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The Unexpected Lessons of Times Square’s Comeback
There’s a right way and a wrong way for government to foster economic development.
William J. Stern
Autumn 1999 Economy, finance, and budgetsPublic safetyThe Social OrderNew York
Almost everybody rightly celebrates Times Square's revival as one of New York City's greatest recent success stories. Just a short while ago it was sleazy, blighted, and crime-ridden; today it is all but crime free, it has driven out the prostitutes and pornographers who made it so seedy, it bustles with tourists by day and night, and world-spanning corporations such as AMC, Disney, and Viacom prosper within it. But if everyone knows about Times Square's remarkable comeback, few understand what made it happen.

I thought I knew what the ingredients for success were back in 1984, when I worked for Governor Mario Cuomo as head of the Urban Development Corporation (UDC). On my watch, the UDC put in place a gigantic project, first conceived in 1981, to revitalize Times Square, then at its absolute nadir. The $2.6 billion 42nd Street Redevelopment Plan would extend tax-abatement deals to developers and direct them to transform Times Square by building grand office towers, a huge merchandise market, and a fancy hotel; by restoring historic theaters; and by revamping the dingy 42nd Street subway station. Also sponsoring the plan were Mayor Ed Koch and—unofficially but prominently—the New York Times, whose headquarters gave the square its name in 1905.

But almost nothing we planned ever came to fruition. Instead, Times Square succeeded for reasons that had nothing to do with our building schemes and everything to do with government policy that, by fighting crime, cracking down on the sex industry, and cutting taxes—albeit only selectively—at last allowed the market to do its work and bring the area back to life. The lesson: there's a right way and a wrong way for government to pursue economic development. It's a lesson that needs spelling out, since it's crucial to future economic recovery in New York.

It's important to recall accurately what Times Square was like when we officially launched our plan in November 1984, since today you still find a few people perversely nostalgic for it. Samuel R. Delany's new book, Times Square Red, Times Square Blue, is a case in point: it is a lament for defunct Times Square sex clubs like the Capri, the Eros, and the Venus. These risqué establishments, Delany argues, provided a harmless, playful way to subvert stuffy bourgeois morality.

But the Times Square Delany mourns was anything but playful. The area began going to seed during the late fifties after the sex industry—waved on by ill-advised federal and state court decisions that extended First Amendment protections to pornography—edged out and took over once-lustrous theaters that had been economically struggling since the Depression. The decline was rapid thereafter: the porn establishments attracted to Times Square an unsavory and increasingly criminal crowd. Already by 1960, the New York Times was calling the heart of Times Square—42nd Street between Seventh and Eighth—the "worst block in the city." By the eighties, things got worse still, with an amazing 2,300 crimes on the block in 1984 alone, 20 percent of them serious felonies such as murder or rape. Dispirited police, at the time more concerned with avoiding scandals than fighting crime—especially low-level crime like the prostitution that was swamping Times Square—would investigate the serious felonies but mostly stood by and watched as disorder grew (see "What We've Learned About Policing," Spring 1999).

The lawless climate had devastating economic consequences. In 1984, the entire 13-acre area that we sought to revitalize employed only 3,000 people in legitimate businesses and paid the city only $6 million in property taxes—less than what a medium-size office building typically produced in tax revenue.

No legitimate business—indeed, scarcely a normal person—would willingly visit so blighted and threatening an area. As head of the UDC during the mid-eighties, I would walk through Times Square at night, a state trooper by my side, and feel revulsion. We'd hurry past prostitute-filled single-room-occupancy hotels and massage parlors, greasy spoons and pornographic bookstores; past X-rated movie houses and peep shows and a pathetic assortment of junkies and pushers and johns and hookers and pimps—the whole panorama of big-city low life. Everywhere I'd look, I'd see—except for female prostitutes—only men. A UDC study later verified my impression empirically: 90 percent of those who walked Times Square's streets were adult males. Times Square was haunted with them, like a circle of lost souls in Dante.