Turning potential into place-based investment

MassDevelopment’s Transformative Development Initiative (TDI) entered its second decade last month with the announcement that new districts will launch in Chelsea, Fitchburg, Holyoke, Lowell, Malden, and Peabody. These six new designations are a testament to the agency’s steadfast commitment to furthering economic development in Gateway Cities with carefully targeted place-based investments. TDI has now supported a total of 28 growth districts across 19 Gateway Cities since 2015.

In addition to providing each of these local initiatives with TDI Fellows—a full-time staff person who helps organize efforts to stimulate investment in the targeted areas—districts receive technical assistance, access to equity investments to de-risk catalytic real estate projects, and grants to support creative placemaking and small business development. This support helps spark activity to jumpstart weak Gateway City real estate markets that haven’t seen significant private investment for decades.

Over the years, MassDevelopment has built and refined TDI into an economic development organizing partner that Gateway Cities leaders hold in high regard. While the program has all the right components, it lacks a true funding source. MassDevelopment has been generous, but the agency doesn’t have the resources to catalyze growth in 28 different locations. On average, it has injected just over $2 million per district in direct program outlays. While it has helped mobilize other state and federal funding, by all accounts, these sums have been very modest relative to what is actually needed to unlock the true potential of these growth districts.

The 2013 MassINC Policy Center report that called for a statewide transformative development initiative and helped shape the legislation that created the program at MassDevelopment described the tools required to undertake this work and suggested an investment of $1.7 billion over 10 years. This may sound like a large sum, but it is less money than the Commonwealth spends to build a single bridge, or two or three courthouses.

Massachusetts faces serious economic headwinds. It is crucial that we have a sound economic development strategy behind this plan. Place-based investments in growth districts that make our economy stronger and more productive should be the foundation of this strategy. Efforts to boost key industry sectors have a role to play, but the state can have far more impact creating better conditions for growth writ large.

There should be strong demand for the real estate that place-based investments unlock because there is relatively little room in Massachusetts to accommodate new growth. If investments are sizeable enough to spark activity in strategic growth districts, they should restore the healthy function of private real estate markets. However, if demand is slack for revitalized real estate in regional urban centers, it is a clear sign that complementary economic development investments are needed in sectors where these regions can gain competitive footing.

While state capital funds are in short supply, there are strong arguments for marshalling resources to make transformative place-based investments now. First off, MassDevelopment has demonstrated that TDI can provide a strong platform for organizing these efforts. Second, with Governor Healey’s leadership, the Commonwealth has started to pare back the red tape. Gateway Cities have also done their part to reduce regulatory barriers. Complex redevelopment projects can now move forward faster and with greater predictability, generating larger returns on the state’s seed investment. Lastly, with the expansion of South Coast Rail to four Gateway Cities and Interim Transportation Secretary Eng prioritizing efforts to transform commuter rail into a far more robust regional rail system, the Commonwealth has a new lever to draw private investment into transit-oriented development districts. And with regional rail service costing significantly more to operate, the state will have an even stronger interest in seeing to it that private land alongside invaluable public infrastructure serves the highest and best use possible.

To be sure, channeling investment to these areas in this challenging moment will not be an easy task. But MassDevelopment and its Gateway City partners know difficult. There is no doubt that the models they have built together through TDI over the past decade can help the Commonwealth emerge from this rough patch stronger and more productive.