Strengthening Weak Market Cities

The decade of the 1990s was a time of growth for some, but not all, American cities. Fifty-five percent of metropolitan areas with populations over 100,000 saw their populations diminish, stagnate or grow only modestly. Suburbs account for the majority of growth in most cities, while the core inner-city neighborhoods saw decreasing populations. Cities with these limited growth characteristics are termed “weak market cities.”

Most cities and neighborhoods do not compete well or grow in a weak market. For many, the shift from a manufacturing-based to a knowledge-based economy contributes to their declining market strength, which is further eroded by factors such as residential preferences, declining school quality, the reality or perception of rising crime, racism and job shifts due to a change in the area’s economic base.

Addressing these deep urban problems is beyond the scope of most CDC abilities. But there is a fair amount that CDCs can do to help attract residents and businesses to inner-city neighborhoods.

Preserving and developing affordable housing continues to be important for both strong and weak market cities. Strong or “hot” market cities contend with issues such as gentrification and displacement. Weak market cities face continued population loss and stagnant economies. Some of the primary challenges facing residents in weak market cities include:

Loss of home value and equity. For most families, home equity is the primary source of wealth. For African-American and Hispanic homeowners, home equity represents more than 80 percent of net worth. However, for homeowners in weak market cities – many of whom are low- and moderate-income – owning a home is not always an asset-building strategy. Many are losing equity because of declining property values or experiencing negligible growth in equity because of a historical depression in housing values compared with other locations.

Diminishing tax base which leads to fewer public amenities and services. Depressed housing prices in weak market settings translate into a diminished tax base, which in turn means limited city revenues for improving schools, police protection, transportation services, parks and other critical city services.

Large-scale vacant and abandoned property. Continued out-migration has led to the abandonment of a great deal of property in neighborhoods within weak market cities. Such abandonment often contributes to an environment of crime and neglect, deters new investment and fosters additional abandonment.

Concentration of poverty and loss of social networks. The flight from weak market cities has often been a flight of minority middle- and working-class families looking for places where city services are better and where homeownership is more likely to build equity. While the 2000 census showed a decline in the concentration of poverty in many inner cities, it is still a reality many weak market neighborhoods continue to face.

Lower median income. Finally, declining or slow growth directly correlates with depressed household incomes. A report from the Brookings Institution indicates that cities with a median income of less than $20,000 in 1989 grew less than 1 percent – only by .3 percent – during the 1990s, while cities with a median income of over $30,000 grew by 18.9 percent during the decade.

To respond to these challenges, community development strategies must strengthen existing neighborhood markets to make them more competitive as places to live, work and invest, stimulate private market investments to bring people and capital into these areas to create mixed-income communities of choice, and promote equity by ensuring that residents have the capacity to act as full partners in guiding investment in their neighborhoods.

Recently, the Community Development Partnership Network published A New Framework for Community Development in Weak Market Cities, based on the experience of four weak market cities – Baltimore, Cleveland, Philadelphia and Pittsburgh – which offers 10 steps for revitalization. Individually some of the steps are not new to community development, but taken as a whole they provide a new, compelling framework for CDCs to consider.

1. Support the development of mixed-income communities. Many weak market cities suffer from high concentrations of poverty that isolate residents and inhibit their ability to build assets and access quality of life amenities. CDCs can help promote a range of housing types to retain and attract a diverse population. For example, Slavic Village Development in Cleveland, OH, formed a joint venture with a for-profit developer to redevelop an abandoned mental hospital into Mill Creek: 222 units of market-rate housing, 35 acres of parks and trails and seven acres of retail. From the beginning, Mill Creek aimed to attract middle-income homeowners back into the city and provide new amenities to neighborhood residents. The project has been successful in repopulating the neighborhood – it was one of only three Cleveland neighborhoods that gained population between 1990 and 2000 – and raised the property values in the surrounding areas.

2. Take a partnership approach. In each of the four cities, a community development partnership exists that enables the philanthropic, banking, corporate, government and nonprofit communities to pool resources. By creating the preconditions for revitalization, these partnerships help build the capacity of CDCs, improve the quality of life in neighborhoods and foster the market conditions that encourage homeownership.

3. Base revitalization efforts on market realities. CDCs in weak market cities recognize that residents and businesses have choices about where they live, shop and invest and that neighborhoods compete with one another for these investments within a regional marketplace. Groups like The Reinvestment Fund (TRF) in Philadelphia are developing more market-savvy approaches to neighborhood planning to help CDCs increase the competitiveness of their neighborhoods. Using an array of data indicators, TRF has created a typology that categorizes the city’s neighborhoods according to their strengths relative to broader regional markets, and matches investment strategies to their particular market challenges. For example, neighborhoods with low housing values, high levels of vacancy and substantial population loss require aggressive revitalization strategies such as large-scale site acquisition and development projects, while strong neighborhoods that can compete regionally, instead need policies to preserve affordability and counteract gentrification.

4. Make land ready for investment. Weak market cities typically have a substantial amount of vacant buildings and land. Lack of reliable information, inadequate policy tools, lack of financing and an absence of land assembly mechanisms are just a few of the barriers to redevelopment. Community-based groups like The Housing Alliance of Pennsylvania have begun to advocate for policy reforms to address these issues. The Alliance recently published the first-ever analysis of state law and identified 10 reforms that would make the acquisition of vacant and abandoned property faster, easier and cheaper. These recommendations are the basis for a bipartisan community revitalization agenda for the 2003-2004 legislative session.

5. Provide the tools that support development and rehabilitation. Weak market cities need incentives to encourage residents of all incomes to move in and buy homes. For example, the Maryland Historic Tax Credit provides a substantial tax credit to developers and homeowners who rehabilitate historic homes, regardless of income. Funds are also needed to provide an incentive to people above 80 percent of area median income to move into weak market neighborhoods. One example of such a program is the Washington, DC $5,000 federal tax credit available to out-of-town buyers within certain income limits who buy a home anywhere in the District.

6. Market neighborhoods. To draw residents back to the city, the Central Philadelphia Development Corporation, Live Baltimore and other nonprofit groups are developing marketing campaigns based on the unique assets that distinguish older, urban neighborhoods from their suburban counterparts. The Philadelphia campaign features actual residents highlighting the assets of urban living such as a sense of community, access to transportation, diversity, parks and cultural attractions – all of which compare favorably to suburban neighborhoods.

7. Develop unusual regional amenities. Successful strategies must have a “lure” that draws people to a neighborhood. In Pittsburgh, two CDCs are collaborating to develop the 16:62 Design Zone (named for the street boundaries), as the regional place for home improvement and design services. This new amenity has brought more people into the district and the neighborhood has become a magnet for other businesses, adding jobs to the neighborhood and helping to lease vacant commercial space.

8. Advocate for accessibility. As a result of years of deferred maintenance, many weak market cities are plagued by poor infrastructure such as roads, bus services, rail systems and sidewalks. In Baltimore, the Citizen’s Planning and Housing Association, a coalition of community, faith-based, business, civic and environmental organizations, is advocating for the Baltimore Regional Rail System. Once completed, the system will extend light rail and bus service within the city of Baltimore to better connect inner-city and suburban residents.

9. Make neighborhoods clean and safe. Responding to “broken windows” has long been a cornerstone of activity for many CDCs. In weak market cities, CDCs like the Detroit Shoreway Community Development Organization in Cleveland, OH, have developed an extensive array of resident-led and CDC-supported crime and safety activities including block clubs, code enforcement work and CB radio patrols to crack down on drug trafficking, enforce curfews and close nuisance businesses.

10. Work proactively. CDCs in weak market cities must work to preserve affordability through strategies such as affordable housing land trusts, tax abatements for low-income residents and vigilance against predatory lending practices in the community. In some cases, it may also mean that a CDC will need to take on issues such as the quality of neighborhood schools in order to stimulate reinvestment. Finally, CDCs will only continue to be effective in so much as they develop the tools to track changes, measure impact and demonstrate the leadership ability to translate that information into effective agendas for action.

Faced with on-going population loss and economic disinvestment, CDCs working in weak market cities must be much more goal-oriented in their approach to reinvestment to ensure impact. These 10 steps can help CDCs create the neighborhood preconditions that will spur revitalization and encourage families to move in and buy homes. Each step helps build quality neighborhoods that are clean, safe, inviting and diverse, and creates the market conditions that encourage residential and commercial investment, and as such they provide CDCs with a new way to think about fostering redevelopment in their communities.

 

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