Steven Torres, Corporate Counsel of the City of Fall River, visited our Affordable Housing and Community Development class with Professor Freeman to guest lecture about urban redevelopment. He mentioned a recent eminent domain case involving the picturesque, waterfront property of Sam Shapiro’s United Textile Machinery Corp., a third generation small business of 10 employees. Relocation of United Textile was forced by a City of Fall River taking for multinational information system specialists Meditech. This private company projected that it would hire 500 new employees, primarily from nearby UMass Dartmouth, Bristol Community College and Bridgewater State College.
One can imagine those students, much like in our class, sympathizing with Mr. Shapiro’s resistance against Meditech’s muscle from a comfortable academic distance. One can also imagine many of those same students jumping on job offers from the deeper-pocket company upon graduation. Mr. Shapiro, incidentally, got $1.3M for 4.6 acres after a $300K withholding for environmental remediation from the $1.6M appraisal. I’m unclear about how much of his compensation trickled down to his 10 employees.
I hold nothing against a hypothetical Fall River-area student who might be pro-private property in theory but pro-economic takings in practice. At issue is economic revitalization. According to the US Census Bureau, MA as a whole has 10% of its population under the poverty threshold, while for Fall River, that statistic is 19%. Maybe the community should come along side United Textile as a locale-defining business that can be modernized and scaled up to contribute to economic revitalization. That’s a pedestal for someone to die on, and I don’t say that in a bad way, because I’m all about dying on pedestals if the cause stirs me. But then again, maybe textiles are the industrial past of Fall River, in decline since 1925, while medical technology is the innovative present along with neighboring business Advanced Technology Manufacturing Center.
This line of reasoning is cold, but it matters in the pressure cooker of economic revitalization. Meditech arrived on the scene with 50X the local hiring capacity of United Textile. Meditech is Fall River’s significant other in a public-private partnership for job creation. That’s an economic engine that we as a society know how to run. I make that comment more out of recognition than affirmation as I sort out the role I will play. We desperately want to churn out jobs smoothly even if we feel mixed about the mechanics.
Speaking of jobs, if a Fall River resident really wants to move up the food chain, working for Meditech is change in the pocket compared to structuring the Meditech deal and others like it. The law firms taking care of documents on such deals eat the poverty threshold for breakfast. Where there is tax credit-subsidization, its complexity adds layers of transactional work on which lawyers can feast. Then there is litigation on the transactions, with Mr. Shapiro still in the courts about whether the cash he received was enough to satisfy the “just compensation” that property owners must get after a taking. The projected 500 Meditech jobs were in the $30-50K range, which pales next to both the median private sector starting salary of BU Law graduates ($148K) and even the estimated annual student budget ($62K). Indeed, the overlay industry of economic revitalization produces its own concentration-of-wealth patterns.
Everyone I’ve met who does revitalization work is doing it to be helpful not predatory, and I’m joining that crowd. But communities might be surprised to know how much of the money directed at their revitalization ends up with those who navigate the financial complexity of it all and take their cut. The outcome is uncomfortable: the intended beneficiaries to economic revitalization do not benefit as much as those structuring the revitalization.
In some sense, two financial worlds are maintained. One runs on payroll, spending and savings. The other runs on leveraged investment, tax benefits and returns on investment. Across these two worlds, we’re not just talking about a spread in who can afford a transit pass vs. a used car vs. a luxury car. We’re talking about a spread in education, housing and health outcomes for whole families, as well as in the self-determined choices that the realities of life give us permission to make. That means the economic engines we know—a medical technology park replacing a textile warehouse, and a financial products industry with specialists on the deal—don’t work for everyone even when they’re working. Let’s get some new engines running while we get all the miles we can out of the ones we have.