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As Schenectady Rusts, Experts Fear Policy Inertia

By LYDIA POLGREEN
Published: December 29, 2003

When Samuel S. Stratton became mayor of the Electric City almost 50 years ago, about 27,000 people worked at the General Electric plant at one end of Erie Boulevard and thousands more worked at the other end, at the American Locomotive Company. On Thursday nights, when the shops stayed open late, a human tide gushed onto State Street, and Mr. Stratton glad-handed voters as they thronged to the vaudeville theaters, elegant department stores and bustling restaurants that lined the city's busiest street.

In November, his son Brian was elected mayor. But the city the younger Mr. Stratton inherits is a shadow of the one his father, who went on to become a powerful congressman, once governed.

It has lost a third of its population. General Electric, which once defined this city, has moved tens of thousands of jobs elsewhere, and ALCO is long gone, having closed the Big Shop, as its locomotive works were known, in 1968. State Street is now a ghostly shell: empty storefronts stand between pizza parlors, a dollar store and a discount clothing shop.

In November, Moody's Investors Service downgraded the city's bond rating from Ba1 to Ba2, the lowest in the state. Only 11 other municipalities and school districts in the country, including the town of Cicero, north of Syracuse, are rated as low.

Schenectady's tale is in some ways a familiar story of Rust Belt decline. But experts on urban policy say its story also illustrates something else: how New York State, in many ways the quintessential urban state, has no real plan to save its cities. So Schenectady's long decline and uncertain future in some ways is not just its own story, but that of cities across the state.

It was not always this way. From 1886, when Thomas Alva Edison brought his manufacturing operations to this bend in the Mohawk River, the Electric City cranked out innovation, from the television to the Monitor Top refrigerator. At G.E.'s employment peak during World War II, 40,000 people worked at the factory.

Today it is a city that is too small for its britches. From its opulent marble City Hall on North Jay Street, built in 1931, to the outsize Roman Catholic Church, St. John the Evangelist, on Union Avenue -- built in 1904 to accommodate thousands of Italian, Irish and Polish immigrants -- to the row upon row of wood-frame houses in now-dilapidated neighborhoods, the physical dimensions of the city overwhelm its current occupants.

''We're a city built for 100,000 people that only has 60,000 people,'' said Marv Cermak, who writes a column about Schenectady once a week in The Times Union, an Albany newspaper.

''That's a lot of empty houses and empty streets.''

Left behind are a needy population and cheap housing that attracts poor people from downstate.

Hamilton Hill, the city's grittiest neighborhood, is just six-tenths of a square mile, but it accounts for half of the gunfire reported in the city.

''We are losing a whole generation of kids to these streets,'' said Judy Atchinson, a 62-year-old composer who runs Quest, a program in Hamilton Hill that seeks to keep children away from street gangs. ''There are no jobs, no decent housing, no hope. Schenectady is the bottom of the barrel.''

The common perception downstate is that upstate is a vast, desolate place that died a slow but natural death when its industrial heyday ended. But the picture here is more complicated.

Schenectady is part of the Capital Region, a relatively prosperous section of upstate propped up by the vastness of state government, which employs more than 30,000 people, along with more than a few private employers. The region is now the focus of an intensive program created by Gov. George E. Pataki to attract high-tech business.

While Schenectady foundered in recent decades, its suburbs prospered. In the towns that surround the city, quarter-million-dollar houses fill cul-de-sacs in tranquil subdivisions. Niskayuna, one of the city's suburbs, has the third highest median household income outside the New York metropolitan region, $70,800.

Some of the city's problems are of its own making. A report by the state comptroller issued in 2002 found gross mismanagement of city money -- money for capital projects, like roads and buildings, had been used to cover operating expenses, for example. Replenishing the city's capital fund required a 25 percent property tax increase in 2003.

But experts on urban affairs say the disparity between the upstate cities and suburbs also reflects the state's failure to develop an effective approach to revitalizing cities.

''As hard as it is to believe, there is no urban policy in New York State,'' said Edward C. Farrell, executive director of the New York State Conference of Mayors. ''There is no design to help cities recover.''

Cities with populations of 50,000 to 100,000 lost a tenth of their total population between the 1990 and 2000 census. Cities have seen their tax bases shrink and their costs mushroom as they struggle to meet the needs of populations that are growing older and poorer. But as costs rise, two out of three cities receive half as much money from the state as they did in 1989, according to an analysis by the mayors' conference.

And many urban experts say that reduced state financing, scattershot economic development plans and multiple layers of government that served to isolate foundering cities from their affluent suburbs have battered places like Schenectady. A survey of city budgets by the mayors' conference this year found that nearly 60 percent of cities said that their financial situations had deteriorated in the past year.

''People see this decline of cities as inevitable,'' said Rolf Pendall, a professor of city and regional planning at Cornell University. ''It is not inevitable. It is something public policy has helped bring about.''

Joseph Conway, a spokesman for Mr. Pataki, who once was mayor of Peekskill, a struggling city in northern Westchester County, said in a statement that Mr. Pataki ''has led an aggressive, comprehensive effort to strengthen and revitalize'' small cities across the state. He cited, for example, the creation of the Office of Small Cities, which gives out $50 million to cities, villages and towns each year.

''No one has done more to encourage economic growth and job creation in our small cities than Governor Pataki,'' Mr. Conway said.

And mayors of several cities, including Utica, Plattsburgh and Binghamton, after being prompted by Pataki administration officials, praised various state programs, including the Empire Zone program, which gives tax breaks and other incentives to companies that choose to locate in depressed areas.

Still, both politics and policy have conspired over several decades to harm New York's cities.

Hemmed in by geography and unable to annex adjacent land the way cities do in other parts of the country, New York's cities are forced to increase taxes in order to raise more cash from fewer people. School districts set up along town lines further isolate cities from their suburbs.

Meanwhile, economic development initiatives, like the Empire Zone program, were initially intended to help cities recover from the loss of major industrial employers, but, bowing to political and economic pressure, many of these zones have been expanded to include suburban locations that are easier to develop. Schenectady's Empire Zone includes land in one of the city's affluent suburbs, Glenville, and in June officials asked for permission to expand it further to include land in other wealthy suburbs.

And there are political issues, too. Rather than being represented by a single person in the State Legislature, cities, unlike most towns, may be broken up among several districts. Two assemblymen share Schenectady, and each has a piece of the suburbs as well, so the representation of cities is diluted, Mr. Farrell said.

While Mr. Pataki created a program that gives extra money to cities in distress, it does not make up for the deep cuts enacted in the early 1990's, when the state last faced a fiscal crisis. Schenectady, despite its serious financial problems, still receives 15 percent less money from the state than it did in 1989, according to the mayors' conference.

And its expenses keep rising.

The slump in the stock market in recent years and enhanced benefits passed by the State Legislature in 2000 mean that cities must contribute millions more toward pensions. In 2002 Schenectady sent Albany $524,033 to pay for pensions. In 2004 that figure will be almost $5 million.

''A city like ours has nowhere to turn for that kind of money,'' Mr. Stratton said.

Professor Pendall said the state needed to focus its economic development programs on cities, not suburbs, and provide housing incentives for suburbs to build low-income housing. Redrawing school district boundaries to reduce the city-suburb divide would help too, Mr. Pendall said, but the political realities militate against that ever happening.

Despite its problems, Schenectady is not hopeless. It has a surprisingly good school system that includes special high schools concentrating on the fine arts and other disciplines. It has impressive houses -- the mansions G.E. executives built are among the handsomest homes in the region.

It has a fine theater, Proctor's, which was recently renovated and is a popular place for concerts and shows. But it cannot compete with its suburbs for homeowners and businesses because its taxes are much higher, said Assemblyman Paul Tonko, whose district includes part of Schenectady.

''The state needs to address tax policy to be fairer to cities,'' Mr. Tonko said.

Mr. Pataki has taken an interest in Schenectady, bringing the offices of three government agencies, including the state lottery, to the city, and the new buildings and their workers have helped breathe some new life into the city's decrepit downtown. Albert P. Jurczynski, the city's departing mayor, who declined to run for re-election after two terms, has been ridiculed for suggesting simply dissolving the city and merging it with the county as a way to get out from under its financial problems. But Brian Stratton is considering doing something very similar -- consolidating as many city government functions as possible with the county government in a bid to save money.

''I love this city with all my heart,'' Mr. Stratton said. ''It was great once, and I believe it can be great again. But we are going to need a lot of help to get there.''

Would someone mind telling me exactly how much better Schenectady is 5 years later? The only thing 'better' is that our welfare roll is larger and we have more government programs, a dysfunctional government, a corrupt police dept., a failing Metroplex and it is the 8th highest taxed municipality in the COUNTRY!!! Thank you Mr. Stratton for that one! We're so glad that you love this city with all of your heart. Sure would like to know what it would be like if you hated it. Your love of this city certainly pays you well with your $36,000/year raise!