Introduction

"...in early Egyptian handwriting the ideogram representing the word city consisted of a cross enclosed in a circle. The cross-represented the convergence of roads which bring in and redistribute people, merchandise, and ideas. The circle indicated a wall or moat."¹

What defines a city is a question that has been kicking around not for centuries, but for millennia. The Greeks had their agora, the Romans the forum. "Islamic scholars defined a city as a place with a mosque, a bazaar, and a public bathhouse."²

In western societies, we tend to classify "city" by its legal definition, setting the city limits by geographic boundaries. In a state like New Jersey, where every square inch is incorporated, our cities have defined limits and structures. (In other land-rich states, cities can continue to expand on their outskirts as that land is not already a part of someplace else. This ability to expand gives them options to meet needs that are not open to New Jersey cities.)

America has long had an uneasy relationship with its cities. In 1800, Thomas Jefferson wrote in a letter to Benjamin Rush, "I view great cities as pestilential to the morals, the health, and the liberties of man." The ideal public servant, indeed the ideal man in our largely agrarian society, was one who - like Cincinnatus in the Roman legend -- came off the farm when his country needed him and returned to the plow when his service was done.

New Jersey, sandwiched between New York City and Philadelphia, has a particularly complicated urban view. Even at their peaks, our largest cities were overshadowed by the behemoths to our north and south.

Of New Jersey's 566 municipalities, 52 have city charters. The Legislature has divided them into classes: 1st Class cities have a population above 150,000 (just two), 2nd Class cities have a population between 12,000 and 150,000 (28), and the rest are 3rd Class cities not counting Atlantic Ocean resorts (15). 4th Class cities are the Atlantic Ocean resorts (7). Similarly, the counties are classified into 6 classes based on population and density. (These distinctions may seem unimportant, but legislation and regulations will occasionally refer to provisions intended to apply to only certain classes of cities or counties.)

Indeed, the majority of our cities are quite small, and 15 don't even have 12,000 people. (My home of Lambertville is the only city in Hunterdon County, and at slightly fewer than 4000 people we are dwarfed by other municipalities in Hunterdon.)

Not only can a New Jersey municipality be a Borough, City, Town, Township, or Village, it can be under one of 12 different potential forms of government - Borough Council, Commission, Council Manager, Mayor Council, Special Charter, etc. To add to the confusion, not all New Jersey cities have the same form of government.

For many years, most New Jerseyans have lived outside the cities in the outlying suburbs. We have been called a "bedroom" state. And yet, there are many who recognize the importance of New Jersey's cities. Governor Kean always used to say, "Great states need great cities."

In many states, a large city dominates the political landscape. New York, Chicago, Boston, Baltimore, to name a few, are centers of population and commerce-and they send forceful delegations to their state capitals. Little gets done if the political leaders in those cities don't want it to happen or can't get anything in exchange for their support.

New Jersey is different. For one thing, there is the issue of population. Only in West Virginia and South Carolina does the state's largest city have a smaller share of the state's total population than Newark does in New Jersey.

So when it comes to legislative representation, the numbers aren't there. What used to be called the Big Six cities of New Jersey today make up only 12% of the state's population. Indeed, more people (347,881) have left Newark, Jersey City, Camden, Trenton and Atlantic City in the past 70 years than live in Newark today (270,000).

Then there is the overall nature of state politics. New Jersey is a suburban state with an historical antipathy for cities. In many ways, the Legislature has aided and abetted attempts by people and groups to split into smaller and smaller entities. Indeed, when cities in other states were annexing outlying areas and adding to their size and strength, New Jersey municipalities were breaking apart.

Don't assume, though, that our urban areas still don't enjoy some political clout. Dual office holding, Senatorial courtesy, and the need to turn out the vote in the urban areas still make them democratic strongholds and give their politicians more say than some of their suburban or rural counterparts.

Finally, don't forget New Jersey's unfortunate "culture of corruption." A glance at our major cities tells the tale: 5 of the past 7 mayors of Newark indicted, along with numerous mayors of Asbury Park, Atlantic City, Camden, and many small and mid-sized towns too. What is corruption's true cost - both in human and economic terms?

What about Newark?:

This seminar will use Newark, New Jersey's largest city, as the focus for two days of discussions and visits aimed at probing what "economic and community development" means in--and beyond--a struggling city in New Jersey. Today, much is happening in Newark that belies any stereotype of a city on hard times.

But at the same time, you can find in Newark poverty, neighborhood decay and, in many quarters, growing impatience. Indeed, the jury is still out (bad choice of words considering the recent conviction of the most recent past mayor) on whether Newark and cities like it--former manufacturing hubs beset by economic dislocation and characterized by dramatically changing demographics--can approach either their former glory or a new future that offers opportunity and high quality of life.

During this month's seminar, we will be sharing a day with the Leadership Newark participants. It is an excellent opportunity for us to get a better sense of the many sides of Newark through listening and discussion.

Indeed, Newark has a lot going for it that some of the other cities we visited would envy:

• Major employment center with more than 100,000 private sector jobs
• Large tracts of land available to develop
• Significant amounts of new housing developed in recent years
• Ease of access to New York and the entire Northeast Corridor by air, water, train and roads o Strong economy in the surrounding region
• Strong economy in the surrounding region
• Concentration of universities with more than 40,000 students
• Solid base of community-based organizations, local and national foundations, civic groups and an active corporate sector
• Historical, cultural and entertainment assets and diverse neighborhoods

Such a city would sound like it had everything in place to be a flourishing metropolis. But it isn't hard to find folks who would take strong issue with a rosy assessment of life. Nor is it hard to see why. As reported in Newark in Focus: A Profile from Census 2000 by the Brookings Institution:

• Newark's adults possess the lowest levels of college education among large U.S. cities, and are unemployed at high rates or absent from the labor force altogether. As a reflection of its low-skill workforce, the city contains only a small fraction of the region's jobs. Only one in 11 Newark adults holds a college degree. Low rates of educational attainment cut across racial and ethnic lines in Newark, affecting whites, blacks and Hispanics alike.
• Newark managed to halt four decades of population decline in the 1990s, but the city no longer anchors the region. Between 1950 and 1990, the city lost over 160,000 residents, one-third in the 1980s alone. Census 2000 revealed that Newark largely stemmed this outflow in the 1990s, as the city's population declined by only half a percent over the decade. The inflow of immigrants accounted for what increase there was. At the same time, the city's suburbs grew by 7%. (Essex County's population, however, has been declining as well since its 1970 peak as more New Jerseyans sprawl out to the surrounding counties.)
• Though the number of people who commute into Newark for work rose in the 1990s, the number of residents working in the city actually declined to where nearly three-fifths of Newark's own residents commute to jobs outside the city.
• As the city loses married couples and fails to attract coming-of-age singles, a growing proportion of households is headed by single parents or other family members such as grandparents. Newark's younger age profile reflects the high proportion (20%) of city households headed by single parents, its continued loss of married couples and its failure to attract young professionals (aged 25 to 34) over the past decade.
• Newark residents participate only weakly in the labor market. Little more than half of working-age adults in Newark were employed or looking for work in 2000--third-lowest percentage among the 100 largest U.S. cities. As a result, more than one in four Newark children live in a family with no working parents.
• Household incomes in Newark dropped in the 1990s and the middle class shrank. Though low- and moderate-income households increased in number in Newark during the 1990s, the number of middle- and upper-middle-income households ($34,000 to $81,000) declined. As a result, the city's median household income dropped over the decade, and ranked 96th among the 100 largest cities in the U.S. in 2000. In several neighborhoods, more than 40 percent of all residents live in poverty. Forty-five percent of Newark's families with children have incomes below or near the poverty line.
• Demographically, Newark isn't enjoying some of the changes other cities have been experiencing. For example, between 1990 and 2000 the percentage of Atlanta residents holding a bachelors degree rose from 27% to 35%; in Newark the rise was from 8.5% to 9%

Newark is now led by Mayor Cory A. Booker, elected in 2006 in his second try for the office. Booker has brought in professionals from other places to work on economic development and crime fighting--with the latter being a key element determining the success of the former, Booker says.

Economic initiatives begun by Booker, according to Star-Ledger articles, include working with local businesses to create incentives for them to hire ex-offenders; customizing training opportunities with Newark's largest employers to ensure residents are being trained for jobs that actually exist and are in high demand; establishing greater levels of accountability for underperforming vendors, whose trainees were not being placed in jobs; securing greater commitments in minority participation in construction, greater commitments for participation for Newark residents and minority businesses in the ongoing running of the sports arena and greater commitment for union inclusion; requesting developers give Newark residents first preference for all construction jobs and any permanent jobs related to the retail and commercial portion of these developments; plans to produce housing strategies that focus on increasing homeownership opportunities and improving affordable housing within the city; introducing an ordinance to take advantage of state law that allows cities to take more aggressive steps to go after absentee landlords and building owners who neglect and abandon their properties.

Early on, Mayor Booker enlisted the nonprofit Regional Plan Association to draw up a Draft Vision to be a foundation for updating the city's master plan and zoning ordinances. The intent, according to the document, is to "create a new neighborhood-driven planning paradigm for Newark." (Full disclosure: Until last year, our own Tom Dallessio was the Executive Director of RPA's New Jersey Office.)

We'll be hearing from the Mayor at this seminar, along with other city and state experts. In addition, the Fellows of Leadership New Jersey and Leadership Newark will form into teams for part of this seminar. Each team will look at a sector or segment of the potential economic development of the city. Try to get a sense of the role it can, should and does play. Throughout this Overview you will find questions aimed at stimulating your inquiry. What you won't find are any easy answers.

What is Economic Development?

"Economic development" is, according to one definition: "the process of creating wealth through the mobilization of human, financial, capital, physical and natural resources to generate marketable goods and services." In perhaps simpler terms, it generates growth, which in turn creates jobs, provides housing and enhances the opportunity to live a better life. But the phrase can also be used to justify projects that make profits for some and further the political aspirations of others while doing little for the overall well being of the larger community. Use what you see and hear in this seminar to help you consider which view best describes what's taking place in New Jersey's largest city.

Some strategies for economic growth in cities emphasize "people;" others stress "places." In Newark you can see places where projects are underway. New projects and those planned for the future, look better than what was there before. Do these projects improve the economic condition of the people who live there or nearby? Would those people, and perhaps society as a whole, be better off if more effort were spent improving the capacity of the area's residents to participate fully in the economic life of the broader community? Is it an "either or" proposition?

Observers like David Rusk, John Powell, and William Julius Wilson have written that the problem in America's cities is not simply the existence of poverty, but rather the concentration of poverty. When more than 20% of the people living in an urban census tract are below the poverty line, the appearance and attractiveness of a neighborhood suffers. And when the concentration of poverty reaches 30 or 40 percent, the neighborhood can collapse, starting a domino effect that threatens surrounding neighborhoods. We saw the results of that in Camden.

Rusk, Wilson and others of that school of thought believe that downtown projects, or even new housing projects in the neighborhoods (such as those in Newark), are futile. They cannot spark self-generating economic growth that improves the lives of those now living in concentrated poverty in the cities. Instead, Rusk and others argue, what's needed is to change the rules of the game by paying less attention to municipal boundaries and reducing competition to attract development that adds to the local tax base, often at the cost of the tax base of the community next door. Their answers include building affordable housing in the suburbs so people can live near jobs, and such ideas as property tax-sharing mechanisms under which municipalities in a region can pool revenue from development. (Such sharing does occur in the 14-municipality Hackensack Meadowlands district, but nowhere else in New Jersey.)

A report by Michigan Future, Inc. contends that what Newark and similar cities need is not plans to build gleaming office towers or sports venues, but rather a reliable system to help the urban poor develop employment skills. The reality is that labor markets are regional, the report argues. So low-income city residents have to compete with others throughout their metropolitan area for good jobs that are the only real route out of poverty. Employers who come into Newark or any city are unlikely to hire the people who live there if they lack the skills those employers seek. The best way to promote the economic development necessary to improve the lives of those now in poverty, under this view, is not by luring white-collar employers. What it takes, rather, is programs to enhance early childhood development, turn elementary and high schools into places that provide a good education, invest in ways to train the chronically unemployed and reduce economic segregation in housing and schooling.

Even if people in power wanted to follow these policies in Newark, could they? Rusk argues that "Big Box" cities like Albuquerque (where he was mayor), Minneapolis and Kansas City are better candidates for these policies than cities like Newark, Jersey City and Trenton, which can neither annex outlying territory nor (at least not now) interest their more affluent neighbors in sharing tax revenues or housing burdens. Many of their more affluent neighbors may say they are already doing plenty of revenue sharing, with the majority of Newark's school (Newark is an Abbott district) and municipal costs born by taxpayers outside the city. Indeed, certain towns in Essex County - weary of their high tax rates -- have tried to secede from the county.

Another--in some ways related--view is that of "empowerment," which is to say attacking urban poverty by finding ways to help low-income people contribute to the economy. A leading proponent of this idea was Rep. Jack Kemp, who played a major role in popularizing the idea of Urban Enterprise Zones as wellas home ownership. UEZs are aimed at increasing investment by relaxing taxes and regulation in the zone. New Jersey has had UEZs since the 1980s.

What Drives Development?

Rarely does development just "happen." It is a complex process that resists being condensed into a single model. Each project has its own history and rationale. Every deal is made out of a mix of goals, incentives and expectations. Often there is a relationship between public investment and private decisions. Four forces are prominent in setting the development agenda:

Location, Location, Location: For a lot of economic development, location is the prime consideration. Location might mean access to markets and transportation, proximity to urban centers or a natural setting. New Jersey's history is one of location-driven development in successive waves, much of it stemming from the state's closeness to New York and Philadelphia. Transportation is especially important in many of the projects you will see in this seminar. The New Jersey Performing Arts Center, The Rock, and other Newark development, for example, are close to air, rail and bus terminals on the Northeast Corridor.

Public Incentives: Both the setting and type of development have long been affected by government involvement. Public encouragement of development can take many forms: tax incentives, zoning rules and such creative financing as selling bonds to buy computers to lease to a business, thus saving the business from paying sales tax (which the state of New Jersey did to help Merrill Lynch decide to build in Hopewell). Whether such measures are seen as necessary tools or outrageous giveaways, they help shape development. Infrastructure such as roads, rail links and airports, as well as such amenities as parks and arts facilities, also have an effect. Investment in human capital--education, job training programs--have a long-term return.

Civic Commitment: Some of the most significant investments in New Jersey's recent economic history can be attributed less to economics than to the commitment of people and enterprises acting on their belief--indeed their faith--in the potential of the community or the state. Think of our visit last month to J&J. Prudential would have been unlikely to make the original investment in the Gateway project so soon after the 1967 riots had the company not been headquartered in and committed to Newark. The achievements of New Community Corporation in Newark are due more to the vision and energy of Monsignor Bill Linder than to any other factor. The NJ PAC owes much to the advocacy of private citizens like Ray Chambers and public officials like then-Governor Tom Kean. Then-Mayor of Newark Sharpe James was the driving force behind the new Newark arena, especially after the state decided against funding it.

Community Organizations: The face of development, and whether it takes place at all, can differ dramatically from place to place. Those differences often have a human dimension. One factor influencing the distribution of benefits of development is the existence and activity level of community organizations. They can promote economic progress as well as monitor how development's fruits are meted out. Problems can occur, though, when such groups lack the ties or savvy to be heard, or when they simply don't exist.

What is the Proper Role of Government?

Government's action in economic development can be pivotal. But the proper role is not always clear. What should be the goals and strategies of government in the development process? Should it serve primarily as a facilitator or as an active participant? How can government act to ensure that the benefits of development are shared broadly within the community? What of the unintended consequences?

Public policy, especially at the Federal level after World War II, helped cripple America's cities. Cheap gas and billions of dollars sunk into highway systems helped make suburbia attractive. Government mortgage programs and tax rules made home ownership in those suburbs easy, at the same time banks were allowed to "red-line" inner city areas, denying mortgages to the poor and minorities. Then, in the 1950s, the federal government, disciples of Robert Moses, began what was called "urban renewal," but it often meant tearing down neighborhoods. Many experts believe, in retrospect, that such programs perpetuated segregation and exclusion. The seminal work on this topic is from 1961 and written by Jane Jacobs, The Death and Life of Great American Cities.

The 1960s brought the new society programs dealing with poverty and human capital. The 1970s brought "new federalism," with the federal government skipping the states and working directly with the big cities. In the1980s, states and localities started taking on a more entrepreneurial role. Their economic development efforts grew increasingly sophisticated, focusing less on "smokestack chasing." State policies turned to increasing the ability to compete for job-producing business by proclaiming the availability of skilled work forces and risk capital, as well as top-quality technology, management information and telecommunications networks--all at reasonable cost.

Almost all states offer programs designed to make themselves attractive to business by means of tax concessions of various forms, financial assistance, help with job training and other programs. According to one estimate, states each year spend about $15 billion on subsidies and tax incentives for business. Localities are estimated to spend another $15 billion.

Some analysts contend the return on these investments is low, and that governments usually do little to monitor whether businesses are delivering whatever they promise in return for state or local help.

New Jersey as a state is in the thick of competition for subsidies, offering an array of programs to attract and retain business. If interested I further reading, please see the NJ Economic Development Authority web site. For a critical study on business subsidies in New Jersey go to New Jersey Policy Perspective; The Good Jobs First site will provide information about an organization dealing with the issue on a national level.

Beyond simply promoting growth, government policies can be directed toward spreading the benefits of development. During the 1980s, many cities were faced with opportunities for attractive projects, but mayors were sometimes unsure if average citizens would get jobs and housing as a result. In response, many localities negotiated sophisticated agreements outlining mutual expectations in terms of hiring, and availability of space for homegrown businesses--even requiring replacement construction of low-cost housing, often in exchange for tax benefits or other forms of cooperation.

How well is Newark performing this function? Is it asking enough, too much, or too little of those who want to develop in the city? Will changes be in the offing after the damning testimony about the oversight role of the City Counsel in the recent trial of former Mayor Sharpe James?

From what you have seen, what is the most effective balance between community-based development efforts and the major investments in downtown projects?

Community organizations have demanded that all citizens have access to amenities and infrastructure improvements that frequently accompany development projects. In addition, they are well situated to use tools such as the federal Community Reinvestment Act (CRA) to bring investment to their neighborhoods as well as downtown. Newark's many non-profit organizations and community development corporations (CDCs) include New Community Corporation, La Casa de Don Pedro, and the Ironbound Community Corporation. On the other hand, state and local government can help community voices be heard by demanding an economic development process that treats broad-based community participation as a valued asset, rather than a necessary evil. In the planning field, efforts like this are often referred to as communicative planning or equity planning.

Who Wins (Does Anyone Lose) as a Result of Development?

Given all that has happened in recent decades, it is no surprise that many people living in city neighborhoods often feel that high-profile commercial projects touted by City Hall have no relevance to them. Many have reacted with skepticism to the Rock, the new Newark sports arena, wondering whether such a project will help them and their neighbors. When they are told they need to wait and see the ripple-effect results of new projects, neighborhood residents often respond that they have waited long enough.

As you look at the development efforts taking place in Newark you should ponder questions like:

• What is the impact on people, in terms of jobs, housing and quality of life?
• How does economic development affect the ability of government entities to provide needed services?
• Are there winners and losers? Who are they?

Urban redevelopment is often welcomed as a way to rejuvenate once-vibrant areas, and to help a city sustain higher quality services by strengthening its tax base. This is seen as a recipe for inviting the middle class back in. Yet, redevelopment can displace others--those who are ill equipped or ill prepared, personally or politically, for the change.

• What about the use of eminent domain? Is it a necessary evil? Should it be reined in in New Jersey?

Similarly, jobs accompanying development often require skills and qualifications that urban residents lack. Some of the jobs created are relatively unsatisfying, without opportunity for advancement, or simply inadequate to support a family.

Nationally, in cities where the office boom was strongest, unemployment and poverty grew worse after 1970. City jobs changed, and so did city populations--in opposite directions. The job mix in corporate center developments often is blamed, but is it really the culprit? Or is the problem deeper, involving the shift from manufacturing to service jobs and to white-collar office jobs as evidenced, for example, at the Colgate site in Jersey City. Indeed, high poverty and unemployment rates in cities are not the result of a small share of jobs for dropouts, but of an exceptionally large proportion of dropouts in the population.

Abate or Not Abate: Is That the Question?

Political, business and civic leaders in Newark and most other cities believe they should make the city attractive for developers, whether development is driven by civic commitment or by the market. But others see limited value of such an attitude. In Newark and other cities, it is not clear that neighborhoods or their residents have benefited enough to lift themselves out of poverty from developments like performing arts centers, sports arenas or office buildings.

The Newark sports arena, as has been the case with arenas in other cities, has been especially controversial. The state decided not to put up money for the facility, so the city of Newark funded most of the project, eclipsing what was put up by the Devils hockey team. Supporters of such projects say they bring other, related development and boost civic pride in important ways. Opponents say arenas and stadiums create a limited number of low-wage, seasonal jobs and that people who venture into a city for a sports contest are likely to return home right afterward, rather than stimulate the local economy.

Recall our search for a gateway between the two Camdens: waterfront development and the rest of the city. Is this just a matter of time: do arts projects, for example, jump-start sustainable development? See the discussion on linkage, below. We will revisit this issue during the LNJ seminar on Art and Public Policy.

Build it and Who Will Come?

Business and government have long worked together on development issues and projects, but not without tension. Their motives are not always the same, so how much local officials can extract from businesses is problematic. In Newark, for example, developers have blocked the idea of "equity linkage": making an investment in neighborhoods, say, in return for tax abatement on a downtown project. They claim that they already are taking risks by investing in the city, and disclaim responsibility beyond the area they develop. Some say that abatements are less important than a region's overall economy or, for that matter, the national economy in terms of affecting developers' plans.

Whether you believe that abatements are crucial to development or that investment in prime real estate 20 minutes from lower Manhattan needs no such jump-start, abatements figure in every significant Newark commercial and residential development since the mid-1960s. The first abatements apparently were offered for apartment buildings when the city faced a housing shortage. In 1975, the abatement program was expanded by state legislation, creating a five-year abatement for homeowners and industry as a way to stem flight and rebuild the city. Then, in 1979, Newark created 15- to 35-year abatements for the Gateway complex and other office and housing developments. According to Star-Ledger reports, these programs have little accountability built in. The city rarely estimates the cost of abatements to taxpayers, and conducts no formal monitoring to see if the beneficiaries of abatement honor the terms of their agreements.

Many developers seeking concessions defend a generous policy of abating property taxes for years after a project is built, as an incentive to build. This leaves local government officials hoping that, over the years, new development will start to pay its own way largely through spin-off commerce, and that, in the meantime, momentum of new construction and optimism will lead to more development. They maintain that the only real alternative to tax-abated new construction is no new construction. Generally, abated developments make a payment at an agreed upon amount to the city in lieu of taxes. But unlike with property taxes, nothing goes to the county or the school system.

The City of Newark uses tax abatement as a major incentive tool for new construction and rehabilitation. Simply put, a deal is struck between the city and a developer under which the developer does not have to pay property taxes for a specified period of time. Short-term abatement of five years is offered to properties anywhere in the city. Long-term abatements of 15 years are available in enterprise zones or areas that are part of a redevelopment plan. Projects eligible for long-term abatement must be new construction or substantial rehabilitation.

Today, at least 135 residential properties and some 200 commercial buildings, many of them large downtown office towers and manufacturing facilities, have received abatements, according to research by the Star-Ledger. The newspaper found that the "in-lieu of tax" fees paid by developers to the city amounted to about $25 million per year--less than half of what would have been collected in taxes. One example cited: an unabated $250 million arena would pay about $9.5 million a year in property taxes, of which $1.8 million would go to Essex County government, $4.04 million to the Newark school system and $3.73 million to Newark city government. Under an abatement agreement, the total yearly tab would be around $3 million, all of which would go to the city. The county and schools are clearly not big fans of tax abatement.

Dan O'Flaherty, Columbia University professor and once an aide to Kenneth Gibson, Newark's first African American to be elected Mayor, wrote: "Newark must be a great place. A lesser place could not have survived the policies that city and state officials call economic development." He noted that Newark's economy continued to deteriorate in the 1990s even as other cities in the region saw their fortunes improve.

Tax abatement is a prime example of mistaken economic development policy, O'Flaherty asserted. He argues that, somehow, money lost to the city must be made up by "higher property taxes or lower services for all the rest of Newark." He contends that tax abatements actually slow development in Newark because developers "have an incentive to wait around until they can get the most lucrative deal." And, he says, the process pretty much guarantees that nothing of significance ever is built without an abatement. "Newark's policies don't combat blight; they create it," in O'Flaherty's view.

Former Mayor Sharpe James stridently disagreed with that view. He told the Star-Ledger, "The gains to the city will far outweigh the expected dollars we might have to contribute. The payroll taxes, just to have people walking down our streets, people shopping, going to the ballgame." The payroll tax reference is to a Newark law requiring companies located there to pay the city a percentage of their payroll's value. In 2005, it was estimated that this payroll tax could have brought in $36 million, up $8 million from seven years ago. However, some businesses also received breaks on the payroll tax in return for locating in Newark. Some Newark officials and developers argue that it is pointless to complain about how much money the city would get in property taxes on a new building compared to what it gets from an abatement agreement--because without the agreement there wouldn't be a new building. In the midst of controversy over a 20-year abatement worth more than $25 million given to Hartz Mountain Industries to build Blue Cross's office tower, the company's counsel, Irving Horowitz, put it bluntly. "They'd [Hartz Mountain] be paying zero [in property taxes] without the abatement because they wouldn't be here. That property was a vacant lot when we bought it and it would still be a vacant property today if we hadn't gotten the abatement."

Abatements remain controversial. In 2004, the Newark City Council voted to cancel a 15-year abatement held by developers of the office building at 744 Broad Street because they had not submitted copies of lease agreements, a financial audit and a report on compliance with city affirmative action programs. Three weeks later, council rescinded their cancellation, a move hailed by the Mayor and the developer, which also plans for luxury lofts and apartments at two other sites. Said one councilman after the vote to rescind, "The first time we voted we didn't think very seriously about the outcome of the vote. If we didn't do what we did today it sends the wrong message to developers."

Some Recent Development(s)

• Leasing is underway for Eleven80 www.eleven80rentals.com, the first upscale rental development in downtown Newark in more than four decades. More than 100 people had moved into the new building as of November 2006. It consists of 317 units a renovated 35-story tower. The building had been empty for 20 years. Studio apartments start at $1,395 a month; 2-bedroom units at $2,215.
  Cogswell Realty Group's chief executive, Arthur Stern, told The New York Times, "This building will answer three questions. No. 1: Who's going to live in downtown Newark? No. 2: What price will they pay? And No. 3: How quickly will a quality building lease up?"
• The NJ Performing Arts Center is developing a $100 million plan to build 250 units of mostly market rate housing, plus street-level retail, across from NJ PAC. The concept includes setting aside 20% of the units for artists with modest incomes. "No city can be great without downtown housing," NJ PAC president Lawrence Goldman--who conceived a similar project when he was with Carnegie Hall--told The Times.
• In an effort to reclaim the Passaic River waterfront, construction began on the first part of a 2.2-mile promenade along the river that will connect downtown to the Ironbound section of Newark. According to a study by the Trust for Public land, Newark has 2.9 acres of park land per 1,000 residents, well below the national urban average of 7.5. New York City has 4.6.
• Light rail service has linked Penn Station and the baseball stadium where the Newark Bears minor league team plays.

Are Schools the Answer?

Of course, it is widely felt that educating the next generation is one way to end poverty and create opportunity. But Newark also has reason to hope that building new schools can boost employment and revive neighborhoods. Newark has benefited from state funds to build or renovate schools in the city under terms of the state Supreme Court's Abbott decision. Of the 80 schools (average building age: over 80 years), 37 are being replaced with new buildings. Every ward will be part of what is, statewide, New Jersey's largest public works program ever.

Think back to our February trip to Camden and our discussion on education. Some hope to tap the exciting potential of "community" schools, buildings that will contain not only classrooms and learning facilities but perhaps daycare centers, clinics and retail establishments. Currently, all projects for Newark which have a completed design include a health clinic for use by students and their immediate families.

The District anticipates that these clinics will have extended hours beyond the school day, and that in some neighborhoods they will be open 24 hours a day. And efforts are being made to train local residents so they will have the skills needed to be hired on these construction jobs. The now-defunct and renamed state Schools Construction Corp. provided outreach and training to residents of Essex County's Abbott districts via the Construction Trades Training Program for Women and Minorities (CTTP).

But, achieving the promise of the school construction program will not be easy. One important issue is land. Since currently Abbott school construction is primarily a state function, the entity building the schools (the state) isn't the same entity that controls land use (the city). The other is that the State is out of money for school construction, although there is talk of a new $2.5 billion bond program, despite the state's current crushing debtload.

Health Care as a Development Resource, and CHEN

Just as schools have an economic development potential greater than educating children, health care means more to Newark's future than keeping people well. In fact, its academic healthcare industry is a principal foundation for the city's economic development. Today, 28% of Newark's private sector service jobs--and nearly 10% of all private sector jobs--are in the healthcare industry, according to the 2001 Comprehensive Economic Development Strategy report from the city's Economic Development Office. And when those employed at the public University of Medicine and Dentistry of New Jersey are added, the percentage is even greater (in spite of all of UMDNJ's recent troubles).

Clearly, Newark's current healthcare infrastructure offers a foundation on which to build, today with five hospitals: Columbus Hospital; Newark Beth Israel Medical Center; St. James's Hospital; St. Michael's Medical Center; and UMDNJ-University Hospital. St. Michael's and St. James's are part of the Cathedral HealthCare System, which also includes the Pope John Paul II Pavilion at St. Mary's Life Center in Orange. Of course, as we learned last month, many of our urban hospitals are endangered by the tremendous costs of charity care in New Jersey.

UMDNJ is the largest health care institution in Newark. Along with Essex County College, New Jersey Institute of Technology, and Rutgers-Newark, UMDNJ is part of the Council for Higher Education in Newark (CHEN). CHEN was created with the aim of filling the gap left by the outflow of private investment. This is a turnabout of sorts: leading up to UMDNJ's 1970 creation there was a time of considerable racial tension over construction that razed the homes of 20,000 residents. Many cite this as a major factor in the city's 1967 riots.

The institutions that comprise CHEN share the belief that the future of Newark's higher education community is linked to that of its neighborhoods and, in 1984, representatives from each of the institutions worked to develop a preliminary master plan for the University Heights area. It identified areas of development, both for the campuses and surrounding community. One primary purpose for CHEN's involvement was to persuade others outside of the universities to invest in the area. In addition to helping to attract upscale, market-rate housing developments, a movie theater and shopping centers to the area in the 1980s, CHEN participants also focused on preparing a growing student population to meet economic, technological and social challenges. Ultimately, the skills acquired by CHEN graduates can translate to higher earnings and a larger impact on the local and regional economy.

In 1992, the CHEN institutions joined with private industry, state and local governments in a major venture to create the University Heights Science Park as an economic and community development strategy to convert university research into commercial applications. In September 2000, ground was broken for the International Center for Public Health (ICPH) at Science Park. In March 2002, the Public Health Research Institute (PHRI)--an independent, not-for-profit research organization founded in 1941 to study infectious diseases--relocated to ICPH from Manhattan. Still, some of our speakers will note that the University Heights Science Park has been less successful than they expected at affecting the surrounding neighborhoods.

All told, CHEN is home to more than 26,265 students and 11,870 jobs. Newark residents make up 17% of those jobs, but--reflecting what some of those jobs pay--just 10% of the payroll. CHEN ranks as one of the largest employers in Newark; county-wide, these institutions generate more direct jobs than the chemical, construction, apparel, printing, legal or engineering sectors.

Linkage

What really will help the neighborhoods? What conditions would have to exist for new, market-driven projects (as Newark's have increasingly become) to reach the people who need economic help the most? There are many opinions. It probably is safe to say that no matter how confident anyone is of their view, they have not figured out how to make it happen. A key element, many believe, is the concept of linkage. Our two-day seminar will help us explore this concept and these issues in depth.

1. Roberta Steinbacher and Virginia O. Benson, eds. Introduction to Urban Studies. Dubuque, Iowa: Kendall/Hunt Publishing Company, 1997, p. 3.
2. ibid.