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Economic Development Report

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Introduction

To successfully build a Premier Economic and Cultural Center, the City, County and State must abandon their efforts to create “silver bullet” solutions to the City of Trenton’s challenges and begin strategically investing in efforts that will build a healthy sustainable economy that provides opportunities for a diverse community.
The key to meeting Trenton’s long-term economic development goals lies in unlocking its potential by building off of strengths. To accomplish this, this Report recommends focusing on simultaneously strengthening the three key pillars of Trenton’s economy:

  • the downtown

  • the industrial areas, and

  • the neighborhoods.

Each of these areas has relatively unique challenges and solutions, but success in these areas will have a city-wide impact. In addition, this report makes city-wide recommendations on how to strengthen the economy.
The following report outlines initiatives that the City can begin immediately and which can be implemented simultaneously. Moreover, each initiative will reinforce efforts to develop and attract industries with regional strength into the city, nurture the city’s workforce and make capital of available land, increase tax revenues, and place more money in the pocketbooks of residents, making neighborhood retail more viable. A stronger downtown will be more attractive to regional employers and professional workers looking for high-quality places to live, which will, in turn, bring jobs and economic opportunity to all residents. This evolution will further the appeal of downtown, luring even more higher-wage industries and companies to Trenton. Moreover, stronger neighborhood commercial centers will make neighborhoods more attractive to new and current residents, strengthening efforts to make Trenton a regional destination.
These initiatives will:

  • improve the retail environment;

  • create new development and business opportunities in key locations;

  • create an improved business environment that provides high-quality employment to residents;

  • take advantage of the region’s employment strengths and growth areas;

  • strengthen Trenton's arts, culture, and heritage tourism; and

  • promote all of these attributes to the outside world.

With multiple departments working in coordination, including both Economic Development and Planning Divisions, the City will maintain an environment that is conducive to accomplishing these initiatives through a series of detailed actions, outlined below.

Defining Economic Development

Economic development can be defined as actions by communities and policymakers that improve a region’s well-being by growing its tax base, increasing residents’ incomes, and creating jobs with the intent of an improved standard of living and quality of life. In this context, Trenton is poised to reestablish itself as the economic and cultural center of Mercer County and the Central Jersey region.

A City with Strengths

The Capital of New Jersey
As the state capital of New Jersey, more than 28,000 workers arrive in Trenton each weekday, providing significant opportunities to exploit multiple markets of products and services. As a former manufacturing hub with a still relatively strong industrial workforce and a ready-to-work immigrant population that can be trained for today's industries, there are opportunities for expanding the city’s industrial base.
A City with Multiple Assets
With convenient access to New York, Philadelphia, and the Shore through many modes of transportation, Trenton's location and transportation infrastructure give it a major advantage over many other New Jersey cities. Moreover, the city is surrounded by multiple public and private educational institutions, and there are opportunities to forge new partnerships to educate Trenton's residents better and prepare them to help grow the city's economy. Equally important, Trenton offers a unique heritage to visitors, unlike any other city because of its significant place in American history. Combined with the emerging arts scene incubating throughout the city, Trenton can position itself as the region's capital of arts and culture. Such efforts will only enhance Trenton’s potential to offer a unique urban lifestyle not found anywhere else in the area, and attract a more creative and innovative demographic.
Strong Regional Economy
Regionally, Trenton is in the heart of an economy encompassing Bucks and Mercer Counties. While Trenton is the center for State government, many private-sector industries are experiencing significant growth in the surround Counties. According to On the Map, a resource of the US Census, the following industries experienced the largest increase in employment in the combined Mercer/Bucks area from 2002 to 2014 (growth indicated in parentheses):

  • Management of Companies and Enterprises (139%)

  • Health Care and Social Assistance (50%)

  • Arts, Entertainment, and Recreation (38%)

  • Accommodation and Food Services (33%)

  • Professional, Scientific, and Technical Services (21%)

Because of their relative strength in the region, these are the industries for which Trenton is best positioned to exploit. The City could capture a portion of this growth and employment, enabling Trenton to better capitalize on its existing infrastructure and the region’s workforce. Therefore, they should be the focus of the City’s near-term efforts to expand business development and increase employment. In some ways, the City has already begun to position itself to do so. Arts, entertainment, and recreation are focused within Downtown Trenton and expanding. Moreover, as demographics change, these large private-sector companies will need to offer the types of amenities their employees are seeking. A segment of millennials continues to seek urban, transit-rich, and walkable communities, and Trenton is well positioned to attract industries that have in the past chosen to locate in the suburbs.
A Strong Industrial Past
With its strategic location on the Delaware River, as well as its rail and canal access, Trenton developed into an industrial and manufacturing hub early in this country’s history. Ironworks and potteries flourished first in Trenton, with steel and ceramics developing into iconic Trenton businesses, followed by rubber manufacturing. Well-known Trenton companies include Lenox, Boehm, American Standard, and Roebling, which built the Brooklyn Bridge. After the city’s chamber of commerce had held a contest for a civic slogan, “Trenton Makes The World Takes” was selected to reflect the city’s manufacturing prowess. Though Trenton’s manufacturing heyday is behind it, the industrial culture remains, and the City looks forward to a renewed interest in manufacturing. While manufacturers in Trenton contracted somewhat in the last ten years due to the recession and to sequestration, according to stakeholder interviews, these same industries are now expanding and hiring.
Enduring Challenges
Despite these strengths, the City is not currently capitalizing on all of its assets. To develop a Comprehensive Economic Development Strategy, the City must be clear about what prevents it from doing so, though the obstacles are serious and often entrenched.
A Homogeneous Economy
Trenton’s economy is currently highly dependent on government as a base industry. This base economy encourages other related businesses, such as lobbyists and social service organizations, to locate in Trenton. However, it also attracts a high concentration of non-profit entities. As a result, much of Trenton’s land is either tax exempt or producing little income: 35% of all land in Trenton is non-taxable, according to the City Profile Report. This severely limits the ability of the City to leverage tax revenue to address many of its entrenched issues and forces it to place a significant tax burden on residents: Trenton has the highest effective Tax rate in the Mercer County Region, according to the State of New Jersey’s 2015 Abstract of Ratables for the County of Mercer. Combined with high concentrations of poverty, crime, and struggling schools, the City currently lags attracting residents who have the financial resources to invest in the city and make it successful.
Trenton’s current struggles are due in part to past Urban Renewal efforts. As the following Case Study explains, urban renewal in the 1950s and 1960s focused largely on “slum” clearance in the downtown. Tragically, this effort resulted in the displacement of a largely African-American community in the Coalport Neighborhood. The planned industrial district for small manufacturing firms never materialized, and the City ultimately transitioned its effort to provide facilities for state government. To varying degrees of success, subsequent efforts have largely focused on leveraging County, State, or National funding to build government buildings, event centers, and/or subsidized affordable housing.
Multi-Sector Challenges
Trenton faces a variety of other economic development challenges impacting its ability to capitalize on its assets. Trenton has a limited supply of retail goods and services, slow business growth, and a shortage of readily developed industrial sites. The arts and culture industry also faces numerous challenges that are impacting its potential for being an economic engine for the city.
In addition, the city faces a variety of workforce, job-skill, employment access, and education-related issues. This includes the fact that those who have been incarcerated often do not have the support they need to return to the workforce upon return to Trenton. These issues are addressed in the Education and Workforce Development Report of Trenton250 Master Plan. Trentonians, as well as stakeholders, have identified improving all of these sectors as critical for achieving the community-driven Vision. Collectively, Trenton’s economic development challenges are limiting its ability to reach its potential.

Case Study: Urban “Renewal” in Trenton

The following is an excerpt from In Philadelphia’s Shadow: Small Cities in the Third Federal Reserve District (Alan Mallach, Federal Reserve Bank of Philadelphia; 2012). It provides a strong background understanding of the City’s Urban Revitalization Efforts from 1950 to 2000.
Trenton’s recognition of its need for renewal was spurred by the 1957 publication of an article in House & Home magazine, based on a study by a University of Pennsylvania team, which described a hypothetical “case city” clearly recognizable as Trenton and predicted that it would be a “low-income ghetto” by 1980. Although the article was denounced by city officials, a contemporary noted that “it said what everyone around here really thought but did not have the stomach to say” (Shuman 1958).
Trenton had already begun to take advantage of the federal urban renewal program, initiating its first urban renewal project in 1954 in Coalport, an area north of downtown flanking the newly constructed Route 1 freeway. The project, however, which displaced some 400 largely African-American families and was designed to create a new industrial district for small manufacturing firms, was a failure. It drew few firms, and in the 1970s, under pressure from the federal government to close out the project, the city sold the last vacant parcel to itself for construction of a new police headquarters and municipal court. Trenton continued aggressively to seek federal urban renewal funds, and over the course of the 1950s and 1960s, the city obtained funds to redevelop most of the city’s downtown as well as the nearby historic Mill Hill area.
The city’s downtown redevelopment strategies tended to focus largely on providing facilities for state government, reflecting the extent to which the city’s role as state capital was coming to outstrip its other economic functions. The city’s two major downtown urban renewal projects of the 1960s, which between them led to the displacement of over 2,000 families, resulted in the construction of a series of state office buildings, along with some 500 units of subsidized housing, adding little to the city’s economic base. A planned downtown shopping mall, for which the city acquired land and covered over a picturesque creek running through downtown, failed to materialize. Another significant effort to rebuild the downtown retail base was the conversion of two blocks of West State Street into a pedestrian mall, which opened in 1973. The mall was generally acknowledged to have made the already bad retail conditions worse, and the street was reopened to traffic in the 1990s.
In the late 1970s the city took the lead in creating the New Trenton Corporation (NTC), a public-private partnership modeled on the Harristown Development Corporation established in 1974 in Harrisburg. The mission of the NTC was to spur the economic development of the city and “bring the city back where it should be” (NTC 1977). In that same publication, the city highlighted 10 “milestone redevelopment projects” representing $156 million ($582 million in 2011 dollars) of investment. Six of the “milestones,” however, were state or city government facilities, three were publicly subsidized low-income housing developments, and the tenth was a publicly funded energy co-generation plant. None were true private investments, nor did any look to the private market for its success. Meanwhile, in 1978, three of the city’s few remaining major manufacturers closed, eliminating 1,000 jobs (Brenna 1979). The only private market success that the city could point to was Mill Hill, where the rehabilitation of historic row houses, public open space, and a modest amount of historically sensitive infill development led to the creation of an attractive but small downtown residential area. The area did not achieve true market vitality, however, until the mid to late 1990s.
Through the 1980s, the two principal prongs of the city’s redevelopment continued to be state government buildings downtown and subsidized housing elsewhere. The NTC faded out of the picture, but under Governor Thomas Kean, the state government began to take a more aggressive role toward its capital city, building three major state office buildings and using long-term state office leases as an inducement for private developers to build additional taxpaying office buildings, some of which also contained modest amounts of space for private tenants or ground floor retail space. Responding to the city’s lack of systematic planning during the 1980s, in 1988 the state legislature created a state agency, the Capital City Redevelopment Corporation (CCRC), whose mission was to develop a master plan for downtown Trenton and coordinate the state’s investment in that area. Although the CCRC still exists, it has never played a significant role (except perhaps briefly during its first two years of existence) in shaping the city’s downtown.
By the early 1990s state government had largely stabilized its Trenton footprint, and since then, there has been little growth in its building inventory. The 1990s saw the city adopt different strategies, in which public resources were used to leverage private investment unrelated to state government, including the conversion of a large part of the former Roebling Wire Works into a mixed-use complex, including retail and office space and senior housing, and the development of a downtown conference hotel under the Marriott flag.
In other areas, the city initiated a redevelopment strategy in the Canal Banks area north of downtown centered on mixed-income development for residential homeownership and established a manufacturing attraction and retention program focused primarily on encouraging the growth of small manufacturers already in the city. Over the course of four years, the city was able to assist over 15 firms, adding roughly 500 manufacturing jobs to the city’s job base. Reflecting the city’s continuing difficulties, however, those years saw the loss of Trenton’s last large “legacy” manufacturing plant, eliminating 800 jobs in one blow. The 1990s also saw the development by Mercer County of a minor league baseball stadium and an indoor arena, both of which were financed by the county through bond issues.
Some individual development projects, most planned in the 1990s, came to fruition in the 2000s, but little new activity ensued despite considerable developer interest during the first part of the decade. While a long-awaited new railroad station, replacing a rundown 1970s structure, was finally constructed, plans to create an office hub around the station stalled with the economic downturn. While the residential market appeared to be gathering steam during the first half of the decade, later events revealed that much of the seeming improvement was fueled by subprime lending and speculation. From 2006 to 2009 the number of residential sales in Trenton dropped by 60 percent and the median sales price by 55 percent. Meanwhile, the city continued to lose jobs as Mercer Hospital closed and the Trenton Times newspaper, for many years the city’s largest for-profit corporation, was downsized substantially.
It is not hard to fault many of the strategies and specific decisions by Trenton’s elected officials, planners, and business leaders, although one should hesitate to do so given the limited options available at the time. Even so, a strategy that did little but add state office buildings must be seen in retrospect as a poorly conceived one. Not only did the proliferation of state office buildings do little to enhance downtown activity, since the vast majority of state workers commuted from outside the city, but the construction of those buildings led to the removal of hundreds of older residential and commercial buildings, many of a scale and character that might have led to future downtown revival. In their place are an architecturally undistinguished collection of concrete and glass behemoths and a sea of parking lots. Roughly half of the total frontage of West State Street for nearly a mile through downtown Trenton is occupied by state office buildings.
All along, Trenton was at both a political and a legal disadvantage. With state government not subject to local land use regulation, the state could – and often did – build whatever it chose, wherever it chose. Many of the city’s efforts to further construction of state facilities can be seen not so much as its own initiatives but as strategies to gain a role in the siting and planning of buildings that would be built in any event while attempting to see that state facilities were built in the city rather than elsewhere. How much the city actually benefited from those efforts is uncertain.
Similar reservations can be expressed about the extent to which little housing other than publicly subsidized low-income housing was pursued; yet, at a time when funds for low-income housing were relatively abundant and the idea of market-building - that is, concentrating on rebuilding the housing market through strengthening consumer demand for the community’s housing stock - was not widely recognized as a strategy for urban revitalization, too harsh a critique would be inappropriate. Cities with far more resources and capacity than Trenton were also too overwhelmed by the effects of white flight and racial transition to mount market-oriented neighborhood strategies. Still, in retrospect, a strategy to mitigate some of the effects of those transitions might have paid off in subsequent decades.
Moreover, it is debatable whether the more intentionally market-oriented strategies of the 1990s were any more transformative. While the Canal Banks redevelopment, the reuse of the Roebling Wire Works, and similar projects improved parts of the city, they generated little in the way of spontaneous improvement or stronger market conditions outside the projects themselves. Similarly, while the largely low-wage jobs created in these projects were not insignificant, they at most blunted the trajectory of decline.
In short, for all the expenditure of time, effort, and money, Trenton was manifestly in far worse shape demographically and economically in 2010 than it had been in the 1950s. Whether it was in worse shape than it would have been without this expenditure can never be determined.

Background

As noted previously, achieving Trenton’s long-term economic development goals requires unlocking its potential. This can be accomplished by building off of the City’s strengths. This Report recommends focusing on simultaneously strengthening the three key pillars of Trenton’s economy:

  • the downtown,

  • the industrial areas, and

  • the neighborhoods.

Each of these areas has relatively unique challenges and solutions, but success in these areas will have a city-wide impact. Moreover, they represent three mutually reinforcing strategies for moving the city forward: make the downtown a destination to live and work, expand and enhance opportunities for industrial development, and support the growth of neighborhood commercial areas. The following provides detailed background on each of these sectors.
Downtown
As the economic engine of the city, Trenton's downtown must be a major focus for economic revitalization. Key economic development issues affecting the downtown and waterfront include:

  • a limited capture of retail demand,

  • limited downtown development and growth,

  • a fragmented arts and culture industry, and

  • a disconnected waterfront dominated by highway infrastructure and underutilized surface parking lots.

Downtown Retail
As outlined in the Trenton Citywide Economic Market Study, Trenton's weak downtown retail market is defined by significant gaps in retail opportunity due to both market conditions and negative perceptions of the city. Simply stated, there is demand for services, but the downtown does not provide the right business supply to capture these workers and its regional share of retail. As a result, shoppers either don't seek amenities in Trenton or are forced to go outside the city due to market limitations. While there is a surplus in some retail categories, downtown workers are generally leaving Trenton because there are not enough grocers, convenience stores, personal services, and general merchandise stores to serve their daytime needs.
Limited Growth
Compounding these downtown retail challenges, Trenton has experienced a prolonged period of limited development and business growth, and a lack of market-rate housing construction. Major investments in Trenton, including the Trenton Transit Center, the Sun National Bank Center, and Arm & Hammer Park have not attracted sufficient spin-off development. Few businesses have been created as a result of these facilities, and many businesses that do exist near these venues have not successfully capitalized on the foot traffic. Developable parcels near these facilities remain vacant or underutilized. Further exacerbating the challenge, many large parcels in key development locations - including the waterfront area - are owned by the state or county. These parcels remain extremely underutilized, unproductive, and generate no tax revenue for the City.
Redevelopment
In instances where the City has used redevelopment as a tool for sparking private investment, there have been mixed results. Various projects have been constructed, only to have been converted into office space for the state or county when no private sector tenants could be found. In addition, many plans have simply sat on the shelf, largely unsuccessful in advancing toward implementation. Interviews with stakeholders and City staff indicate several reasons for the lack of progress:

  • in some cases, these efforts have failed to meet state requirements for financial support;

  • in other cases, project visions were too large to be feasible;

  • a few efforts have lacked sufficient coordination between City leadership and developers;

  • lack of coordination between City departments and accountability to the plans;

  • some have been plagued by recent unfavorable market conditions for redevelopment; and

  • redevelopment sites have not been widely marketed to prospective developers due to limited budgets and staff resources.

However, market conditions are improving, particularly for residential development, and financing is increasingly available. As a result, market-rate development is beginning to occur in Trenton.
Arts & Culture
Arts and cultural organizations can be significant economic drivers in Trenton; nonprofit arts expenditures per capita in 2010 were higher in Mercer County than several nearby counties according to the National Endowment for the Arts. However, Trenton's primary challenge regarding arts and culture is the fragmentation of the industry. Despite having a significant presence in the city with a wealth of attractions and venues, Trenton arts and culture groups have not effectively communicated their efforts, including marketing/promotion, branding, and event coordination. In addition, several venues and facilities are significantly underutilized. Furthermore, Trenton has tended to focus its tourism efforts on its historical heritage more than its arts and cultural heritage. Funding to support the industry is a challenge as well.
Industrial Areas
Industry is another key component of Trenton’s economy and a significant economic development opportunity. A lack of industrial growth and development is another significant issue for Trenton, despite the city’s history as an industrial powerhouse, its relatively strong industrial workforce, and economic development trends pointing toward a resurgence of manufacturing. Trenton’s struggles to stimulate industry are the result of a variety of overlapping issues:

  • While the city has an abundance of abandoned industrial properties, many lack the physical characteristics demanded by modern industry. Most industrial businesses (particularly light industry) require large floorplates to accommodate their desired production plan. Parcels with characteristics sought by prospective industrial companies (specifically, parcels larger than 60,000 SF with adequate parking and good highway access) are difficult to find in Trenton.

  • Trenton has limited large, undeveloped, and "shovel-ready" sites available for industrial development. Sites that are vacant are often fragmented and owned by multiple entities, while properties that are available have not been well-marketed.

  • There is also a disconnect between Trenton's industrial workforce skills and business needs. Better matching the two for both existing and future businesses will require partnerships among the public, private, and non-profit sectors.

  • Finally, stakeholders have identified Trenton’s relatively inexpensive energy resources and water capacity as an asset. But those assets have not been effectively marketed as a means for attracting industrial businesses.

According to stakeholder interviews, in the past ten years manufacturing in Trenton has contracted due to the recession and sequestration. However, these same industries are now exploring ways to expand and are hiring new workers. As such, the time is ripe to support manufacturing expansion in Trenton.
Neighborhood Commercial Areas
A third major facet of Trenton’s economy is the neighborhood-level service economy that meets the needs of residents near their homes. It is in these locations that entrepreneurs and ethnic small businesses have an opportunity to flourish with the right assistance. However, Trenton's neighborhoods experience a variety of challenges impacting economic development. The Housing Report addresses the numerous housing impediments facing many of Trenton's neighborhoods; however, there are obstacles to the commercial realm that impact the neighborhoods as well. Specifically, there are a lack of resources and support to encourage the growth of retail and service amenities in neighborhoods. As a result, shortages in retail options exist in many categories throughout the city's neighborhoods, particularly in the West Ward. There, a significant lack of retail exists in almost every major category, including general merchandise, food service, clothing and accessories, and health and personal care. This area is also located farthest from shopping options outside the city and therefore should experience the least competition. The North and East Wards are also underserved but to a lesser degree than the West Ward, and have several similar opportunities for additional retail stores.

Relevant Goals

Overall Economic Development: Trenton will have a strong, diverse, and sustainable economy with a broad range of employment opportunities
Downtown Economic Development: Trenton's downtown and waterfront will be the economic center of Mercer County and the Central Jersey Region
Industrial Development: Trenton will attract employers to its industrial areas that generate comparatively high rates of job opportunities
Neighborhood Commercial: Trenton will have vibrant neighborhood business districts

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Vision & Guiding Principles

Read more about the community-driven vision for Trenton and find out how this was translated into actionable goals, initiatives, and actions.

http://trenton250.org/vision-guiding-principles
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