton” and get to $30,000 we’ve got to move forward.

I challenge out next crop of mayoral candidate to seize the agenda of growing Trenton into a powerhouse city. You will have plenty of support from voters that are ready to welcome 79,000 affluent new neighbors.

Go Trenton! Beat Clifton!

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.

What they’re saying is “I really don’t know”. It’s a bit daft to call something like this chicken and egg in the first place. If you believe in creationism then the chicken came first. If you believe in evolution, then the egg did. Either way there is a correct answer. Just like there is for business vs. residential.

Politicians are so conditioned to tell you Trenton needs jobs that they’re blind to the economics of the situation. I’m going to attempt, without the support, of hard economic analysis to convince you that residential development comes before business.

First let’s frame the problem.

All business aren’t the same. They fall in to two big buckets: retail and commercial.

Retail obviously includes shops and grocers, but it also includes restaurants, law offices and doctors. These businesses supply goods and services to the local population. The more and better selection of retail business we have, the better our quality of life. However, retail businesses won’t go anywhere near a city without disposable income to spend.

Commercial businesses make products or deliver services that can be exported out of the region. Trenton used to have lots of this and now I’m hard pressed to come up with current examples. Manufacturers, big banks and machine part businesses count as commercial. Cities need commercial businesses in order to create wealth and jobs. Commercial business won’t locate in cities without an educated workforce, nice homes for its executives and amenities (i.e. retail) for the workers.

Residential investments includes home improvements, new developments both rental and for sale and of course the purchase of a house. Residential development depends on retail to some extent but in general homeowners will buy for many reasons other than proximity to shopping. In a region like Central Jersey, close proximity to a job is entirely unimportant.

First consider the decision making process for each type of investment.

Renters take very little risk when they move to Trenton. If they don’t like it they can leave. As long as landlords can keep their costs low (read low taxes) they can attract bargain hunting renters to Trenton.

Homeowners take a bit more risk but also are more prone to make uneconomic decisions. A quick survey of 30 or so new Trenton homeowners found driving reasons like: being close to a black church, being near a gay community, affinity for urban living and availability of interesting architecture. Homebuyers all take a risk, but their home is a somewhat fungible commodity and can be sold in a well organized market.

Of course both renters and homeowners value retail amenities. The availability of retail amenities both makes the real estate more expensive and attracts new residents.

However, retailers make much more sound business decisions on where to locate (as do their banks). It would be a questionable decision for an upscale retail shop to open in Trenton. The few residents with disposable income are spread throughout the city and can easily shop in nearby towns. A new movie theater, hotel or restaurant will never bet that residents will follow them in to Trenton. Rather they’ll happily open a new store in Hamilton or Ewing and hope to attract some Trenton residents.

Commercial businesses are even more careful. Typically they look for an educated workforce (which Trenton doesn’t have), a favorable business climate (Trentononians helped to drive away several large industries) and a great site with (we’ve got some brownfields). We really don’t have much going for us and this shows in our anemic economy. Commercial businesses are more likely to locate in a city with a variety of housing stock, retail amenties and low crime. I recall attempting to convince my former company which was then in Plainsboro and considering a move, to look at Trenton. I got laughed at.

Because residential investors are not making purely economic decisions, they are the most likely to invest in Trenton.

New residential development will beget new retail. In addition new residents, especially high wealth residents, are most likely to form and invest in new commercial business.

Residential development, especially high income development, lays the foundation for everything. And, because residents don’t worry about risk so much they’re easier to attract.

However all residents aren’t created equal. We need new residents who don’t consume expensive city services like schools, social services and jail cells. Empty nesters, gay couples and young professional are the typical target segment a city attempts to attract.

These market segments demand specific types of homes. They aren’t looking for large detached single family homes. Rather they want smaller homes with less upkeep or a more exotic home that reflects a certain lifestyle.

Trenton has relatively little housing that will appeal to these market segments. Hiltonia, Glen Afton, Cadwalder Heights, Berkely Sq and Mill Hill would appeal to this market but represent a relatively small portion of Trenton’s housing stock. They couldn’t possibly absorb the 20,000 or so new high income residents we need to make Trenton attractive to new retail. Also, we couldn’t possibly expect a large commercial enterprise to locate in Trenton if its mid-managers couldn’t find a place to live.

In order to create the chicken (economic development) we need to lay the egg (residential investment).

As politicians craft their economic plans and voters review them. Look for stimulating upscale residential development at the top of the list. If you don’t see it run the other way, the politician has another agenda besides fixing Trenton.