The Revitalist

Much has been made recently of the film-production tax credit arms race going on in this country. Film location decisions for the most part are not sentimental; they're bottom-line decisions, driven by costs of labor, transportation, etc. According to Glenn Rifkin of the New York Times, almost every state has a tax incentive program designed to attract the film industry, and these are getting more and more lucrative as competition heats up: In New York City, filming enjoys a 35% benefit, and even California, despite its Hollywood home-court advantage, is looking at a larger incentive program. Massachusetts raised its tax credit to 25% last year, and has seen a remarkable increase in filming in the state.

If it's all a money game, critics say, the escalation in subsidies may be stripping out all of the benefits of attracting movie business. Not so in Massachusetts. Steady film business helps sustain the creative economy jobs that are so critical to the vitality of metro Boston and the State overall. But it is outside of metro Boston that other benefits of the film tax credits are more obvious. This summer, several movies are being filmed in the Merrimack Valley. Film companies appreciate the lower costs there, and their patronage of local businesses, restaurants, hotels, etc. is a huge economic benefit to the communities.

Towns like Lowell, Haverhill, and Lawrence, with their gritty urban settings and grand historic industrial architecture, offer great sites for filming -- local resources that the tax credit helps the cities leverage. The movies and TV shows bring to town not just money, but also a chance for the towns to market themselves. Just last week, AHF licensed with Disney to film part of a new futuristic action movie outside Washington Mills Building #1, our new loft apartment building in Lawrence. The movie is filming at a number of other nearby sites as well.  It can’t hurt the Merrimack Valley to have A-list actors like Bruce Willis and Rob Lowe spending time there.


In Massachusetts, film credits are supporting good jobs and bringing film business to the state’s industrial towns that can benefit from it. Everyone wins with the mutual benefits to both the community and filmmaker.

The US Conference of Mayors met last week in Washington DC. A couple of the mayors took a few minutes to sit in on a discussion on the Diane Rehm Show about the challenges that mid-size cities face today. It was a very interesting discussion about the effects that the housing decline is having on city revenues and their plans to take their cities into the 21st century.

WBUR has been running a week-long series on immigration in Massachusetts and how immigrants have helped to build and shape our economy over the years. While the state may be losing population in certain demographic segments, it's immigrant population is growing – now at a 50 year high. For developers, the immigrant population is more than workforce, they are consumers of our product: tenants in our buildings, buyers of our condos, business owners looking for commercial space. In Lawrence, we have gotten to know the Central and South American immigrant groups that make the city so colorful, and in Lowell, we have learned about and worked with the Cambodian community there.

The Boston Globe reports on the increasing availability of the "green mortgage." The mortgage is offered to buyers of homes with green components that will reduce the home's operating costs. The mortgage operates in a traditional way, except that the bank takes into account the lower monthly expenses for utilities and leverages that extra cash into more buying power (lower expenses = more $ available for monthly mortgage payments = greater loan value = more house). So far, the mortgages have been mostly available to buyers of units in large-scale green developments where the energy savings have been extensively modeled and demonstrated to the bank, like Olmstead Green, a very green development by our friends at the New Boston Fund. Although, I saw an ad on the T the other day for Wainwright Bank's Green Loan program which gives home owners a discount on their mortgage interest rate for making energy efficiency improvements.

The Globe ran a rather bleak story on Lawrence's struggles with foreclosures this weekend. The North Lawrence neighborhood, dominated by triple-deckers, duplexes and condo-ed Victorians, is the hardest hit with an estimated 1 in 10 owner-occupied homes under foreclosure. The article compares this to the mid-1990's when many houses burnt in suspicious fires, possibly insurance frauds, and the increasing number of burnt or abandoned houses led to the overall decline of the neighborhood. The concern is that the prosperity of the past decade was largely buoyed by subprime loans, many predatory, and a false sense of the depth of financial resources. Those who bought then are now facing rising adjustable interest rates, softening of housing related business income (house cleaners, painters, etc.), inability to sell their homes as prices collapse, and the prospect of foreclosure. The videos that accompany the article put a very human face on the issue and offer little hope.

In our work in Lawrence, we see a different side of the community, one that does see a brighter future ahead and growth within the community, despite the challenges. One organization that we have worked closely with is Lawrence Community Works, not mentioned in the article, who offer financial literacy training and home ownership programs (among others). They have seen the people in their programs able to ride out the storm, having made safe investments. I suppose the reality for Lawrence's future will, to some degree, come down to perception – a battle between defeat and hope for future. The city, the business community and the community service organizations will need to provide the leadership.

Sunday's Globe had a gloomy article about Lowell entitled What Renaissance? The most recent demographic data seems to suggest that Lowell's great revival is stalled. The city's poverty rate has increased over the past 20 years at much higher rate than other second-tier cities in the state. City officials say that this is due to the fact that Lowell has not forced out through gentrification many of its poorer residents. And they say that this moment is just a plateau in a overall upward trend: "Lowell almost takes two steps forward and one step back constantly," says city manager Bernard Lynch.

But a recent report from The Brookings Institution and MassINC points out the problem that is the crux of the issue. While the state is doing a pretty good job overall of transitioning to the knowledge economy, the new growth has been focused almost exclusively on Metro Boston. (Clustering of knowledge economy businesses in the main metro in the region is the normal pattern.) So while the average knowledge economy worker can't afford to buy a house in Metro Boston, the Gateway Cities with lots of potential, existing infrastructure and housing stock aren't seeing the economic growth or investment. This pushes people to live in the sprawling fringe of the metro area, not a geographic growth pattern that the state wants to encourage, and leaves the other cities out of the loop. The trick is going to be attracting more knowledge economy workers to live in these Gateway Cities, which is what groovy mill conversions like Washington Mills are all about.

5th Avenue at lunch time, March 2005

The percentage of people living in cities is growing, and some economists theorize that globalization and consumer choice are the reasons why. Harvard's Edward Glaeser suggests that as the world economy changes, cities are becoming profit centers of the knowledge economy, and therefore attracting people in droves (this, as opposed to, the decline of cities in the 1970's and 80's as the industrial economy moved elsewhere). "New York's advantage has been to be competitive in the knowledge economy - particularly, in finance - where the city as an economic unit has a comparative advantage, with all its cross-fertilization of ideas." The second part of Glaeser's theory is that people are choosing an urban lifestyle because of the plethora of consumer choices offered. "The sovereignty of the consumer is inescapable." While those choosing to be urban consumers are vastly outnumbered by the economic immigrants, the consumers have disproportionate influence of the shape of the city because of their relative wealth. All About Cities blogger Wendy Waters calls this "consumerist urbanism": "certain cities that embody these values seem to attract people from the world over."

Of course, Richard Florida linked to this article on his blog because it aligns so well with his Creative Class theory. Cities will need to meet the desires of these urban consumers, many of whom are the leaders of the knowledge economy. By providing the leading edge of consumers with the lifestyle elements (mainly diversity of choice) they want, the city will ultimately be able to provide more jobs and economic growth all the way down the pyramid. 

Richard Florida posts about a recent WSJ article detailing Pennsylvania's inability to retain its college grads. He then follows it up with an article from the Pittsburgh Post-Gazette about two biotech firms decamping for Boston. He says, "This is why I wrote Rise." Pennsylvania is pulling out all the economic development stakes trying to encourage people to keep/start small businesses there. The Pittsburgh article demonstrates why it isn't working: the companies are moving to where the people are (in this case, Boston). Florida's point in The Rise of the Creative Class was exactly that—companies will go to where the workers are—and, therefore, cities need to focus on creating places where these workers want to live and not financial incentives to retain corporations.

Padraic White and Dermot Kennedy
looking out over the Merrimack.A couple of weeks ago a delegation from Belfast in Northern Ireland visited Lawrence hoping to gain some insight into the redevelopment of a down at the heels mill city. The group toured pretty much all of the big mills, including Washington Mills, and met with local business owners. It seems like they generated lots of ideas on how to spark redevelopment and private investment and met a fair percentage of the Irish-Americans in Essex County (although it sounds like these guys have a thing or two to teach us about negotiating with bureaucracy). One member of the delegation, Mairtin O Muilleoir from the Belfast Media Group, has posted several pieces on the visit on his blog.

A commentary in the Wall Street Journal (no, Murdoch, no!) looks at the most recent demographic data and sees some new trends.

1. Coastal Megalopolises (includes Boston)
US Natives -  Immigrants +
"The result is that these Coastal Megalopolises are increasingly a two-tiered society, with large affluent populations happily contemplating (at least until recently) their rapidly rising housing values, and a large, mostly immigrant working class working at low wages and struggling to move up the economic ladder."

2.  Interior Boomtowns (Dallas, Phoenix, Charlotte, etc.)
US Natives ++  Immigrants +
"These are economic dynamos that are driving much of America's growth. There's much less economic polarization here than in the Coastal Megalopolises, and a higher percentage of traditional families."

3. The Old Rust Belt (Detroit, Pittsburgh, Buffalo, etc.)
US Natives -  Immigrants ~
"If the outflow seems smaller than in the 1980s, it's because so many young people have already left. Their economies are ailing, more of a drag on, than an engine for, the nation."

4. Static Cities (Philadelphia, Seattle, St. Louis, etc.)
US Natives ~  Immigrants ~
"They seem to be holding their own economically, but are not surging ahead and some are in danger of falling back."

Two anomalies: New Orleans (exodus before Katrina turned into mass exodus) and Salt Lake City ("looks a lot like the America of the 1950s," i.e. kids, kids, kids).