Tag Archives: New York economy

Let’s squish the Square

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The economy is teetering. Our food & gas prices are climbing. And, lest we forget, we citizens of New York are the highest taxed in the country.

So how do we want our politicians to spend our tax money?

If you’re a construction worker, you’ll answer: Build Renaissance Square! Because yeah, if that happens, you’ll have a job for, ya know, a few months.

I can understand that. But what comes next?

Most likely, a big long morning after. For example, take this article by Mark Yost in the Wall Street Journal. He’s writing about sports stadiums, but what he says is enough to remind you of your worst public project hangover.

Sports economists have long argued that publicly financed stadiums are a waste of taxpayer money. And they have the data to prove it.

Yes, stadiums do create high-paying construction jobs for a year or two. But the vast majority of long-term employment is low-wage concession jobs. A Congressional Research Service study of the Baltimore Ravens stadium found that each job created cost the state $127,000. By comparison, Maryland’s Sunny Day Fund created jobs for about $6,000 each . . .

Then there’s the fact that only a sliver of the tax base really benefits from a sports stadium. And with ticket prices rising rapidly, that group is getting much smaller.

Consider the New York Yankees, who have the highest payroll in baseball and take in more than $300 million a year just from their television network. They’ll move into a new $1 billion stadium next year, about half of which was covered by the taxpayers. Seats behind home plate that cost $250 this year will be ten times that next year. The net result is that very few of the people who paid for the stadium will be able to afford a seat there.

But perhaps the best argument against publicly financed stadiums is straight out of Econ 101: Opportunity cost.

“What else could the city have invested its money in and what kind of a return would it have produced?” said King Banaian, chairman of the St. Cloud State (Minn.) Economics Dept. Despite reams of evidence to the contrary, the District proceeded with what Councilman Kwame Brown calls “the most controversial project in the history of the city.”

It was controversial, he said, because the city had more pressing needs. The city’s schools are in shambles; crime is out of control; and unemployment in distressed neighborhoods, like Southeast, is double the national average, if not higher.

Fortunately, people are raising their voices. In City Newspaper, Mary Anna Towler asks a whole slew of questions about Ren Square that need to be asked.

Was the big theater the best theater for Ren Square? If MCC or SUNY owns the theater, will taxpayers’ money be diverted from education to subsidize the theater?

If there’s not enough money for the theater, should we go ahead with the MCC campus and the bus station?

And: does downtown Rochester need Ren Square? A few years ago, it seemed to be about the only development hope we had. That’s no longer true. Is it a good idea to build Ren Square, taking prime development land out of the private market – and taking that land off the tax roles?

There’s also an excellent comment after the City piece:

It would be good if the transit portion of the project were as closely analysed as the PAC. Shouldn’t we also notice that over $100 million TRANSIT dollars are essentially being squandered in a way that will make the bus system slower, less efficient and much more costly to operate? Ther is no advantage to the city to leave the auditorium theater and sibleys building empty, as the current plan would do.To pursue such a plan in an environment of record gas prices, (not to mention global warming) falls on the spectrum between “sub optimal use of public funds” and “complete insanity”. The bus station is both the achilles heel and fatal flaw since it literally cannot be used by buses. This might explain why no traffic study has been done.

Hopefully the Ren Square cloud will clear in time to save the federal transit funds to use for badly needed transportation projects that actually move people TOWARDS their destination at lower energy and lower cost.

We have already spent $15.8 million on the Renaissance Square project.

Are we going to wake up and say “no more” before it’s too late?

I’ve blogged about Renaissance Square previously here, here, and here.

Another helping of crow a la Rochester

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Gee, here’s a surprise. A “consultant report, released Tuesday”

recommends city officials abandon a decade-long push to turn High Falls into an entertainment quarter and instead let private investors continue to steer development toward housing and office space . . .

In its report, the Center for Governmental Research concluded that the city should sell off the buildings it owns, halt its operating subsidies and clean up public spaces it has allowed to languish.

No private property remains available for renovation or redevelopment, the report says — thus turning the focus to the city and Rochester Gas and Electric-controlled land and buildings. The city owns the Center at High Falls/Brown’s Race Market complex. RG&E owns the land below the falls, the Beebee plant and other, smaller buildings.

Since 1992, the city has dumped $41 million of our tax money into the High Falls district. The bright idea: subsidize a bunch of bars because, ya know, that would make the place so cool people would flock to it after work, get real smashed, and, uh, revitalize downtown.

The plan was launched during Bill “Fast Ferry” Johnson’s administration.

Creating a housing and office district was the directive from an initial city-commissioned financial and market study in 1990. R. Carlos Carballada, the city’s commissioner for economic development, said that despite the city pushing in another direction, “the market has sort of evolved itself.”

“The market has sort of evolved itself.” Funny thing, that.

Maybe it’s time for our politicians to recognize that they shouldn’t be risking our money in these schemes.

Ah, don’t hold your breath. The next course is already slowly browning in the oven: buying Midtown Plaza, because what else does the city have to do with our money besides develop 1.2 million square feet of abandoned retail space?

(I’m not just being a crank, here, either. Yes, I believe it’s foolish for the city to own hard assets that it has to maintain, at taxpayer expense, for extended periods of time — particularly when local economic conditions suggest the chances of a decent return are not all that great. But I have constructive suggestions, too. I think the city should focus on making our community more livable and affordable for families, as per this post, and perhaps fund events to attract tourists, because that’s been demonstrated as a less risky way to stimulate economic development.)

Too stupid for words, but I’ll dig some up, somehow

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I know I need to blog about this, but I’ve been too stupified to try.

Yet it needs to be said, by as many people and in as many places as possible. So here goes.

First. Fourteen million dollars of Fast Ferry money is missing. That’s $14 million of New York State taxpayer money unaccounted for, and if you think anyone at any level of our government is going to chase it down and get it back to us, you’re smoking something.

[State Assemblyman] Joseph Errigo, R-Conesus, Livingston County, said he does not necessarily fault [state Comptroller Alan] Hevesi or [Attorney General/now governor-elect Eliot] Spitzer for not documenting the fate of the state aid, though he is “disappointed with that aspect of it.”

As for the agencies that provided the money, Errigo said, “The state lost out on $14 million, and you’d think they’d be interested in recouping all or part of that money.

“My conclusion is that they’re, I guess, embarrassed, and they don’t want this investigation to go further.”

(The article is thorough and documents all kinds of intriguing shenanigans. Enjoy it now, as the Democrat & Chronicle has a tendency to throw things behind their firewall & charge for them after awhile.)

(And for further context bear in mind that Hevesi, newly re-elected to his post in a landslide, exudes a strong smell himself & it ain’t roses. The public has spoken, all right.)

Okay. So that gives you a taste of how carefully our politicians watch our money.

Ready?

Now Rochester’s mayor wants to spend a quarter of a million on an option on Midtown Plaza. That’s an option to buy. If the city decides it doesn’t want the plaza after all, the money is gone for good.

“So?” you say. “Maybe the city will decide it wants to buy?”

You’re not from from around here, are you. Midtown Plaza is a mall in downtown Rochester. Well, it was a mall. Now it’s a hunk of deserted retail and office space.

Nobody wants it, because nobody can figure out how to make money from it.

Oh whoa, wait, I forget! The city can figure out how to make money from it!!! Of course!!!

Really, I am so disgusted I could spit.

It’s like they’re deliberately trying to accumulate worthless overpriced junk. The “fast ferry,” which still sits in dry dock because nobody else is a big enough sucker to buy it. Renaissance Square, the performing arts center cum bus station that nobody wants and for which we’ll be paying some undisclosed amount to keep solvent until it’s knocked down for a parking lot or something some day. And now Midtown.

If it wasn’t my money they’re wasting I’d find this hilarious.

UPDATE: Welcome, 2Blowhards readers, and thanks Michael for the link :-)

“A certain level of subsidy”

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Here’s Monroe county exec Maggie Brooks at the unveiling of the design for the performing arts center piece of Rochester’s proposed Renaissance square:

Other questions weren’t answered so completely. One suggested that there may be a $2 million annual operating loss for the performing arts center and a $3 million loss for the bus station. County Executive Maggie Brooks rejected the question’s premise. “Those figures aren’t accurate,” she said.

Brooks admitted, though, that the project might not be self-sustaining.

“I think it would be disingenuous to say there won’t be any subsidy at all,” Brooks said. “There is a certain level of subsidy that the community will accept.”

To minimize that subsidy, Brooks said, the project’s principals have adhered to a guideline of “What is affordable, what is sustainable.”

“We want to live up to that,” she said.

Also unknown is how the performing arts center will be operated.

“These are conversations that will continue,” said Brooks.

Okay. So we aren’t going to be sinking $5 million annually into this . . . thing. But it is going to be an ongoing drain. Of an unknown magnitude. Over & above the public money already appropriated for it. No matter, open your checkbook cuz the pols say so. Open your checkbook, because hey, you’re fine with “a certain level of subsidy.”

Think we’re fooled? We’re not. Poll results from 13WHAM: only 22 percent of us think this is a “good” or “great” idea. Half think it’s a bad idea.

I’ve blogged about this topic here and here. Not just grousing, either, I’m honestly trying to figure out what would work for this city. See also this post & comment thread on the subject at 2Blowhards for a breath of intelligent perspective on our little project.

This one’s about Rochester’s Renaissance Square

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If there’s any local issue that I care enough about to blog regularly, Renaissance Square — estimated price tag, $230 million — is it. I simply don’t believe it’s a good use of taxpayer money. I don’t care how much is funded by the feds or the state. It’s too much money. It’s too much risk. It just can’t be a priority right now.

Now look at this: an article on the DLC website about the folly of municipal planning built on the single leg of attracting “creatives”:

The new mantra advocates an urban strategy that focuses on being “hip” and “cool” rather than straightforward and practical. It is eagerly promoted by the Brookings Institution, by some urban development types, and by city pols from both parties in places like Cincinnati, Denver, Tampa, and San Diego. It seeks to displace the Progressive Policy Institute’s New Economy Indexes with what might be called a “Latte Index” — the density of Starbucks — as a measure of urban success. Cities that will win the new competition, it’s asserted, will be those that pour their resources into the arts and other cultural institutions that attract young, “with-it” people who constitute, for them, the contemporary version of the anointed. Call them latte cities.

This is exactly the thinking behind Renaissance Square. Build a performing arts center, and Rochester will become hip. Young people will want to live here. Downtown will be revitalized.

That’s B.S. We would be fools to fall for it.

Here, from the article, is a round-up of the metro areas — all of which have considerably more resources at their disposal than Rochester — who have pursued this municipal strategy:

San Francisco, according to economist David Friedman, has actually lost employment at a rate comparable to that of the Great Depression. Roughly 4 percent of the population has simply left town, often to go to more affordable, if boring, places, such as Sacramento. San Francisco is increasingly a city without a real private-sector economy. It’s home to those on the government or nonprofit payroll and the idle rich — “a cross between Carmel and Calcutta,” in the painful phrase of California state librarian Kevin Starr, a San Francisco native.

. . . Seattle has also lost jobs at a far faster rate than the rest of the country and has its own litany of social problems, including a sizable homeless population; the loss of its signature corporation, Boeing; and growing racial tensions.

Although Portland is often hailed as a new urban paradise, it is in a region suffering very high unemployment. “They made a cool place, but the economy sucks,” notes Parks, who conducted a major study for the Oregon city. “They forgot all the things that matter, like economic diversification and affordability.”

New York City has also suffered heavy job losses. Gotham’s population outflows, which slowed in the late 1990s, have accelerated, including in Manhattan, the city’s cool core. In contrast, New York’s relatively unhip suburbs, particularly those in New Jersey, quietly weathered the Bush recession in fairly fine fettle.

So where are people going — and why?

Today, economic growth is shifting to less fashionable but more livable locales such as San Bernardino and Riverside Counties, Calif.; Rockland County, N.Y.; Des Moines, Iowa; Bismarck, N.D.; and Sioux Falls, S.D.

In many cases, this shift also encompasses technology-oriented and professional service firms, whose ranks ostensibly dominate the so-called “creative class.” This trend actually predates the 2000 crash, but it has since accelerated. Since the 1990s, the growth in financial and other business services has taken place not in New York, San Francisco, or Seattle, but in lower-cost places like Phoenix; Charlotte, N.C.; Minneapolis; and Des Moines.

Perhaps more important, the outflow from decidedly un-hip places like the Midwest has slowed, and even reversed. Employers report that workers are seeking more affordable housing, and, in many cases, less family-hostile environments.

To be sure, such cities are not without their share of Starbucks outlets, and they have put great stress on quality-of-life issues — like recreation and green space — that appeal to families and relocating firms. But the watchword is livability, not coolness.

Affordable housing. Family-friendly communities. “Livability.”

Sounds dull as dirt, doesn’t it? But it’s the foundation our community needs if we’re going to reverse the exodus of young people.

The politicians who back Renaissance Square will gladly drive Rochester off a cliff, if they can look all flashy while they steer. We have to stop them.

Upstate, downtimes

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For an interesting conversation on the flight of young, educated people from Upstate New York, hop over to Vodkapundit and check out the comments on a post that looks at a NY Times article on the subject.

Here’s one that jumped out at me:

Work for a software security company. We just closed our Toronto, Long Island, Albany and Waltham, MA offices and moved them all to Virginia due to the high costs in taxes and wages (from the high cost of living).

For what we were paying approximately 200 employees in those locations we can employee nearly 300 in Virginia. For the same amount of money I can hire 100 more people, produce more product and make more profit. I still have 2 programmer and one tester position open.

These are not low wage jobs. These are professional software development jobs of people making well into 5 figures (none under 50K) and some into 6 figures.

The region is being run into the ground, and our politicians are either too stupid or too corrupt to care.

But don’t worry. They’re going to get us our $230 million Renaissance Square. It’ll be such a nice place for the last seniors living here to hang out & listen to the crickets chirp.

Turning our city around

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Today’s Democrat & Chronicle reports that this year’s economic forecast by Sandy Parker, chief executive of the Rochester Business Alliance, is “sobering.”

“Where the state as a whole is faltering, upstate — to be frank — is sinking,” Parker said. “Job growth is anemic, incomes are nearly stagnant, and people, particularly young people, are leaving for more promising locales.”

What bothers me most about this is that, as a lifelong resident of Upstate New York, I’ve been hearing essentially the same words for at least 30 years — since people first realized that the manufacturing sector that once supported the Great Lakes economies had begun to falter.

Nor has the dialectic changed much over time. On the one hand, there is the handwringing and the cynicism. We don’t get enough sun. We’re overburdened by taxes and a moribund state government. “There goes Kodak. There goes Sibley’s. There goes Midtown Plaza. There goes the fast ferry.”

Then you have the responses, which IMO tend to be narrow and to have a certain hot-house quality about them. The proposed performing arts center idea is an example. I am sure the people who support it are very well-meaning. But it’s not enough to support an idea because it’s a cultural amenity that I, a native, would patronize. The key question is: would it excite people from Philadelphia, or Seattle, or (gulp) LA? Even more to the point: would it excite them enough that they would fly in for a weekend? Spend a little money? Check out local real estate prices?

And how many of them can we expect?

I’m not saying a performing arts center wouldn’t accomplish this, btw. What I’m saying is that we need to be careful which questions we’re asking — and of whom we’re asking them. Moving money from the pockets of someone in Pittsford to the pockets of someone in Chili is all very nice, but it doesn’t do a thing for the overall economic health of the Greater Rochester Area.

Another example is this recurring assertion that we need to attract young people. We do attract young people. They are here right now, walking to classes at the University of Rochester, at RIT, at the Eastman School of Music. The question is not how we attract them, but how we keep them. “Create jobs,” people will say, and then our leaders will rush off to brainstorm on how to incentivize :-D businesses into settling here. That’s well and good — and heaven bless every start-up in this town — but I’m not convinced that a handful of fledgling companies is enough to re-define the climate — the milieu — of a community.

What we really need is to figure out how to make Rochester a “happening place.” Until we do that, people outside of Rochester are going not to take the trouble to come here for a visit, let alone to stay. Not in significant numbers, anyway.

So how do you make a community a “happening place?”

On December 1st, the Wall Street Journal ran a piece titled “The Fair That Made Miami Hot All Year Round” (subscription required). Here are the opening two paragraphs:

The story of Frank Gehry’s design of the Guggenheim Museum in Bilbao, Spain, is by now familiar. Cities world-wide have begun to aim for the “Bilbao effect”: the construction of a spectacular museum building that attracts international visitors and boosts the economy. The story of the “Art Basel effect” is less widely known. It is the tale of the leading art fair for contemporary art, which has been presented in Basel, Switzerland, every June for the past 36 years, also coming to Miami Beach for the past three Decembers and becoming America’s premiere art fair; the fourth edition of Art Basel Miami Beach opens today.

Although it is a once-yearly, four-day event, Art Basel has profoundly altered the shape and scope of Miami’s cultural landscape, affecting real estate and tourism rates and enhancing government support for the arts.

Art Basel is “happening.” It brings 30,000 art lovers into Miami and (last year) 640 journalists. Moreover, locating it in Miami was enough to shift peoples’ perception of that city.

Art Basel’s effects on Wynwood are not limited to a burgeoning gallery district. Four high-rise residential buildings are currently under construction there, as is Midtown Miami, a 56-acre shopping area and residential complex in a former railroad yard adjoining the neighborhood. If Wynwood, which is still decidedly seedy, is soon to be gentrified, the evolutionary process was undoubtedly “supercharged” by Art Basel Miami Beach.

Now for the real kicker. The fair’s current budget is $14.4 million — and that’s triple what it was the first year.

Miami got this all going with an initial budget outlay of less than $5 million.

The current estimated price tag for our Renaissance Square project — of which the arts center is one piece — is $230 million.

Obviously, I’m not going to propose that we try to woo Art Basel away from Miami. But I’d dearly love our leaders to look to successes like Art Basel for ideas. We need need to find our own wild card — the thing that will make well-heeled, educated people spend a week here, and then maybe start to think how nice it might be to own an Ontario Lake-front summer home.

Because that’s the demographic shift that raises our tax base. And widens the pool of start-up capital for local businesses. And injects cash into our service economy.

One idea that comes to mind is an indie film festival — but one that is modeled after Miami’s Art Basel template. More from the WSJ piece:

In accord with the Swiss model, the fair is not a self-contained entity. A public art program, performances, video and sound lounges, discussion forums and “crossover” events involving fashion, books, music, film, architecture and design are all variously sponsored and promoted by Art Basel Miami Beach. Then there are “partners” in the greater Miami area, ranging from art venues to nightclubs, that feature events officially sanctioned by the fair.

In other words, don’t show a few films at the Eastman House and expect to attract scads of jet-setters packing wads of cash. Make it a real Event, with community-wide tie-ins that involve Rochester and our neighbors.

Whatever you do, though, make sure that you craft it — whatever “it” is — not so that it polls well in Rochester, but so that it pulls well from the rest of the world.

And get away from a focus on infrastructure alone. Yes, we need infrastructure — I’m referring to the arts center and projects of its ilk again, here — but infrastructure isn’t enough, as the fast ferry debacle has demonstrated. We all know, after all, that you can attract 250,000 to a field outside a little town in the middle of nowhere, if people get the idea that the field is going to be a happening place. No infrastructure required.

Let’s figure out how to make Rochester a happening place.