Progress begins downtown

Stroll past the jugglers and the sea gulls as you visit the boutiques and restaurants of Baltimore's trendy Harborplace - a one-time slum site - and you feel you're somehow part of an artist's drawing of what a thriving piece of downtown really should look like. Nearby, watching a group of seals cavort in an outside pool, is a long line of people waiting patiently to get into the recently built National Aquarium.

Stand with Robert Pease high up in Pittsburgh's US Steel Building and scan the array of new and rehabilitated landmarks below - from the sun-reflecting Pittsburgh Plate Glass headquarters and greenly lush Point State Park (once a rundown warehouse district) to new office towers such as Oxford Centre and remodeled Heinz Hall, center of a proposed new arts complex.

Long gone, although the reputation lingers on, is the soft, smoky coal haze that used to hang so thick over the city that street lights had to be left on all day.

''The only way we seem able to convince people this is a decent place to live is to get them to come here,'' observes Mr. Pease, executive director of the Allegheny Conference on Community Development. That group of top local business leaders dates back to the 1940s, and played a key role in the crackdown on air pollution, the revamping of Point Park, and other civic rescue missions.

Drive along the once-rundown Mississippi riverfront in St. Louis and notice the restored shops and streets of Laclede's Landing and, nearby, the park with the majestic arch. Wend your way through many blocks of new downtown housing, offices, and hotels under construction and look in on such mammoth recycling ventures as the red-brick Wainwright Building, Louis Sullivan's 1891 masterpiece , which now serves as a state office building, and Union Station, which, in the hands of Maryland's Rouse Company, is fast becoming St. Louis's answer to Harborplace.

The efforts are varied, but they all add up to economic development. A lot of it is going on in city cores across the Midwest and Northeast. It is by far the most visible and dramatic sign of progress in the region's battle against urban decay. Often it is the result of years of careful planning and close collaboration between local government and business leaders.

James O'Flynn, president of the St. Louis Regional Commerce and Growth Association, remembers that when he graduated from college in the mid-'50s, the Famous-Barr department store and the financial district were ''the only things good about downtown.'' Improvements since then, he says, stem largely from a plan evolved by city and business leaders. He attributes the ''saving'' of downtown St. Louis to several factors: the decision to complete the arch and to build a new stadium downtown rather than to the North, as some proposed; and a longtime Missouri law prohibiting branch banking, which anchored business activity downtown.

James Rouse, chairman of the Rouse Company, which launched many of the nation's most successful downtown shopping malls, has long stressed the importance of vision. In his view, those who care about cities must leap over a preoccupation with urban problems to visualize what cities really could be like if they worked and charted a course of action.

Most urban experts say the involvement of top local leadership in clearing the way and getting needed government dollars has often been vital to downtown development successes. Recently, Baltimore Mayor William D. Schaefer, now in his fourth term and widely considered a master in snaring every available federal and state dollar, set up a number of quasi-public commissions (with fewer public-participation and disclosure requirements than most public bodies) to speed up development action.

Federal aid through Urban Development Action Grants (UDAGs) and Community Development Block Grants (CDBGs) is widely regarded as crucial. In some cases it has helped cities reach a certain economic threshold where the private sector picks up the momentum.

Baltimore developer Robert C. Embry Jr. notes, for instance, that a few years back, no developer wanted to build a hotel in the city's harbor area without a $ 10 million UDAG. But when a harbor lot recently became available, ''there were at least 15 developers falling all over themselves to get it without any sort of public assistance.''

Generally the downtown development boom is credited with giving a needed boost to local morale, increasing entry-level jobs, and, eventually, improving the city's tax base.

Baltimore's Harborplace, which drew more visitors in its first year than Disneyworld and brought in more than $1 million in local taxes, has given the city ''sparkle,'' says the Melvin Levin of the University of Maryland's School of Social Work.

But some neighborhood leaders argue that the benefits of downtown development do not trickle down to the neediest and alone are not enough. Some political leaders accordingly insist on spending as much in government subsidies in neighborhoods as in a city's core. San Francisco requires downtown developers to build low- and moderate-income neighborhood housing in exchange for the privilege of downtown action.

Chicago Mayor Harold Washington's proposed new economic master plan would award extra help to the poorest neighborhoods and require downtown developers using city subsidies to buy 25 percent of their supplies from local companies owned by women or minorities.

A growing number of sophisticated neighborhood groups are quashing some of the criticism, too, by helping finance widely scattered commercial development.

Walk around Pittsburgh's East End, for instance, with David Feehan, director of East Liberty Development Inc., and he'll show you just which businesses are coming back and where the new jobs are in this rundown, racially mixed, blue-collar neighborhood once known as the city's second downtown.

The revitalization project aims at recruiting minority-owned businesses in particular. And Mr. Feehan clearly sees no reason for tolerating deterioration in any part of East Liberty. Passing a tavern which is a reported hangout for drug dealers, he insists: ''There's plenty you can do about something like this. You can keep after the police to crack down on it, or buy it and put the place out of business.

''If all I do is build confidence in this area, it will eventually work,'' he adds.

Several hundred miles to the east in Indianapolis, Joseph Perilli, executive director of the Metropolitan Area Citizens Organization (MACO), is trying to work similar wonders in a 20-acre neighborhood on the city's north side. He describes his organization as a broker between neighborhood groups that set policies and private developers that carry them out.

Although MACO is involved in both housing and commercial development, its first priority is with the latter. ''That's where most of the visible blight is, and if you can make money off that, you can use it for other things,'' Mr. Perilli explains.

MACO's major accomplishment to date: the rehabbing of Devington Plaza, a shopping center where the vacancy rate was high and remaining owners refused to make repairs. MACO, funded in part by the foundation and business-supported Local Initiatives Support Corporation (LISC), which is helping 240 community groups around the country, will get half the profits as half-owner. ''If this country were as committed to restoring neighborhoods over the next 50 years as it is to defense spending, we wouldn't have a problem,'' says Perilli.

Many of the funding is increasingly coming from American business. Recently the First National Bank of Chicago set up a $100 million loan program to help revitalize both businesses and housing in distressed neighborhoods in that city. Others, such as Bank of America, have contributed through LISC to help in various urban efforts.

In some cases a corporation has taken the lead in revitalizing its own neighborhood. When the owners of the Ralston-Purina Company decided some years ago to stay and expand their headquarters in St. Louis rather than head for the suburbs, they soon realized they could not ignore the increasingly shabby south-central neighborhood around them. ''It was very much a slum,'' recalls Fred Perabo, a Ralston lawyer. So for a mix of reasons, including protection of its own investment, Ralston embarked on a 140-acre housing project, with the help of substantial urban-renewal funding.

Mr. Perabo, now president of the LaSalle Park Redevelopment Corporation, which did the job, drives a visitor around what he calls ''the campus'' - a mix of new public-housing apartments and restored century-old brick homes. It is home now to 1,400 city dwellers. Ralston's effort was recently singled out from 60 contenders for the George S. Dively Award for corporate leadership in urban development.

Business' rapidly expanding view of what action is in its own self-interest is helping considerably in the citywide fight against urban blight. Some local groups, such as Pittsburgh's Allegheny Conference, now involved in everything from improving local schools to infrastructure, took that broad view early on, when city air pollution hampered company recruitment efforts.

''It's terribly important that it be a mandate on the part of business leadership to make sure that our major urban centers don't go bankrupt,'' says St. Louis's Mr. O'Flynn.

R. Scott Fosler, co-editor of a Committee for Economic Development book on case studies of public-private partnerships, insists that the once-clear distinction between business operations and philanthropy is no more. ''Business is beginning to see giving programs as investments rather than throwaway money, '' agrees Pittsburgh's David Feehan.

Most urban experts agree that recent economic development efforts have left cities of the ''rust belt'' better off than a decade ago. Pablo Eisenberg of the Washington-based Center for Community Change, says: ''It's not necessarily going to bring in the millenium, but it is certainly a chipping away.''Next: Improving the overall quality of life in cities