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Event - April 2005

The Boroughs as an Engine for NYC’s Future Economic Growth

This Center for an Urban Future forum, held on April 6, explored the potential for economic growth in New York City's outer boroughs and how decision makers in the private and public sectors could help tap into this potential.

Tags: economic growth boroughs

Kristin Nygreen, Citibank Community Development : Good morning, everyone. Thanks for being here. I see a lot of familiar faces in the audience, it’s wonderful that you all came. We at Citibank are very excited to be sponsoring this series of forums on economic development. We have about 50,000 employees in the New York City metro area. We’ve got 3,000 employees just in my building in Long Island City alone, so we have a very vested interest in the economic development and prosperity of this city. And the Center for an Urban Future does a wonderful job bringing us together for important panel discussions such as this. So, I just want to welcome you and turn it over to Jonathan Bowles, who will introduce the panel. Thank you.

Jonathan Bowles, Center for an Urban Future: Thanks a lot, Kristin, and thanks so much to Citibank for supporting the Center for an Urban Future’s 2005 forum series. Thanks also to Mia and Milano for hosting this event. With Citibank’s support, the Center for an Urban Future has had some terrific discussions over the last year and a half, about economic issues that don’t always get the attention they deserve, such as the importance of immigrant entrepreneurs to the city’s economic growth – a panel we had last spring, the role of academic research institutions in incubating new and innovative companies, and the entrepreneurial vitality of New York City’s neighborhoods, a forum panel discussion we had last month. I am particularly excited about the forum we have on tap today, and I’m really excited to see so many people here. So, without further ado, let me introduce our distinguished panelists.

First we have Joan Bartolomeo, who has been president of the Brooklyn Economic Development Corporation since 1989 and is one of the city’s smartest thinkers on economic development issues. As President, she directs a staff that provides services in the areas of small business lending, commercial and retail development, entrepreneurship and commercial revitalization. BEDC also directs the Initiative for a Competitive Brooklyn, a new project that seeks to create sustainable jobs for Brooklyn’s residents by facilitating the growth and expansion of the borough’s private sector employers. She also serves as the Business Manager of the REDAC Mini-Loan Program, which is managed by BEDC and has disbursed over 120 loans totaling $2.5 million to small businesses in New York City.

Next to Joan is Joel Kotkin, who is one of the nation’s most well-known urban experts and a longtime friend of the Center for an Urban Future. He is currently an Irvine Senior Fellow with the New America Foundation, a policy institute based in Washington. And his new book, “The City: A Global History,” has just been published by Modern Library. He has written several other books and is a frequent contributor to publications such as the New York Times, The Washington Post, The Wall Street Journal, Inc. Magazine, and The New Republic. For almost three years he wrote the highly acclaimed "Grassroots Business" column for the Sunday New York Times Money and Business Section. Two years ago, Joel and I co-authored a report for the Center for an Urban Future, on New York’s economy, titled “Engine Failure,” and he has also written major reports on the future of the Inland-Empire Region of Southern California, St. Louis and Los Angeles. For anyone interested in getting Joel’s new book, called “The City,” he’s going to be staying over after the end of the discussion today, signing some copies, so please come up to the front if you’d like to get a copy of his book.

Our next panelist hasn’t yet arrived, but he should be coming any minute now, John Liu, so I’m not going to go through and introduce you. But, obviously, I think most of you know John Liu is a City Councilman who is the Chair of the Transportation Committee in the City Council, who represents Flushing in the Council.

Errol Louis is a columnist at the New York Daily News and a member of the Daily News editorial board. He is also a frequent guest on television and radio, including New York 1, Regional News Network, WLIB and WNYC. Prior to joining the News, he was Associate Editor of the New York Sun, where he published hundreds of columns from 2002 to 2004 and won an award for commentary from the New York Association of Black Journalists. He also writes a monthly column, titled Commerce and Community, for Our Time Press newspaper. He was formerly a Visiting Assistant Professor of Social Science at Brooklyn's Pratt Institute, and he previously served as Executive Director of the Bogolan Merchants Association, a business improvement organization in the Fort Greene section of Brooklyn. From 1993 to 1997, he was the Treasurer and Manager of the Central Brooklyn Federal Credit Union, a community-owned financial institution that he co-founded in 1993.

Finally, Fred Siegel is the author of “The Future Once Happened Here: New York, D.C., L.A. and the Fate of America’s Big Cities” – which was named by Peter Jennings as one of the 100 most important books about the United States in the 20th century. He has been a fellow at the Institute for Advanced Study in Princeton, taught at the Sorbonne, and is a Senior Fellow at the Progressive Policy Institute in Washington. He makes his intellectual home at the Cooper Union for Science and Art in New York, where he has been a professor for the last twenty years.   Formerly an editor of City Journal, he has written for numerous publications, including The New Republic, The Atlantic, and The Public Interest. He was also a senior advisor to Rudy Giuliani’s 1993 mayoral campaign, a member of the 2003 New York City Charter Revision Commission and has just completed a new book, titled “The Prince of the City: Giuliani’s New York and the Genius of American Life,” which will be out in the spring of this year.

Now, just briefly, let me frame the debate today. This is an exciting forum on an important topic. According to a 2004 report from the State Comptroller, New York City’s outer boroughs weathered the last recession better than Manhattan, losing proportionally fewer jobs and seeing private sector wages increase while Manhattan’s payroll declined. While Manhattan lost more than half the jobs created there during the 1990s, Queens lost only 20% of such jobs, from 2000 to 2002, and Brooklyn lost only 5%. The Bronx was the only borough where private sector employment actually increased during the height of the economic downturn of these years.

The New York Times recently reported that last year, the city approved permits for more housing units in New York than any year since 1972. And Manhattan was fourth out of the five boroughs in the number of permits. Queens was number one. And you’ve all probably read that the boroughs have been getting a lot of attention from developers and large national retailers. So, I want to kick it to the panelists. My first question – what accounts for the recent increase in economic activity we’re seeing in the boroughs outside of Manhattan? And, do you think the boroughs still represent a largely untapped economic opportunity for the city’s economic future? Let me start with Joan and move over, but afterwards, I just want to really let everybody chime in and make this as informal as possible. But, let’s start off this question with Joan, if we could. Thank you.

Joan Bartolomeo, Brooklyn Economic Development Corporation: Thanks, Jonathan. Well, I think a lot of what happens in New York City is driven by real estate. That’s sort of a guiding principle. So, as we’ve seen a tremendous amount of out-migration from Manhattan into places like Brooklyn, I think you’ve seen a corresponding interest in bringing along other services. Disposable income has always been pretty high in Brooklyn – I don’t have the current numbers, I tried to get them yesterday but I didn’t have them – but we’ve seen the median family income rise. We’ve seen neighborhoods that five years ago I never would have thought could undergo a renaissance, in fact, undergoing a renaissance, as people are driven out of higher-income neighborhoods and they begin populating the next one. So, I think in part that’s put more attention on Brooklyn, because the more important people of the world – the masters of the universe types – care about Brooklyn, and places like Brooklyn now. But I think there also has been this tremendous immigration influx, which has been a very positive impact on places like Brooklyn.

You know, fortunately or unfortunately, depending on your viewpoint, we’ve gotten a tremendous amount of attention because of things like the Nets arena project, the downtown redevelopment plan. So, I just think being in the news has been a helpful thing. But I think there’s also a huge undercurrent of people who have made their home in Brooklyn, want to keep their roots in Brooklyn and are investing in Brooklyn, which is why this housing boom is so huge – not just the big public projects we read about in the paper, but you can drive through Brownsville and other neighborhoods like that, and the amount of private development is just absolutely astounding. It astounds even me and I’ve been around the block a few times. And we do have this very solid base to build on in the boroughs. We’ve never been a one-company town. So, that’s why we maintained ourselves during the recession, but it also gives us a solid base to build upon over the next couple of years.

Jonathan Bowles: Thanks. Joel?

Joel Kotkin, New America Foundation: Well, I want to maybe, if I could, put this in a little bit of a national context, which is – what seems to be happening is the core cities, and of course New York is unique in having such a large core city, have become, I think, over-inflated. We may see a bit of a bubble in the near future. But many of the people who are buying in, let’s say, Manhattan, are really not natives of Manhattan or actually full-time residents of New York. There’s a lot of speculative building. We talked to the Trump people, you will see that a significant majority of the people buying don’t live in the city of New York. So, where are the New Yorkers going? They’re going to the outer boroughs, if you want to stay relatively close. So, obviously, that’s one big factor. We see similar things happening in other cities that have, if you will, extended, what might be called inner-ring suburbs or places that are not in the core but nevertheless part of the city. I happen to live in one, called the San Fernando Valley, which has also well outperformed the urban core of Los Angeles over the last five or six years.

And I think there are several things happening. One is, of course, affordability. The second is, I think, that many people are making the choice that even though there are problems with the schools, that bringing up their children in the urban environment, as long as it’s not overwhelmingly dense, actually has a lot of advantages, and it makes it worth doing. And I think also the fact that you can start up a business more easily and run a business more easily in a place that’s less expensive. When Jonathan and I were working on “Engine Failure,” we found over and over again the biggest problem for Manhattan-based businesses was real estate, that it cost so much to locate in Manhattan that it made it very hard to start up. So, I think there are a lot of different factors that are going on at the same time. The other thing that I think is most important – the big danger for a city like New York, unlike a city like, let’s say, Baltimore or Cleveland, which is just continuing to decline even as they build their little Potemkin villages. I was just in Baltimore, and it was made very clear to me.

What I think is unique about a place like New York – and I think it’s also true of Los Angeles, Houston, cities that have lots of immigration, lots going on – is that you’ll be able to maintain some bit of a middle class. In the history of cities, almost from the beginning, cities only thrived when they had a significant middle class. Many cities went through a phase when they were, if you will, combinations of rich and poor, over-educated and under-educated, and they almost inevitably declined, the civic culture declined. One of the most important things about keeping the boroughs and growing the boroughs and keeping families and long-term residents in New York, is also the effect on the civic culture. Who is going to join the churches and synagogues? Who is going to do the charity work? Who is going to be involved in civic politics, who isn’t getting a city paycheck? All those things are very, very critical to the survival of cities, particularly big cities like New York, Los Angeles, Houston, Phoenix, which are now beginning to go through a revitalization period. But the key thing is: will that revitalization have a middle class component? And, of course, that middle class component is increasingly diverse, multi-racial and increasingly in LA, and I’m sure here, a lot of mixed-race couples. Maintaining that middle class base is really what the outer boroughs offer New York, and I think without it, New York would be in serious trouble.

Errol Louis, New York Daily News: A couple of factors I would add, kind of off the top of my head – one would be, if you want to call it a peace dividend that came from making the city significantly safer over the last ten years. It was only a matter of time before it would occur to people that you can live in Harlem, you can live in the South Bronx, you can live in Central Brooklyn. There are people who wouldn’t have considered it before who are considering it now, and ditto for business start-ups, so I think that’s partly why you see some of the outer borough development over and against Manhattan.

Secondly, I would point to one of the more interesting things, and I’m still trying to get all of the information on and really write about, is what could be called a sort of retail revolution. In Brooklyn, in particular, a number of national chains – when you talk to the developer, well, Bruce Ratner, in this case, who brought some of them into New York City for the first time, into Brooklyn for the first time. Some of these national chains had never built an urban store at all, or a really urban store before. And, the results have been spectacular. And, so, now there’s a new factor on the ground. It’s a new attraction for people to live there, it’s a new attraction for subsidiary businesses, it’s a new addition to the outer borough economy.

So, you have a Chuck-E-Cheese at the Atlantic Center in Downtown Brooklyn – it’s the highest-grossing Chuck-E-Cheese in the United States. It’s not all that big, but there is at least one occasion where the fire marshals had to come because the kids were streamed out the door, down the escalator, down the stairs. It was unbelievable. And ditto for TJ Maxx and a bunch of the other kind of stores, who had never been in an urban setting before. And what they had to go through was actually a fascinating story, again, that I hope to tell, which is that the cops had to be brought to meet with their people, to make clear to them that this was not the wild, wild west. The operations people had to reconceive how you do a store, because it wasn’t going to be 200,000 square feet in the middle of nowhere, outside of Cleveland. It had to be sort of restructured, and the loading bays and all that stuff has to be rethought. But it has been rethought, and I think that’s another important factor.

The impact of technology. It’s loose and it’s easy and I hate to be so sloppy about it because I don’t really have anything concrete to tell you about it, but I know that, I think we all know, you can telecommute and do a lot more kinds of business without being in an office in Manhattan than ever before, and that’s got to count for something, I would think. And then, finally, I’d say – we’ve all just gotten smarter. I mean, places like BEDC, places like Center for an Urban Future, my long and very scattered and somewhat aimless resume was read out. And we’ve all kind of moved around a lot, but a lot of us have been in this kind of urban conversation about how to make the boroughs work, economically, and we’ve all maybe switched chairs over the last decade or so. But, assuming everybody’s settled into the right place for them, there is some real importance to leaders and community leaders and thinkers and other people, working together and putting a lot of brain power on this topic, over the last few years.

Jonathan Bowles: Fred?

Fred Siegel, Cooper Union for Science and Art: First of all, I just want to say I agree with what Joel said about the importance of the middle class. Rich Daley, in the early ‘90s, before he was known as a successful mayor, said this over and over and over again: the key to the future of Chicago is whether we can retain and grow a middle class. As for the peace dividend that Errol talked about, I couldn’t agree more. A major – actually, the largest developer in the tri-state region said to me he now feels he can build anywhere in New York, without having to take special risks, because of the drop in crime. If you want to see the effect of not having a drop in crime, go to where Joel was – Baltimore. Baltimore looked like it had enormous possibilities five years ago. The attempt to control crime failed, corruption in Baltimore is quite extraordinary, it’s still a 19th-century city in many ways, including corruption in the courts that makes Brooklyn look good. I forgot the name of the program that was on HBO – the Wire. I think it’s the best program I’ve ever seen on television, although sometimes it’s hard to understand the Baltimore accents. The account there of the relationship between drug dealers, politicians and the courts was quite accurate. It was a stunning program.

Finally, to go to another point that Errol made about – we’re still under retail. But, now, let me become a little pessimistic for a second. Brooklyn had enormous potential because we had tremendous subway connections to Manhattan, the best set of subway connections imaginable. That’s why Atlantic Terminal can make sense as a sports arena, because it connects so well to the rest of the city. We also have this extraordinary belt of brownstone houses, this underused and old Victorian, the largest collection of old Victorian houses in the United States, which is where I live.

So, some of that potential has been tapped. What hasn’t been tapped? Because New York is a hyper-centralized politics, a French-style politics, the harbor – the only natural, deep-water harbor in the region – is still virtually unused. And that’s a function of what I call the mistake of 1898, when the city merged, when the boroughs merged, local economic development interests lost out to those interests that were primary to the core economy in Manhattan. If Brooklyn – I don’t want to start a movement for Brooklyn independence, it’s not going to happen, but just to give you a sense of what it would mean. If Brooklyn was an independent city, it would be inconceivable to allow the harbor to lay fallow – this fantastic resource. It couldn’t be imagined. And the cross-harbor tunnel, that the Port Authority was created to build 80 years ago, there would have been a government pushing to do that.

Secondly, and I’ll go into detail on this later, it’s very difficult because of this hyper-centralization for local merchants to get help when they need it. Very hard. If they have a problem with construction, with city construction, parking, whatever, excessive regulations, misunderstood regulations, they can lose an enormous amount of time and an enormous amount of business. So, even though Brooklyn is still under retailed, it’s going to be a long time until it reaches its potential in that regard.

Finally, let me disagree a little bit with Errol. I think Errol says we’re all smarter now. I was at a forum at the New School last week, which made me think maybe not, where I listened to people presented as the new and innovative mayors, recycle the clichés of the 1970s and ‘80s as if they were fresh and important. What strikes me about this – we’re coming out of recession, this recession we’ve just been through is – in the early 1990s, there was tremendous ferment, rethinking. Very little, very little has occurred. Very little rethinking, not just in New York, but around the country has occurred in this last downturn. And part of that is a function of the fact that those mayors, the only economic development project they talked about were stadiums. And what are we talking about in New York? A stadium, without a very important economic development potential. Again, it feels like we retrogressed in some ways and I’d like to see a return to the spirit of the early ‘90s when people were genuinely questioning how cities did business. I think that would help break out of the period of slow growth.

Jonathan Bowles: Councilman Liu, I guess to just give you a chance here – there’s so much activity, there’s so much interest and activity happening in the boroughs outside of Manhattan. There’s been a lot of talk so far about Brooklyn. Obviously, you represent the Flushing area in Queens and have a broad view of the entire city. Seems like this interest is happening all over the city. Why do you think that we’ve seen this kind of interest, increased activity in the boroughs? And have we only just begun to tap into the boroughs as a real engine for economic growth in the city?

John Liu, New York City Council: Well, Jonathan, thank you very much for inviting me to this fantastic seminar. I think this kind of forum is exactly what we need more of in the city, to really tap into the expertise of my fellow panelists here, as well as perhaps hear some feedback and questions from all of you, as well. Hopefully we’ll have some time for that. But, in New York City, if you’re from a borough other than Manhattan, there’s been a long-standing gripe that the city centers its policy around Manhattan. And, being from Queens, I generally agree with that kind of sentiment. Under this administration, I think that City Hall has made greater efforts to incorporate the outer boroughs, so-called outer boroughs, into economic development.

And, so, I’ve been asked to come here to talk about Flushing as an example. And I think Flushing is a terrific example. It’s actually a place that I’ve grown up, since I was a little kid, and it’s very different today than it was thirty-some odd years ago. But, in the decades of change that we have seen in Flushing, it has become, it has been transformed from a relatively sleepy commercial area into, really, what’s become a bustling, thriving, almost a city within a city. And if you come to downtown Flushing today, you will see lots of steel beams going up all over the place. And I think that has been largely driven by the private sector. It’s almost completely privately financed, privately planned. And that’s good to some extent, but in Flushing, we’ve kind of hit a plateau, I believe, because there hasn’t been enough attention paid from City Hall. And, so, I’m happy to see that three years ago with this new mayor, he did put together a very comprehensive task force of city agencies, led by the Economic Development Corporation, to put together a plan to bring Flushing forward, and to help us break out of this plateau that I have seen for many years now.

And, so, the Bloomberg administration has, through this task force, created a framework for redevelopment of downtown Flushing, as well as the reclamation of the Flushing River, and to begin to, finally, after decades of talking and decades of minimal efforts, try to do something with the area west of the Flushing River, which is called, nicknamed, the Iron Triangle, the Willets Point section. It’s a fourteen acre site next to Shea Stadium that up until now has been occupied by junkyards. And, so, with downtown Flushing, which is on the east bank of the Flushing River, we see a great deal of growth, and I’m happy to see that much of it is planned growth. I think we expect 3,500 to 4,000 new apartment units going up within the next five years. We see new schools being built in downtown Flushing, and that is really to accommodate the expected increase in population over the next few years.

A lot of that is driven by the fact that Flushing is a desirable place to live. That’s my unbiased opinion. It’s also a place that has a tremendous potential for growth. And I think it’s that potential for growth that should be the driving force behind growth and development in the boroughs other than Manhattan. In Manhattan, we only have one area that remains undeveloped and that would be the west side, the subject of many, many discussions going on today. But, in the boroughs outside Manhattan, for example, in northern Queens, in the Flushing area, we do have a great deal of potential. Potential to build housing, potential to create jobs, potential to really use those areas, convert or transform those areas into economic engines for the city of New York. Now, Flushing has already been a tremendous economic generator for New York City. I think, because of all the investments that have been privately driven, the tax revenues from Flushing have increased more and more in the last couple of decades. Again, without a lot of additional resources or services coming from City Hall, and that’s been the problem.

And my argument to this administration and even before this administration has always been that it’s the right thing to do, for City Hall to reinvest in downtown Flushing. But, forget the right thing, it’s actually just a good investment, for City Hall to invest some money in some capital projects and use some of the city-wide resources – Department of City Planning, Economic Development Corporation – to really figure out how to squeeze even more out of Flushing. And I think that results in a win-win situation for people who live and work in Flushing, as well as for the city as a whole.

The centerpiece, in my opinion, it may not be the opinion of City Hall, but, in my opinion, the centerpiece of redeveloping downtown Flushing has to be the reclamation of the Flushing River. We have this river that really could be an asset to the entire community, something that draws people to the Flushing area, but instead has, for decades, laid fallow as an industrial waste site. So, I think that there are many efforts being undertaken to reclaim the Flushing River. I have pledged that I will jump into the Flushing River and take a swim within the next ten years. People look at me like I’m absolutely nuts, but I remind people that, ten years ago, if someone had told you that people would be not only boating and canoeing in the Hudson River, but actually taking dips in the Hudson River, not all the way upstate, but actually down by Manhattan, they would have thought that you were crazy also. And, now it’s actually happening.

And I think that if it can happen with the Hudson River, it certainly could happen with the Flushing River, and again, there are many efforts being undertaken now to clean up that river. But even when that river’s cleaned up, it doesn’t make sense to have a gleaming, downtown area in Flushing on the east side of the river and have 200 junkyards on the west side of the Flushing River. And, so, that has, the Bloomberg administration has already begun to accept suggestions for what to do with the west bank of the Flushing River.

Jonathan Bowles: Councilman Liu, I want to get more into the Flushing situation, but let me just ask all of the panelists, and you mentioned at your start of the discussion here that you hoped that we would allow for some questions from the audience. We are going to do that the last half hour today. But let me just throw out, also – there’s been a lot of talk about just: things are happening. But I’m curious – how do we get to the next level? How do we begin to tap into this? I mean, a lot is already happing. Councilman Liu, you talked a lot about that the city can play a role, with public infrastructure. Also, we’ve seen, as the population has increased, driven a lot by immigration throughout the boroughs, I’ve heard from some people in a lot of neighborhoods that the infrastructure investment, the amenities, hasn’t kept up with that population growth. What exactly is the role of the public sector in really tapping into the boroughs in the years ahead? And this is to everybody. Fred, you look like you’re looking to talk.

Fred Siegel: Actually, I want to pick up something the councilman mentioned about the area west of the Flushing River, because I’m not quite sure I agree with him. He described it as junkyards. It is junkyards. It’s also urban entrepreneurs – there’s all these body shops. You feel like you’ve wandered into another country if you take the wrong turn coming out of Shea. The streets are not paid. It’s an extraordinary stretch. But, I worry about the city doing too much, their trying to plan it too much. Because you’ve got a lot of energy there, there’s a lot of commerce. What could be done to take the people who are there, give them a better shot, without paving it all over and losing the businesses, the many businesses that are in that area you describe as a junkyard?

John Liu: Well, Fred, I think they’re junkyards. It’s dirty, it’s messy, it’s disorganized and many of them –

Fred Siegel: All auto repair is junky and messy.

John Liu: And many of them aren’t even legal businesses.

Fred Siegel: But Bed, Bath and Beyond was not legal when it first began in the Chelsea district, it didn’t meet the building code. Those aren’t arguments. The question is – there’s energy there, you want to clean it up, I understand that. But you don’t want to clean it up in such a way to displace it all.

John Liu: In probably every part of Queens, and I suspect this is true of parts of the Bronx, Brooklyn and Staten Island, as well – in Queens, there may be a lot of energy at this site, and some of those businesses, I don’t actually believe that many of them are immigrant-driven. Many of these businesses have actually been there for decades, family-owned businesses. It’s not a question of trying to dismantle the legitimate businesses. It’s certainly not an effort to encroach into the efforts that have already been started by immigrant entrepreneurs. And, in fact, everywhere you go in Queens, you’re talking about immigrant entrepreneurs. That’s basically what drives all of the economy in Queens.

The point here is that in an area that is surrounded by three major highways, that has a subway running right through it, a Long Island Rail Road station very close near by, a stadium to the west of this location and a bustling downtown area to the east of this location. Is this really the place that we need to use – you know what? I think I said 14 acres before, I meant 55 acres. 55 acres where, I don’t remember the exact number, but I think it’s something like – I can’t remember – say it’s 100 jobs per acre, which, roughly, I think that’s about the case. It’s about ten percent of what it could yield in terms of the number of jobs. In other words, this site is a very valuable site and yet, because the city has not invested in the infrastructure of this site, paving the roads, installing storm sewers, that the productivity of this site, that the job output of this site is so minimal. And, so, this is a perfect example where, for $220 million, the city could take all of those properties, build all of the infrastructure, including paving the roads and installing storm sewers and also install telecommunications equipment, and then resell that property. It would be a great investment for the city of New York. They would get much, much more money out of that. And, for the long term, it would transform that area into an economic engine for the city of New York.

Jonathan Bowles: Joan?

Joan Bartolomeo: I think that a lot of economic development policy, at least in my lifetime, has been sort of looking for the next big thing – out with the old, in with the new. We saw in the ‘80s, with manufacturing policy in the city of New York, where it was deemed in a series of studies that manufacturing was dead in New York City, and the FIRE – the finance, insurance and real estate industry – was going to be the economic driver. Well, we now know from the “Engine Failure” report and any number of other reports that that has become a much more decentralized industry and New York has in fact lost huge market share, even though it’s still one of the highest income producers for the city of New York. I think we sort of have to be at a place now that economic development has matured from real estate development, which is how we viewed it, I think, 20 years ago. Those of you who were around in the late ‘70s and early ‘80s, in the sort of bad old days, remember that just seeing a new building going up was this incredible benchmark of growth and progress. I think now we have to look past the point, though, where we sort of build buildings.

We have to think about filling out. What’s the next stage of economic development? It’s really about, sure, bring in the private sector, bring in the private investor, let them do their thing, but we also have to have more of a sense of who’s living in those buildings, who’s working in those buildings, what are they bringing to the local economy? And infrastructure, I think, is an interesting question. Again, five years ago, if you had told me that Red Hook was going to be a place that was hot, I probably would have thought you were out of your mind. There is no more geographically isolated place, I think, in the city of New York, than Red Hook, Brooklyn. Yet, here it is, you know, being one of the hottest real estate places in Brooklyn right now.

I do think the city of New York, however, in its sort of bureaucratic processes does let infrastructure be detrimental to neighborhoods. I mean, I take the subway to work almost every day, but on days when I can’t find a parking place on alternate sides, I will drive in down Third Avenue, under the Gowanus Expressway. And while they’ve studied the reconstruction of the Gowanus endlessly and they continue to patch it, it’s a decrepit structure. The streets underneath the Gowanus have not been paved in probably 15 years, at least it seems that way. And, yet, people are expected to keep investing in those areas. Telecommunications infrastructure is very poor in a lot of areas, especially in Brooklyn. So, the city does have to do its investment thing, the private sector has to do its investment thing. But we have to start creating more of a dialogue between those two things, those two parties. Just plopping down a bunch of buildings in the middle of a bunch of vacant lots is not economic development. It’s how you integrate that in with the broader economic structure of the community where it’s located.

Errol Louis: I think the exchange between John and Fred points to some of the issues that we have to be aware of, in trying to figure out what government should or should not do, to take things to the next level. Government can squelch innovation. It can choke off all kinds of entrepreneurial energy. One of the real basic problems that I think has not been addressed, is that this is not a unique situation, where you have people who are operating in sort of a gray zone – the permits are not right, the health and safety is not right, the citizenship status of all the workers is probably not right, and yet you don’t want to chase those people out of the city. So, what happens is they operate right now in a gray zone, where all kinds of exploitation and predatory and unsafe conditions can be flourishing.

The problem is, if you go to the city and ask for help, even the most sympathetic bureaucrat you come across is going to say: okay, the bottom line is I cannot funnel you a loan or even any assistance, as long as conditions here are violating half a dozen codes. Some intermediaries that can sort of help bring people out of, and businesses and sectors and maybe even entire neighborhoods out of that gray zone, and plug them into the economy, is something that is needed, and I don’t know how you do that, but it sounds like the kind of work that non-profits are best at, where you can sort of negotiate that transition. Because, if you go to the city right now, at a fairly early point – this is what I encountered when I was working with merchants – fairly early on, at a surprisingly low level, people will say: I cannot help you if your merchant has that problem, because we are not in the business of spending government resources on undocumented or illegal businesses. I mean, you just don’t do that. So, that’s one issue that we have to really be aware of.

The other is, I think, the politics of the situation just can’t be avoided. We have an administration right now that is committed to certain projects and it’s doing some really interesting and good things – in fact, it’s doing some of the rezoning that’s really necessary. I think of it as a kind of infrastructure investment, when you go to Downtown Brooklyn and you rezone it to make it possible for certain things to happen, that’s almost like building a rail line. It’s like building a pipeline to money, to capital, to investment and to new growth and development.

On the other hand, it’s really got some of these Manhattan-centric projects that I think just outright need to be killed. The talk about a new Second Avenue subway in Manhattan, I think, should just absolutely be killed. There’s no way when you look at that multi-billion dollar project, that it does much more than make the daily commute for a handful of Manhattanites maybe a little bit more comfortable. What else could you do with a half a billion dollars, or a couple of billion dollars, frankly? The couple of billion dollars is just for the planning. I mean, that itself is a waste. The extension over to the West Side – good and important. Is this the right thing to do at this price, at this time? The one-seat ride from Lower Manhattan to Kennedy Airport. If you talk to anybody involved in it, they will tell you – if they’re being straight with you – that it’s really intended to help the commute for Long Islanders. It’s really more of a suburban project than anything else, to help make Lower Manhattan accessible to the suburbs, which it really hasn’t been. Too many people have to come in through midtown, and then go downtown, and it’s a problem in a lot of different ways.

But, a multi-billion dollar project to make those things happen is not necessarily, and it’s not really even intended to help the outer boroughs. So, if we want to talk about how to make things better and take this to the next level, I think we have to get out of the habit and there has to be just political capital expended on this, to say: we’re not going to always assume that – I just described three multi-billion dollar transportation projects that either benefit the suburbs or Manhattan, primarily. It has nothing to do with the outer boroughs, and for all of us to sort of watch that happen, it almost guarantees that we’ll have this conference again in ten years and say: why did we spend x billions of dollars to make a commute easier for the Upper East Side and the suburbs, and here we are, languishing, still, out in the outer boroughs.

Joel Kotkin: I really like the question the way you posed it. And this is a question – I travel to a lot of cities, not just in this country but around the world – and it’s a question of: well, couldn’t you have done something else with the money? So many things are done, I think, for prestige purposes. They’re a little bit like a bunch of young men with testosterone in the locker room – I’ve got this, well, look at this. There’s a kind of competitive streak in cities where they want to build the tallest building or the most spectacular site or the biggest art museum. And, unfortunately, that’s where a lot of money is going right now in the United States in cities, including here in New York. I mean, the Jets stadium is such an absurdity, I don’t even know how it even got started.

The fact of the matter is that what’s happened is that there was the evolution of what we now call downtown, is actually fairly recent, came in the late 1890s, and this idea that everything had to be centralized in one part of the city. And New York, Chicago, in particular, really developed the epitome of what a downtown was. Prior to that, places like Brooklyn, in particular, because it’s one of the older settled parts of the outer boroughs, had an economy of its own. Even as I was growing up as a kid, originally from Brooklyn and then Long Island, people actually worked in Brooklyn. That’s where their factories were, that’s where my father practiced medicine. And, I think what happened is we got sort of mesmerized by this kind of notion of this sort of imperial capital, particularly in New York, which is the most awesome of all the downtowns in the world, that everything had to be centralized.

Well, what I see happening around the world, and I think it’s happening in other cities, as well, is that we are in an era of multi-polarity. In other words, there are many centers. And, yes, no question, Manhattan will be the major center not only of New York City but of the world for the foreseeable future. But, more and more of the energy is going to be in these various poles where people live, where they work. We’re changing how we work. We have, many of us, two people working in a family. The hour, hour and a half commute – the New York area has the longest commutes in the country. That is very family-unfriendly, and ultimately becomes a reason why the New York region has by far the largest out-migration of any part of the United States. And, so, what you need to do is, say: how do you make life better for people where they live in New York? And I think the key thing is: what do you do with that money? Well, I think what you do is you do those things that make those various poles of New York City more viable, places where you can have a business, where you can shop, where you can have cultural activities. I know the Center did something on the cultural opportunities in the outer boroughs. And these are places where maybe you can live and work closer to each other. This is definitely where things are going, on a national level. This is what people are looking for.

And how do you do that? You improve the infrastructure. Broadband – you should be able to get broadband service anywhere in New York City. It should be a much bigger priority than a stupid football stadium. Instead of building a luxury subway system for the east side, maybe you ought to fix the subways that don’t work very well going out to the outer boroughs. You may want to think about how to fix the roads. I’ve driven on some of those roads, and we have share of potholes but I think you’ve got a big lead. And so, fundamentally, to think of the city not as sort of this centralized unit around which everything else is built, which is, again – Fogelson makes a point, and I quote him in the book, that this was something, that we didn’t even appear in Webster’s until about 1900 and everything built around it and everything was subsidiary, essentially a bedroom.

Well, these are not bedroom communities. These are communities with their own economies, their own economic potential, Flushing certainly being a good example. And the infrastructure investment should be directed, in large part, in fostering that multi-polar development. That is what makes sense, it makes environmental sense, it makes sense for families, it makes sense for a diversified economy, as opposed to this endless desire to create this sort of spectacular center and, unfortunately, to make everyone else pay for it. By the way, this is not unique to New York, it’s just like everything else in New York, the scale is a little bigger.

Jonathan Bowles: I want to get back to the transportation issues that Errol brought up, about the Second Avenue subway and other things that could be done, but, first Fred – a couple of things that you always think of about the other boroughs is: neighborhoods and small businesses. Could you just talk about, I mean, what do we need to do to shore up these parts of the outer borough economies?

Fred Siegel: I want to get uncharacteristically specific for a second. I live in Flatbush. The shopping street near where I live has had a bridge repair going on – I mean, a tressle over the subways. The repair should have taken about three months. It’s now three years. They’re talking about another year, maybe two years. One business has gone out, other businesses are suffering. The contract was let to a company that had never done this before. In the course of doing their work and learning on the job, they cut the cable lines several times, so cable service, broadband service goes out, television goes out, telephone lines go out. They repair it and we go back and it happens again.

On that business strip, are the offices – without mentioning the names of the people – of all the local legislative officials. On the key block, the prime block, they have been absolutely no help whatsoever. In part because, it’s not just that New York is hyper-centralized. Hyper-centralization is combined with a completely unresponsive political system, because incumbents are forever. In the case of the Council, the Councilman notwithstanding, term limits replaces people with their identical twins or their cousins or people from the same interest group. There’s very little accountability. So you have on the strip this project that is three years overdue, you’ve got all the legislative officials who represent the area in a building a block away, to no effect. To absolutely no effect. The office next to theirs on that block is taken up by the construction company.

So, you have a stretch of about eleven stores, two of which are taken up by government agencies that contribute nothing to the street, and meanwhile the bridge isn’t repaired. It’s hard not to sympathize with the merchants on the block who are trying to make it and trying to revive the block and there have been some gains, when they have no one they can turn to. Literally, no one they can turn to. The Community Board can be of help when the parking meters don’t work, which is fairly often, they plead with the cops not to give people tickets, but the bridge construction has taken away most of the parking spaces. So these guys are dying. And if I sound impassioned about this, it’s because I am. I mean, I want to see my local business strip – and this is small potatoes.

On a larger level, there are those instances where needs of businesses have come up against, say, school construction. There was a very famous case a few years ago of a food processor – and God knows we don’t have many of them left in Brooklyn or New York anymore – wanted to expand and was told that the land next to him was set aside for school expansion at some point in the future. He couldn’t expand. He didn’t leave New York, thank goodness, but he expanded elsewhere.

And one final point before I give up the mic. Errol’s point, I think, is right. I basically agree with his points. But I don’t think infrastructure competition should be competing with infrastructure projects. This was once the engineer’s city. Manhattan is an island, for God’s sake. It was connected by bridges and tunnels. Infrastructure was central to the life of the city until the 1960s, and, essentially, ever since then, infrastructure spending has been displaced by, first social service spending and now by social service spending and debt. And, so, the portion of the budget we spend on infrastructure today – city and state – is at record lows as a percentage of the total budget. Record lows. So it’s not just a question of infrastructure competing with infrastructure, it’s infrastructure competing with other projects, made all the more problematic by this debt question. I don’t know when it’s going to happen. At some point, someone is going to ask: how much debt can New York State sustain? New York City, New York State. Other than the federal government, and California, which God help it, we have the two largest debt-bearing – the city and the state – we’re the next two largest debt-bearing institutions and if we throw in the public authorities, which is supposedly there for things like infrastructure projects, but it’s hard to see where they are, we’ve got this tremendous debt load with very little to show for it. So, I don’t want to be too pessimistic, but –

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Jonathan Bowles: There are six new business districts that have started up, I think all of them outside of Manhattan. How important are things like that to supporting the small businesses, and I know you’ve also been working on things like sanitation services, making traffic flow more freely along Flushing. Are those kind of things, things that just didn’t get the attention in borough neighborhoods before, and how important are they to the growth of those neighborhoods?

John Liu: They’re very important. They serve a fundamental purpose. Let me, if I may, just spend half a minute talking about transportation infrastructure investment. I think, clearly we need to see more of that here in New York City. Those infrastructure investments should be undertaken with city dollars whenever possible, but certainly with more state and federal dollars. And I think transportation at the federal level is somewhat lacking, because it continues to be biased towards vehicular transit and highway construction, rather than increasing mass transit infrastructure, which we desperately need here in New York. And I will comment that no matter how much more we are able to muster to invest in transit infrastructure, it’s still always going to be a question of prioritization. I wouldn’t call it making one project compete against another project, it’s really a matter of priority setting.

And with that regard, I am in complete agreement with Errol, in that we’re talking about certain projects here that have, over the last two or three years, been narrowed down into two projects that should be looked at by the MTA. One, that, magically, the city of New York, under this mayor has agreed to unilaterally fund, that being the 7 train extension. So, apart from these massive billions and billions of dollars worth of projects, so much less could be invested just in transit infrastructure in the boroughs outside of Manhattan. In Queens, we have basically two subway lines. But it’s a borough that is heavily dependent on bus transportation, and yet, even as people talk about investing billions of dollars on one or two subway or train projects, we keep cutting the bus service. Bus service is something that is not capital intensive. It’s something that is not even operationally intensive, compared to subways. And yet we look to save pennies to spend dollars, and that is just a wrong priority. I think certainly in whatever I talk about in transportation, I look towards increasing the capacity, mass transit capacity, in the areas outside of Manhattan, and looking more and more to busses to serve that purpose. Busses do, even though they add to the traffic, they, I think, are a net gain on our efforts to reduce traffic on the highways and streets. They take more people out of their individual cars, even though they may be getting into a bigger vehicle that uses the roads and highways.

As far as getting into neighborhoods that are dominated by small businesses, such as Flushing – Flushing is actually one of those neighborhoods that in the past has been dominated by small businesses and there is still a large concentration of small businesses. But, it’s actually, when I talk about a city within a city, that’s exactly what Flushing has become. We’re talking about an area that is somehow known for restaurants and grocery stores, and, yes, we have some of the best restaurants and grocery stores, but we’re also talking about a place that has thirty banks, insurance companies and financial brokerages within a six block area. It is a huge, huge financial center. It is not seen by people who are not very familiar with Flushing as being a financial center, but that’s actually the biggest economic generator in Flushing. The restaurants are great, but they’re not the economic generators that dominate Flushing.

Jonathan Bowles: Councilman Liu, I just want to interrupt for a second because I want to follow up with you. With Flushing, I mean, this is what we’re talking about with this forum here, is the boroughs as an engine for growth. You’re saying that Flushing is a neighborhood that’s already doing very well, it’s been growing, but you’re saying it’s got a lot of potential. It’s got all these banks, it’s got a lot of restaurants, it’s got a lot of population, but, yet, with Flushing, one of the problems seem to be that its downtown area, its commercial area is very small. So, part of the question seems to be: how do you take this neighborhood and expand it? Is that right?

John Liu: Well, that depends on how you – and just keep interrupting me if I’m not answering your question because that gives me focus. We wouldn’t want to have too many people in this room cynical of politicians. When you say small, I don’t know what small means. If you look at the Wall Street area, how many blocks is it, really? And if you overlay that on the geographic area of downtown Flushing, it’s not – the comparison isn’t as vast as you might expect. In fact, Flushing, thirty years ago, when I was a kid there, it comprised basically two or three blocks of stores. Now it is not two or three blocks of stores. You go, you look at Main Street, you go all the way from 35th Avenue all the way down to Elder Avenue. You go from basically College Point Boulevard on the west side, all the way up to Union Street. That’s a huge area. That’s a very large area. So, when we talk about a small area, it may not be as tall as the Wall Street area, but certainly the geographic area is pretty substantial at this point. And it keeps growing, block by block. It keeps pushing westward, it keeps pushing northward and southward, as well. Eastward, there is a limitation because there are apartment buildings there.

But to get back to your original question, which is – what does a Business Improvement District serve, and how does that, well, I think that Business Improvement Districts are very useful. I don’t think they work everywhere in the city. I’m not necessarily an advocate of setting up a BID anywhere in New York City. But, in a place like Flushing, where there has been no coordination, that’s exactly the purpose that a BID serves. It starts to coordinate between the businesses so that the left hand of this vital downtown area knows what the right hand is doing and vice versa. And it begins to focus very limited resources on addressing things like more sanitation services, getting the downtown area cleaned up so that more people will be attracted back to the downtown area rather than be turned off by it.

Jonathan Bowles: Joan, you just worked on something called the Initiative for a Competitive Brooklyn. I know part of that was seizing the potential of all the cultural opportunities, not only the cultural institutions, but, I think, the restaurants and just the cultural life of Brooklyn and making it more of a tourist attraction, attracting people from around the world but also New Yorkers to know about Brooklyn. And I think the same thing has been said about places like Flushing over the years. I know the Center for an Urban Future has said: well, we have the U.S. Open, we have all the Mets games that happen right there, but there’s no connection. I’m just curious, based on what you worked on with the ICB project, what can – is there a role for the city’s convention and visitors bureau, NYC & Company? What do we do to seize the potential of our cultural opportunities?

Joan Bartolomeo: Well, you know, we’ve spent a lot of time talking about the role the city can play in coordinating tourism efforts in Brooklyn. Clearly, Brooklyn is an iconic place. I mean, you can probably go anywhere in the world, and you mention the word Brooklyn, and it will, a glimmer of recognition will follow that. The convention, the NYC & Company, which is the city’s destination marketing organization, is one of the most under-funded organizations, I think, in terms of promoting tourism. Considering the world-class city it’s supposed to promote, it really has a woeful budget, that is in large part funded by members who are mostly hotel operators in Manhattan.

So, we can bemoan the fact that they don’t allocate a lot of resources to the outer boroughs, and, in fact, we do, and we bitch and moan about that on a regular basis. But the bottom line is: they do have limited resources and they are driven by their membership, which is a Manhattan-centric membership. And, you know, their response to you in terms of promoting more stuff out in the boroughs is: well, why don’t the tourism destination organizations in the boroughs join NYC & Company? When you talk to the tourism destination operators, like, you know, Astroland in Coney Island, Carol Albert will tell you – well, it’s not worth the bang for my buck. My investment in a membership in NYC & Company, I don’t get enough back in return.

So, we faced the realization on the Competitive Brooklyn project that if Brooklyn was going to be serious about its efforts to coordinate tourism in a meaningful kind of way – that means, you know, not just inviting a bunch of double-decker buses spewing diesel fumes to drive around for a couple of hours a day when the people never get off and spend a dime, but to really get people to get off the bus and put some money in the local economy, that we had to be the masters of our own fate. And that meant engaging the tourism entities in Brooklyn, which are the museums, which have done a valiant effort, through a project called Heart of Brooklyn. They’ve invested a tremendous amount of resources and energy into creating a tourism potential for the major cultural institutions in Brooklyn. But it also means connecting Coney Island to the Brooklyn Museum to Weeksville in Crown Heights. How do you get someone to Brooklyn and then get them to go to Point A to Point B to Point C, to make them see it as not a series of isolated but as an overall destination to go to?

We’re in the process right now of creating our own destination marketing organization, which is a professional tourism management organization for Brooklyn. We hope that organization is going to be funded, eventually, by its membership, as NYC & Company is funded by its membership; that the folks in Brooklyn, who care about bringing tourists there, will ante up and help that happen. And also look for support – you kalking tour, it’s self-directed, you can buy art, you can sort of see what people are doing. People would just eat it up. Everyone in this room would just eat it up.

But, how do you get that out there? Somehow, the politics and the commerce haven’t really sort of been figured out, and it’s, again, one of these things where the one agency you see – NYC & Company –you’d think would be doing it, isn’t doing it. You look at the borough-wide tourism councils, they’re kind of trying to figure it out but they’re usually under-funded and attached in a small way to the borough president’s office, which is concerned with a million other kinds of things. So, this is one of the more important agenda items, actually, because you look at Museo del Barrio, you look at all these different, smaller institutions. Not the giants, not Brooklyn Museum, not the Botanic Gardens and so forth, but some of these smaller institutions – they’re waiting, they’re an important part of the city, they’re a big part of all of our individual lives, and if we can make something happen there, I think there’d be a big economic payoff for the city.

Joan Bartolomeo: And, I just want to say, in this regard, you know, we’ve put a lot on the city here, but the State of New York has done nothing to promote tourism in the other boroughs. It’s not that we have not approached anyone you’re supposed to talk to representing the State of New York, regarding tourism promotion. There is just no entity. There is an I Love New York program, but it promotes the Adirondacks, it promotes the Finger Lakes region. It is not really promoting any kind of urban tourism in any kind of meaningful kind of way, so I don’t think we should let the state off the hook on this issue, either.

Jonathan Bowles: Fred?

Fred Siegel: Let’s talk about the state for a second. First, I want to say something nice about a former elected official, Peter Vallone, from Queens. Peter looked at the transportation issue, and he said: why is there an MTA? Until 1969, until John Lindsay so mismanaged things that Rockefeller took over the subways and bus lines, the city was master of its own fate. The history of the city, after World War II, is a history of the city giving away control of its infrastructure projects, one after the other, the 1947 agreement to hand over the airports to the Port Authority being the most significant. And Vallone asked the question, because he had this question of Queens transportation in mind: why is there an MTA?

And if you think everything connects to the stadium, it does. Part of the reason the stadium issue is so resonant, it’s got to do with this agency, the MTA, which can’t get out of its own way, which is heavily in debt, which has mismanaged the commuter lines, and Vallone said: if we’re the ones who are concerned with the subways, we should be running the subways. Why is Albany? Why does Albany have an important say in how we run our local transportation? What I was hoping was going to happen after 9/11 is that we were going to think about tran