Cities Must Lead Way Back to Prosperity

Bruce Katz and
Bruce Katz Founding Director of the Nowak Metro Finance Lab - Drexel University
Jennifer S. Vey

June 24, 2007

For all of Connecticut’s affluence, its economic performance in recent years has been lackluster at best. According to a recent report by the Connecticut Economic Resource Center, the state has fallen far behind in job growth and entrepreneurialism, population growth is slow and young professionals are leaving. Given its research findings, this same report is adamant that “dynamic and vibrant cities” are vital to sustainable economic growth in the state.

We couldn’t agree more.

Last month, The Brookings Institution released “Restoring Prosperity: The State Role in Revitalizing America’s Older Industrial Cities.” The study looked at 302 U.S. cities on eight indicators of economic health and residential well-being, and found Bridgeport, Hartford and New Haven among 65 cities that are underperforming compared with their peers nationwide. Most of these cities – and their regions – are still struggling to make a successful transition from an economy based on routine manufacturing to one based on more knowledge-oriented activities.

But the report is emphatic that the moment is ripe for the revival of these urban economies. For all their challenges, demographic trends – growing numbers of immigrants, an aging population, young people delaying marriage and having fewer children – are having a profound influence on how and where people choose to live, to the benefit of many urban areas. At the same time, globalization, technological advances and growing concerns about climate change are causing a renewed appreciation for the density and diversity that sets older cores apart from the expanding suburban fringe.

Good things are already happening: Witness, for example, the Hartford 21 project in this city’s downtown, the Urban Green Builders development in Bridgeport, and the surge of economic activity Yale has helped stimulate in the New Haven region. But on the whole these cities remain beset by job and business losses, low incomes, high unemployment and deep concentrations of poverty.

Hartford and its counterparts have a chance to leverage their assets and build on positive trends, but they can’t go it alone: To truly catalyze citywide revitalization, the state needs to engage, on multiple fronts.

The state has already taken some positive steps toward re-energizing its urban cores. In 2006, it established an Office of Brownfield Remediation and Development to provide a centralized resource for brownfield funding and information. It is working to strengthen crucial rail corridors to increase capacity and reduce service delays caused by aging rail infrastructure. And with one of the strongest minimum wage laws in the country, it is helping to grow the middle class in cities and elsewhere.

It is time to build on these efforts and help create the innovative, competitive cities Connecticut needs to ensure that all its residents have the choices and opportunities needed to thrive. Our report spells out a playbook for how states can help cities fix the basics (for example, public safety and schools), build on their economic and physical assets, and create strong neighborhoods and families. Here are three specific ideas that Connecticut’s leaders should consider for the near term:

First, the state should develop a strategy to better target its market-shaping resources (infrastructure, economic development) toward existing commerce centers – the established cities and towns still struggling to find their way in an economy that has for years rendered them obsolete.

A more strategic focus of existing resources would go a long way in helping to foster private investment and development in these communities, while at the same time helping to curb sprawl and preserve rural areas.

Imagine, for example, the economic, fiscal and psychological impacts of revitalizing Connecticut’s downtown cores such that they became home to 2 percent of their respective metropolitan areas’ residents. This equates to about 23,000 residents in downtown Hartford, almost 16,500 in downtown New Haven, and nearly 18,000 in downtown Bridgeport – numbers that would bring life, vitality and a virtuous cycle of growth to these important metropolitan hubs.

Second, Connecticut needs to provide a new funding stream dedicated specifically to redevelopment activities in ailing commercial cores.

To this end, the state should establish a Regional Reinvestment Fund – modeled after a similar fund proposed for counties in northeast Ohio – that would be used to make investments in land assembly and infrastructure improvements in urban areas. This low-risk fund would be capitalized by a state-backed revenue bond, to be repaid with a real estate transfer tax on new land acquired with money from the fund. It would then operate in perpetuity, with municipalities taking half of the property tax revenue generated by the resulting new development, and putting the other half back into the fund so it can continue to be used for new projects.

Finally, the state should implement the recommendations of the Task Force on Brownfields Strategies, which calls for a new package of programs dedicated to the cleanup and development of contaminated sites, most of which are in the state’s cities. Modeled in large part after similar programs in Ohio, Pennsylvania and Massachusetts, this effort would provide more flexible financing tools – including loans, grants and tax incentives – to put blighted properties back into productive use and help stimulate new investment in their surrounding urban neighborhoods.

For the first time in many decades, there is reason to be optimistic about the future of Connecticut’s older industrial cities. Advancing beyond hope, however, requires a vision of the possible, and the will to achieve it. Is Connecticut up to the task?