Neil Fraser
April 29, 2003
I MET Rob Walsh quite a few years ago when we served together on the Board of the International Downtown Association. Rob was then the Executive Director of the Union Square/14th Street BID, one of the oldest of the New York City Business Improvement Districts (what we now in South Africa call CIDs - City Improvement Districts).
Shortly after we met, he moved to Charlotte, North Carolina where he headed up the Charlotte City Centre Partnership. We enticed him together with the late Barbara Wolff to visit South Africa for a couple of weeks some years back to assist in promoting CIDs in various parts of the country and the three of us had a great deal of fun doing so.
More recently Rob was approached by the then incoming Mayor of New York City, Michael R Bloomberg, to join his administration as the Commissioner heading up the City's Department of Small Business Services, (SBS). The SBS is also the council entity responsible for the development and oversight of its 40 plus BIDs.
So Rob is back in his beloved city bringing his boundless energy, entrepreneurial flair and ability to make things happen in a city still reeling under the combined effect of the September 11 attack and the more recent war in Iraq as well as SARS.
SARS? New York City? Well, this is clearly another outcome of globalisation-fuelled perceptions - New York's Chinatown has evidently seen its normal buoyancy and hustle and bustle disappear over the past month as New Yorkers and visitors alike give it a wide berth purely due to the perception that the constant movement of people between it and the Far East is likely to introduce the virus to the precinct, if it hasn't already done so! The Mayor in fact took it on himself to have a much-publicised breakfast in Chinatown on Wednesday to allay such fears.
As someone who has had the privilege of visiting this amazing city many times over thirty years, the first indication that things were different was when my flight on Monday night was cancelled by SAA and combined with the Tuesday flight.
But even the resultant flight was only half-full! Then the arrivals terminal at JFK was clearly well under-utilised and, wonder of wonder, the ride into the city was the fastest I've ever experienced because the ever present traffic congestion was just non-existent. I even thought that I might have got my dates wrong and that I'd arrived on a public holiday! Rob confirmed that the economy of the city is under a great deal of stress and many of the reports in the local media are unusually negative. One spoke about a "mood of defeat" in the city even suggesting that it is time to remove the giant American flag over Ground Zero "which feeds the crisis atmosphere."
The media are full of stories of retrenchments and everyone I have spoken to has remarked on the reduction in economic activity. But the gloom hasn't stopped the city dressing for the change in seasons and the pavements and parks are gloriously colourful with spring flowers.
Against that background, the staff in Rob's department remain bullish as they go about their business. Recognising the critical role of New York's City's 200,000 small businesses in strengthening the economy, the mission of the SBS is "to support the formation, growth and expansion of the City's small businesses and the improvement of the commercial districts in which they operate." This is done through four main thrusts, regulatory; business assistance; neighbourhood development and, fourthly, strategic planning and policy development.
All of the work done by the SBS should be of vital interest to ourselves in Joburg and some of it is remarkably relevant to our own situation. For instance I spent some time at an informal trading market in Flatbush Avenue, Brooklyn built by the city to remove informal traders from the streets - shades of Yeoville and MetroMarket! One gets so tired of our local cynics who believe that so-called First World cities have nothing to teach us!
You may recall the overview of Joburg's Inner City Regeneration Strategy described in Citichats 8 and 9 earlier this year. Some of the problems the Strategy was trying to address were that (i) public sector investment at its current levels is unsustainable and (ii) enough has not been done to attract sufficient private sector investment to maintain the upward spiral in order to achieve a steady rise in property values.
The proposal put forward was that the overall goal of "raising and sustaining private investment leading to a steady rise in property values" can be achieved through five thrusts or strategies city's which were addressing the sinkholes; increasing the ripple ponds or ripple-effect investments; supporting economic sectors; intensifying urban management, and maintaining and upgrading the infrastructure.
The Strategy has not yet been 'teased out' so it was silent on how these five thrusts are going to be successfully achieved. It strikes me, after looking at what has and is being accomplished here, that the broad scope of the work being done by Rob Walsh's department is critical in this regard whilst the issue of incentives is one that can no longer be ignored by local government.
The SBS has proved that incentive programmes enhance economic development "by spurring companies to make business investments and create and maintain jobs thus promoting neighbourhood commercial activity and strengthening New York's small-business community." Whilst not all the incentives are necessarily Council sourced, the SBS makes it its business to know the details of all such schemes intimately so that it can direct interested parties in the most relevant direction.
The experience of the SBS has shown that incentives encourage both expansion and retention through improving facilities; expanding the workforce; purchasing machinery and equipment and fostering employment growth. Incentives are also critical in retaining businesses or relocating them into targeted areas or designated zones within the city. There are thus five general types of business incentives available:
- benefits for capital/facility improvements
- relocation
- employment based benefits
- financing assistance, and
- energy and utility benefits
There are at least thirty incentives detailed by the SBS that relate to these five categories. This is aside from ten State (Provincial) "Empire Zones" that are located within New York City. Businesses that move to or grow or expand their business activities within these ten designated zones can qualify for up to five year wage tax credits; investment tax credits; sales tax refunds; tax reduction tax credits; real property tax credits and sales tax exemptions.
Not-for-profit or community revitalisation programmes aimed to improve the quality of life within the Zones attract additional credits. Then there are two Empowerment Zones in New York City under a Federal programme, which provide tax incentives to encourage business expansion and private investment in other designated areas.
Whilst our minister of finance, Trevor Manuel, has taken the lead in announcing tax write-offs for inner-city investments, it is time for Joburg to look boldly at what it could be doing at local government level so as to attract substantial private investment and NYC would be a good place to start looking. All of the three BID areas we have visited in NYC, MetroTech, Times Square and the Downtown Alliance are beneficiaries of the incentive programme as are many other areas across the city. Without some sweeteners such as are available in NYC and most American cities, we are not going to be successful or are going to take too long to be effective.
