Tuesday, March 20, 2007

Downtowns and Prosperity

From an article in The Economist:

San Jose has attempted to create a commercial heart by selling city-owned land or even giving it away to developers. The city offers tax breaks and uses a portion of the property tax to pay for improvement projects. Since the late 1970s the redevelopment agency has shelled out $2 billion, almost two-thirds of it on downtown. It has built museums and theatres to lure people to the centre. Trams have been supplied to entice them out of their cars.

Such largesse has indisputably made the middle of San Jose more appealing than it used to be. By any measure other than an historical one, though, the campaign has been a failure. The office vacancy rate in downtown stands at 21%—higher than it was four years ago, during the dotcom slump, and almost twice as high as the Silicon Valley average. The theatres, which were supposed to lift downtown, now depend on the council to bail them out of trouble. In a city of 912,000 people, just 30,000 passengers ride trams each day. All this in a wealthy metropolis that has higher house prices than anywhere else in America, according to the National Association of Realtors.

Despite its anaemic condition, most visitors to San Jose at least know where downtown is. That is not the case in Las Vegas. The historical centre, with its string of small casinos and its neon cowboy, once seemed glitzy. It is now a shadow of the Las Vegas Strip, which has grown dementedly since the late 1980s, building ever larger, more exuberant hotels. Despite offering better odds than their competitors, the downtown casinos took in $630m last year, compared with $6.7 billion on the Strip. And they are the brightest spots in the area. Beside them lie cheap motels, shuttered shops and bail bondsmen.

The article is titled "Where the lights aren't bright." It is worth reading.

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