Making It in Red Hook: An Inner-City Model?

November 28, 1994|By NEAL R. PEIRCE

Brooklyn, N.Y. -- Greg O'Connell is a Brooklyn native and ex-cop who's found a way to make business thrive in Red Hook, one of New York City's toughest neighborhoods.

In Civil War-era buildings set on finger piers jutting out into the harbor of Upper New York Bay, a site with stunning views of downtown Manhattan, Mr. O'Connell has created a home for 40 firms with a total of some 150 workers -- many of them ''locals'' recommended by a non-profit friend, the South Brooklyn Economic Development Corporation.

Anyone who says the inner city is unfit for business should consider this resourceful Irishman's tenant mix. He's attracted Isabelle Lam, an internationally known flatware and jewelry designer who manufactures both here and overseas. Flickinger Glass Works is the Big Apple's only firm that still bends glass. Technico, a marine supplier, runs a boat out to ships in the harbor, supplying them with almost every esoteric kind of light bulb produced around the globe.

The capitalist mix ranges from a firm that slices fresh apples to one warehousing pet foods. Mr. O'Connell has encouraged a trolley museum on his project grounds and hosts a yearly Brooklyn artists' show.

And when you ask him about crime, he says he used his detective's experience to create a well-lit area with wrought iron fences. In a city section notorious for crime, he's operated 12 years without a break-in.

The Red Hook property is living proof of the theory now expounded by Harvard Business School economist Michael Porter -- that inner cities have real competitive advantages, just awaiting more entrepreneurs.

Mr. Porter's blueprint -- a paper called ''The Competitive Advantage of the Inner City'' -- is now circulating among top urban officials and business schools. It advocates abandoning the familiar nostrums of social assistance, subsidized loans, tax and job credits, or trying to shame corporate America to return to America's most troubled neighborhoods.

Instead, says Mr. Porter, the answer is the free market. It's to identify the inner cities' inherent advantages, advertising their upside, so that enterprises new and old will voluntarily seek out urban locations -- not out of charity but self-interest.

A Greg O'Connell passes muster: He's financed his entire operation on sweat equity and a self-generated cash flow, never receiving a government subsidy.

Mr. Porter sees radically expanded possibilities when business schools and mainline capital institutions join such efforts. But what about government -- is it just a hindrance, or can it help? Mr. Porter's answer: It can start helping by clearing away regulatory mazes.

Example: Vacant urban lots and buildings often don't translate into affordable or easy real estate deals because of the nightmare of assembling appropriate-sized parcels from quarter- and half-acre lots. It took eight years, for example, to assemble the 21 contiguous parcels necessary to develop the Jeffery Plaza shopping center on Chicago's South Side. Many land sites suffer toxic hangovers; total cleanups are costly and new owners can be stuck with liability for old pollution.

A maze of city-imposed regulatory hoops, fees and delays often stand in the way of business development. Entrenched city bureaucracies may just not care about economic development. NIMBY (Not In My Back Yard) resistance in adjoining neighborhoods may slow projects.

The solution? Mr. Porter suggests local governments set up a single agency responsible for all aspects of city building, zoning and permitting inspections. A regulatory ombudsman would be appointed to assure fast handling of requests.

What about crime -- a prime reason firms shun city locations or move out? Mr. Porter suggests community policing, satellite stations serving commercial areas, and putting enough economic mass in one area to spread security costs and reinforce a perception of safety. Companies in touch with their communities, he found in multicity interviewing, have many less security problems.

But what about the existing network of community-based development promoters, especially the nation's some 2,000 community development corporations with their stellar record in quality low-income housing, in particular?

Mr. Porter started out disparaging CDCs, identifying them with local activists who viscerally oppose major business development. He doubted whether CDCs could put profit ahead of their social mission; conversely he worried they'd try to launch supermarkets or other big projects without sufficient expertise or business orientation.

But after viewing actual neighborhoods and talking with such prime CDC advocates as Rockefeller Foundation president Peter Goldmark and Local Initiatives Support Corporation president Paul Grogan, Mr. Porter's started to come around. He now respects CDCs' formidable deal-making skills to put complex housing deals together. He still believes most CDCs should leave the big commercial projects to developers and qualified entrepreneurs.

But Mr. Porter does see CDCs playing vital, complementary roles. They know real estate -- why not let them help out assembling properties for development? They know neighborhood people -- why not let them recruit workers for the new enterprises?

So maybe the free marketeers and the grassroots developers -- the folks who never gave up on the inner city in the first place -- can work together after all. If the collaboration clicks, then Greg O'Connell's Red Hook development may simply be a harbinger of an inner city economic renaissance waiting to happen.

Neal R. Peirce writes regularly on urban issues.

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