Until recently, there was an eerie dead zone in downtown Worcester, surrounding a huge old mall. Heather Gould remembers not hanging out there with her friends when she was younger.

“We didn’t really come downtown because there was nothing to do then,” Gould says.

There were a lot of places like that in Massachusetts in the early 2000s. Legislators decided to strategically target aid to small and mid-sized cities with high levels of poverty and low rates of post-secondary education. They called them Gateway Cities. Worcester was named one of them – and Gould – now the city’s chief assistant development officer – says officials knew what they wanted their first redevelopment target to be.

“The mall was a big white elephant right in the middle of downtown,” Gould says. “It was just this huge building. You either had to walk all the way around this way or all the way around that way. You couldn’t go straight through. We decided that something needed to be done.”

The state spent $50 million dollars to kickstart the project. Years later, the mall’s gone, and the redevelopment’s finally complete, with a new cancer center and apartment buildings. Gould says a development chain-reaction is underway, with hundreds more downtown market-rate apartments being finished for students, young professionals and empty-nesters.  

“We’re just now at the point where now that we see progress, we want more,” she says.

And that’s where it gets tricky. Few gateway cities with rejuvenated downtowns have been able to significantly extend that progress to surrounding neighborhoods. As a whole, gateway cities haven’t rebounded from the recession and housing crisis as much as Boston. That’s despite the state spending more than $3 billion in gateway cities’ public facilities like schools, parks, infrastructure, and affordable housing, according to a new report from the nonpartisan think tank MassINC.

Part of the problem is developers can still make far more money building housing in the greater Boston area, says Elyse Cherry, CEO of Boston Community Capital, a nonprofit community-development financial institution.

“If I were a for-profit developer looking to maximize return, it makes a whole lot more sense for me to work in Boston, because in fact I can achieve a greater return on my investment,” she says.

Public money can help bridge the profit gap and attract developers, but a debate is underway among officials, developers and advocates about what kind of housing that public money should support.

“At the end of the day it’s the private and public sector getting together deciding where they’re going to bridge that gap – it can’t be bridged everywhere; there’s not enough money,” says Gilbert Winn of the Boston-based developer WinnCompanies.  “But in certain locations that can have catalytic effects on the community and the rest of the region, that’s the solution.”

Winn thinks those catalytic locations are downtowns. Communities like Worcester have managed to attract him and developers with tax incentives and large-scale mixed-income projects that work in downtown areas – but not in blighted neighborhoods with old single-family homes falling into disrepair. Homes like that account for 80 percent of Worcester’s housing stock, says Tim McGourthy of the Worcester Regional Research Bureau.

“And that’s the hard part – how do you hit 182,000 people in Worcester?” he asks. “How do you get people without the means to fix up their house, maintain their house, get them the means to do so, and ensure low-income folks have a chance to rise – not in a project based environment, but in their own home, in their own residence?”

There are some programs to help, but not nearly enough, McGourthy says. Ben Foreman of MassINC thinks Massachusetts needs more incentives for homeownership and scattered site redevelopment.

“We haven’t been able to develop places that should be attractive for housing because the state of the market is that values are so low nobody would underwrite development there,” he says. “So you need a subsidy, and we don’t have that subsidy.”

Meanwhile, we can’t forget public money is still needed for affordable housing projects, says Marc Draisen of the Metropolitan Area Planning Council.

“We have huge numbers of low-income families and seniors who are living in market-rate housing and paying 40, 50, 60 percent of their income for housing every month,” he says. “That is still a problem we need to address.”

Without more state aid, gateway cities rely on traditional economic drivers. And in that aspect, Worcester is luckier than most– many old manufacturers have stayed in town, and the city has nine colleges that constant bring people in. Another gateway city, Brockton, hasn’t been as fortunate.

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The state recently turned down that city’s application to host a casino. Massachusetts has also backed out of a plan to build a new $21 million multi-university campus on the edge of Brockton’s downtown. Gary Leonard, a long-time realtor who does development for the city as part of the national Main Streets program, drives past the empty building that would’ve housed that campus, into the adjacent Campello neighborhood.

“This was all cherry trees,” he says. “It was gorgeous. My grandparents lived on this street, second home in. Now it’s like the combat zone.”

All but one block. Leonard parks in front of a tall white building surrounded by a high fence.

“This building used to be a haven for undesireables, and it was falling apart,” he says. “I convinced a developer to purchase this property and make it into an arts center. I just redid this whole street, and the sidewalks.”

Across the street are a handful of houses with nice sidewalks, tended lawns, fresh coats of paint, and solar panels on the roofs.

“They all started fixing up their homes! These were all trashed homes!” Leonard says.

As a whole the block looks conspicuously better than the rest of the neighborhood.

“This is what the rest of Brockton can look like,” Leonard says.  

He says improvement can be made in gateway cities’ less desireable areas; it may just have to happen block by block.