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Former Pittsburgh mayor: City leaders need to bypass comfort, take risks to compete in global economy

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Tom Murphy sees a world that is being turned upside down by innovation, where cities of all sizes are trying to figure out their place in a global economy.

But the former Pittsburgh mayor, who now serves as a senior resident fellow for the Urban Land Institute, a nonprofit education and research institute that focuses on land use and real estate development issues, also believes that every city, even those facing tight budgets and stagnant population growth, has an opportunity to succeed.

To do so, city leaders need an appetite for risk and a willingness to invest. It's about priorities, said Murphy, who was in Harrisburg Tuesday for an Urban Land Institute event at Harrisburg University of Science and Technology. Murphy, who travels the world with the institute, talked about cities that have been able to successfully move on after losing major job creators.

For many urban areas, including Pittsburgh, job losses have come in manufacturing, whose decline has led to vacant industrial sites and steep population declines over several decades.

Technology has led to greater automation in modern manufacturing, which now requires fewer people. But tech also is creating new job opportunities across every sector of the economy and in many metropolitan areas, including those in Central Pennsylvania. Growth in professional and business services, as well as education and health service,s has helped offset industrial job declines. 

"We have watched a whole world change over the last 20 years," Murphy said.

Employment opportunities have been returning to the Pittsburgh area, with large health care organizations and universities being magnets, as well as high-tech companies such as Google and other startups. 

But to get the ball rolling on revitalization efforts in the 1990s, it took difficult decisions by Murphy's administration, including reducing the city's workforce and moving millions of dollars in operating expenses to help finance a $60 million bond issue.

The city bought old steel mills and other vacant properties, forged partnerships with universities and shared financial risks with private investors to kick off large redevelopment projects.

Murphy, who briefly shared the stage with developers and economic development leaders from Harrisburg, Lancaster and York, stressed the importance of strong leadership and thinking strategically about what will spur growth in cities.

Mobility is a big ingredient in any city's advantage over the suburbs, he said, especially for millennials and a growing number of baby boomers who are looking to live in more walkable communities. Large corporations, including General Electric and McDonald's, have taken notice and have been relocating their headquarters into cities to chase talent.

"Companies are making the decision to be where the people are," Murphy said.

Officials in other cities, he said, have to ask themselves: Are they comfortable with the status quo or do they want to reach for more and take the steps to attract new residents and business?

"You gotta reach. That's the challenge," Murphy said.

In Harrisburg, the high tax burden on real estate is an impediment to economically feasible development projects.

Dave Butcher, president of WCI Partners LP, and Brad Jones, president and CEO of Harristown Enterprises, both believe the city's population could grow significantly if reforms lowered development costs, which would boost the housing supply.

"We know we can fill them," Jones said, citing recent residential and mixed-use developments that have slowly trickled into the city over the last few years.

Indeed, interest has been growing in downtown housing projects to meet workforce needs, especially in the tech sector. Harrisburg University, which has grown to more than 4,000 students and is adding new programs around data analytics, has helped fuel a recent surge of tech-related companies in the capital city.

If Pennsylvania abolished school property taxes in favor of increased sales and income taxes, that would be a big help, Butcher said. He also advocates refining the state's Redevelopment Assistance Capital Program, or RACP, so that it would cut out suburban projects.

RACP is a grant program used largely by businesses for the acquisition and construction of regional economic, cultural, civic, recreational and historical improvement projects. The program requires an equal match of nonstate funding from applicants.

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Jason Scott

Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin County. Have a tip or question for him? Email him at jasons@cpbj.com. Follow him on Twitter, @JScottJournal. Circle Jason Scott on .

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