NRC, Columbia University lead look at America's cities

Want to cause a stir? Ask a roomful of people for their opinions about America's cities. That's what Washington, D.C.-based National Realty Committee (NRC) did in New York when it sponsored a roundtable about urban reinvestment and public policy in March.

The future of America's cities is another of this country's many intellectual divides. While federal and state fiscal woes highlight wasteful government, what many consider big drains on public spending -- urban areas -- are under serious scrutiny. Regardless of your stance, urban policy and the state of urban America are crucial to the real estate business, given the large roles that both the industry and cities play in the nation's economy.

In a sometimes lively roundtable discussion, co-sponsored by Columbia Participating in the roundtable University and held before an intimate group of students and faculty at the university's campus in upper Manhattan, members of New York's real estate investment community expressed deep cynicism about government's role in improving America's cities. But there were hints of optimism, with one developer predicting that the private sector will see efficiency in city government and New York's deputy mayor citing the election of "mayor/managers" in major metro areas.

The seven panelists and the moderator, Ernst & Young partner and Columbia University real estate professor Michael Buckley, agreed that before more money is directed at urban ills like crime, infrastructure and education, the apparatus for solving these problems must be changed.

"Money doesn't solve the problem. The problem is process -- rules and regulations and an often unmotivated and unproductive workforce," John Somers, senior vice president of Teachers Insurance & Annuity Association and an NRC vice chairman, said. "Unfortunately, the greater the direct role of government, the greater a project's cost and chance of failure. The real estate industry does need the indirect support of government but keep government's hand out of business's pockets."

In the eyes of Robert McCormack, executive vice president of Citibank, N.A., and also an NRC vice chairman, a sense of urgency on a city's part is often needed for a turnaround. But the pressure to change is not great enough now, and he cautioned New York City's boosters about describing the city's attributes too generously.

"It's a disservice to call New York the world capital because it dulls the sense of urgency," he stated. "Competition is everywhere. The city doesn't have to be the low cost provider, but it does have to be competitive."

Republican mayor Rudy Giuliani and his administration are trying to cut spending, improve core services and invest in economic development. Deputy mayor Fran Reiter said core services like public safety and education are keys. Its economic development investments include a "one-stop shopping" permit program that's reportedly working well, and an ambitious group of tax incentives to promote the redevelopment and conversion of buildings in the city's down-and-out downtown market.

"Cities are perceived as money sinkholes," Reiter added. "Cities haven't managed themselves well. Now the argument is, with the rest of the country coming back, cities aren't."

The myth that cities are a drain on the economy persists, she said, and it's being advanced by an anti-city sentiment in Washington. "Cities send more wealth to Washington than Washington delivers back in services," she said. "But this is a hard message to get out there."

The message of efficiency and user-friendliness that cities want to get to the public sector is not new. The Grace Commission issued a huge document on federal government waste more than a decade ago, and one of the Clinton administration's mantras re-inventing government. As the private sector takes advantage of technology and makes giant, seemingly daily, steps toward greater efficiency, some cities are stuck using old ideas and old methods to solve problems, NRC president Steven Wechsler said.

But some cities are overcoming this inertia. Charles Reiss, vice president of the New York-based Trump Organization and head of Columbia University's graduate program in real estate, said the private sector will see a difference when dealing with New York bureaucracy.

Ultimately, America's cities will have to overcome their problems and create a better climate for new investment and jobs. To foster a dialogue on this subject, the NRC expects to sponsor more roundtables with universities around the country this year, according to Wechsler.

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