In this issue of Spotlight on the Region:

– A Rising Tide Fails to Lift NJ’s Fiscal Boat

– A 1,776 Foot Stumbling Block at Ground Zero

– Euro Cities Connect with Nature for Economic Gains

– Calendar

What’s Wrong With New Jersey?

Across America, state economies and budgets have been steadily improving for two or three years now. Over the last three years the NYSE composite index has risen at an annualized rate of 20%, employment is up by 3.2%, and state revenues have generally risen higher than expected, producing solid surpluses. In this region, both Connecticut and New York are certainly riding the wave of prosperity. While outyear deficits are still looming, last year New York State, New York City, and the MTA had the happy dilemma of figuring out what to do with billions in unanticipated revenues from red-hot Wall Street and real estate markets. Connecticut is enjoying similar increases in revenue and an estimated surplus of over $510 million in the current budget.

Yet somehow all this positive news is missing in Trenton. Instead, the nation’s medicine cabinet, joined at the hip to the robust Manhattan economy, with the second-highest household income in the nation, finds itself in perhaps the worst fiscal shape of any state in America.

Playing the cards dealt him by seven governors over the past eight years, Governor Jon Corzine on Tuesday announced that his experience with Goldman Sachs offered no silver bullets for the problems facing the Garden State. New Jersey’s state budget of $30 billion is almost $4.5 billion in deficit, and the options for closing it run from bad to worse. He presented a “tough love” mixture of painful cuts in spending and modest increases in the sales tax, luxury items and other revenue “enhancements.” Not surprisingly, he’s been criticized by the left and the right, both for cutting too many programs and raising too many taxes, by legislators who do not own up to their own role in landing the state in its current fiscal mess or mention how they would make up the current shortfall.

Governor Corzine inherited the situation from elected leaders who spent billions of dollars on worthy projects such as open space preservation, school construction and new transit investments. They also approved billions on not-so-worthy programs, such as homeowner rebates and pet projects in districts across the state. Meanwhile, the revenues to pay for these projects never materialized. Governor Whitman promised that robust stock market returns meant the state could cut taxes and reduce funding for state employee pensions. Governor McGreevey papered over the growing problems with a series of one-shot fixes. All of these actions were approved by a compliant Legislature, often with bi-partisan support. But as Governor Corzine pointed out on Tuesday, “Every time we use a gimmick or a trick to pay for this year’s expenses, all we’re doing is making next year’s problem bigger.”

Certainly there are other reasons that New Jersey is in such a uniquely difficult position. New York lives and dies by the stock market and real estate, so it is doing especially well this year. But New York politicians and economists are often the first ones to point out how difficult it is to have an economy tied so closely to a single industry – even one as lucrative as finance.

What should New Jersey do? As the maxim goes, when you find yourself in a hole, the first thing to do is stop digging. Governor Corzine has certainly begun to restore fiscal sanity to the situation. In the expected debate over the budget, it would be refreshing to hear critics actually suggest alternatives, rather than complaining about the choices. But don’t hold your breath.

Instead, watch what happens as the budget negotiations play out. While the ramifications of the budget will be felt across virtually all regions of New Jersey, touching students, taxpayers, and businesses alike, two particular areas should be closely watched: transportation and property taxes.

In transportation, the Governor pre-empted his budget address by pushing through a bill to reauthorize the state’s Transportation Trust Fund for five years by raising borrowing caps and extending debt to 2041. Corzine chose not to attempt raising the gas tax or extending the sales tax to motor fuels, which would have enabled the State to cut its debt load considerably and would have provided a sustainable source of funding. The good news was that the Governor supported a robust capital plan; New Jersey desperately needs new investments to fix its decaying bridges and roads and build a new commuter rail tunnel under the Hudson River. The bad news is that in five years, the choices for re-funding the Trust Fund will be that much worse.

A second area of concern is property taxes. While promising to slightly increase the rebate program from last year’s levels, Governor Corzine’s proposed budget freezes municipal aid, which pays for public education, police, and other essential services. Municipalities are expecting a 7% to 8% increase in local property taxes, to keep pace with inflation and rising costs. This will certainly stoke the fire for property tax reform in New Jersey. But the shape of that reform is still anyone’s guess. Mandatory caps have proven themselves to be a very effective way to gut public education and reduce the quality of essential services. The real question is whether efficiencies can be wrung out of New Jersey’s patchwork of 566 municipalities, 600-plus school districts, and other micro-levels of government.

So New Jersey, let’s give credit to a Governor willing to stand up and speak the truth, even as the specifics of budget proposals are debated. Let’s hope for a similarly honest bi-partisan legislative response. In the meantime, hold on for a wild ride.

–Tom Wright, Executive Vice President, RPA

At the Heart of Ground Zero Renegotiations, a 1,776-Foot Stumbling Block

As the centerpiece of the plans for a rebuilt World Trade Center, the iconic Freedom Tower, with its soaring pinnacle echoing the torch-bearing Statue of Liberty, has been the focus and recipient of many of the hopes and dreams for a revival of Lower Manhattan.

Yet that Freedom Tower is really a metaphor, one evoked by Daniel Libeskind’s initial presentation in 2002 and embraced by Governor Pataki as a symbol of New York’s rebirth. The Freedom Tower today is bogging down development on the World Trade Center site for reasons that also call into question its long-term merit. Its current design includes a 200-foot reinforced steel base to guard against truck bombs, evoking a bunker more than a symbol of freedom; its potential for gaining future commercial tenants is inhibited by its perception as a terrorist target; and its tremendous height and security requirements have escalated both the cost to build it and to operate it over the long term, potentially absorbing all the insurance proceeds available for rebuilding.

For all these reasons, it makes sense to give the authorities time to rethink this fraught symbol. The proposed Towers 2, 3 and 4 along Church Street, which present fewer design, security and operating challenges, are more viable in the marketplace, and could be built by a willing developer in the near term. These buildings should proceed first.

Mayor Bloomberg reached a similar conclusion last month when he suggested a renegotiation of the World Trade Center lease to allow Towers 3, 4 and 5 to move forward independently of Silverstein with a mix of activities, including office, retail, hotel, housing, and government uses that can be supported by market demand and willing tenants. But the Mayor’s proposal required a complex financing scheme (including cross-subsidizing office space in Tower 4 with the profits from 700,000 square feet of housing development in the same building) because so much of the insurance proceeds would be sunk into building the Freedom Tower, which few believe has the chance to attract tenants in the foreseeable future.

Ultimately, the only way out of this box may be to replace the Freedom Tower’s current design with a more functional building that lacks the superlative height and iconic status. As Governor Pataki and the Port Authority have recognized, the first priority is to renegotiate the outdated World Trade Center lease, which would have Silverstein build five commercial office buildings in sequence, starting with the Freedom Tower. A new lease should permit the Port Authority to carve out a number of sites for Silverstein to develop in exchange for reduced rent, allowing the Port Authority to enter into relationships with outside developers to move forward with the remaining parcels. Though not ideal (since it is outside the Port Authority’s core mission), the Port Authority has also proposed to develop one government building for itself, shared with the federal General Services Administration, which would also hasten development on the site. Some party will end up saddled with the responsibility for building the Freedom Tower, a task best delayed and rethought, after Towers 2, 3 and 4 have proved their worth in the market.

The chief parties in the lease agreement – the Port Authority and Larry Silverstein – have returned to the negotiating table and may be close to hammering out a deal. It is in everyone’s interest that they succeed. Anything less guarantees another lawsuit between Silverstein and the Port Authority, and the continued postponement of World Trade Center development. One of the bargaining chips the Port Authority should play is additional funding for the memorial, a vital piece of the puzzle which faces funding challenges of its own. Once the roles and responsibilities for each parcel are established, the phasing of commercial development at Ground Zero should proceed with the construction of the towers along Church Street, enlivened by street-level retail and a mix of hotel and entertainment activities in addition to office space. These commercial uses will be complemented by the memorial and the transportation hub, which will already be underway, and a performing arts center and public realm strategy that are also vital pieces of filling out the newest and most important public space of New York City. Ultimately, the Freedom Tower may be more useful as a symbol in our imaginations than as money pit for New York’s limited rebuilding dollars.

– Petra Todorovich, Senior Planner, RPA

Facing Competition, Euro Cities Look to Environment for Economic Edge

If you’re standing in Times Square, even though you might enjoy bathing in the bright lights and the tall towers, you probably feel more remote from the natural environment than any place on earth.

By contrast, if you’re standing in the middle of many European cities, including Amsterdam, Barcelona and others, you feel less remote from nature, even as you enjoy a fantastic level of urban life. That’s because you know you can actually walk or bicycle from the center of these cities into surrounding forests and farms. The city planners have made a point of connecting the interiors of cities with the surrounding natural areas.

This sense of connection to the natural environment is one example of ways Europeans are reinventing and remolding their metropolitan areas to make them more competitive in a global environment. Although there are many examples, the consistent theme is using environmental stewardship as a tool for economic development in a global marketplace.

Although summarizing these techniques might appear difficult, at a workshop this month at the Fundacion Metropoli in Madrid on planning for the mega-region, European planners had a consistent and simple theme throughout: parks and rails. The economic benefits of parks and open space are comparable to convention centers or tax breaks, they claimed, and longer lasting. High speed rail links between urban areas bring the housing stock of each city into commuting range of one another, reducing development pressure on the land in between. Europeans are protecting agricultural landscapes, forests, wetlands, floodplains, and coastal zones in a pattern of enlightened self-interest, placing these resources’ ecological advantages second to their value as economic development tools. The construction of rail lines help this campaign. While American planners debate the leverage a city gains by increasing its cappuccino coefficient versus its gay index, ala the Creative Class, Europeans are taking a more holistic approach to improving quality of life in their metro regions for everyone. Large protected open spaces improve air and water quality and save money in water treatment and mitigating the effects of global warming. These concrete economic advantages are becoming clearer to the American public, but it is the ways in which Europeans draw these large open spaces into their urban areas, turning former industrial spaces into amenities, that is inspiring.

The Arnhem-Nijmegen region in the Netherlands is a perfect example of stitiching natural and urban spaces together to stay competitive. They begin with the dominant landforms, especially those with cultural significance. Rivers, canals, and farmland dotted with windmills form the foundation of the landscape. Preservation starts with the wetlands, floodplains, and forests, saving future generations from the costs of inundation and water filtration. These lands then serve as the backbone of a regional open space system, connecting the natural lands to the region’s urban cores along the meandering and man-made water courses. The connection to nature is apparent on any street corner as most public squares and parks can serve as the trail head for a day long hike through the countryside. And the economic benefits have been clear. When a large multi-national corporation recently moved its headquarters to Amsterdam, the back-office employees persuaded them to retain those positions in Arnhem-Nijmegen so these workers didn’t have to leave. They preferred the quality of life here, and high speed rail connections to Amsterdam made meetings possible when necessary. Open space amenities influenced office location through labor force desires. The benefits of the green infrastructure are felt by the whole region, and spare municipalities from throwing costly tax breaks to keep companies in place.

In New York City it is easy to feel cut off from the natural; access to wild spaces has never been its selling point. The street grid, gleaming towers, and straight coastline make it feel as though Manhattan Island itself was built from scratch by man. Yet the island stands at the convergence of several natural systems. It is directly connected to the Appalachian Highlands and even the Adirondacks by the Hudson River. Long Island Sound is just a quick paddle up the East River and, if you can make it, across Hell’s Gate. And the Atlantic Ocean lies just beyond the Verrazano Narrows and Lower New York Bay. So why does nature feel farther from Times Square than from any other point on earth? Hudson River Park is a step in the right direction, but it still feels both cut off from the island’s interior as well as the larger Hudson River system. The riverfront should be a bridge between the urban and the natural, rather than an entity all of its own.

Better physical linkages between Midtown, the riverfront, and subsequently the Highlands can help create mental connections between the city and its hinterland, re-branding New York as the green city that it truly is. New York is the most efficient city in America, but fenced off waterfronts, exposed rail yards, and underutilized industrial space feel straight out of a previous century. We can learn from the Europeans and use open spaces and natural amenities to parallel the region’s other efforts to sustain its role in the new economy.

Europe and the United States have similar challenges in reviving old industrial cities, but so far they have taken different paths toward that goal. Industrial cities with no more industry like Glasgow and Barcelona are looking to avoid the evolutionary path of decline already realized by their American counterparts. To do so, city and regional planners across Europe are looking for ways to attract their continent’s creative class and entrepreneurs, reinventing themselves in the new economy. Their method is to let open space and regional amenities drive the planning process as an economic development tool.

–David Kooris, Associate Planner for Regional Design, RPA

March 30
The Mayor as Urban Designer. Mayor Joseph Riley of Charleston, S.C. will deliver the keynote address for the Connecticut Mayors’ Institute on Community Design, hosted by RPA in cooperation with the CT Conference of Municipalities and Yale Schools of Architecture and Management. March 30, 6:30 p.m. Yale School of Architecture, New Haven, CT, Hastings Hall, basement floor. Limited seating. Please RSVP to 203/356-0390.

April 7, 8 a.m – 12 p.m.
The Office of Community and State Affairs at Princeton University and the Policy Research Institute for the Region (PRIOR) at Princeton University's Woodrow Wilson School are pleased to be hosting the Symposium on New Jersey Issues. The topic "Managing Emergency Management in New Jersey" is one clearly on the radar screens of elected officials and community leaders. The Symposium features presentations by academic and professional experts in the field, followed by a legislator panel discussion responding to the information presented in the first half of the Symposium. Robertson Hall, Woodrow Wilson School. For more information or to register (mandatory), please RSVP as soon as possible to emetro@princeton.edu

April 8
Prudential Financial and other national and local businesses and
nonprofit organizations presents Stepping Out: a Day of Finance, Fashion and Fitness. The conference is a full-day program that will help women focus on some of the most important things in their lives: their financial independence and overall well-being. It will feature general sessions and workshops throughout the day led by national and local authorities on topics for women at every stage of life; a mini-mall with information and resources on health and fitness, beauty, fashion, food and financial topics; and a Girls' Night Out Reception. Saturday, April 8, 2006, Hilton Philadelphia/Cherry Hill, 2349 West Marlton Pike, Cherry Hill, NJ. For more information or to register, see the event's website at www.steppingoutconference.com or call 1-800-287-1677.

April 18
Institute of Transportation Engineers meeting, Princeton University, Prospect House. This is a change of date. The afternoon program will be a presentation of "Safe Routes to School." The evening program will include a presentation by the Deputy Commissioner of the New Jersey Department of Transportation. For more info: www.ite-metsection.org.

April 19-23
9th Annual US/ICOMOS International Symposium, April 19 - 23 in Newport, Rhode Island. "From World Heritage to Your Heritage." The World Heritage List as a rich source of models for the protection and management of heritage sites with a particular focus on World Heritage cities. For more information, go to http://www.icomos.org/usicomos.

April 21
Policy Research Institute for the Region at Princeton University and the Institute for Urban Research at the University of Pennsylvania: Nationally renowned figures will discuss downtowns’ shift from commercial centers to 24-hour mixed-use communities during this colloquium titled, “New Downtowns: A Conference on the Future of Urban Centers.” Panelists will consider the social, political, and economic driving forces behind this change and the planning and design standards new downtowns should reflect, at the state and local level, with a particular focus on cases in NY, NJ, and PA. Friday, April 21, 2006, Woodrow Wilson School of Public & International Affairs, Princeton University, Princeton, NJ. For more info:http://region.princeton.edu/conference_21.html.

April 27 – 29
Local Solutions to the Energy Dilemma. The Community Church of New York at 40 East 35th Street and the Manhattan Center Grand Ballroom at 311 West 34th Street. The early environmentalists' motto of “think globally, act locally” takes on new and profound relevance, as it becomes increasingly clear that the best response to a global energy crisis will be local solutions. The Local Solutions to the Energy Dilemma conference will bring national and local experts together to address the topic of fuel depletion, the prediction of higher fuel prices, and ways to prepare New York City for the consequent economic impacts. Regional experts in economic localization, sustainable food systems, alternative transportation, and responsible financial management will share their insights into the evolution of a low-energy, sustainable society. To register visit http://www.energysolutionsconference.org/ or call 718 441-0246.

May 5
Come What May: Planning in an Age of Disaster. RPA’s Annual Regional Assembly at the Waldorf-Astoria in Midtown Manhattan. More information will be available soon at www.rpa.org or call 212/253-2727, ext. 317.

May 9
Dialogue on Property Tax Reform, Tuesday, May 9, 6:30 p.m. The New Jersey Coalition for the Public Good in collaboration with the Regional Plan Association is presenting a Dialogue on Property Tax Reform on Tuesday, May 9th at 6:30 p.m. in the new library auditorium at The College of New Jersey in Ewing. www.njcpg.org.

May 24
Governors Island Alliance, Evening Reception honoring NYC & Company on Governors Island. This fundraising event will celebrate Governors Island, New York’s Next Great Place, and honor NYC & Company, the organization responsible for the revitalization and nurturing of the city’s dynamic tourist industry. Contact Amanda Jones at 212/253-2727 ext. 317 for more information.