The Joint Committee for Economic Development & Emerging Technologies held a hearing on April 5^th to review the Baker-Polito administration’s economic development bill. Filed in January, the $918 million package provides funding to implement the administration’s economic development strategy. MassINC Research Director Ben Forman submitted the written testimony below in support of Gateway City provisions within the legislation. 

Testimony Regarding House Bill 3983
“An Act to Promote Opportunities for All”

Provided to the Joint Committee on Economic Development & Emerging Technologies

April 5th, 2016

Benjamin Forman
Executive Director
MassINC Gateway Cities Innovation Institute

 

Thank you Chairman Wagner and Chairwoman Donoghue for this opportunity to share some thoughts on how H. 3983 lives up to its name by promoting “Opportunities for All.”

MassINC has long believed that large swaths of our Commonwealth cannot reach their full economic potential without strong urban centers. Our “Gateway Cities” play this critical role by placing newcomers on an upward trajectory, retaining young professionals, and anchoring regional business organizations, institutions, and other economic assets.

In recent years, the Legislature has been steadfast in recognizing the vital function of Gateway Cities in our state’s economic geography, as well as the unique set of challenges and opportunities that they face. This committee has shown real ingenuity, creating forward-thinking policy, such as the Historic Rehabilitation Tax Credit, the Brownsfield Tax Credit, and the Housing Development Incentive Program, to help these cities reweave their physical fabric for a new economy.

We must acknowledge that—despite this much needed support, our Gateway Cities are not currently on a path that will lead them to reach full power as regional economic engines. It is particularly telling that in a recovery that has heavily favored urban real estate markets throughout the US, Gateway Cities in Massachusetts have actually seen significantly less investment than in the previous real estate cycle. Economists continue to draw attention to the growing divide between Boston and other regional economies as the greatest challenge facing the Commonwealth.

Gateway Cities will need significantly more public investment in order to turn the tide. New York has provided $2.5 billion to revitalize upstate cities. This outlay is much closer in order of magnitude to what we require here. Unfortunately, Massachusetts is not in a good position to make this necessary investment. Unfunded liabilities and other budgetary pressures are straining capital spending. And our aging infrastructure means that nearly every available dollar is already accounted for. If we don’t improve the economic conditions of these cities and regions, the state’s long-term structural imbalances will only grow.

Foremost, this situation calls for enormous discipline in how we program investments. By virtue of their position as regional centers, Gateway Cities already receive an outsized share of state capital spending in the form of public colleges and universities, courthouses, infrastructure, and agency office space. Making sure that all of this spending aligns with revitalization is the first order of business.

The Legislature made a strategic step in this direction when it created the Transformative Development Initiative (TDI) in the 2014 economic development law. Based out of MassDevelopment, TDI provides Gateway Cities with resources and support targeting districts for revitalization. MassDevelopment has worked hard to engage partners from an array of state agencies in these efforts.

Governor Baker’s legislation provides funding to take TDI from proof-of-concept phase to a robust program that will help ensure that state spending in our Gateway Cities is carefully layered to synergistically stimulate private investment. While the funds allocated to TDI are far less than New York State has provided, we believe that in combination with efforts like the Working Cities Challenge and the Urban Agenda, they are helping Gateway Cities organize for success and setting the conditions for larger investments from both the state and the private sector down the road.

Complementary funding for Brownfields and changes to the Housing Development Incentive Program also included in the legislation are appropriate and necessary resources to accomplish the predevelopment work required at this stage. These tools can also help cities tackle initial development projects, which can spur momentum and draw attention from the private development community.

Over time, TDI will lead to a pipeline of full scale projects and project partners ready to proceed to the next level. The Commonwealth will then be able to make clear-eyed decisions about how to support and schedule these investments. The infrastructure fund recently proposed by the Pioneer Institute is on viable option. Reprioritizing capital needs to carve out more resources for transformative projects in these cities may be another. Perhaps there are strategies to capitalize a larger fund for transformative development that we could adopt from other states.

Regardless of the pathway forward, as an interim measure to chart a course for the next several years, we feel strongly that this legislation represents a smart policy, building on the hard work of leaders in the Legislature, economic development agencies, and our Gateway Cities.