Turning The Page On Economic Development
Representatives of the state’s 11 “Gateway Cities” were on Beacon Hill a couple of weeks ago to convince the state to expand, uncap or create new tax credits to promote economic development in their underperforming municipalities.
It was a good effort, and the tax credits described in the law proposed by the gateway cities in the state House of Representatives would provide for tax incentives that are similar to, or extensions of, others that have been successful in the past. The law intends to bridge some of the shortcomings of current state economic development tax incentive policies.
We support the requested extension/creation of these many credits intended to spur further investment, but we do so only with the proviso that the challenges that Worcester and other mid-sized cities throughout the state face get a more direct, structural fix in the future.
The fear is that Worcester, Fitchburg and the other gateway cities have become over-reliant on state policy as a crutch to underwrite development efforts. “An Act to Promote Economic Development in Gateway Cities,” looked at with a jaundiced eye could be called “An Act to Promote Tax Breaks, Nonprofit and Quasi-Public Funding For Development Projects.”
The problem these tax incentives and financing arrangements through local, state and federal government programs intends to solve is that for-profit development financed by private sources has “remained elusive,” as the Worcester Regional Research Bureau aptly put it in testimony supporting the act.
But private developers and financiers don’t have difficulty recognizing the opportunity for development in Worcester and other gateway cities. Large, easily accessible, historic buildings in downtown locations that can be had at very reasonable prices are attractive to multitudes of developers. What’s unattractive is gateway cities’ inability to sustain such developments and effectively build on them as catalysts for further positive change.
While state population has dropped this decade, Worcester’s population between 2000 and 2006 grew by 1.6 percent, according to the U.S. Census Bureau, and remained steady through 2008.
While the city and region may struggle to provide sufficient career opportunities for many of those students in the Worcester region after graduation, it is that younger group of professionals that the city and region need to focus on retaining.
We’ve heard City Manager Michael O’Brien say publicly that Worcester wants those students to stay, and the College Consortium is working on strategies to facilitate a greater connection between students and the community, it’s an effort that needs more juice, and more time to show tangible results.
Equal Opportunity
In order for those students to find the opportunities that would convince them to begin careers here in fields other than health care, the city must first come to grips with and finally do away with its arbitrary and unfair dual tax rates. Currently, the tax rate for commercial property in Worcester ($28.72) is more than twice the rate for residential property ($13.50).
City economic development officials have told us that “there’s demand out there,” for all kinds of office space in the city, “and we don’t have the supply to meet it.” And that’s not only because there aren’t enough tax credits and incentives to go around.
It takes a real, dynamic presence in the street on the part of the government and elected leaders to convince current and potential residents that the city is and will continue to be a desirable place to live.
The state’s gateway cities have some built in disadvantages that require a helping hand, but also have some distinct advantages that they need to do a much better job capitalizing on. Worcester for one has some momentum on the ground, and while a renewed package of tax incentives may help make the funding difference for a few new projects, it’s the wholesale fix of the antiquated dual tax rate that will make the biggest difference in attracting vital new development over the long run.
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