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Staking a claim in gentrification

In a speech to Capitol Hill Housing’s annual fundraiser in Seattle, Denise Scott, LISC’s executive vice president for programs, plumbed the fraught topic of gentrification.  How can development be successful and equitable at the same time? The answers, Scott explains, lie in intensive investment guided by community residents and an unwavering commitment to affordable housing.

I must admit I struggled a bit with how best to talk about our topic for tonight: Gentrification.

It’s a word that points to the possibility of better housing, businesses, schools and parks in low-income areas. But it is fraught as well. Will long-time residents be displaced by rising rents and home prices? Will the fundamental character of the neighborhood be lost?

You are struggling here in Seattle with some of these questions just as communities across the country are. And I wish I could tell you there was a sure-fire formula to realize the benefits of reinvestment without running any of the risks. But, of course, there are no guarantees.

Some people talk about a tipping point—finding that place just before healthy development morphs into dislocation. But, I’m not sure it’s as simple as we’d like it to be. It’s not an either/or situation—poverty or affluence; blight or development; boarded-up storefronts or late-night dance clubs.

Everything about my 30 years in community development tells me those are false choices. I’m here and LISC is here and I think all of you are here because we don’t believe those are our only options. We care about revitalizing low-income neighborhoods.

And what’s more: We think we understand how to do that in ways that have broad economic benefits. I say that based on LISC’s own experience. Since 1980, we’ve invested nearly $15 billion in distressed communities—and, I can tell you first-hand: there is plenty of trial and error in that number. Some plans fall short. Some ideas don’t really help low-income people live better no matter how well intentioned they might be. But we learned those lessons and we moved forward.

Our primary mission when we started all those years ago was to give nonprofits the tools they needed to succeed. Back then, that was mostly about replacing blight with quality affordable housing—and housing is still the foundation for most of our work.

But, now, the conversation is really about raising overall standards of living. How do we make low-income communities good places to live, work, do business and raise families?

For us, that required a different way of thinking about our work, and we built a range of new partnerships to support this expanding landscape. This is what most people in my business refer to as comprehensive community development. This is our strategy at LISC now.

But one of the things that has never changed at LISC, and never will, is our deep belief that this must be driven by residents and the organizations that best represent them.

I don’t know about you, but we’re not in this to attract bars that sell $15 martinis and to build luxury condos. We care about grocery stores and farmers markets with fresh affordable food. We care about quality educational options that help shatter the myth that low-income kids can’t succeed. And we care that people can take advantage of good jobs and health care...that their families can play in clean parks and walk down safe streets and come home to a decent place to live.

Don't get me wrong. I know the hipsters and millennials have come to town. We all love them and the vibrancy they bring to any neighborhood or home. I have one still living at home with me! I'm sure these young people are welcome in Seattle, in all communities.

But it's equally important to preserve the existing character and people in these same neighborhoods. All of that is part of a healthy community. It all contributes to a good quality of life. When we make that our focus, then everything from building permits and police partnerships to graduation rates and employment training to gay venues and hipster bars becomes part of the same vision.

At the top of that vision should be affordable housing. There is no better safeguard against displacement in a community facing rapid gentrification. As a nation, we have an absolute crisis when it comes to affordability. And it’s particularly evident in cities like Seattle with high housing costs.

There is no way around dealing with this issue if we care about our cities—and just about every indicator, from job creation to tax receipts, tells us it is good for the broader economy as well. We need to build and preserve quality affordable housing—and lots of it. But that’s easier said than done.

We don’t need to look far to see neighborhoods that still struggle with the legacies of disinvestment and housing discrimination or the ripple effect those have had. Low-income communities of color, for instance, have had much less opportunity to build wealth. They have fallen even further in the recent recession and are recovering more slowly than other communities.

So this begs the question: how can we talk about redevelopment if we don’t expressly address the challenges that work together to keep people down? Because, here is the truth that some might prefer to ignore: In the long run, it makes far more economic sense to help the poor than it does to leave them behind. We need to stabilize their neighborhoods in ways that lift the people rather than only rely on high-income earners and the amenities they demand to spur change.

So, what works? Let me throw a bit of data your way. Over the years at LISC, we could walk down the streets of many neighborhoods where we were working and see renewed energy and hopeful residents. But we weren’t really sure what programs and policies were having a lasting impact.

So, we decided to do some research. We looked at 10 years of data for communities where we’ve invested—and in many places, invested heavily. We didn’t just look at residents of housing developments we funded or businesses we helped launch. We looked at the overall economic condition of the community.

We found, that on average, incomes and employment were nine percent higher than they were in similar low-income neighborhoods. People were realizing broad benefits from our investments. And yet there was little in the way of fast-moving gentrification, the kind that threatens residents.

And by the way, this is data we gathered during one of the worst economic recessions this country has ever seen. And yet, people and their neighborhoods were better off. Communities were more resilient because they were more economically diverse. And on the whole, there was not much displacement.

Why? Because community developers—nonprofits, for profits, city government, philanthropies—made deliberate choices that helped keep people in place. We were able to drive fundamental change but we could also protect the people who brought us to the neighborhood in the first place.

That takes a real commitment—to balance interests in the face of considerable market pressures. An area that’s near a downtown business district is going to have a different set of opportunities than one that’s more isolated. Both probably have assets that we can leverage. For some, its proximity to public transportation or anchor institutions like universities and hospitals. For others, it’s having a deeply held ethnic heritage that can attract healthy development. Local stakeholders can work together to make the most of those.

We also need to look at how government policies impact change. Are we inadvertently encouraging runaway development? Or are we being thoughtful about what it takes to better a community? Maybe, we need tax-exempt bonds to spur more mixed-income housing. Or maybe we could use real estate transfer taxes to limit destabilizing practices. Could we extend regulatory agreements to preserve affordable housing or look at targeted protections for renters? There’s a clear need to fight for responsible federal policies.

Successful community partners also must look at equity and racial justice as part of revitalization efforts. In many conversations, this is the elephant in the room. But we can’t ignore it. The numbers on economic inequality and the near-absolute lack of economic mobility for low-income people are shocking. If we want to lift the prospects of our neighborhoods, we have to lift the prospects of the people on the bottom of the economic ladder.

That’s a lot for any one organization to tackle alone. It takes all of us—neighborhood nonprofits and for-profits working with municipal and business leaders, philanthropic organizations aligning with corporate funders—to bring the pieces together.

And—always—residents have to be at the forefront of both planning and implementation. I get to travel around the country week after week and see these kinds of partnerships in action. And I can tell you that this approach works as well in San Diego’s Logan Heights as it does in Boston’s Roxbury neighborhood.

Let me describe a couple of specific examples. Harlem might just be the best known place in America that has come back in recent years. Admittedly, I’m a New Yorker. So, I’m biased. But I have reason to be proud. Over the last three decades, we worked hard to help develop close to 9000 affordable apartments—and that laid the groundwork for additional investments in businesses, the arts, schools and more.

In all of that activity, there is one essential ingredient: and that is non-profit ownership of affordable housing properties. If that hadn’t been built in, many of those 9000 properties would have flipped to market rate because the neighborhood has appreciated so much. Instead, the affordable housing developers made sure their properties were maintained as high-quality affordable housing.

So, for example, on West 145th Street, a two bedroom apartment, in a protected building rents for $700 a month. Across the street, in a brand new building, the same size apartment rent for well over $2000 a month. Harlem is safer, more attractive and more energetic than it has been at any time in the last 50 years—and low-income people are also benefiting from that change.

Shops and Lofts in Bronzeville - Chicago, IL
Shops and Lofts in Bronzeville - Chicago, IL

In Chicago’s historic Bronzeville neighborhood, housing has also been critical to stabilizing the area. There, we worked with local nonprofits to develop 1,400 affordable homes, with another 2,000 planned.

That’s what I mean when I say we need a lot of affordable housing. We need enough to meet the needs of renters and homeowners with low- to moderate-incomes, as well as those of higher earners who are now attracted to the neighborhood because of its rich history and easy access to downtown. Everyone gets to take advantage of a new grocery store and retail center and charter school—all coupled with programs that help long-time neighbors build their economic strength and live healthier.

So, what does this tell us about Seattle? What should everyone here tonight be thinking about as we look at development around Capitol Hill or the Central District? I realize Capitol Hill is one of the hottest real estate markets in Seattle. Hats off to Capitol Hill Housing for having the foresight to get in the game of preservation early. And for figuring out preservation strategies for HUD housing.

12th Avenue Arts in Capitol Hill - Seattle, WA
12th Avenue Arts in Capitol Hill - Seattle, WA

It’s those strategies that must be first on the list. Be the driver of affordable housing—especially owned and operated by nonprofits. Because that housing will secure current residents a foothold in their own neighborhood when the market takes off. And use tools at your disposal. I know there are folks in the room tonight who don't agree but Inclusionary Zoning might offer a few solutions. If nothing else, the debate will force you to consider many other options to achieve the same goal.

Second, take a close look at incentives and subsidies for locally based businesses. They bring much-needed goods and services to disadvantaged areas and also help to maintain the character of the neighborhood. They make neighborhoods more vibrant and create jobs. And they have a stake in a healthy future for the community in ways that out-of-town investors simply don’t.

Next, I would figure out ways to help people build skills to find good jobs. If we want our neighborhoods to be stronger, we have to give people the chance to move past minimum-wage and other low-paying employment. We need to offer them the chance to earn a decent living, take care of their families and save for the future. When they have more disposable income and places to spend it in their own community, everyone benefits.

We see this in our own network of what LISC calls Financial Opportunity Centers. These centers help people develop better financial and employment skills. And we also have new data on this work that shows it is really helping people make significant gains.

And, finally, cultivate strong leadership in the community. We can stand here all night and talk about what kind of projects and capital our communities need—but it is the people on the ground, working every day to make neighborhoods better places to live that are best positioned to determine what is going to work. Invest in those people and their neighborhoods will have a much better chance to thrive.

Let me leave you with this. The capacity to fuel healthy change is not built overnight. It is a long and painstaking process. As community developers, we don’t just focus on one thing. We have to be real estate investors and education advocates, health watchdogs and crime busters, job trainers and entrepreneurs. We have to be able to span generations, cultures and lifestyles and find ways to help everyone maintain relevance.

Change can be good. But the only way—the only way—we can pull all the pieces together is by asking residents what they want and need. Change always starts there. That’s how we succeed.

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