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The State We're In
By BusinessWest Staff February 1, 2011 735 No comment
A Progress Report from the State's Economic-development Czar
Greg Bialecki, secretary of Housing & Economic Development
As the Patrick administration begins its second term in office, the focus, from an economic-development perspective, will be to continue to use public dollars to leverage private investment, says Greg Bialecki, secretary of Housing & Economic Development. He noted that so-called gateway cities such as Springfield and Holyoke need investments from the state to stimulate private spending and create new sources of jobs and overall economic vitality. In a wide-ranging Q&A touching on everything from corporate incentives to market-rate housing development, Bialecki talks about what's been accomplished, and the work still to do in such cities.
Greg Bialecki acknowledged that that much of the progress being seen in Springfield and other area communities has been generated by state and/or federal assistance — on one level or another.
Examples abound, from the presence of Liberty Mutual in the Technology Park at Springfield Technical Community College to the high-performance computing center in Holyoke; from the tax incentives recently awarded to Smith & Wesson in exchange for its pledge to create 225 new jobs at its Springfield plant and make significant investments there, to the backup data center soon to be take shape at the former Technical High School on Elliot Street in Springfield.
Bialecki, the state secretary of Housing and Economic Development, prefers to look at the state's contributions as investments that will help trigger private-sector spending in older, former manufacturing centers, like Springfield, Holyoke, Chicopee, and others, that need a boost in their efforts to reinvent themselves and spur economic growth.
The Deval Patrick administration's strategic plan has been to make prudent, well-thought-out investments capable of generating significant returns, said Bialecki, adding that this policy will continue in the second term that started this month, and that, given some help in the form of economic recovery, such returns should soon be visible and measurable.
The data center taking shape at the old Tech High building is another example of state investment in a gateway city — Springfield.
In this Q&A, BusinessWest sounded out the state's economic-development czar on what's been accomplished to date, and what can be expected in the months and years to come.
BusinessWest: Talk about the state's investments in economic development and the goals and expectations that come with this assistance.
Bialecki: "Everyone who does investing is always looking for leverage, and the state is no exception. The governor has asked me to look for opportunities where a state investment will be matched, not just one-to-one, but many times over, by private investment. The high-performance computing center is a good example of that; the state has committed $25 million to that effort, which will probably be a $160 million project when all is said and done, and a number of private colleges involved have made sizeable investments as well. Originally, we put out the promise of some public funding to encourage private funding, but at this point, all the money that's needed to make this go is in hand.
"Smith & Wesson is another example. Our $6 million investment tax credit is probably going to be about 10% of the actual private investment. Smith & Wesson has committed to spend at least $60 million in new plant equipment there over the next several years, so we're just making a commitment that's way overmatched by private investment."
BusinessWest: How do these investments fit into the state's broad strategic initiative involving the so-called Gateway Cities, such as Springfield and Holyoke, and are there signs that state-assisted projects are, in fact, stimulating private development?
Bialecki: "You can see some examples of the model this administration is advancing taking place in Springfield. Liberty Mutual is one, and the old federal building, 1550 Main St., is another, and so is the data center. These are public/private projects, for the most part, and examples of how state assistance has been provided to help older cities. We do believe that, if you're really going to be a catalyst for economic development and job creation, we need to be thinking not only about places where we can do public projects — Union Station might be an example — but balancing that out with projects where we are providing an incentive for private investment.
"These projects send a bit of a different message about the way we think of the economic potential of different regions of the state, including our older cities. In other words, this approach is based on the view, the perspective, that good things are happening in all the regions and many of our cities, and if we can address their challenges, but also talk up the good things about them, we can convince private business to locate there."
BusinessWest: Some people and groups criticize such public assistance to private companies, calling it corporate welfare and a flawed system for spurring economic development and job growth. How do you respond to that, and does the state need to make such incentives available to compete with other regions and cities?
Bialecki: "We believe that some level of assistance is probably required in a number of these places to help people make the decision to locate in a Springfield or locate in Western Mass., in part because of what other regions are offering, but also in part because some companies like it here and want to be able to stay here.
"Frankly, the Smith & Wesson deal, although that was real money, was in a way a blockbuster deal, in terms of the amount of incentives compared to what other states are offering. We have other states offering some of our companies huge deals — they're saying, 'if you move here, we'll build you a factory, and we'll pay for it.' And if you talk to Smith & Wesson and ask them if the state's willingness to commit to incentives was an important part of their decision, they'll say, 'yes, absolutely.' But they'll also say that they really like being in Springfield, we've got a great workforce; it's not a case where they're saying, 'we don't want to be in Massachusetts, we don't wan't to be in Springfield, but if you pay us enough, we'll stay here.' They want to be here."
BusinessWest: How important is balance, in terms of public and private investments, to a city's long-term success?
Bialecki: "Very important. The ultimate goal, obviously, is to maximize the amount of private-sector job-creation and private-sector investment in the region. We're glad to continue to make significant public investments as well, but, realistically, and from our point of view, you're only to going to be able to say we have a healthy economy in Western Mass. if there's not only public dollars going into employment and investment, but also private dollars, and more private dollars than public."
BusinessWest: Talk about the plight of the gateway cities and what the state is doing to assist them.
Bialecki: "Our approach is very consistent in that we don't look down condescendingly on these cities — we view them as being able to participate in and contribute to the economic health of the state. We want them to be in the mainstream of the business mix in the state. What are the big industries in Massachusetts? Health care, higher ed, financial services, high tech … a measure of our success should be that those industries are in our gateway cities. In Springfield, MassMutual was already there, but getting Liberty Mutual was big — these are Fortune 100 companies, and they both have a presence there.
"There are also many colleges and universities in Springfield, and that's important, as well as Baystate Medical center and other health care providers. We want to add the tech sector to that mix, and the high-performance computing center will help. We want the gateway cities to be in the mainstream of the state's economy, especially the innovation economy."
BusinessWest: What role does housing, specifically market-rate housing that will, theoretically, attract young people and professionals, play in economic development, and what is the state doing to stimulate such developments?
Bialecki: "Housing is a critical component, and we want to make sure that cities have a good mix of all kinds of people living within their boundaries. We want there to be enough affordable housing for those at that end of the spectrum, but also enough places for people who are middle-class and above and have choices about where they want to live. How can we create an environment where people will want to live in our gateway cities?
"We started a new program where, for the first time, we have money available to provide tax-incentive support for people to create market-rate housing in gateway cities. It's a pilot program with $5 million available initially, and it's something [Springfield] Mayor [Domenic] Sarno has expressed great interest in. Officials in Springfield have done an inventory of what market-rate housing is available today, and identified potential pipeline opportunities where such housing can be created; developers will probably need some help, and we're willing to do that."
BusinessWest: Is there a policy or strategic plan for helping these cities, and if so, what are the main elements?
Bialecki: "Some of the strategies that people have talked about in the past for helping gateway cities have been to mitigate the challenges and the problems facing these cities, such as public safety, and those are important things to do. But we are actually aiming higher. We're not just trying to mitigate the problems; our vision focuses on determining what these cities, like Springfield, would look like if they were functioning at a high level and were contributing to the economic life of the region.
"And if you look back, all of these played that role at one time, some more recently than others. Holyoke was the first planned industrial city in the country, New Bedford was the whaling capital of the world, and Lowell and Lawrence were main textile centers. Most all of these cities were, at some point in time, not just keeping up with the economic prosperity of their neighbors, they were driving the economic prosperity of their respective region.
"We understand the challenges, but we think that that is the right aspiration to have for these cities: what would it look like and feel like for Springfield to be that driving force again?"
BusinessWest: What are the immediate hurdles to achieving that goal, and what has to be done for the city to achieve this vision?
Bialecki: "There are a lot of good building blocks in Springfield, like its colleges, universities, and fine health care facilities. We would like to see other aspects of the innovation economy; we'd like to see more tech companies. There are some initiatives with incubator space [at STCC], and there is the Pioneer Valley Life Sciences Initiative to get some other life sciences and biotech. There is plenty to build on.
"And development of these sectors goes back to my earlier comments about how many projects require some measure of state assistance. While it's true that, to jump-start some of these things, assistance is needed, our goal is to move off that.
"In other words, let's talk about the things we have to do in Springfield and the other gateway cities so that the businesses will say, 'you don't need to persuade me to open a new business unit in Springfield — that's where things are happening; that's where I want to be.'
BusinessWest: Is there a model to be followed in terms of such a recovery?
Bialecki: "Lowell is the classic; that's the one everyone points to, and they have had a good deal of success over a prolonged period of time, going back to the '80s. But I've seen some very impressive changes and improvements more recently, over the past four years, for example. In Haverhill, the mayor has made a big focus on market-rate housing in the downtown, mostly in old mills and even to the point where people said, 'what are you doing?' But it's worked out very well; he's got a lot of telecommuters there and people who can work anywhere, and it's a short commute to Boston. And he's generated a lot of street life, a lot of new restaurants.
"And New Bedford's done very nicely. We've helped them with some things, and they've used those projects to trigger some private investments; there is a nice creative-economy element to what they've done, with a lot of artists moving in.
"The thing about gateway cities is that there's no silver-bullet project that's going to put you over the top; it's an accumulation of things that are going to make a difference, including that all-important private investment."
George O'Brien can be reached at [email protected]
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