Former Atlanta Georgia Mayor Maynard Jackson is a legend in minority political circles because he so skillfully used the power and permission of municipal government to create wealth among African American businesspeople. You might think that with the emergence of Black mayors all over the nation the Jackson model would have been repeated over and over. Unfortunately that has not been the case. We don’t want to speculate as to the reason or even postulate whether or not the model is still relevant or appropriate. What we do know is that it was short lived and nothing effective has replaced it.
So what is happening in Newark? Initial steps are being taken to help establish minority builders and developers as an economic force. But much more can be done if we allow our creativity to blossom. It generally takes a very long time for a new developer to generate real wealth. And in today’s real estate market the prospects have dimmed considerably. Real estate development as a pathway to wealth is fraught with roadblocks. We must pursue other avenues if we want to give Newarkers a shot at the really big bucks.
In the meantime here is an idea that our community might pursue with municipal support: The creation of a “Resident Taxpayer Real Estate Trust” open to investment by resident taxpayers of Newark. Residents who would accumulate wealth through the development of their city would own such a “Trust.” As tax paying property owners, we are already investors in the development of our city. Particularly since new developers are frequently exempted from taxes as an inducement to develop. Whenever that happens taxpayers pick up some portion of the financial burdens created by these new developments. If the municipality would agree to use available incentives to encourage all developers to joint venture with the “Resident Taxpayer Real Estate Trust,” the development of Newark would necessarily benefit Newarkers. The legalities and details of how such a “Trust” would come about or operate rely upon details better left to experts. We are positors. Our idea would not generate gobs of cash for any individual. But it would provide real opportunity to cash in on the red hot redevelopment of their city, substantially increase overall community wealth and cause an uptick in resident commitment to Newark.
Imagine the energy that could be unleashed among citizens if they knew that they could literally own a piece of their city. With every skyscraper and shopping center that went up, their wealth would increase. Their investment in their city would lead to an increase in pride, concern and public participation. It is not likely that resident investors would harbor a casual attitude toward anti-social behavior or mediocre and failing institutions. The establishment of such a “Trust” could even trigger a burst of enlightened in-migration. More importantly residents might be motivated to invest and learn about how money works to drive development. Terms like capital formation and dividends might become commonplace among common people. Just suppose for a minute that the reality of ownership could tamp down consumer tendencies and give birth to notions of commercial productivity. With such luck, we could actually stumble into the creation of a class of entrepreneurs.
Surely some will say we can’t create a “Resident Taxpayer Real Estate Trust.” They will support their case with arguments that protect their interests. We believe there is a way to accomplish this idea. The application of serious thought fueled by the will to change creaky paradigms is all that is required.
Others will question: What of tenants who are not property owners? Our view is that they are second tier taxpayers and as such accommodations for their participation should exist.
A friend of ours recently reminded us that the residents of Green Bay own the Green Bay Packers. While mulling that over we wondered had there been a moment, during the negotiations that sent 220 million of Newark taxpayer dollars to the New Jersey Devils, when it occurred to someone that the arena might have provided an investment opportunity for residents?
A community trust could certainly emerge without the support of government but its potential potency would be far less likely to be realized. On the other hand if the government had the foresight to view supporting the development of a resident (community) based financial business as they might a local developer or construction company, we could turn an important page in the concept of wealth creation among indigenous Newarkers. We think it’s worth consideration.
February 13, 2008