Thursday, March 25, 2010

Erie Canal Harbor

Interview with Bruce Fisher
Subject: Buffalo’s Waterfront Development

March 23, 2010

The interviewer is Josh Scheller, a student at Buffalo State College

Q: Do you live in Buffalo and if you do how long have you lived here?

A: Yessiree. I am a native of Western New York. My family has lived here since 1794. I attended private school in Buffalo, graduated UB law school, and have lived continuously here since 1987. My children are the 10th generation of our family in WNY.

Q: Why do you think Buffalo has taken a turn for the worse in recent years?

A: Deindustrialization due to the flight of industrial capital has plagued the Buffalo metro area since the 1970s, but the roots of the problem extend back to the 1920s, when many leading industrialists sold their local interests to out-of-area corporations. The more Buffalo became a branch-office economy, the less it was a home-office economy, the greater the power of out-of-area decision-makers over the regional economy. That trend led to the empowerment of the finance and real estate sectors in the 1970s, which is when sprawl development (which is driven by real-estate speculators in collusion with the officials of suburban townships) began to deplete the tax base within the urban core. Concurrently, school desegregation resulted in middle-class flight because the boundary of the city became the boundary of the desegregation effort; after the MILLIKEN decision in 1976, desegregation was a major driver of middle-class exodus from most Great Lakes cities, as it was conducted entirely within the boundaries of the city rather than regionally (as, for example, in Raleigh, NC and other urban regions).

Since the 1980s, ongoing deindustrialization accelerated, as did sprawl development, further depleting the tax base of Buffalo and of the inner-ring suburban townships. Population in the Buffalo-Niagara Metropolitan Statistical Area peaked in 1970, which is when Erie County population peaked at around 1.1 million; in 2010, the estimate is that Buffalo-Niagara MSA will be less than it was in 1970, with Erie County down to about 910,000.

Notwithstanding major investments in entertainment, lifestyle amenities, culture and educational infrastructure, and notwithstanding some in-migration to some Census Tracts inside the urban core, sprawl development continues to diminish the relative and the absolute value of the housing stock within City limits, as more than 6 new homes are built for every new household that forms in the Buffalo-Niagara MSA. Meanwhile, because the most major public investment in the region -- namely, the University of Buffalo, a public research university -- is outside the urban core, there are no opportunities for the urban core to experience any benefit from that investment, except to the extent that some activities of the UB Medical School (about 700 personnel out of a University workforce of well over 10,000) are conducted within city limits. Other than two foreign-owned banks (M and T corporation, and HSBC), there are no growing sources of employment in the region.

In sum, the nearly century-old trend toward out-of-region corporate ownership continues (even the professional sports teams are owned by non-natives), while the fractured sovereignties of local government continue to subsidize sprawl at the expense of the urban core, and while the massive ongoing public investment in the educational infrastructure -- except for Buffalo State College -- continues to maintain stability in an isolated, practically walled-off compound far from the traditional crossroads of the region, i.e., where the waterfront, the Erie Canal and the road and railroad systems all connect.

Q: Do you believe that the restoration of the Buffalo waterfront will help stimulate the Buffalo economy and help bring tourism? Or will it have the opposite effect and be a waste of the taxpayers’ money?

A: The restored Commercial Slip, which is the original terminus of the Erie Canal, is a worthy destination for low-intensity tourism. If adequately promoted through elementary and secondary school curricula, Buffalo's waterfront historic sites, coupled with Buffalo's architectural heritage, may bring in up to about 50,000 to 100,000 out-of-market visitors per year. The local incremental sales tax proceeds from family, school-based and cultural/heritage tourists may amount to as much as $10 million per year, but that is a very optimistic estimate that should be checked against the actual numbers of visitors to other relatively isolated heritage/cultural sites, such as Fallingwater, a Frank Lloyd Wright residence in western Pennsylvania, or the preserved Old Fort Niagara in Youngstown, NY. More likely, the Canal District in Buffalo may support mainly local and intra-regional festivals and casual weekend use.

Q: Will the waterfront restoration project have an immediate impact on the economy as the Erie Canal once did?

A: No. The substitution effect will be evident. As most of the traffic will be intra-regional, drawing from a shrinking population with a limited and shrinking pool of discretionary income, what the Canal District yields in net sales tax proceeds will probably not increase the regional sales tax proceeds. I do not expect net new employment in hospitality or retail as a result of the development. There will be zero impact on population trends.

Q: Compared to cities in the past that have undergone a similar transformation what can be interpreted?

Economic fundamentals are more important to a region's sustainability than small, themed retail clusters.

Q: What are some other alternative solutions Buffalo may have used to stimulate the economy?

A: The policy changes needed in Buffalo are the subject of my forthcoming book. The regional economy is suffering from deindustrialization, capital flight, an anti-entrepreneur business culture, rent-seeking by entrenched construction, real estate development and financial interests, anti-intellectualism in the political class, sprawl development, a lack of regional land-use planning, and incompetent marketing of the region's great assets, namely, its massive supply of well-educated workers, its price competitiveness for business and residential real-estate, its quality-of-life amenities for the well-educated, and its proximity to the largest economic center in Canada.