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Conference addresses small cities’ futures

Philadelphia Mayor Michael Nutter, left, Lancaster Mayor Rick Gray and former New Bedford, Mass., Mayor Stephen Lang discuss the challenges of leading cities during a panel discussion May 11 at “Building Resilient Cities,” a conference sponsored by the Federal Reserve Bank of Philadelphia and held at the Hyatt Regency Philadelphia at Penn’s Landing. Submitted/Melissa Kinney, Federal Reserve Bank of Philadelphia

Lancaster Mayor Rick Gray looked around the grand ballroom at the Hyatt Regency Philadelphia at Penn’s Landing, where academics, businesspeople and government officials were wrapping up a conference on the challenges facing smaller, older cities.

The diversity of opinion had given him fresh perspective on many of the issues he deals with, he said.

“It’s nice to be in a conference where it’s not all mayors and city officials,” he said.

For the past decade, the Federal Reserve Bank of Philadelphia has organized biennial conferences on reinventing older communities. Nearly 400 people attended the series’ fifth iteration, “Building Resilient Cities,” held Wednesday to Friday last week.

Topics included job training, reclaiming vacant land, the arts as an economic development tool, manufacturing, green development and urban agriculture. One ominous topic: Municipal bankruptcy, a fate that some think still threatens Harrisburg.

The Philadelphia Fed is working on developing an index that would measure urban resilience, Fed President and CEO Charles Plosser said Wednesday. Researchers hope to zero in on key characteristics that help cities overcome economic shocks, he said.

Gray was a featured speaker on Friday, participating in a panel discussion with Philadelphia Mayor Michael Nutter and former New Bedford, Mass., Mayor Stephen Lang.

By and large, Gray told the audience, the fundamentals of good city government are the same whether you’re a Democrat or a Republican.

“Ideological differences that separate way too much on the state and national level just don’t exist at the local level,” Gray said. “Municipalities are there to provide services.”

Nutter and Lang offered similarly pragmatic views. City residents will see the mayor’s face in every pothole, Lang joked.

Unfortunately, long-term structural problems, particularly pension and health insurance costs, coupled with the effects of the Great Recession, have made it ever more difficult for cities to make ends meet, they said.

New Bedford lost one-quarter of its state aid in three months due to budget cuts, Lang said. Philadelphia reduced its workforce by 1,600 through attrition and temporarily stopped paying vendors to conserve cash, Nutter said. Lancaster cut its workforce by 15 percent yet still had to raise property taxes 25 percent, Gray said.

Cities like New Bedford are out of patches to fix their budgets, Lang said. If the recession takes a double dip, “everything will collapse,” he said.

The Philadelphia Fed oversees the Federal Reserve System’s Third District, a region consisting of Delaware, New Jersey and eastern and central Pennsylvania. In conjunction with the conference, the Philadelphia Fed released a report on Harrisburg, Lancaster, York and 10 other mid-sized Third District cities.

“All face daunting economic, social and physical challenges,” the result of decades of population decline and deindustrialization, the report said.

Still, there are reasons for hope. The report ranked Lancaster as one of three “rebounding” cities that “appear to be building a strong post-industrial future.” Lancaster has capitalized on its cachet as the center of Amish country and has effectively cultivated its downtown, focusing on arts and entertainment, the report said.

The Fed classed other cities as “declining but stable,” “coping” or “struggling.”

Harrisburg and York fell into the “coping” class.

Harrisburg’s revitalization “may be set back by the effects of the city’s dire fiscal condition,” the Fed said. York’s redevelopment efforts look promising, and the city’s location near the historic Civil War town of Gettysburg arguably gives it a basis for tourism comparable to Lancaster’s, though that potential is not yet realized, the Fed said.

Among the more exciting prospects for smaller cities is the potential resurgence of manufacturing, several presenters suggested.

Though old-style manufacturing continues to decline, and the jobs it supported are disappearing, selected manufacturers have been able to create something of a renaissance, thanks to remarkable productivity gains, said Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University.

In Massachusetts, manufacturing has the third largest payroll of any industry sector, and manufacturing employment remained stable during the Great Recession, he said.

Small cities with a skilled workforce and good access to transportation are well positioned to attract and retain manufacturing, he said. Cities can use a test called the “Economic Development Self Assessment Tool” to evaluate their competitiveness and formulate appropriate strategies, he said.

In thinking about economic development, cities should be wary of quick fixes, particularly those that involve spending millions of dollars on infrastructure projects of dubious merit, said conference keynote speaker Edward Glaeser.

Glaeser, a professor of economics at Harvard University, is the author of “Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier.”

The decline of the industrial Northeast was driven by long-term structural forces, in particular falling transportation costs and Americans’ preference for warmer winters, he said.

He outlined four possible “policy approaches to decline”: building infrastructure, offering tax incentives, investing in human capital and “shrinking to greatness.” The latter strategy involves intentionally downsizing a city, reducing its footprint and thus the services and budget it requires.

The infrastructure approach is by far the least effective, Glaeser said. While it’s vital to deliver basic city services, showcase projects designed to spur development almost always fail, he said.

Tax incentives and shrinking to greatness are better approaches, but investing in human capital is by far the best, he said.

“Education has been the critical component of urban resilience across the country,” he said. “Education is awfully close to being destiny.”

Cities, simply by creating human proximity, catalyze outsized amounts of creativity, innovation and economic growth, Glaeser said. Worldwide, countries where more than 50 percent of the population lives in cities have five times the income level and one-third the infant mortality rate of their less urbanized counterparts, he said.

In the U.S., urbanized counties have significantly higher productivity and per-capita incomes than rural ones, he said.

“Cities are the economic heartland of America,” he said.

A typology of cities

The Federal Reserve Bank of Philadelphia ranked 13 cities in Delaware, New Jersey and central and eastern Pennsylvania based on nine measures of economic vitality for a recent report. Based on the results, it classified the cities in four categories.







Declining but stable















Source: Federal Reserve Bank of Philadelphia, “In Philadelphia’s Shadow: Small Cities in the Third Federal Reserve District”

Tim Stuhldreher

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