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Pioneer Calls for Creation of $20 Million Middle Cities Infrastructure Fund

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Read news coverage in The Enterprise of Brockton.

Convention Center Fund surplus would also modernize delivery of basic services, create incentive for municipal reforms

BOSTON – A new Pioneer Institute report calls for the creation of an Infrastructure Investment Fund (IIF) that would use excess money drawn from the Massachusetts Convention Center Fund (MCCF) to jumpstart economic activity in parts of Massachusetts that have not benefited from Greater Boston’s boom.  The white paper is being released to coincide with the Joint Committee on Economic Development and Emerging Technologies hearing on the Baker administration’s economic development package.

“Historic cities across the Commonwealth have not enjoyed the kind of growth we’ve seen in Greater Boston,” said Jim Stergios, executive director at Pioneer Institute and the author of “A New Start for Massachusetts’ Middle Cities.”  “This report lays out a plan for how the state can partner with these cities to change those trends and create economic opportunity for their residents.”

“A New Start for Massachusetts’ Middle Cities” builds on Pioneer Institute’s body of urban policy work on the state’s 14 Middle Cities, most recently including, “Ten Years Later: Trends in Urban Redevelopment,” a review of longitudinal data on education, economic growth and earnings, public safety and financial management in these cities.  The Middle Cities are a subset of the state-designated “Gateway Cities.”

The IIF would make $20 million available annually to older Massachusetts cities outside the Boston area and to disadvantaged neighborhoods of Cambridge and Boston between 2017 and 2034.  It would be managed directly by the Executive Office of Administration and Finance (EOAF) and leverage the expertise and resources of MassDevelopment to ensure that its priorities don’t compete with the Commonwealth’s general capital budget priorities.

The IIF would be combined with state grants and technical assistance, and would be offered in exchange for cities enacting education, public safety, economic development and fiscal management reforms.  Municipal participation would be voluntary; the state would make large infrastructure investments in cities that want to modernize their delivery of critical services.  In those cities that cannot or will not do their part, it is unlikely that the state would get a sufficient return on its investment in the form of increased economic development.

Coordinating grants and technical assistance is not new.  The Commonwealth currently bundles decisions for six grant programs through the MassWorks initiative, and technical assistance through the Community Compacts Cabinet.  The IIF proposal expands the scope of that coordination to encompass all state grant programs and technical assistance for the Middle Cities.

The creation of a targeted infrastructure program for these cities, tied to a competitive process built around local reforms, is new.

Even after the annual $20 million draw and annual Massachusetts Convention Center Authority (MCCA) expenses, the MCCF’s balance would increase each year.  Pioneer’s scenario uses MCCF revenue projections that are far more conservative than those used by the MCCA in support of a proposal to expand the Boston Convention and Exhibition Center.

Today, nearly 50 percent of the revenues in the Middle Cities come from the state, while the state funds less than 15 percent of total municipal revenues in two-thirds of Massachusetts’ 351 communities.  In four Middle Cities, the state provides more than half of the local revenue base, with state aid to Lawrence constituting more than two-thirds of its total revenue.  Almost 40 percent of all local aid goes to the Middle Cities, which make up less than 17.6 percent of the state’s population.  While the state has moral and political reasons for disproportionately directing local aid to the Middle Cities, the Commonwealth’s significant commitment has not changed troubling trends in education, public safety, economic growth and fiscal management.

“We have seen report after report about the difficult trajectory our older, industrialized cities are on.  Shame on us if we continue to do the same thing,” said Stergios.  “We believe the money is there to do this, the need is evident, and the proposal would enhance local leaders’ ability to bring positive change to their cities.”

About the Author

Jim Stergios is Executive Director of Pioneer Institute. Previously, Jim was Chief of Staff and Undersecretary for Policy in the Commonwealth’s Executive Office of Environmental Affairs, where he drove efforts on water policy, regulatory and permit reform, and urban revitalization. His prior experience includes founding and managing a business, teaching at the university level, and serving as headmaster at a preparatory school. Jim holds a doctoral degree in Political Science from Boston University.

About Pioneer

Pioneer Institute is an independent, non-partisan, privately funded research organization that seeks to improve the quality of life in Massachusetts through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.

What are Middle Cities?

Massachusetts cities with populations of more than 40,000 and average per-capita annual incomes of below $25,000 (Pittsfield is the one city in the study in which per-capita income is greater than $25,000).  They include Brockton, Chicopee, Fall River, Fitchburg, Holyoke, Lawrence, Leominster, Lowell, Lynn, New Bedford, Pittsfield, Springfield, Taunton, and Worcester.

Middle Cities Facts

  • Per-capita income in the Middle Cities is between 31 percent and 66 percent below the statewide average and has been falling for over 30 years.  It was 82 percent of the state average in 1979, but fell to 53 percent by 2009.
  • All 14 cities underperform state averages on MCAS.  In 2015, 91 percent of Massachusetts students scored “Advanced” or “Proficient” on MCAS English language arts tests, compared to between 67 percent and 89 percent in Middle Cities.  In math, more than 15 percent of Middle Cities’ students scored in the “Warning/Failing” category—nearly double the state average.
  • The dropout rate in Middle Cities is nearly twice the state average and students attend college at a lower rate.
  • In terms of equalized valuation, which compares the value of property assets, state values grew at an annual rate of 7.92 percent between 1992 and 2012.  During the same period, Middle Cities’ property values rose by 2.66 percent annually, just over one-third the statewide growth rate.
  • In the aggregate, population in the 14 cities fell by 0.3 percent from 1970 to 2013, while the state population grew by 17.6 percent.  The level of population decline is especially alarming in western Massachusetts, where Chicopee, Holyoke and Pittsfield saw decreases of 16.4 to 22.7 percent.

Middle Cities Initiative

General

Ten Years Later: Trends in Urban Redevelopment (February 2016) by Aaron Beitman

Driving the New Urban Agenda (July 2009) by Jim Stergios and Maria Ortiz Perez

Rehabbing Urban Redevelopment (February 2007) by Jim Stergios

Extending the Stat Model Across the Commonwealth (2007)

 

Educational Excellence

Municipal Benchmarks for Massachusetts Middle Cities: Educational Achievement (April 2010) by Dr. Robert D. Gaudet

 

Economic Development

Municipal Benchmarks for Massachusetts Middle Cities: A Look at Economic Growth (May 2010) by Ezra Haber Glenn, AICP

New Business Creation and the Urban Economy (January 2008) by John H. Friar

Housing and Land Use Policy in Massachusetts (February 2007) by Amy Dain

Housing Programs in Weak Market Neighborhoods (December 2006) by Peter A. Gagliardi

Navigating Regulations Guides for Urban Entrepreneurs, now available for 10 cities.

 

Effective Fiscal Management

Testimony before the Joint Committee on Public Service of the General Court of the Commonwealth of Massachusetts Regarding the Fiscal Condition of Local Retirement Systems (January 2014) by Iliya Atanasov

A Practitioner’s Guide to Outsourcing (July 2011) by Stephen Lisauskas

Learning from Springfield: An Asset Management Approach to Tax Title Collection (February 2009) by David Panagore

Regionalization: Case Studies of Success and Failure in Massachusetts (October 2008) by DeWayne Lehman and Charles Chieppo

GIC Consolidation (June 2008) by Steve Poftak

Learning from Springfield: Lessons in Effective Fiscal Management (April 2008) by Steve Poftak

Guide to Sound Fiscal Management for Municipalities

Leaving Money on the Table: The 106 Pension Systems of Massachusetts; Public Employee Benefits Series: Part 2 (May 2006) by Ken Ardon

Competition & Government Services: Can Massachusetts Still Afford the Pacheco Law? (October 2002) by Geoffrey F. Segal, Adrian T. Moore, and Adam B. Summers

Public Safety

Where Are the Public Safety Funds Going? (July 2010) by Brenda Bond, PhD. and Gabrielle Aydnwylde

Facing the Economic Crisis: Challenges for Massachusetts Police Chiefs (April 2010) by Brenda Bond, PhD., and Gabrielle Aydnwylde