NEWPORT NEWS — The city is so far spending $14 million of taxpayer dollars to redevelop a 12-block section of the Southeast Community, a neighborhood that struggles with crime and blight.
City officials said even more city tax money will be spent in the future to prod the development along.
The $14 million question:
Are city leaders throwing taxpayer funds into a money pit, or is it a wise long-term investment that will reap benefits for decades to come?
"There are a lot more (redevelopment) failures than there are successes. Nobody has found the magic bullet," said Sam Staley, director of urban growth and land use policy for the Reason Foundation, a public policy think tank.
But Tom Murphy, a land use expert for the Urban Land Institute, said strong public investment is one of the few ways that turnarounds in blighted areas can happen, and he pointed to several success stories across the country.
"Either you look at (the blight) for the rest of your life, or you do something about it," said Murphy, the former Pittsburgh mayor who was heavily involved in redeveloping sections of Pittsburgh. "It's better to take the risk."
"The risk of failure is not a pleasant prospect," said Newport News City Manager Neil Morgan. "But you can't be paralyzed by fears."
Time will reveal the answer for Newport News, but some now are questioning how the city is spending taxpayer money.
Bland Burcher, who grew up in the Southeast Community but now lives in the Menchville area, said he's skeptical. He said he just doesn't believe that a significant development project, including new retail and condominiums, would be successful in the Southeast Community, citing a lack of disposable income and reluctance of more well-heeled residents to live or shop there.
"You would hate for the city to spend all that money down there and then say, 'It didn't work,'" Burcher said.
But Evelyn Azeem, co-owner of Pearlie's restaurant on lower Jefferson, said it's a good idea, and she believes it will work.
"The citizens are standing behind this," said Azeem, who has visions of a movie theater, indoor fish market and other stores. "We need something to happen here, and quickly."
The area along lower Jefferson Avenue between 24th and 36th streets currently doesn't look like a spot ripe for development. Crumbling businesses blocked off with black metal gates front Jefferson Avenue. Economic activity appears to be at a near standstill.
Just south of 24th Street sits World War II-era public housing that will be demolished over the next few years.
But city leaders have big plans to transform the community, block by block.
Ex- NFL quarterback Aaron Brooks, a Newport News native, is proposing a mixed-use development on 14 acres, between 29th and 33rd streets, including a neighborhood grocery store, condominiums, restaurants and more retail. The city is hoping that the development will spark a rebirth in the Southeast Community.
But to make way for the Brooks development, and other possible private investment, the city plans to spend or has already spent:
•$7.5 million on burying power lines underground and a streetscape project.
•$2.9 million to purchase Peddler's Village indoor flea market, which will later be demolished. Peddler's Village had been a problem for city officials with vendors selling counterfeit goods. To acquire the property, the city spent $800,000 more than the $2.1 million appraisal, Morgan said. He said it was $1 million less than the asking price of $4 million.
•$1.2 million to renovate Martin Luther King Jr. Park, including a monument to the civil rights leader.
•$2.5 million to build the new Hornsby Tire. In exchange for the city receiving 1.44 acres of land from Hornsby Tire's previous location, the city helped finance a new building for the long-time Southeast Community business.
•More city money will be spent. Florence Kingston, the city's development director, said while the details are being negotiated, the Brooks project will receive incentives, such as discounted land prices, and significant public infrastructure dollars to move it forward. She said she anticipates a higher percentage of public dollars spent on the Brooks development than the city spent on City Center. She said in order for Brooks to be able to keep rents low, the city has to subsidize the project.
Morgan said the city could also purchase more land, although nothing is imminent.
Does redevelopment work?
Staley said often redevelopments attempt to buck the trends in the private sector, in this case the exodus of businesses to midtown Newport News and elsewhere.
"The question you have to ask is, 'What are the primary reasons the private sector has not invested? What are the impediments to investment?'" Staley said.
He said safety is a big issue. It doesn't matter how much money is invested, he said. If business owners and shoppers don't feel safe, it's a "no-go."
Other problems are taxes and quality of schools.
"You can't be forcing development where there's no real demand for it," Staley said. He said streetscaping programs typically have little impact on redevelopment efforts.
But Murphy said that it can work. The East Liberty neighborhood in Pittsburgh was so poor, it lacked a grocery store. He said the city tore down public housing, subsidized a Home Depot and Whole Foods, and now Google is setting up shop there.
The demographics of the neighborhood have changed dramatically over the past 10 years as a result, Murphy said, from predominantly poor to a mixed neighborhood.
"The key is getting the private investors to come in," Murphy said.
Morgan said while the city has not commissioned market studies to indicate whether the redevelopment plan will work in Newport News, he believes market studies by outside groups are often not useful, especially this early in the process.
"I believe our team is as qualified as any group to see a way forward," Morgan said.
Local developer Bobby Freeman, who developed Port Warwick mixed-use project in midtown, said it's "appropriate" for the city to spend taxpayer money in an attempt to spur revitalization. Freeman said he thought about developing in the Southeast Community, but ultimately decided that it was too difficult.
From the 1960s to the 1980s, the city poured millions into the Superblock, an area in downtown between 26th and 28th streets and Washington and West avenues.
Superblock never materialized into the retail mecca that city leaders touted for decades. In 1986, the city abandoned the Superblock revitalization after spending $18 million during that decade, the last large-scale attempt to revitalize Superblock. City officials were quoted at the time saying that it was taking too much taxpayer dollars to finance the $276 million project.
"They were fighting the exodus. There was no way they were going to stop the exodus (out of downtown) from happening," Freeman said.
So, what makes the Jefferson Avenue corridor different than Superblock?
Kingston said perhaps previous city leaders took the wrong approach. She said now they have experience with these types of projects after the city successfully helped develop City Center.
"We're being more strategic in the property we acquire," Kingston said. "We're assembling a more critical mass of property, which will make it more viable."
Did the city overpay?
As part of the city's efforts to revitalize the area between 24th and 36th streets, the city recently signed a $2.9 million purchase agreement to buy Peddler's Village, a 51,000 square-foot indoor flea market. The appraisal was $2.1 million, but City Manager Neil Morgan said the owner, Brown Investments, wanted $4 million, so they met in the middle.
Morgan said it seems like whenever the city makes a purchase, they get criticized.
"Somebody either says, 'The city paid too much' or 'You're stealing our property,'" Morgan said.Copyright © 2014, Los Angeles Times