The following appeared in the Autumn 2015 edition of City Journal.
The western New York city should focus on getting better—not bigger.
Governor Cuomo says that the sight of cranes in the sky means that Buffalo is back—but is that really true?
In November 2014, newspapers in the Northeast filled their pages with astonishing images of a blizzard that buried Buffalo under seven feet of snow. This record-breaking storm was caused by a band of lake-effect snow a mere 20–25 miles wide. It seemed almost as if fate had decided, once again, to punish this long-suffering post-industrial city best known nationally for bad weather, chicken wings, and four straight Super Bowl losses—a place on which many have given up hope. “Can Buffalo ever come back?” asked Harvard economist and City Journal contributing editor Edward Glaeser of this perennially struggling region in 2007, in these pages (Autumn 2007). “Probably not—and government should stop bribing people to stay there.”
That was then, and, at least as New York governor Andrew Cuomo sees it, this is now. Thanks to the so-called Buffalo Billion—a pledge of $1 billion in state aid—Cuomo believes that the city is poised for a revival. “The signs of progress are undeniable and they are everywhere,” he says. “You see cranes in the sky again in Buffalo.” Mayor Byron Brown celebrated the initiative as “very effective.”
Is it true? Is Buffalo back? Sadly, no, and what’s more, Cuomo’s Buffalo Billion is “the hugest dose of corporate welfare upstate has ever seen,” Jim Heaney, editor of the Buffalo news organization Investigative Post, rightly observes. (U.S. Attorney Preet Bharara has opened an investigation into the bidding process for contracts connected with the project.) Even so, this city of 260,000 continues to play an important role as a regional center, and some good things are happening here. But Buffalo needs to abandon the idea of bringing the city “back” in the way that is commonly understood. Instead of celebrating cranes on the skyline, Buffalo should focus on being a better—not bigger—city, by restructuring its cost base, rebuilding core public services, and embracing the attributes that make it unique. If it takes that path, Buffalo could become a model of reinvention for dozens of similarly situated midwestern cities.
The opening of the Erie Canal in 1825 helped create Buffalo, making the city a key transshipment point for grain and goods heading east across the Great Lakes. Via the canal, those goods could navigate around Niagara Falls, traverse the vast expanse of New York State, and float down the Hudson River into New York City on a single barge. When railroads broke water’s monopoly on easy long-distance shipping, Buffalo adapted and became, for a time, the second-largest rail hub in America. Later, the city harnessed the hydro power of nearby Niagara Falls to invent one of the first cheap and reliable sources of electricity, earning Buffalo fame as the “City of Light.”
Its status as a transport and electric-power hub helped Buffalo become an industrial center, too. The city didn’t just ship or store grain; it developed into the largest grain-milling center in the country. Buffalo also began to produce steel in massive quantities. Firms like Lackawanna Steel were drawn to the city by its low-cost, nonunion, immigrant labor.
Buffalo’s competitiveness eroded because its unique advantages as a city fell victim to changes in transportation and technology. Rail, and later the interstate highway system, diminished the importance of water transport. The 1959 opening of the Saint Lawrence Seaway, connecting the Great Lakes directly with the Atlantic Ocean, delivered the coup de grâce. Goods bound for New York City—or beyond—no longer needed to be loaded and unloaded in the port of Buffalo. As cheap electricity became widely available, Buffalo’s unique hydropower resources lost value, too.
A variety of social and technological factors turned the once-sleepy cities of the American South into viable places to do business. Buffalo’s industrial base was old and inefficient, and its workforce, now heavily unionized, had become increasingly expensive. As elsewhere in what came to be known as the Rust Belt, this combination resulted in plant closures and mass layoffs. (A 2005 Cornell University study found that the Buffalo region lost 92,000 of its 180,000 manufacturing jobs between 1969 and 2003.)
Buffalo’s industrial decline left it not only without the jobs it once had but also without many of the world-class assets around which other postindustrial cities are today trying to build their futures. Detroit remains the center of the North American auto industry and boasts a major hub airport with plentiful flights to Asia. Pittsburgh is still home to many large corporations and Carnegie Mellon University’s world-renowned robotics and computer science programs. The Cleveland Clinic is a global destination for medical care. By contrast, Buffalo has no Top Ten–ranked academic programs or Fortune 500 companies and is not the center of any major industry.
As business dropped off, people started packing up. The city’s population peaked in 1950; the region began losing population in 1970, a trend that Cornell University’s Program on Applied Demographics projects will continue through at least 2040. While few people today are moving out, even fewer are moving in, leaving Buffalo in a sort of demographic cul-de-sac. It has the second-highest percentage of people who were born in their state of residence of any major region in the United States: 81.4 percent of area residents were born in New York State.
New York’s state and local policy environment has made everything worse. High-tax New York consistently ranks as one of America’s worst places to do business. Analyst Larry Littlefield writes that Erie County’s state and local tax burden amounts to 12 percent of income—low by New York standards but much higher than, for example, Pittsburgh’s Allegheny County, at 9.9 percent. New York also has the highest rate of unionization of any state, and public-sector unions wield considerable power, driving up costs for taxpayers and businesses. In Buffalo, where 76 percent of public school children are classified as economically disadvantaged, public school teachers enjoy a cosmetic-surgery benefit worth $5 million per year.
The core cities of Buffalo and Niagara Falls are plagued by many urban ills. As the child-poverty figure suggests, the city of Buffalo has one of the highest poverty rates in the United States. More than one-third of residents receive food stamps. The Buffalo metro area is one of the most racially segregated regions in the country. And Buffalo’s industrial past has left the region heavily polluted. The metro area is saddled with hundreds of toxic-waste sites; the Buffalo News identifies 174 state and federal Superfund sites in the region. These include the infamous Love Canal site, near Niagara Falls.
It’s not surprising, then, that while Buffalo has added 15,000 jobs since 2010, the city’s job-growth rate ranks third from the bottom among the nation’s 53 metro areas with more than 1 million people.
While Buffalo suffers many urban ills, signs of hope are visible. A nascent revitalization in select urban neighborhoods has prompted a flurry of articles depicting the city as a paradise for young, hip millennials priced out of Brooklyn. In Buffalo, “the urban dream life is going cheap,” New York said in 2008. More recently, Gothamist wrote that millennials could “live like kings” in the city, with huge homes and spacious apartments available for bargain-basement prices. Though exaggerated, these stories aren’t untrue—one can live in the city without spending as much on housing as one would in many other cities.
But no longer just cheap, Buffalo has followed the path of other smaller regions by dramatically upgrading its quality, too. For example, at a cost of over $40 million, the city renovated the historic Hotel Lafayette, which now houses businesses like Public, a top-quality coffee shop in the hotel’s beautiful art moderne lobby; Anatomy, a bespoke wedding-gown maker; and Groom Service, which carries luxury makeup brands otherwise not available locally. These and other firms are operating at a global-city standard, and the Internet, as it has done elsewhere, gives residents access to most of the same products on offer in those global cities.
These bigger-city trappings haven’t erased Buffalo’s local culture, however. On the contrary: in a world of cities that increasingly all feel the same, Buffalo offers a genuine sense of place. Massive silos continue to dot the cityscape. When the wind blows right, you can still smell Cheerios being made. The Buffalo chicken wing is alive and well, as is the “beef on weck” (a sort of salted kaiser roll). Sponge candy is a spring treat. Locals still prefer Weber’s brand mustard. And at Easter, Buffalo’s Polish community makes the trek back from the suburbs to the East Side’s Broadway Market for America’s biggest Dyngus Day celebration.
Other advantages include the Lake Erie coast—which, though it helps cause the city’s brutal winters, is a coveted recreational amenity in summer—and one of America’s best collections of historic architecture. Industrial riches left a legacy of masterpieces by Frank Lloyd Wright, Louis Sullivan, Daniel Burnham, and H. H. Richardson. Sullivan’s Guaranty Building, modern yet ornate, is a particular stunner; it shows what the American skyscraper might have been. The city boasts parks and parkways laid out by Frederick Law Olmsted, who immodestly proclaimed Buffalo “the best planned city in the United States.” Numerous intact neighborhoods are thriving, with good-quality streets and sizable prewar homes at those affordable prices. Many of the surrounding towns are likewise charming. Traffic in the metro area is manageable, and the regional quality of life is generally good.
The Buffalo–Niagara Falls region has all the lifestyle perks of a major metro area—a real airport, popular professional football and hockey teams, major hospitals, the Buffalo Philharmonic, and more. Less than 100 miles from Toronto, the metro area is one of the nation’s two biggest gateways to Canada. Niagara Falls is a global tourist destination. The Buffalo region serves as an educational, medical, media, and cultural hub for western New York.
Buffalo also has its passionate Buffalonians. Perhaps nowhere in my travels have I found a city with more true believers. Residents’ love for the city persists in defiance of all reality, such as staunchly maintaining that the weather isn’t so bad—even as it snows on Easter. This civic faith is a grace in its own right and a necessity for renewal. As G. K. Chesterton observed, “If men loved [the impoverished London neighborhood of] Pimlico as mothers love children, arbitrarily, because it is THEIRS, Pimlico in a year or two might be fairer than Florence. Some readers will say that this is a mere fantasy. I answer that this is the actual history of mankind. . . . Men did not love Rome because she was great. She was great because they had loved her.”
Cuomo’s plan to reflate the region’s economy with an injection of cash and incentives isn’t the boost that Buffalo needs, however. The city has effectively been on life support from Albany for years, and it has long enjoyed largesse from Washington, too. In 2004, the Buffalo News found that the city had been the top recipient, per capita, of federal Community Development Block Grant money in the country—$550 million—yet had virtually nothing to show for the investment. Add to that another $550 million that Buffalo spent on a light-rail line in 1985 that failed dismally to revive the city’s fortunes, and that’s over a billion dollars squandered right there. Beyond this “special” spending, rivers of recurring state aid flow to the region every year. Buffalo’s Erie County gets over $900 million more annually in state expenditures than it sends to Albany in taxes, according to an analysis by SUNY Buffalo State economist Bruce Fisher. It adds up to “a Buffalo Billion every single year,” he points out.
Growing cities become more cost-efficient as they add people and businesses, but shrinking cities face the fundamental problem of excess physical capital. “Declining cities are practically defined by having too much infrastructure relative to people,” says Glaeser. Cities like Buffalo find themselves caught in a downward spiral as their declining population drives up costs and taxes, which drives more people and businesses away—which, in turn, drives costs and taxes up yet higher. Reducing costs is the only way to break out of the spiral, but most cities in such circumstances do the opposite—spending big money to build even more stuff, making their cost profile still worse.
Buffalo has been adding physical capital—houses, roads, sewers, parks, and so on—much faster than it has been adding households and people. Local planner Chuck Banas observes that while Buffalo’s regional population today is roughly the same as it was in 1950, the urbanized footprint of the region has tripled. “Same number of people, three times as much stuff to pay for” is the quip—and it’s true. Physical capital must either be maintained at great cost in perpetuity or ignored and allowed to become a drag on the city. Between 1980 and 2011, according to the University of Buffalo Regional Institute, Buffalo-area governments issued permits for almost 60,000 new single-family homes—while regional population declined. Given the gargantuan scale of state aid to the region, this is clearly not market-rate development.
While Buffalo’s urban advocates agree that investing in sprawl is misguided, they’re less critical about new construction in the urban center. The city’s $550 million light-rail line was an epic civic folly, yet Buffalo is currently reconstructing a downtown station on the line. More ill-conceived spending lies ahead. The region’s long-range transportation plan projects a need for an additional $100 million in capital expenditures through 2040, just to keep the existing line running—plus more operating subsidies every year. Seen in this light, neither cranes on the skyline nor bulldozers paving the countryside are necessarily good signs for Buffalo.
Alas, the centerpiece of the Buffalo Billion plan is a $750 million state investment (yes, three-quarters of the whole plan) in a 3,000-employee solar-panel factory for SolarCity, inventor and entrepreneur Elon Musk’s firm. Musk has certainly proved adept at obtaining taxpayer subsidies—at least $4.9 billion so far, according to the Los Angeles Times—and this deal is no exception. The mammoth size of the subsidy to one firm is troubling enough, but SolarCity is currently under federal investigation for improperly claiming stimulus credits, and a Taxpayer Protection Alliance study compared the company with Enron. (Oddly, neither New York’s 2011 “Strategy for Prosperity in Western New York” nor its “Buffalo Billion Investment Development Report” even mentions solar panels or subsidizing large manufacturers.) Pumping so much money into one risky enterprise creates significant reputational risk for Buffalo if it fails.
Another project partially funded by Buffalo Billion money is a new medical school for the University of Buffalo, which will move to a $375 million facility near downtown. This is exactly the kind of new infrastructure that the city doesn’t need. With an aging population driving demand for health-care services, an expansion of the medical center might seem to make sense. Yet though the number of 85-and-over residents will keep rising for a time, its elderly population will start shrinking in the not-too-distant future. Within a few decades, at most, these expanded health-care facilities will be the next oversize piece of infrastructure that Buffalo struggles to support.
The medical-school project illustrates Buffalo’s tendency simply to move pieces around on the chess board at great public cost. Having previously paid to remove cars from its downtown Main Street for a transit mall in connection with the light-rail line, Buffalo is now spending $30 million to reopen the street to cars. Leaving its old offices just as its subsidized lease expires, Delaware North Companies is building a new government-subsidized headquarters downtown—even as Buffalo’s tallest skyscraper stands empty. Taking Delaware North’s place at the old building is IBM, lured with $55 million in Buffalo Billion funds.
That’s not to say that all the Buffalo Billion–funded or other regional projects are flawed. The region has legitimate potential as a tourist destination. It has long been known that the U.S. side of Niagara Falls is far less attractive than the Canadian side. It makes sense to allocate some public money, as the Cuomo plan does, to remedy this imbalance. So does trying to market additional regional destinations to people already visiting the falls. The creation of the Buffalo Manufacturing Works, an applied research and development organization for advanced manufacturing, is probably also a solid Buffalo Billion investment. The area still has a significant amount of manufacturing, and this organization will help those companies remain competitive in a tough global economy. The business-plan competition and accelerator program 43North, another beneficiary of state support, is similar to the type of initiative that Buffalo’s peer cities are using to promote entrepreneurship. These smaller programs, however, are likely to be overshadowed in the media by the Buffalo Billion’s headline-grabbing corporate-welfare deals.
If not bribing businesses and putting up buildings, what should Buffalo be doing? Like other cities in its circumstances, Buffalo must find ways to create a psychology of civic improvement that isn’t rooted in signs of physical growth. This is difficult because Americans have a culturally ingrained tendency to equate improvement with expansion. The cranes in the Buffalo Billion logo reflect this outlook.
There’s good news on this front: Metro Buffalo’s economy shows real signs of life. Regionally, per-capita GDP has increased 18.7 percent since 2001 (adjusted for inflation). Similarly, the Buffalo metro area has increased its percentage of residents with college degrees by 6.4 points since 2000. It improved its percentage of young adults aged 25–34 with degrees by 7.1 points. For both overall and young-adult educational attainment, Buffalo gained ground versus the country as a whole.
Buffalo should put a moratorium on public funds for new or expanded infrastructure in the city and the suburbs. In other words: cancel all the envisioned highway improvements from the regional transportation plan, and allocate no further public money to additional greenfield development. Buffalo needs to let the market discipline investment. Buffalo should stop all spending on economic development except in areas where the city has a legitimate world-class or highly unique asset that it can leverage—whether that’s tourism, U.S.-Canadian trade, the Lake Erie shoreline, or historic architecture.
Distinctiveness is the source of all competitive advantage, and Buffalo has strengths here: it should preserve the positive traits that make it identifiable. Chicken wings are the city’s strongest brand asset. Too often, places attempt to downplay such humble local items in order to trumpet generic hipster elements to prove their big-city bona fides. This is usually a mistake—and certainly would be, in Buffalo’s case. Other elements, like the abandoned grain silos, may not have an obvious use today, but there’s no reason to spend money to get rid of them. Such unique structures should be preserved or mothballed where possible, as they are an evocative feature of the city. University of Illinois art history professor Robert Bruegmann writes that “stewardship of historic heritage can play an important role in reminding everyone of the specific qualities of a place that made it successful in the past—and perhaps can be built upon to craft a better future.”
With one of America’s oldest housing stocks, Buffalo has a serious problem with lead-based paint. The Investigative Post found that children test positive for lead poisoning here at a rate three times the state average. State funds would be well spent on lead-paint abatement and other high-priority environmental cleanups.
Buffalo would be helped by the demolition of its thousands of vacant houses. Care should be taken to avoid destroying genuinely historic homes; but in a shrinking city, a surplus of housing units will be an ongoing drag on home prices, to say nothing of the problems that vacant homes create in their own right. But demolition will help Buffalo solve its fixed-cost problem only if the city ceases building thousands of new subsidized houses that it doesn’t need.
The entire Buffalo region needs to rebuild core public services. The city of Buffalo suffered 62 murders last year, for a murder rate of 18.7 per 100,000 residents—more than four times higher than New York City’s. The Investigative Post found that only 39 percent of murders since 2010 have been solved. The picture is no better for other serious crime. And it is mostly the poor and minorities who are victims of crime in the city. Public safety is the sine qua non of urban revitalization, and Buffalo is doing a poor job of maintaining it. Mayor Brown, a Democrat first elected to the office in 2005, says that he supports Broken Windows policing; but clearly, results need to be better. Additionally, while the government can’t easily create jobs for Buffalo’s poor, it can strengthen the basic services on which they rely. Old-fashioned bus service is much more important than a fancy rail line. Neighborhood parks are critical recreational amenities for city residents who can’t afford summer homes or vacations in the country.
While there’s not much that Buffalonians can do about New York State’s onerous tax regime, they can do plenty to reform and simplify the city’s tangled regulations. Catherine Tumber’s description in The Baffler of the city’s current sign-permitting process makes clear how stifling the Buffalo regulatory regime has become: “After paying a $75 application fee, [a restaurant owner] needs permission from the commissioners of inspection services and public works, and then must post a $5,000 performance bond to the city controller, protecting the city from liability. At this point, the sign display requires approval from the Common Council.” And for all that, the approval is only good for 30 days.
Fortunately, reform may be at hand with Mayor Brown’s Buffalo Green Code—a complete rewrite of the city’s 60-year-old planning and zoning rules, along with a brand-new zoning map of the city—which has been in development for five years and will shortly go before the city council. Though its name implies environmental concerns, the focus is not on conservation but on simplicity. The new code runs only 350 pages, down from 1,500. It will make it vastly easier to build, open a business—or even put up a sign.
Ultimately, it might be the tenacious faith of Buffalonians in their city that sees it through an extended transition period. This deep civic spirit is an underappreciated asset. And, leaving emotional identification aside, Buffalo’s size, institutions, and status as a regional capital mean that it has the scale to be a viable city. But rather than trying to recapture industrial grandeur or reignite expansion, Buffalo must get better without getting bigger. Those who love and choose the city must do so for what it is, not for what it might be if massive money is spent attempting to transform it. Buffalo will be “back” when it transitions to a smaller—but ultimately, more financially sustainable—model and refocuses on its role as a quirky regional center with steadily improving civic functioning and quality of life.
If Buffalo does that, it could become as much a leader in creating a viable postindustrial city as it was in the industrial past. In a new psychology of civic improvement, that’s not a diminished future but a hopeful one.
Aaron M. Renn is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.