Tuesday, July 26, 2016

Gentrification: what do we know ?

How will development in New Bo affect Oakhill-Jackson?
A number of forces--economic, ecological, health and fashion trends--are driving middle-class Americans back to the central cities many of their own ancestors abandoned decades ago. If you're looking for affordable, walkable urbanism, you need to be looking in places built along those lines, and those tend to be places that were built a good while ago. Accordingly, central city populations have increased in recent years--in many respects, given the scope and durability of the economic and environmental forces, it's surprising the trend isn't stronger, although as the California city council member said to Dave Alden last week, "as long as they can afford a tank of gas for their new SUV" a lot of people are comfortable where they are.

Maybe climate change is just a data error, maybe we're now Saudi America with limitless supplies of cheap energy, maybe the economy will roll over and whimper in the face of the awesomeness of the next President. However, if not, it's likely this wave of gentrification is just the beginning.
Restaurant coming soon
Gentrification occurs where there is a "rent gap" between the actual and potential value of housing. (The corollary is that in the many places where there is not a "rent gap," gentrification is unlikely, but more on that later. So far gentrification has produced some considerable successes, along with some negative impacts. That sounds a lot like life in general, but let's not be too quick or too blithe in our dismissal of those impacts. Our common life can't promise good outcomes for everybody, but there need at least to be opportunities for all.

The argument for gentrification rests on data that show its positive effect on places, and the real absence of alternative paths for areas of concentrated poverty. Joe Cortright and colleagues at City Observatory have tracked urban neighborhoods from 1970 to 2010. A small percentage of urban high-poverty neighborhoods have seen dramatic improvement in economic conditions and increased population; the rest have stayed the same, or gotten worse, while losing population. Hence displacement occurs whether or not a poor neighborhood gentrifies, and gentrification doesn't automatically push out one poor resident for every middle-class interloper who moves in (p. 22). A study of Philadelphia neighborhoods found long-term residents of gentrifying neighborhoods were no more likely to move away than residents of neighborhoods that weren't gentrifying (Florida 2015b). Similar studies in the last decade of New York City by Lance Freeman and Boston by Jacob Vigdor turned up similar results (see Freeman 2005). Meanwhile:
Block by block, the neighborhood changes. The newcomers fix up old buildings. Galleries and cafes open, and mom 'n' pop groceries close. City services improve. Finally, the [initial waves of bohemians] are joined by lawyers, stockbrokers and dentists. Property values rise, followed by property taxes and rents.... To some urban planners, gentrification is a solution to racial segregation, a shrinking tax base and other problems. (Rick Hampson, "Studies: Gentrification a Boost for Everyone," USA Today, 19 April 2005; see also Hartley 2013 or the executive summary at Grant 2013)
New construction in Oakhill-Jackson
But if all were rosy there wouldn't be a debate, would there? Some opposition to gentrification is surely driven by fear of outsiders or resistance to change. But some of the negative effects of gentrification are materially real. The study of Philadelphia cited above showed the long-term residents who remained in gentrifying neighborhoods faced sharply higher housing costs. Residents who did move out went to places that were worse off, both in terms of socio-economic conditions and access to opportunity. Poverty became more concentrated, in parts of the city away from the educational, medical and transit facilities that attracted the gentrifying influx to those other neighborhoods (Florida 2015a). The price of housing is a widespread complaint, driven in some cases by speculation by outside investors (Chakrabortty 2014), and displacement has been noted since at least the 1960s, when the term "gentrification" was coined by London-based sociologist Ruth Glass (Slater 2014). And even in densely-populated, diverse cities, better-off newcomers don't integrate well with long-term residents (Lees 2008), while the most well-off are developing exclusive enclaves within the neighborhood (Badger 2015). New development impacts places as well, by removing historically-important landmarks; this "erasure of history" similarly occurs in formerly agricultural areas that have sold for suburban development (Rotenstein 2016).

Gentrification is a social force, and attempts to prevent it are likely to be as futile as attempts to roll back globalization. But it's not enough to say that change is inevitable; if there are consistent and permanent losers a society based on equal opportunity needs to respond. In fact, experiences with gentrification have not been uniformly bad or good (Grabinsky and Butler 2015). Preventing gentrification surely is doomed to fail, but can we make it "gentle" by tilting the process towards the good effects and away from the bad? Cities have a number of alternative responses to gentrification from which to choose:
  1. Richard Florida notes that gentrification has not occurred randomly, but occurs close to attractive transportation, park, education and health facilities brought about by public investment. This implies the capacity for cities to manage or at least mitigate the effects of gentrification. While successful cities have used investment in amenities to attract members of the vital creative class, "Building less divided and more inclusive cities will require a different and far more extensive set of public investments" aimed at less advantaged neighborhoods, "along with a renewed federal commitment to addressing the root causes of persistent poverty and concentrated disadvantage" (Richard Florida, "The Role of Public Investment in Gentrification," CityLab, 2 September 2015). In a light-hearted but seriously on point essay, Kristen Jeffers, Kansas City's "Black Urbanist," wonders why we're not doing this already.
  2. Some cities have tried inclusionary zoning to encourage mixed-income housing development. With this tactic, cities require developers to include below-market-rate housing, typically facilitated by public incentives, to get approval for a market-rate development (Stockton Williams et al., The Economics of Inclusionary Development, Urban Land Institute, 2016). New York City and San Francisco have been pioneers, others like Boston and Chicago have achieved some degree of success, and still other municipalities are considering inclusionary zoning measures. The study by the Urban Land Institute concludes inclusionary zoning "can be an effective tool for harnessing local real estate market dynamics to generate development of new workforce housing units under certain conditions" (p. 19, italics mine). The Benedict Park Place development in the Five Points neighborhood of Denver sounds like it resulted from inclusionary zoning arrangements, though I don't know for sure (Kaplan 2014). If requiring some housing be set aside at below-market-rate results in higher prices for other new construction, rent subsidies might achieve the same goal (Buntin 2015).
  3. I wrote about a year and a half ago about some cities that were trying to control increases in property taxes and rents. These have a certain face appeal, particularly in the case of long-term residents who are a particularly sympathetic group. (Boston requires 10 years' residence to be eligible for deferring payment of increased property taxes.) But a roomful of economists who might disagree on a lot of things are most likely to agree that price controls are awful--for a lot of reasons, but for our purposes the most compelling is that they are likely to discourage the very investment urban neighborhoods need. (Recall Cortright's evidence that areas of concentrated poverty over time either gentrify or get a lot worse.) I wonder if there's been time to evaluate some of these cities' experience with such programs?
  4. Charles Marohn of Strong Towns, noting the contribution of government policies to the housing problems faced by the less-well-off, argues for addressing housing shortages through deregulation. Building codes "don’t allow people to stake out their own spot with a modest investment in a small place that is only designed to last long enough to be torn down and replaced." Zoning policies prohibit living above or behind your shop, "the prototypical investment of the upstart." Mortgage and tax policies encourage the well-off to build big houses on large lots, while either requiring the poor to take on way too much debt or excluding them altogether. The problem with gentrification, from this perspective, is not that it displaces people, but that the displaced have such crappy choices of places to go (Charles Marohn, "The Gentrification Paradox," Strong Towns, 26 January 2015; see also Cortright 2016).
  5. Pete Saunders, who writes the Chicago-based Corner Side Yard blog, argues for managing gentrification through ongoing dialogue between long-term and new residents, facilitated by creating institutions that can serve as loci for such dialogue. He draws inspiration from the successful experience of Oak Park, Illinois, which in the 1950s and 1960s was able absorb a large number of black immigrants without spurring white flight, both through grass-roots efforts and the creation of a Community Relations Commission. While admitting that is not entirely parallel to contemporary gentrification, he notes complementary interests that could serve as the basis for negotiation: "Potential new residents focus on the value of moving into a new neighborhood.  Longtime residents of that neighborhood, particularly homeowners, might look at new residents as the means to bring the actual value back to their properties" (Saunders 2016; for the role of interests in negotiation see Roger Fisher and William Ury, Getting to Yes: Negotiating Agreement without Giving In [Houghton Mifflin Harcourt, 2nd ed, 1992]).
Like Saunders I believe in "all communities for all people." It's really the only way to have anything close to equality of opportunity in this country that values it so highly. Gentrification that shoves people farther to the margins is no better than hunkering down in enclaves and fighting any changes in the name of property values. We must look for ways to make things work for everybody.

[P.S.--As Kristen Capps of City Lab shows, issues of housing and neighborhoods have not been highlighted by either party so far this election year.]
Old store with building permit, Oakhill-Jackson
EARLIER POSTS ON GENTRIFICATION: 8/14/2013  12/4/2013  3/21/2014  6/23/2014  12/9/2014 ... or click on "Gentrification" in the conveniently-located list of labels along the right column!

John Buntin, "The Myth of Gentrification," Slate, 14 January 2015
Ben Kaplan, "This Week's #Urbanist Goodreads are All About Gentrification," We Create Here, 2 January 2015

VIDEO: "A Changing Mission," San Francisco Chronicle (2014), http://www.sfchronicle.com/the-mission/documentary/

Streetcar tracks exposed by construction on 7th St;
this has nothing to do with this post but it's a cool picture anyhow

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