Gentrification

Having grown up in a neighborhood being gentrified ( Capitol Hill,
Washington, DC 1970s), it was interesting to see your positive take on the
process, when "done right." Although somewhat true of my experience, there
was also an emotional loss of community that long-term residents of Capitol
Hill were struggling with (they lost). The consistent tension between new
and older residents reflected that loss (as wel as the income and racial
differences.) There was also a consistent pattern of real estate agents
purchasing homes at very low prices from long-term residents who were not
so savy about the market, and then re-selling them for significantly higher
amounts to newcomers who weren't so savy either. So ... one way to "do it
right" might be to inform the public about the market in objective terms.
I haven't seen this occurring in Chicago so far in the MANY neighborhoods
undergoing gentrification here.

Is there a way to "do it right" when it comes to local businesses and
community centers as well? When I grew up I was embrioled in an effort to
keep a local art gallery in communty hands, whereas a group of private real
estate agents wanted to turn it into an upper-end gallery managed by the
Corcoran Art Institue. We won. Now Market 5 Gallery, at Eastern Market, not
only housed a teen theatre group (how I got involved) for over a decade,
and continues to host local performing artists, but hosts 50-100
enterprises in a local crafts fair every week-end. It provides a major
attraction and multi-cultural community space in a way that old-timers, new
comers and tourists appreciate.

This was rare, however. In general, new, wealthier residents demand more
sophistocated products and services and can pay higher prices, but in my
experience this means both new businesses entering a neighborhood to occupy
run-down property, and new businesses replacing older businesses as
landlords can get higher rent from new businesses. In East Atlanta (GA),
where I recently worked, every month for the last 2 years a black-owned,
locally owned business (thrift stores, barbara shops, rib shacks) closes
and a white-owned, new resident-owner business ( antique shops, cafes,
gourmet foods) opens. Do you think these local businesses are re-locating
and opening up somewhere else? The new businesses have access to capital
and the older ones do not. The new businesses sometimes even have tax
incentives for locating in an "empowerment zone" which older businesses do
not. The older residents have neither the income nor the inclination to
patronize these new businesses, so they loose their former (albiet not very
hgh quality) services. In addition, few of the new businesses hire
employees form the neighborhood, in my experience. I know of at least one
case in Chicago when a group of Mexican-American business owners sued the
city and received compensation when they were edged out of the market by
competitive new businesses that received tax incentives from the city.

Given that our urban areas need economic and community revitilization, that
this is a critical part of sustainable regional growth, and that it's
happening all around us: I am interested in a more positive take on the
business development part of the gentrification process, and how it might
be "done right."

Thanks,



At 09:22 AM 6/8/99 -0400, you wrote:
>(I am posting a response to the list because I believe it to be of more
>general relevance)
>
>Alan,
>
>Speaking as one individual based on his personal experience living in a
>low-income, urban community who volunteered on a local housing review
>committee for a decade, I believe that your premise is flawed.
>
>I know we look at the "threat" of gentrification in certain areas. What
>that usually means is that wealthier residents move into an area and
>displace the former, lower income, residents.
>
>Unfortunately, that ignores reality. What happens is a few individuals
>move into vacant properties and improve them. IN THE RIGHT
>CIRCUMSTANCES, other "pioneers" follow. This is where the premise tends
>to get fuzzy.
>
>When the second wave of "gentry" move in, they generally offer to buy
>homes from current residents. The low-income residents have just
>received a windfall - some multiple of the current value of their homes
>as a lump-sum payment. They generally take the money and relocate to
>more prosperous areas.
>
>Let me recap what we see in the alleged gentrification. 1) Individuals
>made unilateral investments into depressed real estate. 2) Other
>individuals purchased additional real estate at inflated prices,
>enriching low-income residents. 3) Property values for the entire
>community rise as a result of #1 and #2.
>
>The remaining population, which CHOSE NOT to sell, now has increased
>equity in their properties. The problem? A municipality may reassess the
>properties and increase their taxes. I see two solutions to this. The
>best use of the area CDC's is in coordinating efforts to 1) Forbid the
>municipality from reassessing properties which have not changed hands in
>more than X number of years, or 2) Help the property owners to refinance
>their (or get) mortgages.
>
>Older residents can use reverse mortgages to increase their income,
>younger residents can use the extra funds (and, hopefully, lower
>payments) to maintain their homes. Both groups should be encouraged to
>have automatic property tax payments.
>
>Done right, this is a boon to all, with minimal cost (and a lot of
>praise) to the CDCs. Or maybe I'm just a stark raving lunatic.
>
>Keith Ferrell
>Technical Assistants
>1315 Walnut Street, Suite 500
>Philadelphia PA 19107
>(215) 546-4530
>tadirector@juno.com
>
>
>
>>
>>“Here's the issue: I am concerned, as are most of the southside's
>>residents, about what this development might do to the neighborhoods,
>like
>>gentrification, displacement and the like. So I want to propose a
>>housing trust fund that would be supported by a percentage of the new
>tax
>>revenue generated by the new development activity. This fund would then
>be
>>used to fund affordable housing programs like rehab, facade
>improvements,
>>lease-purchase programs, mortgage subsidies, etc. to protect the ability
>>of regular folk to stay in their neighborhoods.
>>
>>“I need advice on the research part to, first, prove that development
>>can have a deleterious effect on the neighborhood (gentrification,
>>displacement, etc.) and, second, figure out how much new tax revenue can
>be
>>projected and what portion of it is an appropriate amount to capture for
>a trust
>>fund.
>>
>>“We have a CDC on the southside and there is a fair amount of
>>community organizing going on and I think this would be a great issue to
>
>>galvanize the troops, based on the anxiety I am hearing about the
>Steel's
>>development plans.
>>
>>“Any thoughts?”
>
>_________________________________________________ __________________
>Get the Internet just the way you want it.
>Free software, free e-mail, and free Internet access for a month!
>Try Juno Web: http://dl.www.juno.com/dynoget/tagj.

Mary McVay
Microenterprise Consultant
773-274-1340 (USA)


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Mary,

I found every one of your points to be both relevant and valid. In
response, however, I believe that those very arguments show the path for
a resident nonprofit. Instead of exacting a financial penalty from
newcomers (which was proposed in the original posting), the nonprofit
could serve the community better in the following ways:

1) To prevent residents from being exploited by real estate speculators
and to encourage them to remain in the improving communities, the
nonprofit could disseminate information and actually doing door-to-door
visits to residents, to make sure they know the market value of their
properties. One problem of which I am aware is that residents of
depressed areas often hear glowing tales of the glorious future. Cash is
more believable.

2) In my experience, areas ripe for "gentrification" tend not to have
many viable businesses. However (allowing for my limited experience),
could not the nonprofit coordinate a business improvement program, aimed
at taking those inflated property taxes from the newcomers and channeling
them, in the form of loan/grants (a loan which does not have to be repaid
if the business remains for a designated period of time), back to the
existing businesses?

3) If existing businesses close, as you indicated, is it possible that
the businesses were not viable? You yourself mention that they are not
always of the best quality. This is the free enterprise system in
action: the best businesses survive, the weaker businesses die. Despite
this "natural selection", the nonprofit organization could easily provide
technical assistance to the existing businesses to increase their
survivability. Since this is what I do, I know that it is a VERY
inexpensive service to deliver.

4) One primary function of many nonprofit organizations is to sway public
opinion. The empowerment zone legislation is one area in which I would
expect the nonprofit organization to have some input. Use your influence
to ensure that existing businesses derive some of the same benefits as
new businesses. Further, put conditions on new businesses, requiring
them to document hiring from the area in order to receive or to renew
their incentives.

I guess what I am saying is: instead of creating a burdensome program,
why can't the nonprofit use existing staff to do plain old grassroots
organizing to effectuate change?
It's cheap, it's easy, and it works!


Keith Ferrell
Technical Assistants
1315 Walnut Street, Suite 500
Philadelphia PA 19107
(215) 546-4530
tadirector@juno.com


On Tue, 08 Jun 1999 10:00:29 -0500 Mary McVay <marymcvay@mindspring.com>
writes:
>Having grown up in a neighborhood being gentrified ( Capitol Hill,
>Washington, DC 1970s), it was interesting to see your positive take on
>the process, when "done right." Although somewhat true of my
experience,
>there was also an emotional loss of community that long-term residents
of
>Capitol Hill were struggling with (they lost). The consistent tension
between
>new and older residents reflected that loss (as wel as the income and
>racial differences.) There was also a consistent pattern of real estate
>agents purchasing homes at very low prices from long-term residents who
were
>not so savy about the market, and then re-selling them for significantly

>higher amounts to newcomers who weren't so savy either. So ... one way
to "do
>it right" might be to inform the public about the market in objective
>terms.
>I haven't seen this occurring in Chicago so far in the MANY
>neighborhoods undergoing gentrification here.
>
>Is there a way to "do it right" when it comes to local businesses and
>community centers as well? When I grew up I was embrioled in an
>effort to keep a local art gallery in communty hands, whereas a group of
private
>real estate agents wanted to turn it into an upper-end gallery managed
by
>the Corcoran Art Institue. We won. Now Market 5 Gallery, at Eastern
>Market, not only housed a teen theatre group (how I got involved) for
over a
>decade, and continues to host local performing artists, but hosts 50-100
>enterprises in a local crafts fair every week-end. It provides a major
>attraction and multi-cultural community space in a way that
>old-timers, new comers and tourists appreciate.
>
>This was rare, however. In general, new, wealthier residents demand
>more sophistocated products and services and can pay higher prices, but
in
>my experience this means both new businesses entering a neighborhood to
>occupy run-down property, and new businesses replacing older businesses
as
>landlords can get higher rent from new businesses. In East Atlanta
>(GA), where I recently worked, every month for the last 2 years a
>black-owned, locally owned business (thrift stores, barbara shops, rib
shacks)
>closes and a white-owned, new resident-owner business ( antique shops,
cafes,
>gourmet foods) opens. Do you think these local businesses are
>re-locating and opening up somewhere else? The new businesses have
access to
>capital and the older ones do not. The new businesses sometimes even
have tax
>incentives for locating in an "empowerment zone" which older
>businesses do not. The older residents have neither the income nor the
inclination
>to patronize these new businesses, so they loose their former (albiet
not
>very hgh quality) services. In addition, few of the new businesses hire
>employees form the neighborhood, in my experience. I know of at least
>one case in Chicago when a group of Mexican-American business owners
sued
>the city and received compensation when they were edged out of the
market
>by competitive new businesses that received tax incentives from the
city.
>
>
>Given that our urban areas need economic and community revitilization,
>that this is a critical part of sustainable regional growth, and that
it's
>happening all around us: I am interested in a more positive take on
>the business development part of the gentrification process, and how it
>might be "done right."
>
>Thanks,
>
>
>Mary McVay
>Microenterprise Consultant
>773-274-1340 (USA)

__________________________________________________ _________________
Get the Internet just the way you want it.
Free software, free e-mail, and free Internet access for a month!
Try Juno Web: http://dl.www.juno.com/dynoget/tagj.


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