Posts Tagged ‘Trenton’

Many things have led to Trenton’s economic problem but they aren’t unique to post-industrial America. If you don’t understand how it happened I can recommend some books.

The question is how to turn it around. Some cities have. Some have done fairly well simply by having good leadership over the years. Trenton, like Detroit, hasn’t been that fortunate.

We’re in a situation where brave leadership will have to offer creative solutions.

Our crime situation can’t change quickly. Our public schools can’t change quickly. Our taxes are chronically high because our tax base funds only 1/3 of our budget. Therefore we can’t afford to invest much more money into police, schools or infrastructure.

So what can we do?

I suggest that we create a Downtown Investment program that seeks to increase our tax base to a point where it can once again fund city services. It has three key elements:

1) Fund an investment subsidy of 10% on any rehab investment of over $100,000. Because our tax rate is currently 4% well will recoup this investment in under 3 years, a 33% ROI. This will be available only to market rate, residential development not seeking abatements or PILOTs. Residential investment needs to come first and will eventually drive retail and commercial investment.

2) Target millennials and professionals with no kids. Over 1,000,000 people like this live within 30 minutes of Trenton. This is mostly who’s bought in Trenton over the last 10 years and it squarely fits the broader demographic trend towards America’s urbanization. A marketing program (web site, newsletter, some advertising, open houses, Realtor and developer organization) will embody this targeting.

3) Start small and offer the program (for now) only in Downtown Trenton. Scholars and Trenton activists have long pointed out that revitalization efforts need to be focused and start at the center. Trenton has had problems with execution in the past, starting small will let us see whether this works, and fix it if if it needs fixing. Downtown is the place to start as it allows us to spread outwards from there. If it’s successful downtown we’ll expand the program, one neighborhood at a time.

With modest investments funded just out of our budget, we can hope to increase our tax base from just under $2B to over $2.4B in 10 years. State participation in the program will help and other policies could also speed up the process. This will stop our vicious cycle of decline and start a virtuous circle of revitalization.

Few Americans will ever see civic corruption as up close and personal as Trentonians have recently.   Now that our 3 ½ year ordeal has been ended by the Federal Government our first inclination as citizens is to react.   I know I have already, especially at the public figures who supported or refused to denounce Tony Mack even in the face of his obvious misconduct as Mayor, even before his arrest.

But we have only 5 months until we elect a new government.   That new Mayor will have all the latitude in the world to reorganize and reinvent Trenton’s administration.  He will be able hire new people and perhaps let some poor performers go.  He will be able to close down operations that don’t make sense anymore or aren’t critical to our functioning as a city.   He’ll be able to put in place systemic changes to our tax, development and policing policy.

What we need now is an Acting Mayor who will allow his Directors to be open and transparent, who will question spending and who will put on a trustworthy face to the rest of the world, especially the State.   We don’t need new policy from an Acting Mayor.  We don’t need new programs.  There simply isn’t time.   With the exception of a few dismissals of employees who have deliberately ignored Council’s directives and needlessly withheld information, there should be no mass firings.  Instead, an Acting Mayor would do well to help the candidates prepare their policies by opening up the books and processes to those campaigns.

All indications so far seem to indicate Council President Muschal will take the “steady stewardship” approach.   Let’s hope he keeps a cool head and does his part to insure the public makes the smartest choice it can for our next Mayor.

The End of the Suburbs: Where the American Dream is Moving by Leigh Gallagher is a wonderfully accessible book for beginning urbanist that need grounding in the demographic trends that are creating opportunities for cities like Trenton.

Last year the Trenton Times carried a review of the book but it seems appropriate for Reinvent Trenton to add a few words.

Ms. Gallagher has honestly built her narrative of the drivers of new urbanism on the backs of authors that have come before her including Jane Jacobs, Richard Florida and James Howard Kunstler.   This is important for Trentonians attempting to come up to speed on the best thinking about what can drive Trenton’s growth.

The basic theme in Gallagher’s book is that fundamental demographics and attitudes are driving a shift back from suburban to urban living.  This is good news for cities and bad news for suburbs that have likely overextended their spending and debt.

The demographic trends involved include an older child bearing age, lower number of married couples and therefore fewer children.   This, coupled with a shift in attitude amongst millennials that shows a preference for urban living and against owning a car, has started a profound shift in American lifestyle.

The trend has been with us for many years says Gallagher but become most pronounced during the Great Recession that has left great swaths of suburban McMansions abandoned while home values in cities suffered only slightly.   In fact cities are now growing at a faster pace than suburbs and according to Gallagher, home builders like Toll Brothers, the Godfathers of the McMansion, have noticed.  Builders have shifted their efforts to building luxury condos, lofts and New Urbanist development that mimic older cities.

Cities like Philadelphia, New York and Baltimore have already felt the benefit.   New Jersey towns like New Brunswick, Montclair and even the post-Sandy Jersey Shore are being built with a New Urbanist feel.

The question for Trenton is will we lift a finger to ride this fundamental wave of migration?

For us it means pitching developers like Toll Brothers on our city, offering a sane development environment that works with developers instead of against them.  It includes a new tax structure.   It includes increasing our walkability, perhaps by rethinking our transit system in favor of trolleys.  And most of all it includes a small well-disciplined government that can support new development.

There are millions of young people living in our region who, given the opportunity to live in a great urban space would jump at it.   It’s up to Trenton to make help facilitate an environment that allows buyer and seller to come together.   We’re not there yet, but I can see Jane Jacobs vision of a city that constantly reinvents itself coming to life here.

I recommend The End of the Suburbs: Where the American Dream is Moving by Leigh Gallagher to Trentonians hoping to get an easy to read overview of our city’s possible future ($14 from Nook).

For me the other refreshing story here was who recommended the book to me.  I’ve read quite a few books on cities and have publicly bemoaned the fact that Trenton’s politicians appear to be under educated on the latest thinking.  However, in this case mayoral candidate Jim Golden recommend The End of the Suburbs and I jumped at the chance to read what was driving his thinking.

The news of Trenton City activist Pat Stewart’s passing has hit me hard.

It’s difficult to let a friend go, especially one that you’ve stood beside for so long and in so many capacities.  I can’t remember exactly when I first came across Pat Stewart.  I was new to Trenton’s political scene and Pat seemed to know everybody.   Everybody.

But no matter who she was talking to, whether friend or not, she spoke her mind including to me.  Pat would not tolerate what she saw as foolishness.  And frankly we’ve had more than our fair share of that in Trenton.

The Reinvent Trenton blog owes quite a bit to Pat Stewart.   My first foray into real politics was with the Lamberton Historic District Committee over Doug Palmer’s plan to tear down the Kearney homes and replace it with a new government housing project.   She  couldn’t understand  why we’d  tear  down  one  housing project which, in her words “was strong enough to withstand  a nuclear war”  just to build  another one.   We like to think that our efforts helped defeat that project.  Because of that effort we now have very nice market rate (non-government) housing on that site.

Pat, along with that same group, rallied the South Trenton neighborhood in opposition to Leewood  Development’s proposal (again with Doug Palmer’s support) to bulldoze 8 square blocks of historic housing stock along Centre Street.  Though  hers and  the group’s  efforts   over 300 residents showed up  at several citizen’s  meetings to oppose  the  project.   The opposition was eventually too intense for Palmer and Leewood and they retreated.

With these successes under her belt she encouraged former City Councilman Jim Coston   to organize an urban studies book club for residents who wanted to be better educated about revitalization issues.   For many of us, this group was our education.  We read the literature on urban revitalization and invited guest speakers of national renown to talk with us.   It’s an education that led directly to this blog. Pat Stewart was a ring leader of that group.

My affiliation with Pat has continued throughout almost all of my civic endeavors.   She was a leader in the Trenton Council of Civic Associations and was vocal with the Trenton Republican committee.   She joined me in Fix Trenton’s Budget and Majority for a Better Trenton. She put her hat into the ring in the 2009 Special election for South Ward Council and as everyone with an ounce of familiarity with Trenton politics knows, Pat Stewart was a fixture at City Council.

Pat, who was self-admittedly intimidated by technology, even started her own blog, Lamberton Lilly.  She made short and to the point comments about the goings on in Trenton.  She had a following.

Pat was everywhere and so much a part of Trenton for me that it I’m sure I will think of her often in the years to come.    I know that when our next administration finally crafts a real strategy for Trenton and it includes a real marketing plan for our city, I’ll probably shed a tear and hope that Pat knows that her constant admonition has finally come to pass.

In many ways Reinvent Trenton has been written with Pat in mind.  It puts into words the ideas she had in her head.   I know this because she constantly encouraged and commented favorably on my articles.       I knew I was on the right track if Pat liked the article.

Of course Pat’s influence goes far beyond what I know about personally.  She was a leader in the STARS civic association for many years, sat on the Zoning Board and was recently appointed by City Council to sit on the Ethics Commission.    These are places of honor in Trenton.

I know that her son Nicholas knows how we all feel about his mom.   I also know that the most important thing for a family member to know when a loved one passes is that the loved one will be remembered.   Nicholas, that is a certainty.

Even the State of NJ thinks the recently passed   “New Jersey Economic Opportunity Act of 2013” is a bad idea.  However, the Act was confirmed by Trenton’s   City Council and made applicable to Trenton by Ordinance 13-58.

The Act is meant to stimulate certain types of investment and create jobs in NJ. However, it does so at a high price of over $400,000 per job in tax credits and the loss of local property tax revenue for 20 years.  It is targeted at four NJ cities including Trenton and requires those cities to forego substantial taxes that would otherwise be collected from property owners.   The State’s Office of Legislative Services (OLS) did an economic analysis of the Act which estimates that in the best of circumstances the State’s   investment would return 10% over 20 years.   That’s .05% per year.     We’d be better off investing in a savings account.

The OLS summarizes its findings below:

The Office of Legislative Services finds that the revenue impact of the substitute (the Act) is indeterminate with certain revenue losses due to tax incentive agreements which may or may not be fully offset by revenue increases from expanded business activity. The magnitude of the revenue losses from tax incentive agreements cannot be known because ERG and GROWNJ have no aggregate award cap from January 1, 2014 through the program expiration on July 1, 2018.

What’s worse is that the .05% yearly return assumes that the alternative is that no new   jobs are created unless this Act is in place.  That’s a horrible assumption and the OLS so much as admits it.  Read the full analysis here.

So why did our City Council sign on for a bill that is so terrible for both the State and the City of Trenton?

It’s hard to say and there has been much speculation amongst activist.  Some of facts surrounding the passage the Ordinance are as follows:

• Council passed it in a hurry with little to no public comment and on a Friday evening when the public was not likely to be in attendance at the meeting.  This was suspicious.
• One person who did make it to the meeting was a developer from Robert Torricelli’s Woodrose development who stands to benefit from the Act.
• Days  later  that same Woodrose development  handed  out  500 free Turkeys at their  development site  in Trenton and invited local politicians Marge Caldwell-Wilson and  Eric  Jackson  to  be seen as  having something to do with the gift.
• Robert  Torricelli was  reprimanded in the US  Senate for corruption

So on the surface this deal is smelly and reeks of connected developers getting rich on the backs of taxpayers.

Given the OLS’ analysis it’s clear that NJ taxpayers are being shafted.  The question is, “are Trenton taxpayers getting any benefit?”

First, we have to assume that Trenton taxpayers are suffering from this bad investment in a similar manner to our suburban friends.    Our State income tax dollars are being wasted.

Then there’s the matter of lost property taxes that many in the activist community have complained about.   This is trickier.

The deal is that a developer would pay no new taxes on improvements to a property for 10 years.   During years 10 – 20 taxes on improvements would gradually be raised to reach 100% by year 20.

So this could stimulate new taxes, just not in some of our lifetimes.    There is no guarantee that any property in Trenton could ever be developed (many abandoned properties have negative value).   So getting something on those difficult plots of land  and having the State stimulate that future tax benefit does have a positive benefit.  Perhaps that’s what our Council members are reacting to (I’m giving them the benefit of a doubt).

But here are the problems:

The deal is unfair

This tax break is not available to all citizens or even all types of investment.  For instance, there are exclusions on retail investment such as stores and restaurants.  The deal is not available to homeowners or even condo owners.    You and I can’t benefit from this Act and are in fact subsidizing those that do. The state and city should not be in the business of preferring one type of investment and one type of investor. They’re not that smart.

The deal will have unintended consequences

Trenton does not have unlimited developable land.  The Act heavily incents developers to build non-retail commercial space or residential rental property.  If all the prime development spots were taken for these purposes, then the price of retail and owner occupied development will go up.   Many in Trenton’s revitalization community believe that if anything, Trenton needs to over index on owner-occupied housing and new retail amenities.  This bill is likely to make that more difficult.  In this regard we’re shooting ourselves in the foot.

There are better alternatives

A maxim in real estate development is that a building or land should find its highest and best use.   This Act warps that concept by preferring only certain developers with certain kinds of projects.   A better alternative is to establish a standard PILOT agreement and stimulus that are available to anyone investing  in our cities.  One such PILOT plan would offer a very high tax rate on land but a very low rate on improvements thereby rewarding high value or high density development no matter what type it is.  This PILOT could even be made optional to existing landowners.  This would be especially beneficial to home owners seeking to improve their homes.    It could do away with existing abatements and negotiated PILOTs (long an opportunity for abuse).    The state could directly and more transparently provide tax credits on the total value of a project of say $200,000 or more.  This standard subsidy gets the   State out of the dicey business of trying to manipulate the economy.

I suspect that the City of Trenton did not have a real voice at the table when this scheme was cooked up.  Certainly it was foisted on the citizens of Trenton in a rush.  This is a big problem as there is no evidence the State is acting in best interest of Trentonians.

An Act and Ordinance of this scale and importance (it fundamentally   changes our tax structure) should never be considered in the current political situation where a Mayor indicted on corruption charges related to real estate development has only 6 months left in his term.   Rather we need to let the next administration determine whether this deal fits into a strategic plan for Trenton.   Let’s vote on it by making it one of the issues in the upcoming election.

Our City Council has done the citizen of a Trenton a disservice by allowing us to be bullied into the deal. There is an online petition being run to show opposition to Ordinance 13-58. I encourage all to sign it.

Petition to Oppose Ordinance 13-58

After 24 years of mayoral leadership that has gone from bad to worse, we once again have the chance to change direction in Trenton.  Like we did in 2010, we’ll have a crowded field of candidates.  Unlike 2010, in 2014 we have several viable options.

In this very difficult time in Trenton’s history, we as citizens need to be equipped to make a smart choice.   We’ve all seen how poor choices at the voting booth can materially damage our city.  This time around:

• Voters need to consider all aspects of what will make a good Mayor, and
• The campaigns need to communicate clearly to voters.

The question I have for myself is, what can I do to help this process?  What can I do differently in 2014 to help elect a leader that will chart a more productive direction for Trenton?

I’ve tried quite a few approaches to improving Trenton.

• I’ve blogged for years trying to bring new ideas for revitalization to the city.  The evidence will show that my blogging hasn’t helped.
• I formed Fix Trenton’s Budget to provide an economic point of view in the 2010 election and later assist Mayor Mack in setting budget and economic policy.  The evidence shows that didn’t help.
• I helped form The Majority for a Better Trenton in order to create an unaligned political force in the city.  It turns out the group had organizational challenges, so that didn’t help.
• All along I’ve been an outspoken critic on Facebook, in the press, at City Council and on my blog.  Sometimes that makes me feel better, but it hasn’t helped.

As I’ve often said, doing the same things over and over again in Trenton and expecting better results is the definition of insanity.  So this election cycle I’ll do something I’ve not done before.

This election cycle I’m going to choose one candidate to not only support but also to volunteer for during the campaign.   This implies quite a bit.

It implies that I will have to make my own informed decision about the candidates well ahead of walking into the voting booth.   I’ve done some homework in preparation for my decisions.  I have:

• Talked to each of the candidates I would consider,
• Read their websites, and
• Reviewed their track record in Trenton.

To put all of these conversations, impressions and histories into perspective I created an objective scorecard to help.  The scoring approach rates the candidates along several dimensions and weights the scores based on how important that dimension is for a good Mayor.  It’s like coming up with GPA for the candidate but allowing the flexibility to weight one course as more important than another.

Being numbers driven seems appropriate for me as I’m constantly encouraging city leaders to be objective, unemotional and fact driven in their approaches to our problems.   It’s sometimes hard to do but often provides clarity where a muddle of data and opinion cloud the issues.

For each dimension I scored the candidate 1-10.  The dimensions and weighting are as follows:

Table ‑1 Candidate Selection Criteria

Dimension	Weight	Description
Approach to Strategy	9%	Thinks critically about cause and effect.  Is data and fact driven.  Results focused.
Planning	15%	Organized, clear and thoughtful about actions and timing.  Considers risks.
Campaign	12%	Well run campaign with people who share a focus on revitalization and diversity.
Motivations	9%	Setting an example for urban revitalization in small post-industrial cities.
Management Style	12%	Disciplined.  Has an air of gravitas.  Reads people well.  Transparent.
Track Record	12%	Has participated in thoughtful activism in Trenton.
Budget awareness	15%	Understands the budget and what drives it.  Appreciates its role as the central policy tool.
General Capability	9%	Smart.  Hard working.   Well written and well spoken.  Well educated.
Sacred Cows	9%	Has revitalization minded positions on regionalization, residency, reassessment, etc.
	100%

To be fair I didn’t talk to all of the candidates.  Walker Worthy’s strict partisanship and lack of presence in Trenton politics ruled him out as an option.   Kathy McBride’s frequent missteps, support for Tony Mack and lack of interest in policy rule her out.   Bucky Leggett was so uninspiring the last time he ran that I voted for Doug Palmer.  Each of the other four candidates:  Patrick Hall, Eric Jackson, Jim Golden and Paul Perez are fine people by all accounts, including my own.   They deserved serious consideration.

Of course, whoever I support may very well not win the election.  That’s not the end of the world and we have good options.   I certainly hope that even if I wind up on a losing campaign team, the winning Mayor will take me up on my offer to do whatever I can to help his administration succeed.  I made that offer to Tony Mack, he just didn’t follow through.

Also, I’m not going to say anything negative about any of the other candidates except maybe to critique a policy idea here and there.

After several months of talking and thinking about the next Mayor of Trenton I’ve decided I’d like to support Jim Golden to be our Mayor.

Jim is seeking to bring the best thinking in the country to bear on Trenton’s revitalization problems.  He has good initial insights especially on our crime issues. He has good experience in running large organizations.   He’s been openly committed to setting measurable goals and setting up feedback mechanisms to track our progress.

Jim was an early and vocal critic of Tony Mack and actively supported the recall effort.  He’s conscious of the budget and its limitation, especially the biggest component, police.

In every conversation I’ve had with Jim, he’s sought to think through pragmatic steps towards making Trenton more livable while eventually lowering our tax burden.  Finally, his motivations are simple and clear, he’s a retired resident of Trenton who wants a better town in which to live, so do I.

I’ll enjoy working with him both on the campaign and the transition into office.   I know his heart is in the right place and that he has the right skills and temperament.  Most importantly for me, he did the best in my candidate qualification scorecard, earning 7.7 out of 10 points.

I look forward to working with Jim and his campaign but wish all the candidates well.

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.

Earlier this year I become so upset about politics that I took a leave of absence from Trenton political scene. (Giving up on Reinventing Trenton).   My reasons reflected frustration with working to make Trenton a better place including:

• The inability of city activists to create and maintain an independent political organization (Majority for a Better Trenton),
• The no-show park rangers we paid for at the 2012 Alexander’s Run
• The lack of thinking that went into ceding the Glen Cairn Arms property to a non-profit
• My inability to help the LYDC board think analytically about the city’s hotel

However, the past 12 months have been downright tragic for Trenton

• Our Mayor has been indicted on corruption charges
• Our tax base declined, forcing us to increase tax rates
• Our hotel has come within inches of closing
• Our murder rate is set to shatter the single year record
• Police response has declined to the point of being dangerous

It seems that absolutely nothing can go right in Trenton and that we’re on track to become an East Coast Detroit.

Trenton’s problems hurt my family in many ways, some big and some small. Our property values are kept low by the high crime rate and continuing lack of amenities in the city.  Our property taxes are crushing and make our rental properties unprofitable.  It’s hard to invite suburban friends to our home (guests at one party had their SUV tagged).  Babysitters are afraid to come to Trenton.  This is not a healthy environment and for those of us hoping to live a full life in Trenton

I have three choices going forward:

1)      I can move. However this would involve a substantial financial loss given that we have invested so much money in the city. Also we desperately want to stay close to our first son’s grave in Riverview Cemetery and our memory of him in Trenton.

2)      I can close my eyes and hope for the best.  I have to imagine that this is what the vast majority of Trentonians are doing.  They complain from the sidelines or just suffer in silence perhaps because they don’t know or haven’t been told how to help.

3)      I can reengage in some useful way. There are many options and I’ve tried several of them. I’ve worked to become an independent resource for revitalization thinking. I’ve tried to help start a political group (Majority for a Better Trenton).  I’ve helped start a non-profit arts organization and I’ve helped lead election debates.   One option I’ve not tried is to become involved with a mayoral campaign in a meaningful way.

But the fact is, if I can’t move and sticking my head in the sand won’t work, then I’m better off trying to help one candidate be the best that he or she can possibly be.   I’ve never expected a Mayoral candidate to have all the answers.  I do expect them to lead in an intelligent way and bring serious thinking to what amounts to world class problems.  I expect them to turn away from those who have led us to the place we’re in and to embrace new thinking about revitalization.
So with all of this said, I’m in the market for a transformational Mayoral campaign.  I can write.  I can research.   I can stuff envelopes and I can debate.   I wouldn’t mind doing a little door to door, though I’m sure I’m about the least likely person in this city to connect with the average voter.  I know that.  But I do want to start putting a real revitalization plan into language all of us can understand.
My positions on policy are clear.  They’ve been posted on Reinventtrenton.com for many years.  I should be a known quantity by now.

So, here’s how I’d like to proceed.  I’ll email you and let’s set a time to talk.  Let me hear your approach and your positioning.  Rest assured that political platitudes and dubious promises won’t work with me.  I know the budget and its issues pretty well and I’ve been studying Trenton and urban revitalization for a while now.   I’ll be difficult and I have a reputation as an angry taxpayer.  However, if you want: policy development help, logistical help and to be seen as a pro business, pro taxpayer candidate, it might be worth the trouble.

The world is made up of causes and effects.  Hurricanes cause storm surges.  Hitting a cue ball hard into a break causes pool balls to scatter.  A bad earnings report causes a company’s stock to go down.  And so it goes in business, sports, life and cities.  High crime rates cause visitors to stay away from a city.  High taxes slow development.  High college acceptance rates attract students to schools.  This is what economists spend their time thinking about.

Most people think about these causes and effects abstractly.  Common sense tells them that one thing ought to affect another.   For instance, an after school program keeps kids off the streets and therefore should reduce the crime rate because kids on the streets sometimes commit crimes.    Another example might be, making a city’s inspections process less expensive to lower development costs and stimulate investment.   Or perhaps, opening a new museum will increase tourism.

Most people are comfortable making statements like the above, but generally don’t know the details.  For instance, they can’t answer questions like:  If we spend $1,000,000 on foot patrols how many FBI index crimes will be avoided?  Or, if we lower inspections fees by 50%, how much incremental investment should the city expect to see over the next 5 years?   These are fair and important questions.  Most citizens can come nowhere close to answering these types of questions, and that would be OK but sadly, most policy-makers in a city like Trenton can’t answer them either.

So how can normal citizens get better at thinking through the policy issues that face us every day?

Without researching every policy assertion that’s ever made, how can we begin to really understand causes and effects?

We make better choices by knowing whether a policy has a 1^st order or 2^nd order effect and whether the effect is strong or weak. Of course we need to start with clarity on our goals (investment, crime, education, population, income). But after being clear on goals we must carefully consider causes and effects so we can begin to decide whether policy assertions are important.  This kind of thinking is often called “systems” thinking and is used to better understand complex things, like cities.

There’s a difference between 1^st and 2^nd order effects

In pool, when the cue ball strikes another ball and knocks it directly into a pocket, we call that a 1^st order effect.  One thing caused another.  However that same pool shot may have left the cue ball well positioned to allow the player to sink the next ball.  That’s a 2^nd order effect.  The difference is that  in order for the good “leave” to have happened, many more effects of physics had to take place over and beyond the just hitting the first ball in.  The cue ball had to be deflected just so, the spin had to be just right and perhaps the cue ball needed to bounce off the bumper with just the right angle.  The good “leave”, assuming it was intentional, had a much less likely chance of success than hitting the first ball in.

And so it is with city policies.  An afterschool program will most definitely get some kids off the street.  Getting kids off the streets is a 1^st order effect and can be measured fairly simply.  It’s the number of kids in the program minus the percentage of those kids who would have otherwise stayed at home or in the library.  For instance: of the 100 kids in the after school program we might say 40 of them would have been home.  So the program got 60 kids off the street.

But how does an after-school program affect crime?  It’s not likely that a kid staying home would cause a crime.  But what about the 60 who would have hung out on street corners.  It’s a bit harder to say because crime reduction is a 2^nd order effect.  For example, not all of those 60 kids would have ever committed a crime.  Of the several who might be inclined to commit a crime they might do it when they weren’t in the after-school program.    But then again, maybe the program has a long term effect on the child, or maybe it doesn’t.  As you can see, the 2^nd order effects begin to get murky.  This is why sophisticated policy makers don’t depend on them and often point to 2^nd order effects as “potential side benefits”.

In Trenton, we shouldn’t base our important policy decisions on 2^nd order side effects.

Strong vs. weak effects and the importance of context

Even when causes and effects are 1^st order, the linkage between the two can be weak.  For instance in buying a used car, high mileage may not dissuade you from buying it.  This is a 1^st order effect but not a strong one because you’ve already decided you could accept a few miles on the car.  However, dented side panels may just completely turn you off.  The big dents might be a strong 1^st order effect and keep you from buying the car.

It’s the same with public policy.  Let’s return to inspection fees for a new home.  Let’s say we want to stimulate growth by reducing the fee from $1000 to $300.  That’s a big drop.  And because it directly affects the price of the house, it’s a 1st order effect.  However, that $700 drop in cost is fairly small in comparison to the $300,000 that you’ll eventually spend on the house.  Other things like lumber, labor, land and property taxes easily dwarf the inspection cost.  So while the reduction in inspection fees may be annoying to the builder, it has a weak effect (though 1^st order) on the eventual buyer.

2^nd order effects can be weak and strong as well.  For instance, we can imagine a school retention program that lowers the high school drop-out rate.  This program might have a good 1^st order effect on education but also a 2^nd order effect on crime reduction.  That 2^nd order effect might be considered strong because we know there’s such a high correlation between high school graduation and likelihood of committing a crime in the future.  Compare that to an after-school basketball program which should have a 2^nd order effect on crime reduction (as we discussed above) but that effect may be weak.  Certainly the research and evidence linking graduation to crime reduction is stronger than that linking basketball to crime reduction.  That’s not to say there’s no effect, it’s just not likely to be as strong.

The cause and effect of crime also varies widely.  Economists have shown that each incremental index crime in a city leads to one person moving away.  However, the rate of emigration is 5 times higher for high income people and 3 times higher for families with children.  Poor, single people are much less likely to move away due to a high crime rate.    Therefore we can say that a high crime rate has a strong effect on high income people leaving a city but a weak effect on the poor leaving (likely because they have fewer choices).

Just understanding this differences in the effects of crime, even in the abstract, should have a profound impact on how we think about policy in a city like Trenton.  Sadly, you’ve never heard a government official make the above distinction.

It might be good to focus on strong 1^st order effects rather than weak 2^nd order ones.

In the world of policy making and particularly in a cash-strapped city like Trenton, we need to make hard choices.  We don’t have either the money or the man-power to do everything we’d like.  So it’s important for citizens to lobby for the most important policies and for government officials and activists to help clarify 1^st and 2^nd effects and strong vs. weak linkages.

We can use crime reduction as an example of a good objective.  Criminologists know that high rates of incarceration have a beneficial effect on the crime rate (most people get this).  There is a strong 1^st order cause and effect between building good cases against criminals that lead to long sentences.   On the other hand, we may spend the same money we would have spent on an extra detective on a mentoring program.  The mentoring might have a 2^nd order effect on crime reduction and likely a weak one at best.

When we talk about programs and policies in Trenton politics, we need to keep these things straight and always keep our core goals in mind as well as cost-benefit.

Policies that have multiple 1^st and 2^nd order effects are generally more impactful than others

Finally we should remember that sometimes policies can have multiple effects.  You’d likely trade a $1,000,000 program to reduce crime that has single strong and effect on the crime goal, for a $1,000,000 program to stimulate development that might have a strong 1^st order effects on the economic growth goal, a strong 2^nd order effect on the crime goal and a weak 2^nd order effect on the education goal.  Some policies give us broader “bang for the buck”.

Policies that positively affect multiple goals in Trenton (investment, crime, education, population growth and income growth) will not only strengthen the city and stretch our dollars, but will find broader political support.

Every minute of every day, Trentonians have policy discussion on Facebook, at barber shops, in civic association meetings, over drinks and at City Hall.  We discuss crime, trash pick-up, taxes, parades and any number of topics.  It’s important for Trentonians to move past sentimentality and misguided assumptions in our discourse.  We need to get on the same page.  To do that, not only do we need shared goals, but we need a common vernacular for discussing policy.  To the extent we can begin to discipline our thinking by keeping our goals clear and then breaking causes and effects down into 1^st and 2^nd order and then strong vs. weak, we’ll have a more constructive civic dialogue.

Note:  I wrote this article for my blog 2 weeks ago, before the TESC deal for Glen Cairn Arms came up and was having it edited.  I had no way of knowing we would be having a important policy debate about this very subject.  I held off publishing it in favor of reporting on and  providing thoughts about the proposed TESC deal.  However now is a good time to start talking about causes and effects in policy discussion.

Today, Tony F. Mack announced that he wanted to give the Glen Cairn Arms building to Thomas Edison State College (TESC).  They want to put a $16.7M nursing school of some sort on the property.   Right off the bat, unsophisticated Trentonians started messaging that this was progress.

It’s not progress; it’s more of the same.

Every single politician and activist in Trenton for the last 12 years has complained that the State of New Jersey doesn’t pay its fair share in Trenton.  And this deal is simply more untaxed State land.  Do we need another tax exempt property?

Let’s do the math

TESC wants to give Trenton a one-time payment in lieu of taxes (PILOT) of $300,000.  One time!  That’s essentially free.

That $300,000 is to cover taxes for all time on a $16.7M building? Spread over 10 years that’s a 0.2% tax rate. Spread over 20 years that’s 0.1%.  Trenton’s tax rate for the rest of us is 5.5%.   Put another way, the State would be paying 1/50 of what you and I and every other private property owner pays in taxes. That’s essentially nothing.    Many private homeowners in Trenton pay more in taxes than this deal will yield.   It comes nowhere near the cost of paying for the police, fire and public works costs to support the building.  The new building’s direct support costs for just those services would be around $700K per year.

Trenton’s City Council should NOT approve this.

Instead, City Council should do what Fix Trenton’s Budget recommended two years ago and approve a standard PILOT for all new development in Trenton.  That standard PILOT should be based on taxing land at 30% of assessed value and improvements at 1.5% of assessed value. This PILOT should be available to all developers.   A standard PILOT like this would be welcome by developers and go a long way to encouraging new taxable investment in Trenton.   It would also serve as a reasonable basis for PILOTs for non-profits and eventually for a Land Value Tax for the rest of us.   This is important in our effort to have our tax system work for us rather than against us.

“Isn’t something better than nothing?”

It’s true that Glen Cairn Arms has sat vacant for many years.  But, as the math above shows, we lose money on this deal.   So no, “Something is NOT better than nothing”

Why hasn’t the building sold?

The City of Trenton owns the building and has been unsuccessful in selling it for many reasons:

1)    The City has maintained a poor development environment for many years due to crime, ineptitude in city government and lack of a plan to improve.

2)    The city always tried to sell it rather than give it away.  It’s obvious the building is a mess and therefore has no value and maybe negative value.

3)    We don’t have a standard PILOT that makes sense for a developer. I’ve proposed one above.

4)    We may have to demolish it ourselves (i.e. because as the building stands it has negative value)

There are several options

• We sell it to TESC using a standard PILOT. The current assessed value of the land is $500K. With a $16.7M improvement and using the suggested standard PILOT rate, we receive $400k/ year in revenue. This is what we should get.   It still doesn’t cover all of our direct costs, but it’s closer.

• We sell it to a private developer with a new package. We would spend the ~$1.4M * it would take to demolish the building in anticipation of a private developer putting a $5M building on the land. With the standard PILOT in place that would yield $225K a year in tax revenue.  This is a 16% return on investment and a pay-back of 6 years.

• However, we should NEVER approve another tax exempt property deal. Increasing ratables in Trenton should be our #1 priority. This deal with the State of NJ is the opposite of that.

But there’s more

Do we as citizens really want to let Tony Mack negotiate development deals for us?  Time and again, we’ve seen in New Jersey that government money is rife with corruption.  Tony Mack has provided us a case in point.  We have no reason to trust him and every reason not to.

Our Indicted Occupant of the Mayor’s office will do anything to make himself look good to unsophisticated voters.  In this case, it appears that he’s working to curry favor with TESC and let that organization’s patina rub off on him.   The leadership at TESC should know better.   Furthermore TESC and Mack are using State money as part of this scheme.

But I’m really confused about the choice of Glen Cairn Arms?
Trenton has a large unused medical facility with multiple buildings that could certainly be converted into a nursing center.  Why not encourage TESC to purchase all or part of the Capital Health Mercer campus.   Isn’t this exactly the use we’ve all talked about for that site?

Finally …

This deal has been presented to citizens without any economic impact assessment.   Certainly our City Council has come too far with this corrupt and incompetent Mayor to allow him to get by with this. But more importantly, if you support this deal, then you have no business complaining about the State not paying its fair share in Trenton. This is just making it worse.

* I originally estimated $300K based on numbers from a previous bid, but understand that TESC thinks the cost is $1.4M so I’ll use their number to be conservative.