By Peter I. Berman
Letter to the Editor
Mayor Rilling has convened a Business Advisory Council to help select a new economic director to replace Tad Diesel, who served for eight years. Many see this as a positive development, but there are some concerns. None of the members have business development experience, especially small business development.
The critical element – it’s unclear how Senator Duff, the city’s senior Democratic politician, adds to the mission, nor is the Council authorized to use the services of a professional search firm. The recent use by the BOE of a professional search firm in securing a prominent superintendent ought to have served as an example to the city’s politicians of the importance of using capable search firms in securing top talent. None of the advisory members appear to be business development professionals.
Like all previous office holders, Mayor Rilling seeks to enhance business in Norwalk for the obvious reasons – boosting the grand list to ameliorate the city’s punitive property tax levels, encourage new jobs and enhance our long stagnant property values. Decades of failed redevelopment so visible from I-95 continue to degrade the city’s image and reputation. Looking back over recent decades, the city has largely remained unchanged, save for the Big Boxes on Route 1 and additional rental housing. According to the most recent U.S. Census, fully one-third of the city’s population lives in rental housing, thereby enhancing the city’s reputation as a highly transient community.
Suppose we had the mayor’s ear on economic development. What might we suggest? Rather than focus on luring “big names,” the city should encourage and assist small business development for a variety of reasons. An advisory council of small business owners, rather than “big names,” would far better serve the community. Prior to the Big Box development encouraged by the city’s politicians, Norwalk did have a vibrant small business community whose proprietors were mostly city residents active in city affairs. Today, after the Big Box invasion, the city’s small business is mostly food establishments plus the usual assortment of professionals (physicians, attorneys) and services. The entrepreneurial energies of the city’s rapidly changing demographics and new immigrants ought to be encouraged by city, not discouraged by punitive property taxes.
Rather than an economic development director, the city mostly needs a “small business facilitator” who can assist in getting through the red tape, permits, etc., that oft frustrate would-be small business owners, especially those starting their first business ventures. Moreover, the city might well consider modest tax credits to assist small business development, and even go so far as listing on its web sites available commercial properties in a central listing. And be far more aggressive in seeking the potential advantages of our local community college in encouraging small business entry.
Over the long run, nothing is likely to have as positive effect on encouraging business development as regaining control over the city’s finances. It doesn’t take financial expertise to realize that a city with median household incomes of only about $70,000 paying the highest municipal salaries of any city in Connecticut is surely overtaxed. Readers of the recent Arbitration Panel Report can learn the details of how our property values have been negatively impacted by excessive municipal salaries. High property taxes relative to surrounding communities are a continuing discouragement to new business formation. Since Mayor Rilling has studiously avoided mentioning providing tax relief and getting control of the city’s budget either during the campaign nor since being elected, one can’t be encouraged that securing property tax relief will be achieved during his tenure.
At day’s end, Norwalk has long remained a transient residential community, one-third of whom are renters, with local government as the largest and best paying employer and where most residents commute to the better paying jobs outside the city, mostly in Stamford. Surrounded by highly prosperous towns with among the very best public school systems in the nation and with neighboring Stamford – the state’s only truly successful major city – Norwalk does not have a comparative advantage likely to attract major new business.
Big Box enthusiasm really represents Norwalk’s failed business development strategy. They largely destroyed our once-thriving small business community, pay only modest property taxes and brought unparalleled congestion on our major arteries. Big Box employees can hardly afford our median $7,000 property taxes and largely commute from out of town. Yet Big Box enthusiasm remains. After all, what are the alternatives? Other than more rental housing.
But Norwalk could do much better if the city’s politicians fully understood the crucial linkage between small business development and property taxes in our high cost environment. Norwalk’s politicians have been far more energetic in responding to the demands for higher salaries by city workers than the appeals for lower property taxes by homeowners and small business interests. A city that pays the 5th highest public school teachers in the state despite ranking only 19th in income is unlikely to attract new business – large or small. So far Mayor Rilling has given no indication that he appreciates the link between the city’s excessive property tax rates and reluctance of small business to energize in Norwalk.
There is a large literature on municipalities encouraging business development. Far and away the single most important element within control of municipal officials encouraging new business development is encouraging a favorable property tax arrangement. As long as Norwalk’s politicians ignore that basic reality, the city will continue to discourage business development – small and big.
More Big Boxes and more rental apartment buildings are Norwalk’s future. Unless and until the city’s politicians understand the crucial linkage between comparative property tax levels and business development. The evidence is around us. Our surrounding communities have few empty stores, more friendly property tax arrangements and far more healthy real estate market.
If Mayor Rilling wants to have a lasting positive effect on Norwalk, he will need to focus on the crucial linkages between small business development and property tax levels. Promising “more respect for city employees” is exactly the wrong message to encourage business development. Higher salaries and the ever-higher property taxes to maintain those excessive salaries is precisely the wrong message to send to the business community. And if the mayor wants to secure a first-rate economic development officer, he’d have far better prospects with a professional recruiting firm than the recently convened Business Advisory Council including Senator Duff. How many new businesses have Council members recently started?
Peter I. Berman