Reports, studies, testimony and conversations on public policy
by Bruce Fisher
Thursday, December 2, 2010
Waterfront progress in Buffalo?
Inching Toward Sanity
by Bruce Fisher
Too much supply, not enough demand on Buffalo's waterfront
UB Professor Bruce Jackson’s photography exhibit of Buffalo’s grain elevators will open in January at the Anderson Gallery up in the University District. His collection of images of these concrete megaliths is entitled Buffalo’s Chartres, in reference to the massive 12th-century cathedral in France that is the defining example of the Gothic style. Buffalo’s grain elevators brood above the troubled Buffalo River, having largely lost their economic relevance as grain-storage devices and, despite the two decades of effort by Lorraine Piero and the Industrial Heritage Society, as a destination for mass tourism.
That may change now that the Erie Canal Harbor Development Corporation has nodded toward Mark Goldman, his brother developer Tony Goldman, and their friend Fred Kent, who may be hired by ECHDC to advise this New York State board on how to integrate its thinking about Erie Canal Harbor with the possibilities of the Buffalo River shoreline.
Earlier this week, ECHDC’s board voted on some proposals that activists, demonstrators, preservationists, and others have been shouting, whispering, and nudging about for years. ECHDC’s mission is (from its website) “to revitalize Buffalo’s inner and outer harbor areas and restore economic growth to Western New York, based on the region’s legacy of pride, urban significance and natural beauty.”
But until recently, ECHDC had been focused on the 20-acre Inner Harbor area. The plans for which it obtained approval from its parent body, another board called Empire State Development Corporation, included developing 725,000 square feet of mixed-use real estate, building five parking ramps, constructing replica canals in their approximate historic location, and exploring future development options for the 150 or so acres of vacant land on Buffalo’s Outer Harbor area. That land is currently held by the US Coast Guard, the Niagara Frontier Transit Authority, and the New York State Power Authority. ECHDC’s budget is $153 million of public money, mainly from the 2005 settlement with the power authority, plus some state and federal funds.
Broad community opposition to using those funds for subsidizing private development joined with broad community opposition to using those funds to build replica canals. ECHDC decided to take a couple of weeks for public comment. Many public and private meetings were held. Some of the private meetings were uncomfortable.
Then came this week’s vote. ECHDC remains committed to developing 725,000 square feet of mixed-use real estate. ECHDC remains committed to using $39 million for subsidies for an “A-1” tenant, and four of the five parking structures in its original plan are still on-line, as are the replica canals that will remain unconnected to the Buffalo River or Erie Canal Harbor.
Buffalo’s front yard
Buffalo’s grain elevators, part of the distinctive architectural fabric of Buffalo that New York Times architecture critic Paul Goldberger and others have praised, have long been celebrated by enthusiasts and specialists. Out-of-town visitors cite our “genuineness,” and praise us for being distinctive. Local folks who share these sentiments have new hope because ECHDC chairman Jordan Levy has been astute enough to invite their participation in shaping part of ECHDC’s program. When Buffalo historian and restaurateur Mark Goldman obtained private philanthropic support to bring award-winning developer Tony Goldman and waterfront change-agent Fred Kent to a large community meeting on November 6 at City Honors School, Jordan Levy attended. Discernible community enthusiasm developed quickly for the “lighter, faster, cheaper” approach that Kent has advocated successfully in many waterfront cities. And this past week, Levy’s board endorsed much of what has been suggested—including the preservationists’ dream of an open-air pavilion for Erie Canal Harbor, where vendors of art, snacks, and crafts might quickly set up shop, thus cheaply and quickly creating a destination and some hope for more continuous activity. By embracing the 1,000 or so folks who moved themselves to attend the City Honors forum and two others held at the Burchfield Penney Art Center, the leader of the ECHDC responded nimbly.
Levy understood the need to get some buy-in from the arts community; he is on the board of the Albright-Knox. He knows that there is no better or higher use for the 120 acres of the Outer Harbor than for it to become a public space, and for its very spaciousness and greenness to become part of the new brand for a city still burdened with brownfields. He asked for an environmentalist to join his board, and now, after his predecessors stiff-armed preservationists, he has asked for Tim Tielman, the community’s cocklebur nudger-in-chief, to come in to advise. Levy is slow to see the economic utility of bringing the advocates of a “living wage” around despite low-wage work being such a drag on the region’s economy. He is dismissive of the idea of retail workers earning $12 an hour rather than minimum wage, and is unlikely ever to agree to a community benefit agreement that includes a wage standard. He speaks often among friends about bringing a franchise operation like 5 Guys Hamburgers to Buffalo. He speaks of constructing a site for Dinosaur Barbecue, so that it can open up a joint like its restaurant in Rochester, as a good use of public money, even if all the customers for these out-of-town businesses will be local. Levy gives the impression that he has concluded something about Buffalo, which is that its suburbs’ culture—especially suburban tastes in entertainment, branded restaurants, play spaces, and shopping—is permanently in the ascendant, that it’s naïve to resist that culture, which people here like and want, and that we can’t have a bunch of cultural elitists sitting here lecturing people about the story of how Daniel Davis was rescued from slavery at the Commercial Slip in 1851, or how Dart invented (yawn) the grain elevator, or how our towering concrete guardians of the Buffalo River are like a French cathedral, because they may be smart but there aren’t very many of them. Levy respects the acumen of successful developers like the Benderson family, which have successfully catered to suburban tastes in retail, entertainment, and play-space.
If Empire State Development Corporation rubber-stamps the ECHDC plan when it meets on December 16, then all the features that the “faster, lighter, cheaper” advocates want will—if ECHDC does what it says—start happening in the spring of 2011. But then so will the 725,000 square feet of retail, restaurant, office, hotel, and residential space, and so will four of the five proposed parking garages that are also laid out in great detail in the Modified General Plan that ECHDC just voted to accept.
If ESDC approves the ECHDC plan, then in 2011, the Outer Harbor park will start to be created out of what is currently NFTA-owned scrubland. The replicas of canals will start being constructed. Over the next five years, the $153 million of public funds will get spent, and the expensive synthesis of programming, of green space, of “water features,” and of suburban sandwiches, or at least the space for them, is going to happen. What is new about the Levy synthesis is that the arts people, the troublesome Tielmans, the aspiring Goldmans, the buskers, the hawkers and performers, the puppeteers and imageers, are going to get their shot. That’s new. That’s news. The rest of it is a big, expensive gamble that will have dirty Buffalo River water flowing next to it but not through it, as the replica canals won’t be connected to the Buffalo River. And the 725,000 square feet of subsidized commercial space will get built.
But if ESDC has a rationale for rejecting the ECHDC plan, it’ll probably be this: economic fundamentals. Downtown Buffalo’s existing commercial landlords are seething that the state is going to shove hundreds of thousands of square feet of new inventory into an already oversaturated market. The value of existing buildings will be pummeled if brand-new subsidized office and shop space is created at great public expense. The taxable value of existing real estate—and thus the tax payments that go to the city and to the county—will drop. The HSBC tower currently leases more than 700,000 square feet to HSBC, which is one of the largest financial institutions on this planet. If HSBC Tower loses HSBC to a subsidized development, the domino effect will occur: The empty space will become available; the value of the building will drop; the owners will probably declare bankruptcy and then figure out a way to buy it back at a much lower price; the assessment will drop, which will cause city and county tax receipts to drop; then rents everywhere in town will drop. And thus state intervention in the marketplace will once again demonstrate that the road to hell is paved with great intentions—but because there simply is not the demand for office space here that would warrant spending a nickel of public money to create more, when the state creates more, the consequences will be negative.
Meanwhile, the dirty old Buffalo River-Buffalo Harbor-Black Rock Canal system won’t get a taste of the $300 million federal fund President Obama set up in order to help cities clean up the Great Lakes—because access to that pot of money, which is specifically for helping Rust Belt cities fix their leaky sewer systems with new green infrastructure, requires some up-front local matching money. If ESDC salutes the ECHDC plan, then there won’t be any source of local matching money to help us get the federal money, because the local money will all have been spent on replica canals, festivals, and 725,000 square feet of new commercial space.
Buffalo in 2015
Five years from now, the grain elevators Bruce Jackson and so many others photograph will still loom above the Buffalo River. The Ohio Street corridor will happen, if there’s any demand in the marketplace. The Outer Harbor park could be well established by then.
If ECHDC follows through on investing the $2 million, then the Buffalo Olmsted Conservancy could turn the Outer Harbor scrublands into a park, giving the region a front yard that is something like Chicago’s, except that Chicago’s has the Field Museum of Natural History, the Shedd Aquarium, the Adler Planetarium, and the wonderful new art-filled community play zone called Millennium Park. A century of philanthropy by tycoons named Field, Shedd, and Adler gave Chicago its distinctive waterfront, which stretches for 21 miles without a single restaurant, shop, or office building, unless you want to count Soldier Field where the Bears play as an office building. We have tycoons a-plenty, but we seem fresh out of Fields, Shedds, and Adlers.
Five years from now, we could be winding up the fourth season of Tim Tielman’s tent city in the Inner Harbor. Five years from now, we will still have the majestic arch of the Skyway rising above it all, giving Buffalo-area residents their only glimpse of the vista of our harbor and of our peaceful international waterway, of our rolling Allegany foothills to the south, and of our winding parade of grain elevators along our river.
Will Jordan Levy’s replica canals have attracted any private investment by then? In 2015, according to demographic estimates done by Cornell, the University of Pennsylvania, and the US Census, one in four residents of the Buffalo-Niagara metro will be over 60 years old. In 2015, the proportion of the workforce that works in low-wage work will be about the same as it is today unless high-wage opportunities come; the latest available figures from the IRS indicate that about 40 percent of the Buffalo-Niagara metro workforce earns less than $20,000 a year, and that the number of households with incomes over $100,000 a year is fewer than 9,000 (out of about 300,000). The numbers today and the trend-lines we see today indicate that we are bound for an Erie County population of about 800,000 by 2020, down from a little more than 900,000 today.
I would prefer that our state government not purchase more supply of things we have in over-supply, like office space. I would prefer that our state government direct its various boards and commissions charged with this elusive goal called “economic development” think more about sustainability and stewardship than about giving out-of-town consultants free rein to raise expectations. I would prefer evidence-based practices, because I intend to be here in 2015, and I would prefer to be wrong about replica canals, commercial space, water quality, and other such issues, but I fear that I won’t be.
Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.