STABILIZING EQUITABLE COMMUNITIES: Gentrification, Displacement, and Markets

August 13, 2014

It wasn’t long ago, when regional rail-trail conversions were the leading strategy for creating multi-use non-motorized travel corridors, that the biggest opposition came from suburbanites fearing that the bike paths would bring intruders (meaning poor or Black people) into their backyards and lower their property values.   Today, as the action has shifted to our reviving cities, there is opposition from low-income residents worried that the neighborhood improvements they’ve demanded for decades – better transit, bike facilities, parks, street lights, new construction – will attract upscale newcomers, raise property values, and cause displacement.

The fears of the suburbanites were always groundless. But, unfortunately, the fears of inner city people – especially in reviving cities such as Boston, NYC, Chicago, and San Francisco – have a strong basis in fact, especially around transportation facilities – a recent study found that rents go up about $43/month for each 100 meters closer to a station. The working class Davis Square where I once hung out disappeared with the new T stop. Planning for the Green Line extension to Somerville’s Union Square has unleashed property speculation and driven up rents. Smart investors are already gobbling up property along Dorchester’s future Fairmont Line.

THE LIGHTENING ROD EFFECT

It’s not that the streetscape improvements, transit access, bike paths, green space, or public buildings are the real cause of the upscaling. Larger demographic, economic, and historic pressures have built up around certain cities like a gigantic thunderstorm roiling with electric charge. The power surge doesn’t flow everywhere – its starts downtown, along the waterfront or on hilltops, in areas with desirable houses or open space, and where it’s possible to easily get to downtown workplaces without using a car, while at the same time easy to use a car to get out of town. Other places, lacking these amenities or having some negative characteristic (too much crime, too many poor people, too Black) are skipped – nationwide, a recent study found that for every “neighborhood that’s gentrified since 1970, 10 have remained poor and another 12 have slipped into poverty….racial composition did in fact have a significant effect.” In those that did gentrify, what moved a run-down neighborhood on to the hit list, or even transformed an undesirable location into something that upper-income people found attractive, was often new public investment. Sometimes small, sometimes major, these local improvements simply provide a lightning rod for the surrounding energy, focusing attention on a particular place and unleashing the creative destruction of profit-seeking.

The recent move of the better-off back into the city may seem like the impersonal and diffuse working out of personal choices and market dynamics. But markets and choices are shaped by policies. The rightward tilt of politics in recent years, both in the US and internationally, has created escalating inequality giving the upper 20% of our own population and the top 1% of many less stable nations enormous unneeded wealth, which they’re using to buy property – driving up prices in their preferred neighborhoods, pushing the next income layer of renters and buyers into other neighborhoods, and ratcheting up price inflation across the entire housing market.

However, the impact of all this can – must, and can only – be also addressed through public policies and programs. In fact, unless public officials begin implementing ways to create more sustainable conditions for middle-income and lower-income residents, our cities are likely to get strangled by their economic “success” – just as the success of Kendall Square has made it too expensive for new start-ups to locate there. True: given our messed up tax system it is new development and rising property values that provides the funds for physical improvements and urban services.   But it’s also true that a city’s vitality depends not only on its attractiveness to young professionals and rich investors but also, to an extent we seldom acknowledge, on its cultural (meaning ethnic and racial and place-of-birth) diversity and the presence of the rest of the workforce (meaning middle-income and poor families).

MORE IS NOT ENOUGH

Simply building more will not eliminate the pressure on middle and low-income families. In theory, a gargantuan increase in the amount of new housing would create a more fluid and affordable market. Reform of our damagingly old and dysfunctional zoning laws (unfortunately killed in the most recent Legislatative session by real estate lobbyists) and more intelligent mortgage criteria would certainly help. But it would take nearly 30,000 new units over the next six years to merely keep up with current demand, and many more than that to bend the cost curve down – and only 3,200 are on track for completion in the coming year, almost all of which are downtown luxury condos. We simply can’t build our way out of this crisis. In San Francisco, advocates are promoting a ballot initiative requiring at least 30% of new housing to be reserved for middle- and low-income families. Developers say this ignores the financial reality of new construction. Advocates disagree, saying that the limited amount of developable land makes it impossible to satisfy the high-end market, meaning there will never be significant spillover to middle-income or low-income segments.

Given the growing inequality of our society as a whole, if left to itself the real estate market will continue its current tilt towards the highest end of the luxury market, with negative spill-over effects on everyone else. The solution, therefore, is to change the market by changing the context in which it operates, to intervene in the market to change the profits to be made (or not made) for certain types of development, and to reduce or eliminate market pressure on some percentage of our city’s housing.

THERE ARE WAYS

Success requires using the full range of strategies. The city has to help create more housing in ways that protect its long-term affordability – lowering construction costs by using tax-foreclosed and city-owned land, using limited-equity ownership contracts, subsidizing mortgages in ways that translate into partial public ownership, mortgage pools for low-income borrowers, etc. This also requires an expansion of home-ownership training programs and mutual-support groups to strengthen families and communities. For those unable to afford to purchase, we need family-appropriate (e.g. multi-bedroom) scattered site public housing programs that are well designed and well run as well as more rent subsidy programs – some of which can be negotiated with developers seeking development rights or who have been found in violation of building codes (the offer is to avoid criminal prosecution by fixing up a unit and renting it at below-market levels).

Boston is starting to move in the right direction: there are plans to turn nearly 200 vacant lots along the new Fairmont Line into one- to three-family homes with about 400 units, although it’s not clear that the properties’ financing and ownership will be structured in ways that preserve their long-term affordability or just released into the market. In addition, the city has foreclosure-ownership of two huge lots, the old Cote Ford car dealership site in Mattapan and the three-acre former Maxwell box warehouse in Dorchester. Both provide huge opportunity for both local economic development and housing.

And for those who do want to move out of their old neighborhoods, we need much more aggressive state-wide enforcement of anti-discrimination laws as well as more effective “anti-snob zoning” program in the suburbs.

Those of us who favor expanding opportunities for people to walk and bike, want to increase access to green space in every neighborhood, care about the quality of streets, and believe new construction can help create local jobs – we need to expand our focus and demand that public investment walk on two legs: one leg for upgraded facilities and environment, one leg for population stability and support.

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DEMOGRAPHIC CHANGE – THE DRIP AND THE FLOOD

Americans are always moving, so some turnover is normal. Over time, the cumulative effect of individual decisions – heavily influenced by differing (and unequal) opportunities available to differing racial/class groups as well as the desire to be around people similar to oneself – flow into larger patterns. Neighborhood change is not such a bad thing when it happens slowly, with potential movers able to freely make informed choices, communities able to stay or rebuild connections, and no one losing their financial shirt or personal dignity.

Gentrification – the arrival of people with (or from families with) more disposable income – is not, by itself, a bad thing for inner city areas, or any community. (Adding quality-of-life amenities to keep middle-income and professional families from leaving is a key strategy for struggling Gateway Cities such as Lawrence.) The newcomers attract more businesses; bring new cultural energy; are able to demand more attention from public officials; have skills and resources that can help a neighborhood organize itself to deal with local problems. Obviously, it’s not that low-income or non-white communities can’t do some of this for themselves – the Dudley Square Neighborhood Initiative is just one of many successful Boston examples. But the presence of newcomers can be a positive addition to the mix, despite the tensions inherent in the new class and race combinations.

However, there is a point, a tipping point, when gentrification become displacement, when property costs and rents go above levels affordable by the majority of existing residents, when stores and churches that cater to their needs begin to close.   And sometimes, as has happened all too frequently in Boston history, this type of population shift can be the result of a deliberate, brutal, attack. When I first arrived in Boston the big issue was the massive destruction of affordable homes across the Roxbury and South End routes of the planned Inner Belt Highway, intended to let suburban professionals get into or through the city more easily. (The fight against the Inner-Belt is one of the great democratic insurgency success stories of this region and the nation.). Urban Renewal’s destruction of the ethnically mixed working class West End had already happened. Still unfolding was the racial blockbusting along Blue Hill Avenue, a vicious process that wiped out the city’s Jewish community, that was set off when the city’s major banks responded to the demand to stop discriminating against non-white mortgage seekers by bankrolling the Boston Banks Urban Renewal Group (BBURG) scheme.

MARKETS ARE MADE, NOT BORN

In the post-WWII era, urban transformation was deliberate policy by both corporations and governments through highway construction, continuing racial discrimination in mortgage and GI bill benefits, and the resulting sprawl. Today’s population-shifting pressures are more subtle, but no less powerful. Although it isn’t hard to point out the complimentary government and business actions that have shaped the larger contextual dynamic, it doesn’t feel like anyone is directly forcing empty-nest baby boomers to move back to the city or directly forcing Millennials to stop buying cars and preferring to work for urban firms located near a subway stop. And, so long as it’s legal, no one can blame businesses for trying to make money from this situation.

Markets have become a fetishized idea of late, as if all good things flow from them. But, as with highways, we’ve learned that letting markets expand too much tips the balance towards negative rather than positive impacts. Markets are a human creation whose operations and effects are formed by the rules of the surrounding society. After the Great Depression and the horrors of WWII, Americans wanted a better, more hopeful life.   There were a lot of ways these deep desires could have been (and were) realized, but the primary strategy offered by the combined efforts of the automobile, real estate, construction, and consumer product industries – expressed through a long list of federal government policies they pushed into place – was suburbanization. White people (African-Americans were mostly excluded or channeled into separate and inferior situations) moved out of their crowded, inner-city neighborhoods full of old buildings, extended families, and noisy street life and drove out the expanding highways to new single-family homes with green lawns on cheap land with new schools and social status.

Behind the escaping movers, city finances collapsed as businesses followed their owners, executives, and workers into the suburbs, culminating with New York City’s near bankruptcy in 1975. More recently, the Internet was supposed to be the final straw, allowing people to do anything from anywhere and destroying the last remnant of urban advantage, easy communication and innovation-sparking cross-specialty interchange. Not surprisingly, for most of the post-WWII period the headlines were about the death of cities,

If large segments of the public hadn’t enthusiastically bought into this version of the American Dream it wouldn’t have happened. But making it the primary choice available out of the spectrum of options was a top-down process rather than a bottom-up demand. European countries, for example, mostly rebuilt their even more bombed-out buildings rather than move people out of them.

But moving to the suburbs is so twentieth century. In the twenty-first century, urban resurgence is the big story. The re-urbanization of America, the much headlined move back into the cities by empty-nest baby-boomers and Millenials, is more of a bottom-up phenomena. Although federal policies have become less anti-urban in recent years there has been little pro-urban tilt. And while businesses tied to those populations have been rushing to grab space downtown, further raising the pressure on inner-city land prices, this started as a catch-up effort rather than a proactive strategy.   American re-urbanization is partly a reflection of global tendencies – people have been crowding into cities in growing numbers almost everywhere. It’s partly a reflection of the economic depths to which cities had fallen, along with their land and rent costs, and how dysfunctionally far out from their work places new home seekers were finding it necessary to go before they could afford to buy.

GAIN AND PAIN

Still, the rebirth of cities owes a lot to the efforts of urban leaders and taxpayers.   The majority of the growing market price of downtown property is shaped by what’s around it — the surrounding infrastructure, the quality of the environment, the amount and type of business activity, safety, and a dozen other attributes determined by public action, taxpayer investment. By skimming off the luxury opportunities, private investors are reaping what the taxpayer has directly or indirectly sown. And the public has every right to recapture some of that value for the benefit of those caught in the grinding gears of that change.

If we want to have both urban upgrading and demographic stability – or at least keep the pressure for population changes within acceptable levels – we need to directly and explicitly address the land use market. Not only that, we have to deliberately and effectively limit market dynamics to some extent, softening its impact on some properties, entirely removing other parcels and buildings from the market.

Markets will not disappear. But they must be shaped. The only way to combine city-wide (perhaps regional) economic growth and population fairness requires us to mediate the impact of our market success.

As befitting his history as a Building Trades official, Boston Mayor Walsh is emphatically pro-development, with a particular emphasis on downtown growth, along with the traditional accompanying focus on traffic and parking. But he also has a deep commitment to spreading the action around. However, we’ve learned that while a rising tide lifts all boats, it does so disproportionate, with those who have getting the most of the more. We’ve learned that growth by itself will simply trigger more displacement. The big question is whether the new Administration is committed to using every available tool, and pushing to create new ones, to harness investor’s energy for social equity and neighborhood stability in lower-income areas – perhaps framing it, echoing the Catholic Church, as “a preferential option for the poor.”

There is a certain strain of both urban and suburban life that is purely anti-growth. But at best that’s a nostalgic impossibility – more often, it’s a gloss for racism and exclusionary snobbery. Change is the only permanence; it is what keeps a city healthy and flexible. In any case we’ve got little choice: we’re in the middle of a land boom which may slow down but, given that new land is hard to create, is not likely to go away anytime soon – at least not until climate change floods or another generational culture shift once again send people fleeing. The only question is if we allow the booming market to shape us into the increasingly unequal and segregated patterns it inherently creates , or if we shape the market to preserve those qualities of life that we want to preserve.

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Thanks to Jim Campen for comments on previous drafts. Any remaining errors or lapses of good judgment are my own responsibility.

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Related previous posts:

>IMPROVING LIVABILITY, CONTROLING DISPLACEMENT: Can You Upgrade a Neighborhood Without Destroying it’s Community?

>GETTING MORE EGGS FROM THE GOLDEN GOOSE: “Nobody in this Country got Rich on their Own.”

> THE NEXT MAYOR’S BIGGEST CHALLENGE: Creating Prosperity by Lifting the Basement Instead of Raising the Roof

 

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posted in CREATING SUSTAINABLE CHANGE by Steve Miller

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4 Comments to "STABILIZING EQUITABLE COMMUNITIES: Gentrification, Displacement, and Markets"

  1. Steve Miller wrote:

    Mouse (?): You’re right that we currently have very inadequate tools for creating a more equitable, sustainable, and livable housing environment. Zoning was created to deal with the enormous public health hazards that an unregulated land-use market allowed such as toxics spilling out of workplaces (after poisoning the workers) into the surrounding neighborhoods. Separation of uses was the initial strategy and today’s zoning reflects that history. We’ve now learned that we need more nuanced tools, including better zoning as well as better environmental protection laws. Unfortunately, the recent effort to update Massachusetts’ dinosaur-era zoning laws was blocked by developers who wanted to remain able to exploit it’s loopholes. Maybe next year…. Steve

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