The first day of the Mayors Innovation Project gathering in Washington, D.C., addressed how the current economic crisis will affect cities and regions. In short, the answer was “adversely.” As Dean Baker, an economist at the Center for Economic and Policy Research said, “Things will get worse before they get better.” Although he praised the stimulus package currently under consideration, he warned that it will be at least three to four months from the time it gets approved to the day that any impact will be felt at the local level.

City budgets are sure to be squeezed as home values continue to drop, because that will cause a decline in assessed property values and, subsequently, lower property tax revenues. Boom cities such as Phoenix and Las Vegas have seen their average property values decline by almost a third from two years ago. Even cities that didn’t experience a boom, like Detroit, have experienced a severe drop as well.

Crime will be an increasing concern as foreclosed, abandoned houses offer a potential haven for criminal activity.

Stefan Pryor of the Department of Housing and Development in Newark, New Jersey, claimed that mid-sized cities in the orbit of big cities, like Newark, may actually be able to capitalize on the downturn. With companies feeling a financial crunch, Pryor hopes that New York-based businesses will seek more affordable office space, and look across the Hudson to Newark.

I am skeptical of this, because areas like Newark have generally expanded during economic boom times, when companies are priced out of more desirable locations. But Pryor argues that if cities like Newark don’t just sit back and wait but rather proactively seek and approach companies that may be looking to move, they will succeed. Douglas Palmer, the Mayor of Trenton, concurred, adding that with continued investment in central rail links to major cities, businesses might see downtown Trenton or Newark as attractive, affordable locations, given the short trip to New York or Philadelphia. I wish them and their cities good luck in that endeavor, as I’m sure they will need it.

Ben Adler is a journalist in New York. He is a former reporter for Grist, The Nation, Newsweek and Politico, and he has written for The New York Times, The Atlantic, The Guardian and The New Republic.

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