By popular lore, the revival of Times Square ranks among the most celebrated achievements of New York City in recent years. In the 1960s, 1970s and early 1980s, Times Square was sleazy, crime-ridden nd so physically and economically blighted it represented a threat to public safety—but today it is nearly crime free. It is filled with tourists, and world-class corporations dwell and prosper within its borders. It is celebrated as a triumph of “urban planning,” “public-private partnership,” the wise use of the power of eminent domain, an example of the intelligent intervention of government into private real estate markets.
All of it is a myth.
In 1983, when I went to work for Governor Mario Cuomo as chairman and chief executive of New York State’s Urban Development Corporation (UDC), I was convinced I knew how government planning could transform the Times Square I saw at that time to what it is today. The truth is, however, almost none of the grandiose plans my colleagues and I created and aggressively spearheaded ever came to fruition. Our extravagant plans actually retarded development. The changes in Times Square occurred despite government, not because of it. Times Square succeeded for reasons that had little to do with our building and condemnation schemes and everything to do with government policy that allowed the market to do its work, the way development occurs every day nationwide. By lowering taxes, enforcing the law, and getting out of the way instead of serving as real estate broker, the government incentivized investment and construction and encouraged the rebirth of Times Square to what it is today.
I would not realize that until later, of course, for in the early 1980s, I headed one of the most influential government redevelopment agencies in the state of New York. Governor Nelson Rockefeller created the UDC in the 1960s to build low-income housing.1 By statute, it had been given powers that, at the time, were unprecedented for a governmental development agency. It could override local zoning, issue bonds, serve as its own building permit agency, supervise construction and, most importantly, condemn property for reasons of “economic blight,” a term the UDC used for areas it felt were underperforming economically. Seeing its enormous power, Governor Carey’s administration transformed the agency from its original purpose of building low-income housing (a purpose that the agency had used to drive the state and city into a very serious fiscal crisis in the 1970s2) to a full-blown economic development agency that co-opted the functions of the private market, engaging in real estate speculation and procurement (instead of focusing on creating an inviting environment for private development without government assistance or subsidy). For that reason, the UDC played a central role in planning the redevelopment of Times Square, which had reached its absolute nadir in 1981.
There is an old expression in journalism: “Consider the source.” So, when a former government official who oversaw a development as prominent as Times Square says his agency and its use of eminent domain actually impeded the area’s development, that is news. In a new report released today by the Institute for Justice, William J.…