By Dave Gatton
December 9, 2002

Mayors, developers, real estate financiers and urban non-profit research organizations met in Washington, D.C. November 22 to discuss new ways for public/private cooperation in promoting more investment in American cities. The diverse group is part of the U.S. Conference of Mayors Council for Investment in the New American City, chaired by Detroit Mayor Kwame M. Kilpatrick.

The Council agreed to focus on promotion of metro economies as the engines of the nation's economic growth, development of new approaches for placing financial real estate services in underserved neighborhoods, and working with the retail community on new models for more accurately reflecting urban retail and commercial markets.

Kilpatrick was joined by Conference Vice President Hempstead Mayor James A. Garner, Conference Trustee Gary Mayor Scott L. King, and Urban Economics Chair Manchester Mayor Robert A. Baines. Council members included representatives from the Mortgage Bankers Association of America, Fannie Mae, Freddie Mac, the International Council of Shopping Centers, the National Association of Realtors, the Nehemiah Corporation, American Management Services, the American Institute of Architects and the Initiative for a Competitive Inner City.

Kilpatrick urged the Council and its members to work in the coming year to expand and further promote the Conference's U.S. Metro Economies series which annually releases the gross metropolitan product (GMP) numbers of the nation's 319 metro areas.

"When I go before business groups, state legislators, and other local officials and tell them that the Detroit metro economy is the tenth largest in the nation and the 37th largest economy in the world, people listen," Kilpatrick said. "Our U.S. Metro Economy reports show that cites are essential to the nation's future economic growth and therefore central to national economic policy," he added.

Garner announced plans for the Council to foster a closer working arrangement with the International Council of Shopping Centers (ICSC) that will provide mayors a greater opportunity to present development projects to ICSC's commercial and retail members. Garner said, "ICSC's leasing mall is where a large amount of commercial retail business and contacts get made in any given year." "Mayors need to be there and come prepared to sell their city in this competitive market place."

The Council had a lively discussion as to why some developers have overlooked significant inner city markets, even though recent trends suggest that major retail chains are returning to cities with successful projects.

Deirdre Coyle, Senior Vice President for the Initiative for a Competitive Inner City, told the Council that suburban models for analyzing inner city markets significantly understate the purchasing power of many urban neighborhoods. "We have to show the retail community that population density, not just average income, is a key factor that must be used in analyzing center city markets," she said. ICIC just released an analysis of four successful, new grocery stores in Boston, New Haven, Newark, and St. Louis.

"The models simply don-t work," said King, in response to the comment that some developers had to take a "leap of faith" to build in certain urban neighborhoods. Kilpatrick agreed saying, "if developers have to take a leap of faith, yet when they do, the project is wildly successful, then something is wrong with the upfront analysis."

Council members agreed that the topic should be further developed and discussed at its January meeting and that additional work should be performed on working with business to better understand the inner city consumer.

Daniel Russell, CEO of Invision Mortgage, Inc, presented a new business model for increasing minority homeownership. He said that in 2000 the total first mortgage home purchase demand for qualifying minority households exceeded $66 billion, but that it went unmet because of the inability to cross cultural divides and to make the necessary long-term financial investments.

Russell, who was a guest of the MBAA, indicated that financial services must be developed within the neighborhood, not from the outside. "Rather than reaching out to minority homebuyers, we need financial institutions that fully serves them in their community, located within their neighborhood," he said. Such an approach, Russell claimed, could lead to an expansion of other consumer financial services and products on competitive and fair terms, that currently often do not exist in underserved areas.

King, who introduced a resolution at the Conference's Detroit Annual meeting on promoting minority homeownership, said that promoting business models to expand financial services to city neighborhoods should be a key goal of the Council. "As mayors, one of the most important things we can do is to help families own their own home and have access to a broad range of financial services," he said. "Such an approach will increase homeownership in the long run, increase the financial standing of our residents, and build more stable communities."

The Council also addressed a broad range of tax incentives that could be a matter of discussion when the 108th Congress convenes in January. Baines, whose Committee overseas tax policy for the conference, discussed the need to push for adoption of a federal tax credit school construction program to help communities build or rehab public schools. "Before becoming mayor, I was a school principal," he said, "but many of our kids had to sit in classes with their coats on or take tests with their gloves on." "If we are really going to make education a top priority, then we have step up to the plate and acknowledge that we need more and better classrooms," he said.