Ten years ago, Worcester’s downtown was going to hum. A consortium of city officials and investors pledged to turn 21 acres of blight into offices, stores, entertainment sites, and luxury residences. The $565 million project — to be privately and publicly funded — was named CitySquare.
Today, CitySquare is still a far-off promise, an unrealized revitalization effort that is all too common in the region’s old mill and manufacturing cities.
In many ways, Worcester has the ingredients to prosper: It is the second-largest city in New England and home to 10 colleges and universities, including University of Massachusetts Medical School, College of the Holy Cross, and Clark University. It has respected cultural institutions, including an art museum with an impressive, encyclopedic collection amassed during Worcester’s industrial heyday in the early 20th century; diverse industries, like medical, insurance, and biotech; and commuter trains to Boston.
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But few cite the downtown area as one of the attractions. One reason could be the gap between the city’s vision of pedestrian-friendly streetscapes and a vibrant commercial sector, and developers’ goals to attract corporate tenants to realize a return on their investments.
“What’s missing in the downtown is something to do,” said Roberta L. Brien, vice president of projects at the Worcester Business Development Corporation, a nonprofit developer working to rehab the downtown theater district. “Right now, there are few reasons for people to leave their offices” in search of restaurants or other amenities, she said.
The WBDC’s latest effort in the CitySquare zone is a $34 million plan to renovate the former home of the Worcester Telegram & Gazette newspaper. It includes pedestrian-level spaces for dining and retail.
“We can, as landlords, afford to subsidize these spaces to attract restaurateurs or retailers that are start-ups or are not quite confident of the market downtown, and maybe are unwilling or unable to pay a market rate,” Brien said.
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CitySquare did get a boost this year when two major anchor tenants, the insurer Unum Group and Saint Vincent Hospital, shifted some of their operations to the area. Both moved into new construction from existing spaces in other parts of the city. So far, the additions have not brought street-level businesses or generated additional tax revenue, but they did add a couple more vacant buildings to the inventory of more than 400 commercial and residential properties already on the market.
Mark Tigan, professor of community development and planning at Clark, said a focus on big developments is common, but not enough to jump-start a true revival.
“A good public policy is to set aside assets for the interesting and eclectic mix that will draw people downtown, and interest the office workers, and eventually get full-time residences there,” he said.
City officials say that kind of approach requires funding Worcester does not have.
Paul D. Morano Jr., the city’s director of business assistance, said tax increment financing, or TIF, is the only incentive the city can offer right now. The funding mechanism is intended for large-scale commercial developments that are expected to increase future tax revenue for the city in return for up-front tax breaks.
Such developments are also expected to attract other investors, including retail businesses.
But investors and retailers are not flocking to Worcester yet, so today, when commuters disembark from trains at Union Station and cross a six-lane highway to reach downtown via Front Street, they are still greeted by the leftover portion of a rusting skeleton of a failed urban-renewal-era mall.
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It serves as a reminder that despite the progress Worcester has made, the former industrial powerhouse and cultural center remains a city in transition, grappling with shrinking tax revenues, weak public schools, and property tax rates that are higher than those of surrounding communities, according to the Worcester Regional Research Bureau, an independent public policy research organization.
“If you’re a business looking at your options, [the property tax rate] has to be a factor in your consideration of where you want to go,” said Roberta Schaefer, president and chief executive of the Research Bureau.
Schaefer’s organization has been working to persuade officials to update the city’s tax structure — from split residential and commercial levies to a uniform rate — to reduce the commercial and industrial property tax, which is 164 percent higher than in neighboring Shrewsbury.
Lower taxes could help, but there is no all-in-one formula for revitalization, say those involved in the process.
Tigan rattled off dozens of ideas of creative public policy that could shape development in CitySquare, including requiring developers to set aside pedestrian-level spaces with moderate rents for nonchain stores and restaurants. That could help attract more daytime foot traffic, he said.
He also suggested offering low-interest loans, loan guarantees, or working capital assistance to certain small businesses.
“It’s easy for it to look like the city doesn’t have an extra dime,” said Brent D. Ryan, a professor of urban design and public policy at MIT. To make CitySquare more attractive, he said, officials would have to make difficult decisions about reallocating existing public funds, which “requires strong and forceful leadership.”
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Berkeley Investments Inc., based in Boston, was the original owner of the CitySquare project in 2004. After making little progress, it sold half of the property in 2009 to Hanover Insurance Group, one of the largest employers in Worcester. Hanover is responsible for the improvements that have been made to date, and for recruiting the anchor tenants.
Barbara Smith-Bacon, a vice president at Berkeley, says her firm is bullish on the city, but cautioned that fully realizing the vision of a vibrant downtown will take time. She pointed to the success of Boston’s rapidly growing Seaport District as an example of where Worcester could be heading.
“In 1998, you could not buy a cup of coffee in the morning at the Seaport,” Smith-Bacon said. “Look at it now. That didn’t happen overnight.”
Berkeley Investments is holding on to its remaining 700,000 square feet of downtown land in hopes of developing it when CitySquare values increase.
Lonnie Shekhtman can be reached at Lonnie.shekhtman@gmail.com.
Correction: An earlier version of this story misstated Worcester’s commercial tax rate compared to neighboring Shrewsbury. The Worcester tax rate is 164 percent higher.