Affordable Housing Activists

Can 'Gentrifying' Cities Create New Bridges to Wealth?

WASHINGTON -- Love, social equity, shelter to provide a chance for people in crime-ravaged, sometimes burned-out neighborhoods -- with those ideals the Rev. Jim Dickerson founded the Manna Community Development Corporation in this capital city’s inner city neighborhoods in 1982.
         Twenty-five years later Manna (and Dickerson) are still at the job, boasting a record of 1,000 units of homeownership housing along once-ravaged streets. 
        But the real estate world Manna operates in has turned upside down.  From a city of flight, Washington has turned into one of the world’s hottest residential real estate markets. In earlier years a buyer of last resort, Manna now has to compete with hot-to-go investors and speculators.
         Gentrification -- a middle-to-upper-class remake of the inner city, from empty nesters to young professionals with a taste for cities’ variety and excitement -- is gripping multiple Washington neighborhoods.  It’s also fanning out through cities ranging from Boston to Los Angeles, Atlanta to San Francisco.
        The big new challenge: to keep affordable housing for low-to-middle income people, ranging from single mothers just off welfare to aspiring teachers, police officers, fire fighters and clerks.  All are being squeezed by building conversions, escalating rents and property tax hikes in the suddenly chic, newly targeted neighborhoods.
        So what’s to be done?  One answer is inclusionary zoning -- a requirement that a certain percent of units in a new market-rate residential property be made available at reduced rates to people with limited incomes -- especially if government’s had any hand in the land transfer.  Washington’s new mayor, Adrian Fenty, has declared inclusionary zoning a mainstay of his housing approach.  And it’s gaining popularity, tried in New York, Chicago, Los Angeles, Madison, Wis., and other cities.
        Community land trusts, which enable non-profit community-based organizations to take land off the market and reserve it for construction of units for low-income people, are also starting to emerge.  The trusts work especially well if they’re begun before serious gentrification hits a neighborhood, when land costs are still reasonable.
        But there’s a serious problem. If a low-income person gets reduced-price property in a hot neighborhood, officials fear he (or she) may “flip” it, walking away with a sudden windfall.  The unit’s price would then rise to a much higher price, “unaffordable” to other low-income buyers.
        To prevent that, zoning commissions and housing authorities are limiting the capital gains and resale flexibility of low-income buyers -- and far too severely, Dickerson argues.  Some moderate restrictions to stop quick profiteering are OK, he says.  But, he adds:
        “Make the restrictions too severe and you lock the low-income person into an economic ghetto, so he can’t get a home equity loan, can’t use the asset for tuition, for the wealth building that’s the secret of the American Dream.”
        “Many of my liberal buddies,” says Dickerson, “like to throw around the radically hip phrase ‘redistribution of wealth.’  What they mean too often is more welfare and poverty subsistence programs like a $1.50 bump in the minimum wage or a $8-$10-an-hour job.  That will not get anyone out of poverty.”
         Dickerson’s position -- which he says leading CDCs across the country share -- is that steps beyond mere shelter are critical because, for Americans, homeownership is the bedrock of the savings and wealth creation that lets families pass on assets, and a headstart on life, generation to generation.
        The issue’s especially poignant for many of the families of color that the community development groups serve.  Critics note that African-Americans in particular were “frozen out” of the landmark asset-building opportunities of American history, starting with the Homestead Acts in the 1860s.  Depression-era federal homeowner default protections effectively “redlined” (excluded) high-risk (i.e., poor and black) neighborhoods.  Post-World War II low-interest, long-term loans for first time buyers were channeled overwhelmingly to suburbs and away from city centers and their heavy African-Americans populations.
        One result, notes Dalton Conley, chair of New York University’s sociology department, is that the typical white family in America today has net worth 10 times that of its non-white counterpart. “This ‘equity inequity,’” he notes, “has grown in the decades since the trumpeted civil rights triumphs of the 1960s.”
        “Building Wealth” -- increasing poorer Americans’ assets through CDCs, employee stock ownership and similar devices -- is America’s best hope, argues social activist Gar Alperovitz in a recent Aspen Institute report. 
        “Today the top 1 percent of Americans own 50 percent of our investment capital- a medieval difference,” Alperovitz warns. “Either we find alternatives, broadening ownership of wealth, or we’re in great trouble.”
        The irony is that practically no one’s ever mentioned -- until today’s gentrification wave -- the possibility of inner city housing as a seedbed of wealth for Americans who’ve never had it.  Capitalist and progressive at the same time, broadened homeownership to create wealth is a cause one could imagine resonating across the political spectrum.