Posts Tagged ‘economic development’

I can’t think of any urban city in New Jersey which one would classify as truly “great”.   A great city provides the intellectual, creative and financial juice to form new companies that fuel economic growth and the resulting high quality of life.

There are large cities in America that do this like Boston, San Francisco and New York.    There are small cities that have done it as well; Raleigh and Austin come to mind.

As we wonder what it will take to make Trenton great again, we’d be foolish to think we could copy any of those cities.  After all we live in a unique state at a unique time.  But surely the ingredients for greatness are within our reach.

Much has been said about regionalization in New Jersey and how it can help.  But let’s be honest, Princeton is a poor comparable for Trenton, Passaic, Irvington and Camden.

The question is what does regionalization mean for Mercer, Essex, Passaic and Camden counties?  Does a rising tide raise all ships in those places?  Will a regionalized police force lead to lower crime rates and is that a measurably good thing for not only the urban centers but the suburbs as well?  What about schools?  What about economic development?

My suspicion is “Yes”?  Let’s seriously explore being a great county.

The analysis I have read about regionalization points to cost savings from combining operations.   This is obviously a good thing.  However, best guesses are that this amounts to around a 10% overall savings.  This is nothing to sneeze at but given the severe imbalance in property taxes vs. cost of services between a poor city like Trenton and its wealthy neighbors, it may not be worth the risk.

If, on the other hand, we saw an overall reduction in crim, county wide and not just in the urban center, then that kind of improvement would certainly grab a safety conscious suburbanite’s attention.

Schools could benefit too.   As it stands, suburbs currently fund not only their own schools but the lion’s share of the cost of urban schools.  Those urban schools produce generally poor results for a premium dollar.   But what if by integrating schools on a county level we were able to reduce the overall cost of providing a decent education?   There are thousands of examples of where this has happened in the USA.  If I lived in West Windsor, I’d much rather have a vote on how my money was spent in Trenton than not.  And as I’ve said many times, I’m the product of an integrated public urban school that I’d gladly compare to Princeton High.

But the real benefit could come from economic development.  Our suburbs struggle to attract ratables while at the same time fight the ugliness and hassle of sprawl.   But what if they benefitted from development in urban centers which typically have a surplus of developable land and welcome it?  Couldn’t that be a home run?  Imagine what would happen if county leaders could, in good conscious, focus their development efforts on cities knowing that the ratables their efforts generate would fund county-wide budgets.
This all sounds good but there is quite a bit of work to do to turn these ideas into real plans for action.  The fortunate thing in our favor is that a lot of the work has been done by State regionalization task forces and our current State administration is solidly behind those plans.

What is needed are Mayors and City Councils who are willing to lead their municipalities into a form of government that give up traditional autonomy in favor of a more balanced regional economy.   A strong leader in Trenton will need to find and sell the benefits of regionalization not only to the city but to suburbanites as well.

We’ll have to recognize that there is a good bit of well-deserved fear involved in a suburban town throwing in with a city like Trenton.  And Trentonians would have to realize that they would no longer call their own shots.

My hope is that at least one Trenton campaign in the 2014 election sets as its centerpiece, mutually beneficial county-wide regionalization.  Let’s explore sharing our library, Cadwalader park, our communication center, our schools and our developable land with our neighbors in return for becoming integrated back in to the region’s economy.

On Friday afternoon, (Jan. 11, 2013) Trenton first heard that Thomas Edison State College was to acquire the former Glen Cairn Arms (GCA) building at 301 W. State St.

The deal is that they pay a one-time fee of $300K and then never another dime to Trenton for all eternity.  TESC wants to construct a nursing school on the site.

To those of us that have observed the RFP process for GCA and the city’s broader attempts to market the city over the years, we know that our failure to interest a developer was due to lack of imagination, financial acumen and hubris.   The city under Doug Palmer had paid a substantial amount of money to acquire and settle lawsuits regarding the building, in excess of $3M.   We always thought we were better than any developer thought we were.  A Walgreen’s wasn’t good enough or a developer wouldn’t pay enough of the demo cost.  Or maybe other payments weren’t made.

In 6 tries over 16 years the city has not found a proposal that it liked enough to accept.  They’ve turned down proposals that would have had a positive return on investment for the city (i.e. paid more in taxes that our cost to make the site read).   And meanwhile, they never presented a plan to make the area around the site attractive to developers.  Over the years both Palmer and Mack have slowly let the city deteriorate in general both in its ability to fight crime but also to function as a working government.

So here we are.

In comes George Pruitt to present a deal to the city for the site that gives us nothing and for all time.

Tonight’s City Council meeting was obscene in the degree to which those of us working to help fix our approach to government were dismissed.  It was as if we were on the wrong side of the negotiating table with TESC, City Council and the administration lined up jointly to oppose us.

George Pruitt and his subjects threw out comment after comment hoping to convince, I don’t know who, that the project was a good idea.  They didn’t need to convince Council because they’d already been dealt with before the deal was announced.   Council and the city administration have given up on the city’s ability to affect change in marginal areas of the city.

This is a scary thought.  By giving up on Glen Cairn Arms, which has quite a bit going for it in terms of location, they’re saying that they don’t know what to do in any marginal part of the city.  They don’t know how to stimulate development.   It’s a hard thing to accept especially when the city administration and council don’t even know that’s what they’ve done.

But back to Dr. Pruitt’s comments on the numerous benefits to the proposed project:  Bob Lowe called them second order effects, which is what they are if you could even prove that.

For instance, he insists that by erecting a shiny new building property values would go up.  However, there’s no evidence in Trenton to suggest that.  It didn’t happen with the ballpark, hotel or arena in the so-called opportunity triangle.  It didn’t happen with the Hughes Justice Complex and it’s not happening with the new County courthouse.   The theory just isn’t supportable with the evidence.  And even if it was, it wouldn’t help our revenues because we don’t revalue our property, ever.

Second, Diana Rogers of the CCRC strongly supported the project.  Well that’s wonderful but who cares.  Ms. Rogers’ contribution to the “logic gone wild show” was to suggest that students at the nursing school would move to Trenton.   Wow! That was a doozy.   So what she thinks is that nursing student from around the world will pass by all of the other nursing schools in between them and Trenton just to come to TESC so that when they get here they’ll need a place to stay.   It’s hard to believe that a person that calls herself a redevelopment professional actually said that in public.

Next we hear the obligatory jobs argument, both construction jobs and permanent jobs.  I’d like for just once somebody to put pen to paper and show exactly how that translates into municipal revenue.  Unless new workers are being recruited from other areas of the country and need housing, and then when they get her happen to decide they want to live in Trenton, new jobs don’t equal new revenue.   Or maybe Dr. Pruitt thought that TESC would be hiring unemployed homeless people already in Trenton.  I don’t know what he was thinking other than he knew the public would like hearing it.

Finally we hear the nursing school compared favorably to other schools like Princeton, Rutgers and The Naval Academy.  The argument goes that those schools spin off industry and stimulate the economies of their host cities.  There is evidence that research universities have contributed to the development knowledge economies.   There just isn’t any evidence that nursing schools do that.  If there was then wouldn’t we be experiencing the boon Dr. Pruitt and others predict given that Mercer County Community College already has a nursing school in downtown Trenton.  I’ve read a lot about the linkage between universities and economic development.  I just haven’t come across the same linkage for nursing schools.

So we’ve got $16.7M in state spending that will make Trenton look a little prettier, give students another nursing option and construction workers another 6 months’ worth of work.  But Trenton gets nothing.

But we expected those banal arguments.  It’s what people say when they have to run away from the hard truth that a public project won’t benefit the host community.  We’ve heard this story too many times to count in Trenton.

What we didn’t expect to hear was the outright hostility to the idea that maybe we should take some time to think about this idea before we act.  I suggested that we form a group to look into the claims that were made by TESC and their paid contractors.   Shouldn’t we verify that there is no hope for site?  Shouldn’t we calculate the city’s cost in supporting this building for all eternity?  Shouldn’t we find a way to determine how nursing student lunches will translate into municipal revenue?   TESC made a lot of claims and didn’t provide any calculations to show how the city would actually benefit.  Shouldn’t we look into that?

And what about the city?  How is it that an economic development department can go 16 years and not figure out how to turn around one of the most trafficked blocks in the city?   How is it that a Business Administrator can’t figure out that a demolition loan at 2% would be a bargain if it generated a 4% return in taxes?  It’s not hard math.

Shouldn’t we do a little due diligence?

Nope rather than allow citizens to help look into these questions, our city council angrily shut the door on meaningful analysis and research.  They literally suggested that if we wanted to, we could  try to come up with something on our own. We could, but we’ve only got two weeks.   I’m sorry but we have jobs.  TESC told the Council that they had been working on this plan for two years.  Trenton taxpayers working as volunteers have only two weeks.

And to top it off, it was suggested that if we as taxpayers were so concerned why we didn’t do something about it before.  With whom?   Tony Mack hasn’t had the same person in the same job for more than 6 months for the past 2 ½ years.  Activists have tried to work constructively with the administration but it’s like walking on quicksand.   Further, I’ve been writing about this very subject for years.   I’ve written post after post about how to deal with land that has negative value.  I’ve proposed that we subsidize demo costs as early as 2008.  I’ve written extensively about neighborhood level development and land value tax.  These are measures to which the Palmer or Mack administrations or Council could have listened.  But instead they’ve chosen to chase business as usual and cede more Trenton land to the State of NJ.  They’ve chosen to be influenced by the same people who have influenced Trenton into the hole it’s in.  They’ve chosen to make us more dependent on the State, not less.

The lack of questions, the suspension of logic and the shutting out of meaningful public comment is proof positive that once again, in Trenton, the fix is in.

Other blogs/write-ups on the subject:

Jim Carlucci’s write-up of the Council meeting

Reasons to be Cheerful. Not.

Glengarry Glen Cairn

Tony Mack’s Worst Deal Yet

JoJo Giorgianni has given us his economic assessment of the value of corruption to a city.  His plan was to use Mayor Tony Mack like a puppet to enrich himself as developers bribed his version of Tammany Hall for the right to build in Trenton.  JoJo’ and Mack’s thinking was that they were facilitating investment and should get paid.  Why else would they have gone to the trouble of getting Mack elected?  In his conversation with an FBI informant, JoJo called this “Good Corruption”.

I guess that’s one idea.

But just to spell it out we, need to be clear about why corruption hurts a city.

Corruption distorts a market and creates uncertainty.

Investors HATE uncertainty!   When it becomes known that one developer has had to bribe city officials, all other developers become uncertain as to what level of corruption they will face as they consider investment in Trenton.  A developer would much rather play by a transparent and clear set of rules rather than the murky give and take of Trenton’s underworld.

Furthermore, in a climate of corruption, it is entirely likely that a developer could face a second round of shake-downs further into the project after there was no turning back.  This possibility opens the developer up to a high degree of risk.  What was to stop JoJo and Mack from ordering the building inspector to look again at a project, unless the developer had “Uncle Remus” visit again (their code for bribe money).

Our PILOT (Payment in Lieu of Taxes) negotiations are another source of risk and potential corruption.  Every developer negotiates separate deals with the administration on what taxes they will pay.  This kind of uncertainty makes evaluating a deal impossible.  Even when options for a “standard” PILOT have been presented to the Mack administration, they have ignored them.  Why give up the opportunity for graft.

Bribery and extortion create an unequal playing field that raises the cost of business in a place like Trenton. Developers have other options and we need them more than they need us.

Trenton politicians have a history of shaking down developers

Tony Mack isn’t the first politician to require that developers “check in” with the administration before doing business.  Other politicians have required contributions to campaigns as a pre-condition of cooperation.  We should all be suspicious of campaign war chests exceeding $200,000.  That kind of money doesn’t come from normal citizens hoping for better government.  It comes from people who want favors, at our expense.

We don’t want to make it expensive, risky or difficult for developers to build in Trenton.  We can see the results:  very little development happens in our city because of our corrupt climate and heavy handed administration.  I’ve talked to many Trenton developers over the years who’ve refused to work in our city again because of the bad taste it left in their mouths.

We need a completely different approach

In a new revitalization minded administration, we’ll:

• Clean out our Housing and Economic Development and Inspections Departments and start over with a new attitude
• Publish a process for development that does NOT include the Mayor’s office
• Set prices for city owned land in a public Internet based auction system (For the time being, NO more deals).
• Create a standard PILOT hopefully based on Land Value Tax system that rewards investment and discourages speculation

Trenton has been relatively closed to honest business development for many years.  Hopefully, with the Mack era behind us we can start fresh and turn our city into the easiest place in Central Jersey to develop instead of the hardest.  Given our other issues, we need to be better than everywhere else.

The July 18^th edition of Trenton’s Urban Studies group had Alan Mallach as its guest speaker. Mr. Mallach has been studying cities for 40 years and works today as a consultant and author on the subject. He was formerly Trenton’s Economic Development director back in the 90s.

The upshot of Mr Mallach’s comments was that a small city like like Trenton, should have as its objective, to increase the numbers of higher income residents. Increasing downtown residency is an important part of this prescription. Read the rest of this entry »