The shared fortunes of the Capital City and its suburbs

Since 2011, a fight has been brewing in the state capitol over where the Department of Revenue (DOR) and its 500-plus workers are going to relocate. In one corner is Sen. David Blount, D-Jackson, and in the other is Speaker of the House Philip Gunn, R-Clinton.

Sen. Blount represents those who want to house the DOR in the 385,200-square-foot Landmark Center located in downtown Jackson in an effort to consolidate state agencies into one building. Two independent studies — one produced in 2011 by Cushman and Wakefield and the other in 2013 by Millsaps College’s Else School of Management — prove that moving the DOR into the former regional headquarters of AT&T will save taxpayers millions of dollars compared to all other viable options. Based on this evidence, three influential, Mississippi businessmen — Jim Barksdale, John Palmer, and Leland Speed — publicly sided with Sen. Blount in the Clarion-Ledger on Feb. 19, 2013.

In the opposing corner, Speaker Gunn advocates moving the DOR into the old WorldCom building in Clinton. His rationale is not financially based; rather, it is politically motivated. “I haven’t seen (Blount’s) plan or details… But I represent the people of Clinton, and they sent me here to look out for their interests. We believe it’s in the best interests of my constituents for it to be in Clinton, for those jobs to stay in the area,” Gunn said Feb. 4, 2013.

Despite good intentions, Speaker Philip Gunn’s logic is flawed. For suburbs to be successful, like Clinton, they must have a vibrant central city. In other words, it would be in the best interest of Clinton (and all suburbs in the metropolitan area) for DOR to move to downtown Jackson. Please, allow me to explain.

Mountains of academic literature support that the future of cities and their suburbs are intimately related. In a 2002 study, Dr. Andrew Haughwout, a senior analyst for the Federal Reserve of New York, and Dr. Robert Inman, a professor of Finance and Economics at the University of Pennsylvania, plainly state, “There is no question that there is a tight connection between cities and suburban economic fortunes.” What does this mean?

Throughout most of the 20th century, the suburban portion of the United States grew at expense of the city portion. But in 2005, Dr. Jordan Rappaport, a senior economist at the Federal Reserve Bank of Kansas City, demonstrated cities and their surrounding suburbs tended to grow or decline together as their metro areas prospered or struggled. How does this work?

First, let’s look closely the characteristics of a city as it declines. A declining city is marked by a concentration of lower income people and an inability to fund needed investments in education and infrastructure, which leads to additional problems such as high crime, poor health, and unproductive workers.

There are both short-term and long-term consequences of this process. Initially, central city decline reduces city amenities, providing further impetus to move to the suburbs. Thus in the short run, urban decline is associated with suburban growth. However, spillovers from central city decline adversely affect the entire region, causing people and businesses to move to more desirable regions.

This decline is not a fast affair. It is a long, gradual one that is many times disguised by slow-growing suburbs. Nonetheless, central city decline is a long-run, slow drain on the economic and social vitality of the region.

In his 1998 study, Dr. Richard Voith, a professor of Urban Real Estate Economics at the Wharton Business School concludes, “…suburban communities may not be able to isolate themselves from the consequences of central-city decline and, in fact, that suburban communities may benefit substantially from a growing central city.”

A clear example of a declining central city is Detroit. To quote The Economist, “Nowhere is the separation of (the city and suburbs) so destructive — as in Detroit; It is becoming obvious that Detroit’s troubles cannot be contained. Company headhunters, even in the distant suburbs, find it difficult to lure top-notch talent to a place with such a negative image.”

You may say, “So, I get it. The core city is important, but will moving a state agency to downtown Jackson really help revitalize the city? The answer is yes.

In his celebrated 2003 study, “Public Buildings Keep Town Centers Alive,” Philip Landon explains the importance of having governmental offices downtown. One of his most important arguments shows that each government worker injects $2,500 to $5,000 into the local economy. In Jackson’s case, moving the 500+ DOR workers translates into $1.25 to $2.25 million injected into downtown businesses. And if the state uses the Landmark Center to consolidate more state agencies, the additional employees will further enhance the downtown economy.

Mississippi would not be the first to systematically move government offices downtown because they generate significant economic activity. A precedent already exists. National policy requires federal agencies to consider downtown areas first when looking for new space, and they can only locate somewhere else when there are “compelling reasons to the contrary.

Dating back to 1994, a number of states have adopted this strategy, mandating that government offices have to move to downtown whenever possible. According to Torn Torti, Vermont’s Commissioner of Department of Buildings says, “No doubt about it; the policy helps to sustain downtown.”

During Mayor Mick Cornett’s speech at the GJCP Annual Meeting, he said that it was imperative for the success of Oklahoma City to “convince suburbanites that their quality of life is directly related to the intensity of the core.”

As a Brandon resident and Jackson suburbanite myself, I ask Speaker Gunn to see the wisdom of Mayor Cornett’s words and support Clinton, Jackson, and the entire Metropolitan area by allowing the house to vote on SB2763.

 

1LT Matthew D. Bolian, a Metro-Jackson native, was a Distinguished Honor Graduate at the United States Military Academy at West Point, NY in 2011, and he served as a Rotary Ambassadorial Scholar and Phi Kappa Phi Fellow at the London School of Economics (LSE) in 2012, earning a MSc in Regional and Urban Planning. He currently lives in Colorado Springs and plans to return to Jackson after serving his commitment to the Army.

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