Technology, skills put Boston on a one-way street -- up

From the 32nd floor of Boston's new Federal Reserve Bank building, Frank Morris looks down on the spire of the old 24-story United Shoe Company building.

"When I came to Boston in 1963," the bank's president reminisces, "that was the tallest building in the downtown area."

In those days, Boston was a rundown northern industrial city -- but without the industries. The once-flourishing textile and shoe firms were losing fast to cheap-labor competition overseas and in the Sunbelt. A once-thriving seaport, famous since clipper-ship days, was stagnant. The service industries lived among a tatter of well-used brick and brownstone buildings, hugging narrow and winding streets.

Boston was a secondhand city. Not yet an antique, it was too old to be fresh.

Now the Venetian-blindlike Fed tower is perched on the edge of a forest of lofty office buildings overlooking Boston Harbor. A construction boom, beginning in the Back Bay in the 1960s with the Prudential Center, is now the most prominent feature of Boston's bootstrap renewal.

The construction promises to continue for at least several years at the present $1 billion-a-year rate. Among dozens of projects in the works are a $ 300 million, 390-foot-tall Copley Place hotel-office complex and the recycling of the old granite Charlestown Navy Yard into market-rate housing. Hardly a week passes in Boston without an announcement for a renovation or groundbreaking of a new public or private office building.

Boston now ranks first place among major US cities in per capita redevelopment investment. Downtown has been transformed from backwater dilapidation into a national model, raising both the height of the offices and the consciousnesses of their occupants.

"We've dealt so long with failure, stress, and decline that our problem for the 1980s is how to deal with success," says Boston Redevelopment Authority director Robert Ryan.

Why the success? Boston's affluence reflects statewide strength in the job market, which recorded the lowest unemployment rate among major industrial states. Rapid growth in the high-technology industry has helped keep regional joblessness down. And like London, Boston is a convenient place to bring together high-powered financial, legal, and managerial talents. The quality of life helps keep the area's many entrepreneurs here, partaking of a varied urban culture (the Museum of Fine Arts, the Boston Symphony, a theater district which regularly sees pre-Broadway shows) and the deep-rooted traditions of New England seaside life.

Riding his crest, Boston is in the enviable position of having to decide which of many redevelopment plans to follow.

One factor in the decisionmaking is size: Unlike Midwestern cities, Boston cannot develop horizontally. Packed into a 48-square-mile chunk, it is, with 562,000 people, only the nation's 19th largest city. But it is at the heart of 3 million people -- the country's sixth largest urban area.

As a result, office space is at a premium. So is hotel accommodation. Boston drew 7 million tourists last year, but has only 7,000 hotel rooms and one of the nation's highest occupancy rates. Both these "tight" situations, however , will loosen up. Buildings now in construction or renovation will provide 3.5 million square feet of office space and another 3,400 rooms in the next few years.

Its compact size, however, has its advantages. The downtown area is all contained in two square miles. Downtown Crossing, a brick-and-benches outdoor mall on what used to be a traffic-congested corner, reportedly has the heaviest pedestrian activity in New England. The refurbished Quincy Market, where shopping becomes recreation, gathers not only shoppers but street musicians, outdoor acting groups, and social-action rallies -- and reportedly attracts more people a day than Disneyland.

Dealing with all this success, however, is not easy, and Boston has serious problems:

* Some observers worry that it may become "Manhattanized" -- built up into sunless canyons surrounded by impoverished outskirts. Even the so-called "gentrification" of older areas (upgrading rundown buildings into luxury condominiums and houses), while it beautifies the city, causes displacement of poorer people that strains a city where racial and cultural distinctions among black, Irish, Italian, and other communities are still sharp.

* The schools, under federal court control since desegregation began in 1974, are in poor shape. The firing of a reformist superintendent last fall and a $40 million budget overrun projected for this year spell trouble for the city's public education.

* The Boston area mass transit system, or "T," gets low marks from users. The nation's oldest subway has overrun its budget, only staying in operation late last year by a bail- out from the state. Most commuters -- however much they might want to use public transportation -- resort to cars.

* The city is approaching a financial crisis this spring, rooted in a tax revenue shortfall. Proposition 2 1/2 -- the voter- approved 1980 ballot question limiting property taxes to 2.5 percent of assessed value -- has hit Boston especially hard. It will force a budget cut of nearly $100 million, or up to a 40 percent reduction in city jobs. Police and fire services may suffer most. In addition, the city's bond rating has slipped.

"The [tax] structure is dead wrong," says First National Bank of Boston chairman Richard Hill, who has led the business community in urging major city and state tax changes. The pressure for reform is now acute, and many hope the paradox of a thriving private sector and a public sector impoverished by its own extravagance can at last be resolved.

On the firing line is Boston's controversial and glamorous mayor, veteran Irish politician Kevin H. White. A high spender with a taste for luxury and an abundance of street- level charm, he has nevertheless put together a talented team of city administrators and has been instrumental in attracting business to Boston.

And few can deny that, in his over 12 years as mayor, the city has completely turned itself around.