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

Our economic problems are dangerous

Trenton’s revitalization issues can be characterized in two important and related ways:

1. We have a large income gap, Trenton has a $17,000 per capita income vs. $35,000 for NJ
2. We have a structural deficit of approximately $70,000,000 (approximated from 2010 Trenton city budget and our recent tax increase)

Our income gap is a problem because Trenton can’t sustain the services needed to support its relatively poor population nor does it have the disposable income necessary to support amenities like stores and restaurants.  Furthermore, our lack of wealthy residents with access to capital make it much less likely that local business formation will take place that would create a private sector economy.

Our structural deficit is a function of years of operating with this income gap.  Expenses like crime prevention, schools and social services have gone up while revenues from property tax have proportionately gone down.   The state makes up the gap in our structural deficit.  However, if funding dries up (which has started) Trentonian’s will be left with massive tax hikes (which have started) and severe reductions in service (which have also started).

Trentonians need to be reminded that we fund only 10% or our school budget and 25% of our municipal budget.  We’re at the mercy of the state for most of the rest.  This is a risky proposition and we’re now suffering the consequences.

If this situation continues, many Trentonians will be bankrupt by their high property taxes and property values will decline, perhaps sharply.  As service levels go down and taxes rise, a house in Trenton becomes less attractive to a new buyer.  Homeowners will not be able to sell their homes if they need to move and the elderly will leave less in their estates to their children.  The structural deficit destroys the value of all our investments in Trenton.

Our solution is massive immigration to Trenton

There is much to say about these two problems (however none of our political candidates have tried), bet let’s assume for a second that the solution is attracting new people to Trenton.

Readers should remember that though Trenton’s population has fallen to around 80,000, it once housed approximately 140,000 citizens. We have both the land and infrastructure necessary to accommodate significant growth in population.

We can fix both our deficit and our income gap by going on a crash program of attracting new residents.  And given the choice, we should strive to attract middle class and wealthy residents that have no need of social services and schools.

The kind of crash program that will make a difference will attract 30,000 new residents to Trenton and lead to the development of 15,000 new homes.  These homes will average $200,000 a piece (a low estimate) and will increase the tax base by $3 Billion.  Assuming a 2.5% municipal tax rate, our property tax revenue would go up $75 Million.

Such a crash program to stimulate mass immigration into Trenton will go a long way towards resolving both our structural deficit and income gap problems as these residents would have incomes closer to or above the NJ average.

ALL current Trentonians both wealthy and poor, homeowners and renters benefit from this.  All of us have an interest in avoiding the destruction of property values and the preservation of our level of municipal service.  All Trentonians prefer to see more not less amenities in Trenton.  None of this will lead to residents being forced out (we have plenty of underutilized space) or having their taxes increased (new taxpayers will help us eventually lower our taxes).

Our upside is huge

30,000 new residents seem like a lot of people.  At our budget committee meeting I wondered how we could attract such a large number.  I asked, “Wouldn’t we be limited to some subset of the people who move to Mercer County every year? “

A developer in our group corrected my thinking, and pointed to the REAL upside for Trenton.  Trenton can attract new residents not just from the pool that plans to settle in Mercer County, but rather from the entire New York and Philadelphia metro region.

The few developers active in Trenton are already drawing buyers from Philly and New York that can’t or don’t want to afford to buy in those cities but still want an urban lifestyle.  They are also drawing buyers from the suburbs who have grown tired of the sameness of strip mall life.  Furthermore, new residents to Trenton are typically middle income professionals with no children.  Also they won’t need jobs in Trenton.  These people exist in the two adjoining metro regions in vast numbers.  30,000 new residents is a small objective given the size of the potential market for housing in Trenton.

We need an aggressive plan to make this happen

Trenton’s development community needs both help and company.  They need help from a city administration that takes away ALL roadblocks to development.  The Inspections Department needs to take 4 hours instead of 22 days to approve a plan.  Developers should be able to easily buy city owned land not wade through a cumbersome process.  Owners of vacant private land (i.e. speculators) need to be forced to sell.  Politicians need to stop demanding that developers hire a quota of Trenton residents.  We need a revenue neutral property reassessment to lower our tax rate and make Trenton a better deal for new construction.  We need targeted infrastructure and police investment in neighborhoods being revitalized by developers.

If our city government, with the support of the citizenry, can force an overhaul of our development regime and effectively market Trenton’s relative attractiveness, new developers will enter the market to take advantage of the opportunity.  These new developers will join the existing ones in marketing their projects to buyers throughout the region.

Trenton does have upside potential, but so far you’ve not heard our 2010 candidates talk clearly about it.  Perhaps no one has explained the math to them.  I hope this article helps. But if it doesn’t, I hope residents can start asking how our politicians plan to close the $70 Million budget gap and the $18,000 per capita income gap.  I hope you’ll ask about how they propose to help developers attract 30,000 new residents to Trenton in the next five years.