Columnist Dennis Bidwell: Study finds balanced Northampton economy

  • Northampton City Hall GAZETTE FILE PHOTO

Published: 3/27/2017 6:26:46 PM

Editor’s note: This is the first of three guest columns reporting the findings and recommendations from the study of the downtown economy by the Northampton City Council Committee on Community Resources.

In a series of widely attended public forums organized last year by the Northampton City Council Committee on Community Resources, and in a range of reports and testimony before the committee, one theme emerged loud and clear. The local economy, particularly as it affects the downtowns of Northampton and Florence — though not without its challenges — is the envy of other communities.

Our committee, asked by the City Council to study the local economy and recommend ways to strengthen it, reviewed abundant data showing that ours is a balanced local economy well-positioned to face the challenges presented by chain stores, internet sales and the Springfield casino targeted to open in 2018. We did not find support for the contentions by some that our downtown suffers from alarming retail vacancies, soaring occupancy costs and unresponsive local government.

Data compiled by the city’s economic development office shows that 12 new businesses opened in Northampton in 2016, and that another eight relocated within the city. (This compares with 11 retail establishments that closed, two of which were national chain stores.)

Particularly noteworthy is the fact that four “landmark” businesses — A2Z, Faces, Cedar Chest and Gazebo — successfully transitioned to new ownership (to former employees in two cases), in a demonstration of confidence in the local business climate by the next generation of entrepreneurs.

Optimism about the city’s future was also shown by the $117 million of new developments initiated last year in and near downtown, spread among residential projects (market rate rental, affordable rental, condos, assisted and independent living), office and retail projects, and the arts center on Hawley Street.

The city’s report shows a 6.4 percent retail vacancy rate as of December 2016, compared with 7 percent one year earlier. This contrasts with a national retail vacancy rate of about 12 percent. Notably, 10 of the 14 properties that account for the Northampton vacancy rate are long-term vacancies, of which six are owned by one major Northampton property owner. The city lacks the authority to compel a property owner to rent or sell their property, no matter how long it has remained vacant. A range of experts told us that Northampton’s downtown vacancy and turnover rates are in keeping with the normal cyclical nature of such markets.

There are abundant factors that explain the success of our local economy. The Five Colleges, notably Smith College in Northampton, provide a significant anchoring effect to local economies, accounting for about $775 million in annual payrolls, and approximately $15 million in local purchasing and procurement. Add to this the 10 museums in the area — seven associated with the five colleges, plus three independent museums — that attract about 200,000 visitors a year, on top of the growing variety of arts and entertainment venues in Northampton.

Additionally, local agriculture, supported by vibrant farmers markets and the Community Involved in Sustaining Agriculture “local hero” program, grows healthier year by year.

Northampton enjoys a healthy balance of strong locally generated economic activity and tourism dollars. Figures on tourism spending from the Hampshire Regional Tourism Council estimate that visitors to Northampton spend $55 million annually.

Hotel tax revenues to the city declined just 4 percent in 2016 despite the closing of the 100-room Clarion Hotel. And though some restaurant owners have reported declining revenues, meals tax revenues overall in Northampton were up 1 percent over the previous year.

Though the resilience of Northampton’s economy is largely due to the risk-taking and commitment of local business owners, the city itself has played an important role. A long-standing commitment to a unified property tax rate — meaning commercial properties are assessed at the same rate as residential properties — and the ability to maintain a tax rate among the lowest in the region have kept many businesses in Northampton and attracted others.

The city joined with the Chamber of Commerce to stimulate the creation of the Downtown Northampton Association, which has already made its mark on the local scene. And, by the time Phase 2 of the city’s Pulaski Park renovation and expansion is complete, a total of almost $3.5 million in public funds will have been invested, along with $760,000 in city funds going to the Academy of Music upgrades since 2009. In addition, the combination of the new roundabout at Pleasant and Conz streets, and the upcoming streetscape and infrastructure improvements to Pleasant Street, represent an investment of almost $5.5 million in upgrading this critical gateway to the city.

Assembling all of this data paints a picture of a healthy and balanced economy, envied by many. But does it have it challenges? Absolutely.

Next month’s column will address the city’s response to reports of wage theft, the challenges facing at-risk downtown populations, concerns expressed about panhandling, and opportunities to be more effective in coordinating and promoting arts events.

Ward 2 City Councilor Dennis Bidwell, of Northampton, is vice chairman of the City Council Committee on Community Resources. City Councilors Gina-Louise Sciarra of Ward 4, Alisa Klein of Ward 7 and Maureen Carney of Ward 1 also contributed to this column.

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