New York City Regional Economic Development Council 2018 Annual Report Assessment I. Performance a. Impact on job creation and retention Strengths • For each year from 2011-2016, the unemployment rate in NYC was higher than the unemployment rate in the rest of the state. In 2017, this trend ceased, and the NYC unemployment rate is at an historic low (approximately 4.2 percent) compared to a statewide rate of about 4.6 percent. The veteran unemployment rate followed this same trend. • From 2012-2017 CFA projects (including Priority Projects) are projected to retain 17,620 jobs and created 16,508. • Technology cluster employment increased 46.2 percent from 2011 to 2017 – more than double that of the state increase in tech employment during the same period (21 percent). Weaknesses • From 2016 – 2017, the Advanced Manufacturing cluster had a 3.5 percent decrease in average annual employment (AAE). • From 2016 – 2017, the Life Sciences cluster had a 2.1 percent decrease in AAE, and the Food and Agriculture cluster decreased 0.3 percent. b. Business growth and leverage of private sector investments Strengths • The number of private sector establishments increased 1.8 percent from 2016 to 2017, and 12.1 percent between 2011 and 2017. • Visitor spending increased 33.7 percent between 2011 and 2017. • The Gross Regional Product increased 33.5 percent from 2011 to 2017. • From 2011-2017, the ratio of total project cost to ESD Capital Funds awards was 23.3 to 1. For 2017 the ratio was 9.5. For all CFA projects (including Priority Projects) the ratio was 13.8 to 1. Weaknesses • New York attracted only ten cents of venture funding for every dollar of NIH funding in 2017 compared to states like California and New Jersey who attracted $1.56 and $1.52 for every dollar of NIH funding, respectively. • Average wage growth increased in 8 of the last 9 years but is modest by historical standards. II. Progress a. Implementation of regional strategies described in a previous REDC plan and plan updates Strengths • Of the 15 NYCREDC-designated Opportunity Zones, 3 are no longer considered “distressed communities” because of successful strategic investments. For example, four buildings in Lower 1 | Page Manhattan’s Seward Park urban renewal area are expected to be completed this fall, and in Greenpoint-Williamsburg construction began on the Greenpoint Manufacturing and Design Center. • In the CFA process the NYCREDC is prioritizing projects that include an affordable housing component, a strategy in its original plan. It supported the city’s efforts, resulting in financing of over 100,000 affordable homes since 2014. • One NYCREDC strategy is to improve the quality of life in the region. An example of how this is being accomplished is the creation of the Bronx Music Hall, a performance venue and multi- purpose artistic and event space that is currently under construction. • Improved transportation for workers to the Brooklyn Navy Yard touches on many regional strategies. With help from a CFA grant, a shuttle service between the Navy Yard, subway and LIRR went into operation late last year. Weaknesses • None noted. b. Execution of strategies that address state priorities or emerging state challenges and opportunities Strengths • Programs developed through the New York State Life Science Initiative are providing funding for incubation space for several life sciences companies. For example, JLABS@NYC opened. It is a 30,000 SF life sciences incubator for innovative biotech, pharmaceutical, medical device and consumer health companies. • NYC has six certified Business Incubators, including the Brooklyn NYS Biotech Certified Incubator at SUNY Downstate Medical Center which is also a START-UP NY site. The site currently houses 28 START-UP NY companies. • Construction of the Proton Center, a state-of-the-art cancer treatment facility, was completed in 2018 in the 125th Street Manhattan Opportunity Zone. • In 2018, 6 acres were acquired by the city for the Willets Point redevelopment plan, which includes 100 percent affordable housing, retail space, and a school. • Building 77, an 18-story industrial building at the Brooklyn Navy Yard, opened in November 2017 as a manufacturing and tech hub that will accommodate 3,000 jobs when it is fully leased. As of July 2018, the building was 90 percent leased. Little mention was made of other Advanced Manufacturing initiatives. Weaknesses • Little mention is made of the Advanced Manufacturing and Agriculture clusters. • There is much room for growth in the Life Sciences sector, which has a shortage of affordable space for labs and start-up Life Science businesses, insufficient venture capital for early stage Life Science companies, and a lack of qualified mid-to senior-management. c. Success in workforce development initiatives, including engagement of hard-to-place workers Strengths • The report describes several programs that support the study of Life Sciences which will continue to develop talent and foster entrepreneurship, such as the LifeSci NYC Internship Program. However, the NYCREDC involvement with those programs are not clear. 2 | Page • Henry Street Settlement is converting an old firehouse into a new neighborhood resource center that will house workforce development programs that place more than 600 low-income individuals in jobs each year. • Workforce development initiatives address the skills gap, such as a career day held by three Career and Technical Education schools to promote entrepreneurships, higher education, fashion industry history, and career pathways in the fashion industry. The report also lists other NYCREDC member activities aimed at addressing the skills gap. • In June 2017, a training facility developed by Cognizant and Per Scholas opened in the South Bronx to provide no-cost technology skills training, career development resources, and placement services upon completion of training. Cognizant plans to hire as many as 350 of the program’s initial graduates for work in all five boroughs. Weaknesses • There is little evidence that the Regional Council is moving the needle as it relates to workforce training. Also, there is no mention of programs for middle skills, such as those that allow for stackable certifications. • With almost 40 percent of the population of NYC being foreign-born, there is little discussion of how the NYCREDC proposes the special needs of those residents be addressed. d. Advancement of projects that revitalize downtowns Strengths • Outreach about the Downtown Revitalization Initiative (DRI) included encouraging borough presidents to work with community boards, local business improvement districts, and local economic development organizations to develop downtown revitalization proposals. • The Prime Skills Entrepreneurship Fund assists low-income Jamaica residents to launch or grow their own businesses. The first program cohort graduated in Spring 2018. This program was supported by the DRI. • Great Performances Catering is proposed for funding. Located in the Bronx, it was recommended for funding by the Bronx DRI Strategic Investment Plan but became ineligible for funding when the proposed location changed to outside of the DRI boundaries. Weaknesses • None noted. e. Advancement of prior round Priority Projects Strengths • 83 percent of all Priority Projects and 85 percent of all CFA projects from 2011 - 2017 are completed or on schedule. Only 8 percent of all Priority Projects were cancelled or funding was declined. Weaknesses • None noted. III. Planning a. Quality of the Annual Report 3 | Page Strengths • The NYCREDC included many graphic presentations of metrics, including regional metrics and successful performance thresholds. • The report provides detailed project selection criteria such as job creation and retention, relief of conditions of economic distress, innovation, and partnerships with higher education and businesses. • Non-CFA funding sources for proposed projects were described (i.e., NIH). Weaknesses • Timeframes are missing from much of the progress included in the tables provided under “Implementation of State Priorities.” b. Ability to take the next steps in growing the regional economy Strengths • Both the Public High School graduation rates and the college readiness rate (approximately 29 percent to 48 percent) increased between 2011 and 2017. • The number of STEM graduates increased almost 60 percent since 2011, from around 14,000 students per year to 22,000. • Over 30,000 affordable housing units were financed in the last year following 2016’s Mandatory Inclusionary Housing and Zoning Act, increasing the inventory of affordable housing in NYC and providing workforce development and construction employment opportunities. • The Brooklyn Navy Yard continues to attract growing businesses and workforce development programs, which in turn provide a large number of jobs. There are currently 400 businesses employing 8,000 people with projected growth to 17,000 jobs in the next five years. • Regional Exports are up 17.5 percent from 2011. The JFK International Airport is awaiting environmental assessment approval before undertaking work on a cargo handling facility. • The NYC Tech Sector share of jobs is higher than the State share in the last 5 years. Tech employment is growing at a faster rate regionally than across the State. • NYCREDC has modified its priority investment strategy to focus on the federal Opportunity Zones laid out by the governor. • The share of residents who are foreign-born has remained consistent over the past six years, indicating that new immigrants are replacing those that leave the city. Weaknesses • Disconnected youth statistics show that around 140,000 people age 16-24 are neither working nor in school. The report does not demonstrate how the region will address the large percentage of disconnected youth in NYC. • 19 percent of NYC residents lived in poverty in 2016, compared to a state rate of 14 percent, with children comprising the highest concentration of that 19 percent. • Elimination of state and local tax deductibility under the 2017 Tax Cuts and Jobs Act will add to the already high costs of living in NYC and may lead to additional outmigration.