Sunday, December 07, 2003

By Ed Blazina, Pittsburgh Post-Gazette

Pennsylvania is spending plenty of money on economic development, but it's spending it in the wrong places.

The effect is that people have been encouraged to move into outlying areas and abandon urban and suburban centers.

	For information The full study is available on the Brookings Institution Web site. Sustainable Pittsburgh will host a presentation of the study from 8 to 10 a.m. Tuesday at the Omni William Penn Hotel. For more information, call 412-258-6643. Related articles The view from outlying areas on Brookings study: Some agreement, some discord Leadership can solve problems, URA's Birru says Brian O'Neill: Tax break could help revive old neighborhoods

And that's been more prevalent in Western Pennsylvania than in other parts of the state.

To counter that trend, Pennsylvania should reinvest in its older, established communities, the kinds of places where young adults want to live, or it won't be prepared to participate in the emerging global economy.

Those are some of the conclusions of a yearlong, 120-page study released today by the Brookings Institution Center on Urban and Metropolitan Policy. The center, which was hired by the Heinz Endowments of Pittsburgh and the William Penn Foundation of Philadelphia, will present its findings at 10 forums across the state this week in an attempt to develop support for its conclusions and to build a lobbying base to try to change state laws and policies.

The sweeping study, performed by urban center director Bruce Katz, is called "Back to Prosperity: A Competitive Agenda for Renewing Pennsylvania." Katz found that Pennsylvania ranked fifth in the nation in development spending per capita. But the state spends too much of that money to support expensive new development in outlying areas instead of reinvesting in older, established ones.

Pennsylvania's outward migration is different from sprawl in other parts of the country, Katz said, because no one is replacing those who move out of established areas.

As a result, with Pennsylvania lagging at 48th in population growth from 1990 to 2000, the state is following a "hollowing out" pattern. That means older, established areas are being abandoned or ignored, ruining the tax base in established areas that already have infrastructure and causing huge expenditures for infrastructure in outlying areas.

Katz called the state's practice of spending a disproportionate share of its resources in less developed, less populated areas "confounding."

"Something is extremely wrong with that picture," Katz said. "We should make it as easy to develop in the urban areas as it is in the greenfields. You can't build a competitive future by sprawling and abandoning.

"There are very few regions that have succeeded when they abandoned the core."

The state could make major strides toward rebuilding its economy within 10 years if it changes its spending patterns; develops a unified vision of its future; engages in more cooperative planning and eliminates red tape; and concentrates on already-successful enterprises such as higher education and health care, Katz said.

	What is Brookings? The Brookings Institution is an independent, nonpartisan organization devoted to research, analysis, education and publication focused on public policy issues in the areas of economics, foreign policy and governance. The organization was hired to study Pennsylvania's economy and spending for economic development by the Heinz Endowments of Pittsburgh and the William Penn Foundation of Philadelphia. Through its Center on Metropolitan and Urban Policy, the organization previously has done studies on the possible consolidation of city and county government in Louisville, Ky., and state economic policies in Missouri. The agency's other divisions have done studies on federal government programs, foreign policy and social services.

The Rendell administration said it generally agreed with the study's findings and noted that the governor's proposed $2 billion economic stimulation package is aimed primarily at revitalizing existing areas.

For purposes of the study, the center divided the state into two classifications -- one group includes cities, boroughs and first-class townships (those with populations of more than 300 people per square mile); and the other is made up of second-class townships and more rural communities with less than 300 people per square mile.

The study's main findings were:

About 72 percent of the 553,000 houses built in the 1990s were in second-class townships, where the population increased by 12 percent in the 1990s, while population in most other parts of the state declined.

Despite its meager population increase, Pennsylvania has been developing land at an alarming rate, ranking second in the country. From 1982 to 1997, Pennsylvania developed 3.9 acres of land per new resident. Wyoming ranked first with 5.64 acres for each new resident; South Dakota ranked third with 2.33 acres. The state developed 1.14 million acres during that time, one-third of the land developed in the state since the 1790s. The five-county Pittsburgh metropolitan area had an even higher rate, developing 8.3 acres for each new resident.

The state's proliferation of small, local governments and authorities -- Pennsylvania has more municipalities, 2,633, than any state except Illinois (2,824) and Minnesota (2,734) -- creates too much red tape for developers. For example, it takes 19 to 24 months to receive approval for a land development plan in Pennsylvania compared with 60 to 90 days in neighboring Maryland.

PennDOT spends 58 percent of its bridge and road construction money in outlying areas where 42 percent of the state's residents live, encouraging the outward migration.

Of the $863.7 million the state spent in three economic development programs from 1998 to 2003, it spent $71.11 per capita in undeveloped areas and $68.81 in developed areas.

Younger people have left in droves, with 7.2 percent of those between 15 and 24 in 1990 leaving by 2000, severely undermining the state's work force and contributing to the "brain drain" of educated residents. At the state's two most prestigious universities in urban areas, 17.4 percent of students at the University of Pennsylvania and 27.7 percent of students at Carnegie Mellon University remain in Pennsylvania after they graduate.

The outward migration has left a disproportionate share of minorities and poor people in established areas, which makes it even more difficult for those areas to expand their tax base.

The decline in manufacturing and heavy industry caused a major shift in employment and a decline in wages. In 1970, manufacturing accounted for 30 percent of the state's jobs and the service industry provided 19 percent, but that almost reversed by 2000, with 34 percent of jobs in services and 14 percent in manufacturing. Many of those service jobs have been established in outlying areas and pay less than manufacturing jobs. Overall, the number of jobs in Pennsylvania grew by 11.4 percent from 1992 to 2002, far below the national average of 20 percent.

Development in outlying areas also is more expensive than reinvesting in established areas, Katz said. He projected that, unless policies change, the state would pay nearly $1 billion to build roads and sewers in outlying areas, far more than it would cost to upgrade facilities in existing areas.

Despite all of that, Katz stressed that the state had the ability to correct its economic problems. He said the best way would be to concentrate on its attributes -- strong, established communities with good infrastructure; the state's natural beauty and location; good corporate leadership; and strong education and health facilities -- and develop a coordinated plan at the state level to reinvest in older communities.

"The good news is that all of these things can be reversed," Katz said. "If we found the state was following all of these recommendations already and spending money in the right places and still nothing was happening, then I would be concerned. But it hasn't been doing the right things."

Katz said the state had a good program to encourage the redevelopment of brownfields, but that there hadn't been enough money to address the huge number of former industrial sites. That money would be available if the state changes its spending patterns, he said.

The Heinz and William Penn foundations wanted the study because each uses part of its $1 billion in assets to support economic development.

"We are concerned about the economic competitiveness of the state," said Kathy Engebretson, president of William Penn Foundation. "I think the study will be a really useful tool. What we'd like to see is an action plan developed to set a statewide agenda."

Caren Glotfelty, director of environmental programs at the Heinz Endowments, conceded some of the study's conclusions and recommendations might not be popular in some areas. But she said the foundations had begun working with organizations such as 10,000 Friends of Pennsylvania and Sustainable Pittsburgh, which both encourage smart growth and economic development, to build a coalition of leaders to support changes in state policy and laws to allow reinvestment in established areas.

"I do think the role of philanthropy is to move society in a way it doesn't necessarily want to go," Glotfelty said. "What we have to do is get local governments to think outside their boundaries."

Kevin Ortiz, a spokesman for state Community and Economic Development Secretary Dennis Yablonsky, said the study's recommendations confirmed goals that are "incredibly important" to the state.

He said Gov. Ed Rendell's economic stimulus package would use $2 billion in state funds to leverage about $5 billion in private investment in established areas.

"The report generally aligns with the vision that the governor and Secretary Yablonsky share for redeveloping existing areas," Ortiz said.

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