Community Development Corporations at a Crossroads

For nearly half a century, community development corporations (CDCs) have been a tool of choice for organizing and implementing grassroots economic development programs. Emerging in the aftermath of the civil rights movement, CDCs represented a more human scale approach to redevelopment of neglected, mostly minority, inner-city neighborhoods than the “urban redevelopment” programs they replaced. By design, CDCs served as a repository of leadership and technical capacity that was local and directly accountable to neighborhood constituencies. These characteristics were intended to make them effective “local infrastructure,” responsive custodians of authentic economic aspirations in the communities they served.

But 40 years is a long time, long enough for generational change to occur in national politics, economic policy, and market dynamics that drive the economy. As the CDC industry grew and prospered, its work became more and more concentrated in the production of affordable housing. This was in large measure a response to the availability of funding, the importance of housing’s effect as an economic multiplier, and the assumption that physical revitalization held great potential for uplifting people and environments distressed by years of disinvestment. That mission worked reasonably well as the housing industry, despite cyclical downdrafts, mostly prospered up to the market collapse in 2008.

But like all other housing producers, CDCs now face the sobering prospect of a housing market permanently altered by devastating price declines, lost equity, imbalances of supply and demand, financial uncertainty, and mounting pressure from a rapidly aging population.

In the push to make a mark and prove itself worthy of the large investments necessary to transform communities burdened by depletion and hopelessness, the CDC industry increasingly came to mirror traditional housing producers: focused on physical production and the built environment to the neglect of other less quantifiable, but essential aspects of community. Interest declined in quality-of-life factors such as employment opportunity, thriving schools, improved educational attainment, and adequate support for young people, which help build a fabric of social order and resilient culture that can sustain a community through economic ups and downs.

The current economic and housing environment presents CDCs with daunting challenges, not the least of which is an emerging “paradox of affordability.” For decades lack of access to decent, safe housing was assumed to be a consequence of high prices; hence the emphasis on making the cost of housing more “affordable.” Today prices for residential housing have fallen in some areas by as much as 30 to 50 percent. Atlanta, for example, has become one of the country’s worst housing markets, a leader in foreclosures, negative equity, and other dismal statistics. Despite this collapse, housing remains out of the reach of many who have no income, are underemployed, or work jobs that only pay a fraction of what similar employment paid in the recent past. In order for CDCs to remain relevant and solution-
oriented, they must recognize and address the fact that utility payments and commuting distance are, for working-class and poor people, factors in affordability at least as important as the sticker price of housing.

Increasingly, the anecdotal “ownership society” is being replaced by the “rentership society,” as auctions of foreclosed houses for pennies on the dollar to deep pocketed corporate investors suggest a future of widespread absentee ownership, even within previously stable, single-family residential communities. By some estimates, the United States is overbuilt by more than 1 trillion square feet of single-family residences, as millions of foreclosed homes sit vacant and preferences tip toward smaller housing footprints and transit accessible locations.

These circumstances are different from the urgent conditions that called CDCs into existence in the 1960s and ’70s, and they are certainly a departure from American housing norms of the past 50 years. Now more than ever, equitable development approaches will be important for redeveloping communities that have been devastated by the economic downturn.

Other emerging challenges are not even fully realized as of yet. Few communities are prepared for the massive spike in supportive housing and aging-in-place services that will be required by the growing numbers of older Americans. Escalating costs of energy will likely increase the volume of retrofitting activity, and vast amounts of vacant or underutilized commercial space may stimulate fresh thinking about adaptive reuse. These are areas where bold initiatives by CDCs could generate important new development models.

So what is to be done? There are no ready-made, off-the-shelf solutions. The CDC industry must be an innovator. It has to reformulate its affordability equation to reflect changed (and still changing) conditions. It has to become more facile in discerning market conditions and salient trends, while still advocating for the time-tested worthiness of organizing and capacity building. The CDC industry will have to be a determinant, more than a recipient, of future housing directions and outcomes.

CDCs must rise to the occasion or become less and less relevant. Only time will tell.

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