Property Investment In Revitalizing Neighborhoods: Gentrification, Urban Renewal, And Roi – An old house on N. Fargo Street near the intersection of North Williams Avenue stands in the shadow of a new multi-unit housing development, Dec. 17, 2015. Gentrification has driven many from these neighborhoods, which were traditionally home to African-Americans. families. Kristyna Wentz-Graff / Staff LC- The Oregonian/LC- The Oregonian/
Neighborhoods have evolved and changed since the dawn of civilization, but the idea of gentrification—when an influx of new money and new people transforms a community—has only emerged since the 1960s. And that is a complicated and often misunderstood term.
Property Investment In Revitalizing Neighborhoods: Gentrification, Urban Renewal, And Roi
In some communities, gentrification creates immediate distrust. That means the arrival of self-interested developers, investors and corporate chains replacing local, independent businesses – and a flood of well-to-do white people who inevitably displace the poor black and brown people who were there before.
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But for many neighborhoods, gentrification represents a much-needed investment. The local population welcomes the resurrection and revitalization of neglected and disinvested areas. Community leaders want capital investments that lead to better services, jobs, thriving businesses and other components of a healthy, vibrant neighborhood. As one West Baltimore resident put it, “How can we get gentrification in our community?”
Both views turned out to be correct. Gentrification doesn’t have to mean displacement—if the circumstances are right.
A U.S. Census Bureau analysis of demographic data from 2000 to 2013, released last month, confirms what community activists in many cities have long reported: Yes, gentrification often forces people out of their neighborhoods. An analysis by researchers at the organization I lead, the National Community Reinvestment Coalition, found that at least 135,000 black and Hispanic residents were displaced from their neighborhoods during the period we studied. In Washington, 20,000 black residents were displaced, and in Portland, Oregon, 13 percent of the black community was displaced during the decade. Our study report includes interactive maps so you can see what the data reveals about your neighborhood.
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But the displacement of people of color into gentrified neighborhoods has not been uniform. For example, Minneapolis had gentrification in 22 neighborhoods, but only one had indications of displacement. In Los Angeles, 73 neighborhoods were gentrified, and displacement occurred in 13 of them. The data showed displacement in only 22 percent of the settlements, which experienced an influx of new people and new money in the studied period. The rest showed no movement.
This suggests that investments in revitalization of poor neighborhoods do not need to evict the people who used to live there. Sometimes it is. But why not always?
The notion that gentrification does not always lead to displacement may seem counterintuitive to some, as the term is often used as a synonym for displacement. Indeed, if a settlement maintains the same number of dwellings but has an influx of new residents, displacement will inevitably occur. But in some places, investment and economic recovery appear to be occurring without immediate displacement, suggesting a capacity for long-time residents to remain and reap the benefits of increased property values - either the production of new housing or the use of empty units.
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In our study, we defined a neighborhood as “eligible” for gentrification if it was in the bottom 40th percentile of home value and family income in that metropolitan area in 2000. We identified a neighborhood as “gentrified” if it met three criteria: an increase in median home value, educational attainment and income by 2013.
Other research on gentrification suggests that ownership plays a key role in resisting displacement. For communities that have suffered decades of disinvestment, where banks won’t invest in small businesses or mortgages, gentrification finds few homeowners to reap the rewards of the new investment. A 2016 study by the Federal Reserve Bank of Philadelphia found that neighborhoods in that city lost affordable rental units at nearly five times the rate of non-gentrifying neighborhoods.
On the other hand, in lower-income neighborhoods where a significant percentage of residents own their homes, gentrification can be a life-changing event for some families, leading to the kind of wealth building that can dramatically improve their economic mobility.
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The neighborhood bounded by the southeast corner of Gallatin Street and Georgia Avenue in the Washington Petworth neighborhood is an illustrative example of the complexity of this issue. In 2000, the area had around 3,500 residents, 85 percent of whom were black. Home ownership at the time was about 80 percent. Today, the home ownership rate is 85 percent, and 63 percent of the people there are black, including Hispanics and whites.
Home values have increased from about $167,000 to $367,000 and continue to rise. We are seeing gentrification and the displacement of African-American residents in this area, but with the high level of existing home ownership, it is almost certain that some people will sell their homes for much more than they originally paid. Involuntary displacement is always a bad thing, but creating wealth for long-term residents is good. So how do we achieve less of the former and more of the latter?
Our study looked at data and patterns, but did not compare the policies and local practices that might explain them. But community leaders across the country have developed approaches to encourage investment and prevent desperation. For example, most states and many local governments offer limits or abatements on property taxes for long-term residents. This is known as a homestead exemption and is often offered to help seniors on fixed incomes stay in their homes even as their home values increase. For example, in Maryland, every county must have a 10 percent property tax credit for elderly or disabled homeowners. Washington, D.C., offers home tax credits for low-income seniors, as well as some suburban communities.
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There are other ways to help people stay rooted in their communities: giving tenants the opportunity and financing to buy their units; maintain and expand public housing; protect elderly and long-term residents from property tax increases; Enforce building codes and provide easy options for landlords to report bad landlords; Negotiating payment plans with delinquent homeowners; Community benefit agreements with investors in large projects to ensure that local people benefit from the investment; Developers offer higher densities in exchange for financing more affordable housing in their projects; establish a loan fund to help small business owners buy their buildings.
In Washington, a policy called inclusionary zoning requires that up to 10 percent of new or renovated apartment buildings be maintained as affordable housing. This is a good idea, but our study shows that it was not enough, or was not implemented well enough, to eliminate displacement in the city. The definition of “affordable” is not very helpful when the median household income for black Washingtonians is $42,000 and $134,000 for white Washingtonians. “Affordable” rent is still far more than the typical black family can afford.
Another finding from the study revealed a startling problem hiding in plain sight: While gentrification is a common term, it is not a common experience. A small number of booming metropolises have attracted the most investment, construction and demographic changes that fit our definition of gentrification. Other cities, towns and rural areas of the nation disappeared. Almost half of all gentrification has occurred in just seven cities: Washington, New York, Los Angeles, Philadelphia, Baltimore, San Diego and Chicago.
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This points to another serious and difficult political challenge. Not only is the nation’s population increasingly concentrated in urban areas—but investment capital and growth are even more concentrated.
This is what happened last year when cities across the country competed for Amazon’s second headquarters. Any of dozens of struggling Rust Belt or Southern cities could be transformed by Amazon’s investment. Imagine what 50,000 high paying jobs and a huge construction boom would have done for Detroit or Milwaukee. (Amazon founder Jeff Bezos owns the Washington Post.)
Some say that gentrification is by definition a process that displaces people. Perhaps part of the problem is the word itself. So if people don’t get pushed out when new money and people come in, what do you call that? Should we call this process something other than gentrification? Reinvestment? Revitalization? Integration? Or can the word gentrification suffice for what turns out to be a more complex matrix of factors that in some cases lead to stronger communities, in others displaced populations and, at least in the recent past in most places, absolutely nothing?
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Whatever you call it, we have a starting point, a baseline of data that shows that investment and displacement are related but distinct phenomena. That is important. Cultural and physical displacement occurs when people living in booming settlements are pushed aside to make way for wealthier newcomers. Understanding the difference between these phenomena helps community leaders, lenders, investors and politicians to promote sustainable investment and economic growth without destroying the social fabric of cities and neighborhoods. The benefits of urban living, access to work, cultural events and great schools should not only be available to the wealthy. Now we know: They don’t have to be.
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