Economic Development Models

An interesting read on Schenectady’s turnaround with a few highlights (from
Lessons in Downtown Redevelopment Success: The Story of Schenectady’s Comeback
:

Ray listed the five stages of development as they worked in his city, in rough chronological order:

   Stage 1: Coffee, Clubs, and Restaurants
   Stage 2: Arts and Entertainment
   Stage 3: Technology/Office
   Stage 4: Housing
   Stage 5: Retail

Flippin here: Then we have the vital piece, which I’ve advocated before, a public-private entity that is funded and tasked with a mission to bring about economic development:

In his remarks, Ray also allowed that “money matters” and that is also where Schenectady stands out as a model.

Indeed, Schenectady Metroplex was formed under New York State statute that also allowed it to impose a special “half-cent” sales tax (i.e. an additional 0.5% tax within the Metroplex region) whose proceeds would be used exclusively for economic development.  That has created a robust and reliable revenue stream that Metroplex has been able to leverage continuously throughout its efforts.

Flippin here: Priorities and tactics matter:

Besides the stages listed above, Ray’s second major lesson was to “build from strength”.  It seems logical, of course, but required tough choices for the city.  Many redevelopment groups focus their attention on the worst performing neighborhoods and try to fix those “problem” areas.

Flippin here: It’s interesting to note two things from the above:

1) Retail is dead last. In our fair city, we still have proponents of the Retail First strategy. Even with the now vacant Chalmers lot, we have folks who think retail is the top priority

2) Speaking of Chalmers, folks may point to housing as #4 instead of #1 per Kaufman’s proposal. A fair point but that is why I titled my post with the word “models” — there are multiple models that may work in the city but in my view, we are clutching discredited models (retail first) and now working with no model at all.

The questions and issues I highlighted in my post  Big remain the same. A working model would help us get closer to understanding and answering them.

10 thoughts on “Economic Development Models

  1. Great article, thanks for sharing.

    I don’t follow your logic in point #2 though. If you are pointing to this article as proof that the “retail first” idea is discredited, then it also discredits “housing first”. If you are going to say that different models could work, then who knows, maybe “retail first” could work or maybe “housing first” could work.

    Personally, I don’t think this article necessarily discredits “retail first”. I could point to certain suburban areas where retail is the draw.

    What I get from this is that Schenectady looked at their strong-points, made a strategic plan and stuck to it. And that – I think – is why they were successful.

    So I agree with your overall point. We need BIG A!

    • Tim,

      I suppose Retail First might work somewhere but for city revival, I never hear that the catalyst was retail. Not saying it could not happen, suggesting that it is atypical if it does happen. I’d be interested to see a case where it did. I think our own experience here points against a retail first strategy. I also think taking prime waterfront to make retail versus residential is minimizing the value/return of the property. A city relies upon some density of population to be a viable city so trying to drive density toward the high desirability areas like waterfront makes sense to me versus converting waterfront to a paved retail strip mall. if you look at the numbers for potential assessed value of waterfront residential properties ,I think it would bolster the asset base tremendously.

      I also find the narrative on driving retail to the city to be contradictory: We can’t build higher end housing in the city because there is no demand and no one wants to live here and everyone is on social services but we should build retail centers in the city to attract people from outside the city who have money and who are not on social services. When you then ask why someone would drive from outside the area to bypass their own shopping malls/locales to shop here, you get the answer that it would be ‘discount’ here. IMHO, it’s total gibberish and sloppy thinking. (Not suggesting you fall in this camp)

      I guess another point of the post is that a faction here will continue to oppose anything that challenges their preconceived notions that the city can never fare better; they just want us to keep a mindful eye on its downward spiral and make them the stewards. I say we’ve done a good job of letting them do that.

    • I guess it all depends on what type of retail you are talking about. I agree, a strip mall or other big-box type of retail would be a waste, especially given the proximity to RT 30.

      I would think specialty retail stores that you couldn’t find everywhere (either locally owned – like what we have on E Main – or factory outlets maybe?) would definitely attract visitors. Combine that with restaurants (which we already have), clubs or entertainment venues (which we have one of on E Main), a pedestrian friendly layout and along with a waterfront view, that would be a winning combination.

      Overall, Metroplex’s strategy seems to boil down to creating a fun experience that attracts lots of visitors, which then creates a demand to live or work there. So I wouldn’t totally discount retail – the right type of retail could contribute to that experience.

      Oh but it’s always that darn “faction” that spoils everything right? : ) There are stick-in-the-mud people in every community who will resist change no matter what. Ignore them – concentrate on persuading those who are simply skeptical, there is a difference.

      • The “M” word is the key difference in Schenectady’s economic development success stories … Metroplex. A public-private partnership with the sole purpose of reviving Schenectady’s downtown area (nutshell description).
        Schenectady has the Metroplex. Even Gloversville has a Business Improvement District, which is the same model as the Metroplex, although Gloversville’s has not been nearly as successful. Amsterdam has decided it’s the local government’s sole responsibility to revive downtown.
        If you local at urban economic development models across New York state, that private-public partnership is a central theme in nearly all of the success stories. It seems to me that there needs to be some sort of investment on the part of the private business community to make things happen, and unfortunately, the burden in Amsterdam has been placed squarely on the shoulders of 61 Church St.

        Then again, this is Amsterdam. It doesn’t matter if something has worked in a gazillion other cities across the United States. It’ll never fly here.

        After all, if it’s on the radio, it must be true.

      • Tim wrote: “There are stick-in-the-mud people in every community who will resist change no matter what. Ignore them – concentrate on persuading those who are simply skeptical, there is a difference.”

        I agree. Why people put so much weight behind what’s said by the same six callers every day on local radio is beyond me.

  2. Charlie, I think it would be great to have a BID in downtown Amsterdam. I agree it is not the local city government that should be organizing the things down there. It should be the local business owners. And if the business owners instead of the city were running the spring fling they could set up an account so that the money’s earned could go into new trash cans, planters, benches and other things. Baskets and banners are covered.

    They could also set up their own rules, providing they could all agree on them. Maybe getting in touch with the Gloversville BID to find out how they operate would help. Repairs, window cleanings overall appearance of the buildings etc.

    AIDA now owns three/four properties down there, and maybe they should take the lead. They could work with the other property owners to get them on board. While the Fling has been a success in the past, I thought it was supposed to benefit the businesses, and yet the businesses have not to been contacted about dates and times. Like putting a competing pizza cart adjacent to the local business already there. (Frankly I do not think their should be another pizza place there, except maybe one local) Or the fact that it is once again prom weekend and the salon will be jammed with no place for their customers to park. And thirdly, putting booths right outside the door of a business that is open and has traffic that cannot get in.

    If this is truly supposed to benefit the downtown area, what are the benefits that have been produced for them in the past two/three years? Where does the money go that is collected? Is any of it turned back into any improvements in the downtown? As things stand now they have not benefited, but the organizers have.

    You are right Charlie, it it not the city’s job to be doing this. I tried organizing the owners 10 years ago, maybe it is time to contact Gloversville and see how their BID is set up so there is something to go by. Metroplex is huge, and had a huge donation of several million donated/transferred to start them up. We do not have that kind of capital power, but maybe looking at a BID would be the thing to do.

  3. Maybe someone with some money to invest will buy the Best Value in next months bank foreclosure. Maybe they will come in and clean it up, renovate and make the property worth something again. Obviously the owners are not willing to put in any money into it. By the way, they paid 1.3 mil for the property and the foreclosure is 3.2 mil. It was in the paper in the past few days. Unless they spent the money when they bought it, they have not spent that kind of money in the past 12 years that I can see. It is really a run down property.

    Something from a good name brand property, like a Fairfield Inn or Comfort Suites. Something that has a good reputation in today’s travel market. I admit I have stayed in other Best Value Inns in other parts of the country, but they were newly built and that makes a big difference. I look for newly built or newly remodeled top to bottom.

    Something to think about :)

    • Diane,

      We need a good shot of private equity. No single person in Amsterdam has the capital it would take for that kind of venture; and we know what happens when people that do have the money come from outside. Examples provided upon request.

      Schenectady’s Metroplex didn’t just come about overnight. It took ingenuity, a gamble, and the human element to get where it is today. It also took a lot of cooperation that a lot of people (important and not so much) in Amsterdam aren’t willing to give, specifically the vocal few (replete with their own radio shows and pod casts even) who only think they have the solutions, have spent the better parts of their adult lives telling people they do, actually leading people to believe they do, and then blame someone else when those ‘solutions’ fail miserably.

      I’d say Schenectady’s model shows more similarities to Amsterdam’s versus Gloversville, although my belief there is mostly due to a) having lived in Schenectady (at least as a student) so I saw it first-hand; b) easy access off major highways (5, 5S/890, 50, 90); c) access to a bus terminal; d) access to Amtrak; e) access to the Mohawk; f) access to college students who spend cash at local places like restaurants and shops.

      Another thing to consider is that a lot of the State Street stretch of business were taken by eminant domain, which if you ask me, is one thing Amsterdam doesn’t use enough of. As an example, the Pizza King was booted from his building after losing the battle in court, was paid a premium for it, and then was incentivized to move just one street over to the corner of Jay and Franklin, where vehicular traffic and pedestrian traffic meet. I think he quickly got over it.

      Amsterdam has the same important things to offer, from highway access to FMCC students, and there’s no reason why the same things that happened in Schenectady can’t happen in Amsterdam. Except for those that are willing to actually cooperate with the people that have it in them to make it happen, like the Ray Gillens and the Uri Kaufmans.

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