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The implications of NJ's growth management plan.

New Jersey state policy seeking to channel growth to urban and town centers has enjoyed bipartisan support for the past half century. But as the German philosopher Arthur Schoepenhauer wrote, "There is nothing more fatal to an illusion than its realization." In New Jersey -- with the current state of our economy -- we must be careful that in our love affair with urban development we do not overlook the downward economic spiral of the state's suburban communities.

During the past year, New Jersey's private sector suffered the biggest drop in employment in a decade. With our economic recovery lacking a driving force, the state has yet to make up the jobs it lost between June 2001 and the present The job outlook has been particularly hurt by drastic cutbacks at prominent suburban New Jersey companies. An overall retrenchment in the telecommunications industry, concentrated largely in suburban communities in Northern New Jersey, has taken its toll.

Major unemployment has also occurred in our manufacturing sector. In addition, New Jersey residents -- most from suburban communities -- have lost an estimated $300 billion in their stock portfolios since January 2000.

What we are witnessing is a hollowing out of our suburban economic core -- the creation of what I call suburban "gray fields" -- once prosperous areas of the state whose economic lights are dimming. Under these circumstances, the state must adopt an aggressive strategy to stimulate the recovery process in suburban communities.

Yet our transportation infrastructure investments, our EDA financing programs and incentives, our DOL training grants, our UEZ program, and our municipal aid policies are channeled largely into urban centers, therefore, failing to alleviate in a meaningful way the exceptionally severe challenges facing many of our suburban communities. The impact of the "Big Map" proposed by state government to guide development activity may further dampen the prospects for many suburban communities. Clearly, we must continue to advance our urban centers along the path of recovery; but at the same time we must become more responsive to the evolving economic plight of the suburbs.

In other words, the state needs a more calibrated approach to development. This response should begin by extending to distressed suburban communities access to state investment and incentive programs on an equal footing our urban areas. Consideration should be given to creating a temporary Suburban Enterprise Zone program for suburbs hit particularly hard by downsizing office vacancies and job loss. Not to do so will place many of our suburban communities at risk.

We can learn a great deal about reversing factors that give rise to distress by better understanding the patterns of deterioration that have afflicted our cities. For most of the post war period. New Jersey's cities endured substantial population and job loss, housing abandonment, neighborhood deterioration and fiscal distress.

Central city decline is of a self-reinforcing nature. The outward movement of the middle class, and their replacement by in-migrating poor, contributed to a cycle of deterioration. Middle-class families left our cities, in part; to avoid paying taxes to support governmental services for low-income residents. The rising taxes that accompanied this process, in turn. made cities less attractive as business locations. Declining population caused the unit cost of local public services to increase, which encouraged further population and job loss.

Population and job loss can lead to an additional self-reinforcing process of decline by reducing the positive economies of clustering -- in the form of specialized services, labor force, production and consumption -- offered by a city. Economists refer to this as "economies of agglomeration." Transportation policies have contributed to this trend by facilitating the flight of industry and blue-collar jobs out of the inner city.

The good news is that the passage of time can bring a cycle of revival to our older cities. The decline will open up prime sites for potential re-use. While urban areas have lost heavy industry and blue-collar jobs, the remaining employment will be increasingly concentrated in the service sector -- professional, managerial and white-collar occupations that might be expected to attract the middle class. This reflects a national trend because service industries account for 85% of the U.S. economy.

These evolutionary changes taken together have prepared the way for a metropolitan renaissance. But if we allow the core of our suburban communities to enter a cycle of decline, our victory over urban deterioration may become nothing more than an economic Dunkirk.

New Jersey faces unique circumstances. Ours is the only state in the union whose population is considered to be 100% metropolitan by the U.S. Census Bureau. The country, as a whole, averages 80 persons per square mile; New Jersey averages 1,135 persons per square mile. Population density such as ours presents serious demographic and environmental challenges.

The responsibility facing all industrialized and industrializing societies, including ours, is to allow economic growth to occur -- but in a way that minimizes the impact on society and the environment This approach to development is known as "sustainable development" Societies that safeguard their environmental assets, invest in efficient technologies like mass transit and low or no emission industries, and otherwise embrace a way to co-exist with their surroundings, are the ones that enjoy the most robust and vibrant quality of life.

By closely monitoring for signs of distress in suburban communities, and appropriately responding with strong incentive programs, state government can stop suburban decline before it gains a foothold. And by creating incentives for the redevelopment of urban land, maintaining a high aggregate demand for employment, and renovating housing near urban centers, cities can begin to eradicate poverty, attract the middle class back from the suburbs, and spark a self-sustaining revival that could carry them back into a new era of prosperity. But both suburban and urban New Jersey must prosper before the State recovers its economic luster.
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Title Annotation:New Jersey must assist in redeveloping ailing suburban communities
Author:Medina, Gil
Publication:Real Estate Weekly
Geographic Code:1U2NJ
Date:Feb 26, 2003
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