Wednesday, December 21, 2011

A Meal or a Mess


Baltimore and New York City.  Two great American cities.


Two rival cities, as well.  I am not referring to the sports rivalries between the Orioles and Yankees.  Rather, I am referring to the intensifying rivalry for creative talent and thus a stake in the economy of the future.


What made me think of the rivalry between New York City and Baltimore was an announcement on Monday, December 19, by New York City Mayor Michael Bloomberg.  Cornell University, in partnership with Technion-Israel Institute of Technology, was selected the winner of a global competition for the right to develop an engineering campus in New York City on Governor’s Island.  Seven proposals were submitted by seventeen institutions.  Stanford University, the presumptive front runner, pulled out of the competition last Friday.   The winner of the competition were offered the right, at no land cost, to develop an engineering campus on Governor’s Island in the East River plus a $100 million contribution towards the cost of building infrastructure.  The total cost of the venture is projected to be $2 billion, of which $350 million was sourced from Charles F. Feeney, the billionaire Cornell alumnus who founded Duty Free Shops.  The package includes a $150 million venture fund expected to spawn 600 new firms that will create 30,000 new jobs and generate $1.4 billion in new tax revenue.  Cornell also committed to training 200 teachers annually and annually supporting 10,000 students.  Finally, constructing this new, 2 million square foot urban campus will create 20,000 construction jobs.[1]


Amazing!  New York City, the largest city in the country and the financial capital of the world, pivots on a dime in the middle of a deep recession to make a large wager on the economy of the future.  New York City leverages vacant land plus a $100 million investment into a $2 billion initial investment in human capital.    


Looking south towards Baltimore, what do I see? Another large municipality making a similar size wager on the economy of the future.   I see the State Center project.  This is a planned $1.5 billion mixed-use development project that will offer 2,000,000 square feet of office space, 25,000 square feet of retail space and 1,400 housing units.  This project is slated to replace the 932,000 square feet of existing office space owned and occupied by various agencies of the State of Maryland.[2]  We will not discuss the pending lawsuits.


I ask the citizens of Baltimore City and the State of Maryland to compare the Cornell/Technion engineering campus project in New York City to the State Center project in Baltimore.  First, compare the public resources each jurisdiction has wagered:  New York City - $100 million plus some vacant land; State of Maryland/Baltimore City – up to $200 million plus some vacant land.[3]  Second, compare the goals of each project:  New York City – human capital development, economic development, and a new source of tax revenue for generations to come; State Center – a depreciating office building asset, housing units that may only be built if they are heavily subsidized for low income/Section 8 tenants, waived real property tax revenue for 25 years, up-front developer profits, and a free parking garage for state employees.


Is this the best Maryland can do?  Why aren’t we investing our scarce resources to secure a commanding role in the future economy?  Why are we not investing in human capital, the benefits of which are described by Edward L. Glaeser in his book, “Triumph of the City?”  Wasn’t Mr. Glaeser a guest lecturer at a recent meeting of the Downtown Partnership of Baltimore?


When I think of the proposed State Center project as compared to the Cornell/Technion project, Thanksgiving comes to mind.  Growing up, I always marveled at my mother’s cooking.  She was the best cook in a family of seven girls and four boys.  She could transform readily available ingredients into a spectacular meal using her superb culinary skills and vast experience.  As a single adult living on my own, I once tried to replicate my mother’s Thanksgiving dinner.  I stocked my pantry, cabinets and refrigerator with everything my mother used.  I bought similar pots, pans and utensils.  I even used her recipes.  My efforts resulted in a big mess, wasted ingredients and wasted time.  I realized that my mother’s skills and experience made the difference between my big mess and her exquisite meal.


Returning to my comparison of the State Center project to the New York City project, I am concerned that twenty years from now, the State Center project will a be pile of bricks and mortar at the end of its useful life, while the Cornell/Technion engineeering campus will have become Silicon Valley East, training world-class engineers, conducting research with global partners, spawning start-ups, producing creative products, and attracting the brightest minds from around the world.


New York City and the State of Maryland are both staring into a pantry looking at the same ingredients.  Who will make a meal?  Who will make a mess?  I believe we have New York City’s answer.



[1] The New York Times.  “Cornell Alumnus Is Behind $350 Million Gift to Build Science Schil in City.”  Richard Perez-Pena.  December 20, 2011.
[2] Maryland Daily Record.  “Md. moves forward on $1.5 billion State Center project.”  Andy Rosen. June 3, 2009.
[3] Ibid.