10th Anniversary Post: The Gentrification Conundrum Revisited

Census tract 27: Row houses built in 2017 with appraised
values of $400,000+

Ten years ago this month, Holy Mountain looked at gentrification, the value of diversity, minimum wage laws, the city's new strategic plan Envision CR, as well as Indian Creek Nature Center's annual Maple Syrup Festival--which happens again in a couple weeks! We will be there to cover every sticky bite, of course.

The piece on gentrification, driven by the middle class's return to cities, surveyed an array of literature both pro and anti. (For other surveys of that array, see Cortright 2014a, Cortright 2014b, and Kaplan 2015.) It also introduced me to Chicago artist Theora Kvitka, whose cartoon I got permission to use at the top of the post.

Gentrification at its worst involves under-invested urban neighborhoods receiving a sudden influx of middle class residents that dislocate the people already living there, who are often working class people of color. (In Alyssa Cole's novel When No One is Watching [Temple Hill, 2020], the newly-arrived whites in a New York City neighborhood not only displace the black residents and yuppify their stores, they capture the blacks and use them for scientific experiments.) But as Joe Cortright has argued, the alternative to gentrification for most neighborhoods has not been humble stability but concentrated high poverty. So, the goal for policy makers should be to encourage investment without blowing up places where people are already living.

I wrote in 2014:

For the older neighborhoods in Cedar Rapids, such as Wellington Heights and the Taylor Area, I've advocated "gentle gentrification," of which I'll admit I have only the very vaguest concept. But this much is certain: We don't build diverse communities by pricing people out of the homes they own. It's difficult enough to overcome habits of class prejudice and segregation without adding a financial hit.

Cedar Rapids is not New York City or D.C. or Denver, but we too have seen changes. Data from the U.S. Census Bureau's American Communities Survey bear out some of those impressions, and although it's not clear how much of these changes are due to movement in and out, there are new poor areas developing at the edges of town.

Several census tracts exist mostly in core neighborhoods, although they do not correspond exactly to neighborhood boundaries.

Census tracts in the center of Cedar Rapids
(Sources: census.gov)

Data are from the 2000 U.S. Census, and the American Community Survey's five-year estimates published in 2014 and 2022 (so the data center on 2012 and 2020). See table at bottom of post for raw numbers. Note that none of these tracts became whiter between 2000 and 2020.

HARD HIT: Population DOWN, Income DOWN, Poverty UP

Census tract 19: Downtown, with portions of Mound View and Wellington Heights

Population -22.5%, Median Family Income +6.9%, Poverty Rate +69.3%

There's been some condo development downtown, with more under construction, which may account for the jump in income since 2010 (though to keep pace with inflation since 2000, median income would have to be about $47000). There are also some rooming houses in the MedQuarter, and some older housing stock in the neighborhoods in areas that remain poor. The low poverty rate from 2000 relative to today surprises me, because what housing stock we've lost was rickety (around Coe College, for example).

Of the six tracts studied here, this tract has diversified the most, going from 80.2 percent white (not Hispanic or Latino) in 2000 to 62.7 percent in 2018-22.

GENTRIFICATION COMING? Population DOWN, Income STEADY, Poverty UP or DOWN

Census tract 12: including Time-Check

Population -46.7%, Median Family Income +84.7%, Poverty Rate +114.9%

Census tract 26: including Czech Village 

Population -30.2%, Median Family Income +171.4%, Poverty Rate -33.8%

These areas lost much of their housing after the flood, with the city buying out property owners and leveling the houses between C Street SW/Ellis Boulevard NW and the Cedar River. Now that flood protection is being built on the west side of the river, expect construction to begin in earnest. It will be interesting to watch this over the next several years. Note the contrast with nearby tract #22 to the north in terms of economics away from the river.

 

These were the two whitest tracts in 2000, with over 92 percent white (not Hispanic or Latino). Tract #12 remains 87.5 percent white, while tract #26 has diversified somewhat to 77.8 percent white.

GENTRIFICATION STARTED? Population and Income STEADY, Poverty UP

Census tract 22: most of the Taylor Area including Kingston

Population -6.2%, Median Family Income +35.4%, Poverty Rate +124.1%

Coming to tract #22: apartment/condo development at Kingston Yard

This area has almost made back the population lost to flood displacement. The jump in income results from burgeoning condo development near the Cedar River, which before the flood was mostly older shops with some housing. (Note, however, incomes still lag inflation, which was +50 percent nationally from 2000-2020.) Because of the flood, this area was mostly vacant in 2010-14, so any displacement had already happened before the new residents arrived. The high poverty rate is probably located in the blocks farther from the river; its persistence is striking, suggesting that area has not shared in the prosperity brought by recent development. Why it is so much higher than 2000, I do not know.

Census tract #22 has diversified considerably, from 86.5 percent white (not Hispanic or Latino) in 2000 to 63.6 percent in 2018-2022.

LOOKS LIKE GENTRIFICATION: Population STEADY, Incomes UP, Poverty DOWN

Census tract 17: including most of Wellington Heights

Population -3.4%, Median Family Income +107.3%, Poverty Rate -45.0%

Census tract 27: most of Oak Hill Jackson including New Bohemia

Population +5.8%, Median Family Income +113.9%, Poverty Rate -10.6%

Wellington Heights, largely untouched by the 2008 flood, has seen some housing investment since 2010, but I still can't explain that phenomenal jump in income or decline in poverty. The eastern border of Wellington Heights is 19th Street SE, but the census tract extends another half-mile farther to Forest Drive, taking in a considerable portion of a well-to-do area (including the home base of Holy Mountain). Maybe that explains the numbers, or maybe it is indeed an indicator of gentrification of the older area.

Oak Hill Jackson has made back the population lost to flood displacement, and a little extra, though the U.S. as a whole gained nearly 18 percent during this period. The surge in income results both from burgeoning condo development near the Cedar River and middle class influx into the working class area farther in. Of the four neighborhoods this looks the most like stereotypical displacement accompanying gentrification, although the poverty rate remains high so not all the poor have been displaced. 

Census tract #27 was the most racially diverse of the six tracts in both 2000 (65.9 percent white not Hispanic or Latino) and 2020 (59.8 percent white). Tract #17 has diversified from 78.6 percent to 67.7 percent white.

Kristen Jeffers (from theblackurbanist.com)

Planner Kristen Jeffers, who blogs at The Black Urbanist, just produced an hour-long video called "Six Ways to Defy Gentrification." She describes gentrification, with decidedly negative connotations, as both an economic process ("typically accompanied by displacement") and a cultural process by which neighborhoods become more "respectable" (because previous residents were considered "unwealthy or unworthy" or both). Three of the six pieces of advice, directed at those experiencing gentrification from a less powerful perspective, are:

1. have faith in yourself (30:00): "you are worthy, you are valid, no matter what your rent is"
2. ground yourself by cultivating your art (32:00), particularly cultures and folkways like music, fabric or other visual art, gardening, teaching, &c., as well as cultivating your community and your resources
   
3. ground yourself through finding every way to make life convenient for yourself (33:45) by inhabiting your neighborhood: walking to the local grocery store, doctor's office, school, &c.

For gentrifiers, she commends:

1. care about the people around you (41:00), "be that person" who contributes to a diverse community by working and playing together
2. infrastructure (42:55), including public transportation and pedestrian plazas, but particularly housing that is affordable/accessible for everyone
3. access (46:15) for people with mobility needs, including everyone in those conversations
   

Cedar Rapids is growing slowly enough that we ought to be able to manage gentle gentrification, increasing investments in core neighborhoods without dislocating existing residents. I think everybody ought to live as close to the city center as they can, and that services ought to be available within a reasonable distance that makes walking, wheeling, cycling, and public transit viable alternatives. I also think there should be room for everyone, and that the fate of those with fewer resources and/or socially marginalized is the concern of everyone. I see things we're doing right--two-way streets, park development, zoning reform, a flurry of apartment and condo construction in the core--and things we're doing wrong--drive-to urbanism and big "game-changer" projects that don't serve everyday needs or leave room for everyday lives. Could we be doing all this better?

SEE ALSO: 

Pete Saunders, "Rethinking the Affordable Housing Crisis, Part III," The Corner Side Yard, 6 March 2024

Steven Thomson, "As 'Gentrification' Turns 50, Tracing Its Nebulous History," Curbed, 5 November 2014

DATA:

POPULATION

TRACT          2000          2012         2020      00-20 12TimeCh 3215 1362 1715 -46.70% 17Wellingtn 7137 6598 6891 -3.40% 19Downtwn 3359 2850 2603 -22.50% 22Kingston 2779 2259 2606 -6.20% 26CzechV 3012 2725 2101 -30.20% 27OHJ 1797 1591 1902 5.80% POVERTY        TRACT         2000         2012         2020     00-20 12TimeCh 0.087 0.179 0.187 114.90% 17Wellingtn 0.149 0.103 0.082 -45% 19Downtwn 0.225 0.375 0.381 69.30% 22Kingston 0.116 0.293 0.26 124.10% 26CzechV 0.154 0.174 0.102 -33.80% 27OHJ 0.282 0.368 0.252 -10.60%

MEDIAN FAMILY INCOME

TRACT                   2000        2012            2020            00-20 12TimeCh            40451        38365          74722          84.7% 17Wellingtn          55613        72639        115293        107.3% 19Downtwn          31182        28188          33333            6.9% 22Kingston           37946        33304          51364          35.4% 26CzechV             42703        58100          73185          71.4% 27OHJ                  27115        40543          58004        113.9%

What should be in the next CARES Act?

Some bars and restaurants have remained takeout-only,
despite the Iowa government's laissez-faire attitude towards the pandemic

None too soon, the U.S. Senate is taking up renewal of the CARES Act this week. Emergency relief for individuals, businesses, state and local governments, and hospitals was passed in March as the reality of the coronavirus pandemic hit America. (See highlights and details here and here.) It's hard to remember March, but it seemed then that the pandemic's unusual virulence required a drastic social shutdown, and that to keep the economy from tanking during the emergency. Paul Krugman compared the response to a "medically-induced coma" to create space for dealing with the virus. To get the patient (all of us!) through, the CARES Act pumped $2 trillion into the economy, and additional legislation added about another half trillion (Amadeo 2020). That's a lot of money... I can remember when one of President Jimmy Carter's budgets in the late 1970s was the first to pass the half trillion mark for the entire year!

Now we're heading into late July. Partial reopenings in May and June brought some flickers of economic life, but only somewhat, and the pandemic continues. Retail sales are back to pre-pandemic levels, but not across the board and unemployment remains high (Maheshwari, Corkery and Schwartz 2020; Rosenberg 2020). "I'm less optimistic today than I was 30 days ago," Marriott chief executive Arne Sorenson told The New York Times. "The virus is in so many different markets of the United States" (Gelles 2020). So, now what do we do?

The coffeehouse across the street from my campus closed March 20,
and now folks are carrying off the pieces.
(It might have gone out of business anyway.)

House Democrats passed a $3 trillion extension to the CARES Act in May called the Heroes Act, extending unemployment benefits at current levels, issuing another round of stimulus checks, providing much more aid (about $1 trillion) to states and cities, and including money for hazard pay for essential worker, testing and tracing, student loan forgiveness, food stamps, housing support, the U.S. Postal Service, and an employee retention tax credit (Werner 2020). Senate Republicans are negotiating this week with President Trump on a roughly $1 trillion alternative likely to include, liability protections for businesses, another round of stimulus checks, school aid conditioned on opening in person, much less aid to states and cities, extended unemployment benefits at a lower level, tax credits to businesses for adaptive measures as well as employee retention, and quite possibly no money at all for additional testing. Trump's desire for a payroll tax cut now seems unlikely to be included (Werner, Kim and Stein 2020; Carney 2020; Pethokoukis 2020). Among other proposals, Democratic Senator and former presidential candidate Elizabeth Warren has suggested support for child care providers, and Black and Latino neighborhoods, along with a national eviction moratorium and anti-corruption provisions (Warren 2020).

What happens to rental housing if renters can't pay?

Back in the day, I worked with Paul J. Quirk of the University of British Columbia on research on the Presidency and Congress using theories of conflict resolution. Paul argued that policy makers ought to maximize joint gains by identifying complementary interests--goals shared by parties to the conflict--and negotiating the remaining conflicting interests. Joint gains solutions are superior to split-the-difference styles of compromise, or to stalemate (Quirk 1989, Pruitt and Warr 2013, Fisher Ury and Patton 2011, Lewicki Barry and Saunders 2020).

Off the top of my head I'd say there are four complementary interests involved in negotiating CARES bills, pretty much the same now as in March:

1. sustain the economy. The economic health of the country is risked by any shutdown, or even specific restrictions or regulations. Production and sales should be preserved as close to ready-to-go until it's safe actually to go. And, while emergencies call for bold measures, government finances should not be so extended by borrowing that normal operations are impossible once the emergency ends.
2. protect public health. It should be clear to all by now that this virus is serious business, and neither wishing it away or yelling at people is going to work. Social activities need to be restricted until some modicum of safety is achieved, even at some (a lot of?) economic cost.
3. enable essential work and schools. Any vital work should be facilitated and, where necessary, protected. This particularly includes, but is not restricted to, those who provide health care, food, and public safety.
4. protect/sustain the most vulnerable. Not everyone can work from home, or have a reservoir of savings to see them through the emergency. If people's work is essential, they need the rest of us not to endanger their health; and if people are laid off, their jobs should be there when it's safe to return, and they should be sustained until then.

There are also conflicting interests. These include ideological conflicts (does aid create a disincentive to work, and is that bad? should we use aid to shape a more climate-friendly future?), economic interest conflicts (do hog farms, airline companies, e.g. qualify for aid under one or more of the criteria above?), and political conflicts (how will these measures affect candidates' political prospects in November?). Generally, the group that wants a solution more has to give more on conflicting interests. For example, in 1991-92 President George H.W. Bush stood to suffer politically from a poor economy (and he did), so had to accommodate congressional Democratic demands for tax increases. It's more difficult to assess the current situation: President Trump's political standing has suffered since March, but even so Democrats may be more concerned than Republicans about who might get cut off from assistance.

These lists of complementary and conflicting interests are pretty much the same now as they were in March. But the context has dramatically changed. Unlike March when a lot of us were thinking in terms of 3-6 weeks of shutdown, it is now four months on and obvious that the pandemic is going to be with us for quite awhile yet. Policies that were successful in other countries--contract tracing, widespread timely testing, and plenteous personal protective equipment (PPE)--are nearly impossible to implement effectively with the disease so widespread. There have been hopeful noises about vaccine(s) in production, but even under a best-case scenario that remains months away. Demagoguery by a frustrated President and his allies in the media have led many people to reject even the most minimal precautions.

Swiped from diazhub.com. Used without permission.

So it's not now practicable to resume normal economic and social activity, nor is it now practicable to shut the economy and society down for the duration of the pandemic. We've had a half-assed shutdown that's made people poor and still potentially contagious.

America, I am... really disappointed in you.

To the content of the bill! Setting priorities involves making choices, deciding who in these desperate times gets benefits, and who doesn't in spite of hardship. It amounts to "picking winners," about which there is justifiable cultural ambivalence. And yet choose we must, in a world where the invisible hand is infected with coronavirus, and government has resources that are substantial (so it has responsibility to act) but not limitless (so it can't fix everything).

In the immediate crisis in which we found ourselves in March, it probably made sense to think only of getting through it, and to shovel money out the door while making as few choices as possible. It probably had some good effects, but clearly was marred by lack of oversight, and the greater ability of those with power to access the resources, leaving the most vulnerable citizens and businesses in the lurch. 

Now we seem to be in it--the pandemic crisis, I mean--for the long haul, so it behooves us to think more carefully about the choices involved in the next round of aid. Who should receive assistance? There are many people who could claim economic losses from the pandemic and the shutdown. We could put them into three categories:

• those who, if they were to lose their job, might bring down the whole society (health care workers, teachers, child care, firefighters, public transit at least in major cities e.g.)
• those who, if they were to lose their job, would have difficulty replacing that income (blue collar and service workers, locally-owned small businesses)
• those who, if they were to lose their job, could hold out until they find another (white collar workers, corporate CEOs)

These are just examples, but my point is the decision-making should resist putting people, however well-connected or sympathetic, into higher categories than where they truly belong. It may be that we can afford to compensate everyone for lost income, but we probably can't, so we should prioritize by need.

Besides assistance to affected individuals, businesses, and governments, there needs to be considerable investment in pandemic mitigation like testing and contact tracing. I don't know how much, but it needs to be enough to change the situation on the ground and move us towards the end of this.

What's the future of the Postal Service?

Finally and most uncomfortably, we're now operating in a time frame where we need to think about the long-term impacts of COVID assistance. Can we still imagine that we are going to put things back the way they were, or are we thinking about what society will look like after the emergency? For one example, Joseph W. Kane of the Brookings Institution argues that resources need to be directed towards making America more resilient to climate change, because state and local governments will be facing increasing incidence of disasters with depleted financial cupboards. He calls, among other things, for small-scale green infrastructure projects, attention to income- and race-based equity, and greater community engagement in planning (Kane 2020; see also Bliss 2020). At the same time, President Trump seems to see the crisis as an opportunity to reshape Social Security and the Postal Service. Should emergency assistance during the pandemic aid be constructed to reform the public welfare system (Rachidi 2020)? As Holy Mountain is all about working towards inclusive, sustainable, prosperous communities, thoughts about the CARES Act inevitably turn to the sorts of outcomes that would help bring them about.

I've avoided specifics on provisions and amounts; what I'm finding, which should make us somewhat sympathetic towards the politicians who must make these decisions, is there's not a firm standard by which to evaluate the competing claims. But these are some principles that can be used to evaluate whatever comes out of the Senate this week, and the Congress as soon as possible after that. Maybe each party could take a billion, with a third billion devoted to pandemic mitigation? Negotiations being what they are, we should expect some flaws and some unhappiness, but I hope there will be some progress towards a common future.

PRINT SOURCES

Fisher, Roger; William Ury; and Bruce Patton. 2011. Getting to Yes: Negotiating Agreement Without Giving In. New York: Penguin, 3rd ed.

Lewicki, Roy J.; Bruce Barry; and David M. Saunders.  2020. Negotiation. Boston: McGraw-Hill Education, 8th ed.

Pruitt, Dean G., and Peter Warr. 2013. Negotiation Behavior. Burlington: Elsevier Science.

Quirk, Paul J.  1989. “The Cooperative Resolution of Policy Conflict.” American Political Science Review 83:3 (September 1989):  905-921.

Visualization by Gabriel Heller:

The economy--macro and micro--after the pandemic

Still running: Iowa Running Co. in May 2020

In the halcyon days that were the middle of the last decade, my Corridor Urbanism co-founder Ben Kaplan did a series of what he called Urbanist Goodreads... annotated bibliographies of writing on a particular topic. I am shamelessly stealing this format as a way of starting to sort through the vast array of writing on how the pandemic will affect the future of cities. Today's topic: the future of the economy and work.

The economic impact of the coronavirus pandemic has been huge in the short-term, and may continue huge in the medium-term. The May 2020 report from the Congressional Budget Office forecasts an impact on real gross domestic product at the end of 2020 of negative 7.6 percent, which doesn't struggle back to zero until the end of 2030. GDP is a blunt measure of economic strength, but it certainly indicates tough times for many individuals; state governments have also seen substantial lost income and sales tax revenue (Dadayan 2020).

We began this decade with a bunch of economic questions, even in a long bull market: Can the American economy provide careers and opportunities for all our citizens? (After a ten year bull market, a quarter to a third of Americans were financially fragile, Watkins 2020.) Can governments at all levels find some degree of financial stability? Is ever-rising economic inequality a problem in itself, a symptom of a systemic flaw, or both? Now these are joined by others: Was there a better set of policy responses that could have forestalled some of this damage? (Backward-looking, I know, but possibly useful for next time?) Will there be jobs for everyone who needs one? Will some areas be disinvested as they were after the 1960s? Is there anything government can do at any levels to lessen pain and/or increase resilience? And how will the nature of work change?

"How Government Jobs Programs Could Boost Employment," Urban Institute, 6 May 2020

The liberal think tank calls for government job creation to accelerate the recovery, although "Many of these jobs will come back as people return to normal life" anyway. Government efforts could include public works jobs, improvements to the unemployment insurance program, and subsidies for private-sector employers, either generally or targeted at certain areas or sectors. The choice of futures seems to be a bleak 2021 with familiar-looking recovery thereafter, or intense government involvement with intriguing but unstated possibilities for the long-term future of work.

Kirston Capps, "The Rent is Getting Paid. How?" City Lab, 8 May 2020

May rent payments are by and large getting made, which is something of a miracle. The various shutdowns have thrown a lot of uncertainty at people's financial situations, particularly those with little savings and/or more vulnerable to job loss. The pandemic will seemingly last longer than the federal unemployment insurance and stimulus payments will. Renters' income is one link on a brittle chain that includes the businesses that would hire them and the landlords who depend on their payments for income and maintenance. The article quotes Rutgers University law professor Rachel D. Godsil: "Even [government relief] plans with the best of intentions only defer the problem." Are we heading for a rental housing crisis, then?

Texas, for example, had halted evictions (by judicial action) in March; that ban was lifted May 26, though some local protections remain (Garnham 2020). The article continues: "The number of people who could be impacted by lifting the eviction moratoriums is not known because there's no data available yet to understand who is covered by the patchwork of regulations in the state."

Kim Hart, "Federal Coronavirus Relief for Cities is Still Uncertain," Axios, 14 May 2020

Cities and states face dramatic financial shortfalls in the wake of the coronavirus; the main driver is, depending on your perspective, either lost revenue and increased obligation in this calamity, or irresponsible spending and obligations taken on before the virus hit. This controversy is playing out at the federal level as politicians debate a massive aid package. In any case, the amount state and local governments need in the next two years in order to save their credit totals to hundreds of billions of dollars; without that money there will be immediate impacts on public employment as well as senior living, mass transit, and higher education services. 

The Wall Street Journal reports state and local governments cut 1 million positions in April 2020. A study by a Harvard economist estimates a $1.50-2.00 negative impact on the American economy for every dollar states and localities cut (Harrison 2020 [paywall] via Daily Deduction). Where does the money come from, if not from the national government? Tax increases large enough to make a difference seem unlikely (Zaretsky 2020).

Some towns will not survive as cutbacks are passed down the federal ladder, writes Chuck Marohn in "We're In the Endgame Now for Small Towns" (Strong Towns, 1 June 2020). Analyzing the budget of his hometown of Brainerd, Minnesota, Marohn finds locally-generated revenue accounts for slightly more than half of the town's 2020 expenditures; removing debt obligations from the table actually makes it less than half. "Brainerd is a ward of the state," he concludes, and worries what will happen when the state government retrenches in the wake of the pandemic and its attendant financial contraction. Smaller towns are in even more perilous shape; large cities like Minneapolis and St. Paul are in better condition but are also cautioned not to risk their prosperity. Writing from Wichita, Russell Arben Fox (2020) argues that the old way of approaching local budgets is more dangerous than ever now.

Lloyd Alter, "Will the Office Be Killed by the Coronavirus?" TreeHugger, 5 May 2020

Like many white collar workers, I've spent the last two months working from home, and it has its advantages and disadvantages. So does office work. Do I hanker to return to my college office? Well, I have been showing up there once a week; by prior arrangement, my colleagues are elsewhere. Alter provides the guidelines of one design firm, Bergmeyer of Boston, Massachusetts, which contain (by my count) 17 rules for the conscientious employee to follow in addition to doing their actual job. Alter suggests that in the shadow of the coronavirus there are even more disadvantages to office work and the advantages are hard to take advantage of. It will be interesting to see, he muses, how many people are really, really desperate to get out of the house and how many have decided they would rather keep working from home. But do employees really get to choose? [I hear that employees are now finding all those meetings were wastes of time. Well, guess what? We knew that already... but we weren't the ones calling the meetings!] Maybe it's different for designers, but a lot of our employers own our asses and will put them wherever they want them, particularly if the burden of keeping things sanitary can be put on the employee as well.

Indeed, says Washington Post columnist Helene Olen ("Telecommuting is Not the Future," Washington Post, 21 May 2020), employers in the long run "will likely remember that money spent on real estate is often money well spent" because of better collaboration and better control. Workers, too, might find working-at-work means better work-life separation and feeling more connected/included.

The coronavirus causes some second looks at the fashion for "open" offices, especially after nearly half of workers in a Seoul call center caught the virus in February, but probably will result in revision not abandonment, writes Sarah Holder ("Even the Pandemic Can't Kill the Open-Plan Office," City Lab, 14 May 2020). Expect more space between employees, fewer client drop-ins, smaller or virtual meetings, modular furniture and room dividers, and new air filtration systems, rather than a sudden outbreak of walls.

When I do return to teaching this fall, how will it work? Dr. Wendy Bashant, a former Coe colleague spending the year at Jiaotong University in China, reports on that institution's re-opening last week: hand-washing stations and hand sanitizer everywhere, check-in tents, temperature-taking security gates, students required to stay on campus, social distancing regulations with printed and verbal coaching... but mingling during breaks hard to manage. Can American students behave even that well? I'm thinking about:

• What am I supposed to do if a student in my class does not abide by social distancing practices?
• How are we going to manage access and egress to classrooms and buildings?
• Is Marketing going to put something stupid on my face shield?

These are surely "first world problems," in that I have the luxury to worry about stuff like this instead of how will I eat and where will I live? But few people are truly shielded from economic pain; it gets to us eventually, we're more connected than we think, and we're all better off when the system works for everyone. 

Cities in the 2020s

Source: istockphoto.com

These are the days of miracle and wonder--PAUL SIMON

This week, National Public Radio's "Marketplace Morning Report" discussed economic forecasts by the Oxford Economic Group which expects weak global economic growth in the near future, including the U.S. (Safo 2019). Actual results may vary, of course, and the authors suggest the cities best situated for a prosperous early 2020s are those outstanding on dimensions of economic mix, cost of living, and quality of life. So the U.S. urban economy expected to grow the most in 2020-21 is... San Francisco??

I'm not questioning the report's methodology, rather taking it as read, because [a] it's proprietary, and [b] I'm cheap. But San Francisco's cost of living is infamously high, particularly housing. Its cost of living ranked #2 among U.S. cities in 2019 by Kiplinger, trailing only the Borough of Manhattan (which is only part of a city), thanks to "years of relentless growth driven by high-paid tech workers." Average apartment rent: $3821 a month. So, given their criteria, however is San Francisco #1?

Poster, City Lights Bookstore, July 2014

Put another way, if San Francisco is in the best position in spite of its ridiculously high housing costs, what does that say about the rest of the country? For example, what is going to happen in Chicago, which ranks at the bottom of Oxford's list, thanks to the frightening budget and tax picture in the State of Illinois? What about small cities and rural areas, which can't compete with the big places for economic mix (or, arguably, for quality of life)?

The "winner-take-all" nature of the post-industrial economy applies not only to individuals but also to places (though see Sawhill 2019 for the argument that this situation results from political choices as well as economic fundamentals). In the modern tech economy, wrote Emily Badger (cited below) in The New York Times around the time Amazon made its HQ2 announcement, cities that already have wealth, opportunity, highly educated workers and high salaries will just keep attracting more of them.... A small number of rich and internationally connected cities keep increasing their economic advantages--and as a result, the inequality widens between them and everywhere else.

It looks like the 2020s will feature a big shakeout. I hope it won't hurt, but it probably will. Interestingly, Brookings scholars' list of the biggest economic stories of the 2010s focus less on places than on individuals (tax cuts for the rich, rising inequality, lower life expectancy, fewer teens in the workforce) and systems (monetary policy stuck on full-blast, good news on health care access and cost, no worker productivity gains, aging population). But it's fair to say that the fall-out from most of these individual- and system-level trends will impact localities, too, and not all localities to the same degree. Localities will have, already have, fewer resources to address either rising individual vulnerabilities or cutthroat economic competition.

Maybe the 2020s will be the placid sort of decade in which these sorts of issues can be thoughtfully sorted out. The 2010s certainly were, when you compare them to its immediate predecessor which featured a small recession, a massive terrorist attack, a debilitating war, and finally the biggest financial crisis since the Great Depression. The 2010s have been quite a breather, comparatively, apart from a series of unforced errors. Future generations may well wonder why we squandered this opportunity in government shutdowns, highway construction, and the odoriferous politics of Donald Trump. The tasks of the 2020s will be hard enough without the possibility of additional pressure from:

• an economic downturn
• employment issues for the rest (of workers, of places)
• natural disasters exacerbated by climate change
• increasing refugee flows
• increasing homelessness, due to rising incidence of mental illness and/or poverty (see Hu 2019)
• changes in energy prices and supply
• intensified inter-group hostility
• crumbling infrastructure on which maintenance has been deferred too long

Pete Saunders, a planner and blogger from the industrial Midwest, anticipates the decade to come might fulfill the transition period underway throughout the 2010s, turning away from the auto-centric era that ran from World War II until the last decade's housing crisis.

Our development future will be even more urban.  It will be based more on the mobility options and opportunities --autonomous and alternatively fueled vehicles -- that will expand this century.  It will be more economically unequal in America, as America's economy becomes more equal with the rest of the world.   And our development patterns will be something that will adapt to the demands put on it by climate change. [For the next twenty years:] The rebirth of cities actually does take hold nationally, as growth filters downward from our superstar coastal cities to other cities.  Interior cities will tout their assets and amenities and become cheaper alternatives to the coasts. (Saunders 2019)

This fulfillment will be facilitated if millennials stay in cities, as seems to be happening where such opportunities exist (Lewyn 2019), rather than coming to expect the same subsidized suburban development their parents came to expect. It will require the masters of capital to notice all the talent in the cost-efficient interior of the country, and to move to take advantage of it, and for interior cities to position themselves for strength--culturally as well as physically and financially. It will require a willingness to adapt to climate change, even if we have to call it something else to soothe the deniers.

Some days my town seems to be about attracting entrepreneurs and removing obstacles to traditional development, and some days its long-term plan seems to consist of subdivisions and strip malls, not to mention the casino. I guess the glass is never entirely full, nor is it entirely empty, and that history progresses incrementally, even imperceptibly. Whatever this new decade brings, may there always be voices of hope and visions of common life.

SOURCES:
 Emily Badger, "The Same Cities Keep Attracting Tech. Why?" New York Times, 8 November 2018, B1, B2
 Winnie Hu, "Please, Don't Have a Seat," New York Times, 8 November 2019, A22
 Michael Lewyn, "Are Cities Really Losing Millennials?" Planetizen, 23 December 2019
 Nova Safo, "Economic Growth for U.S. Cities Will Depend on Mix of Industries," Marketplace, 23 December 2019
 Pete Saunders, "Revisiting the 'Big Theory' on American Urban Development," Corner Side Yard, 23 December 2019

SEE ALSO: "What Defined the Decade Since CityLab Launched," CityLab, 30 December 2019
EARLIER POSTS:
"Globalization's Challenge to Cities," 25 June 2016
"Can Cities Change Their Luck?" 20 June 2016
"Two Tales of Cities," 7 June 2016

Opportunity Zones in CR

Construction on 12th Ave in New Bohemia;
does this look under-invested?

Three census tracts in the center of Cedar Rapids have been designated Opportunity Zones by the U.S. Department of the Treasury. The program, included in the Tax Cuts and Jobs Act of 2017, attempts to improve economic growth in poor areas by making investors in the zones eligible for special treatment of capital gains income. The city chose four out of  13 tracts that met the AAA's criteria; three were submitted by Iowa Governor Kim Reynolds, among 62 selected statewide (Patane 2018a, Patane 2018b).

The combined area of the three Opportunity Zones--Linn County tracts 1900, 2200 and 2700--includes Kingston Village on the west side of the river, as well as Downtown, the MedQuarter, New Bohemia and Oakhill Jackson on the east side. Parts of Wellington Heights and Mound View are included as well. Coe College, which among other distinctions employs me, is part of tract 1900. The combined area is bounded by 16th Street East, the railroad tracks that cross the river, 11th Street West, and the Cedar River as far as 19th Street SE.

The purpose of the Opportunity Zone program is to revitalize economically-distressed areas. The premise is that low-to-no taxes will shift investors' calculus and make these areas more attractive. Only a few kinds of businesses are excluded, so commercial development, housing construction, new businesses, existing businesses, and infrastructure are all eligible. It's a new name for an old approach, previously incarnated as Enterprise Zones, Empowerment Zones and New Market Tax Credits. Performance under those programs was mixed (Hirasuna and Michael 2005, Busso et al. 2013); the particularly positive effects on employment and wages of the Empowerment Zones  program (which also had a substantial social services component) were mitigated by program costs as well as the degree of regulation which deterred much participation (Looney 2018a).

Tract #1900: Another medical building coming
where there used to be a church and some rooming houses

As a resident of Cedar Rapids, the choice of the our three Opportunity Zones is puzzling; I would have taken note of the rapid redevelopment of Downtown, New Bohemia and Kingston Village since the 2008 flood, whose anniversary we're celebrating this week. I would have liked to use the Opportunity Zone incentives to help connect the new prosperity to residents of the core neighborhoods that border them. But the governments' choices are clarified by looking at the statistical criteria--see the datasets produced by the Brookings Institution and Smart Growth America, cited and linked below--and given the super-fast rollout of the program they didn't have time to do much else. The three census tracts have the highest rates of poverty and child poverty in Linn County. This table compares the three Opportunity Zones with three low-income, bordering tracts. (Of these three, only #2600 was eligible for inclusion; it was included in the city's application but not chosen by the state.)

Census Tract	Rough Description	Poverty Rate 2016	Child Poverty Rate 2016	Brookings Distress Index (scale is 0 to 1)
2700	New Bohemia, Oakhill Jackson	41.3	63.1	.954
1900	Downtown, MedQuarter	38.8	57.2	.805
2200	Kingston Village, Taylor Area	26.3	34.5	.885
2600	Czech Village	19.9	18.4	.864
2300	Johnson Avenue W	18.7	28.6	.749
2500	Linwood Cemetery	18.6	17.2	.861

 [Source:Brookings Institution]

In part, we are constrained by the boundaries of census tracts, which are small but can be diverse. Tract #2700, for example, has experienced massive investment and an ongoing commercial and condo construction boom from the river to about 6th Street. It is also the only one of the three Cedar Rapids Opportunity Zones that has already experienced sufficient housing investment to qualify as gentrifying according to the Brookings measure. Above 6th Street, though, is where the distress remains, and where the poverty has in fact increased since 2012. Tract #1900 similarly includes high- and low-investment chunks. It's experienced more displacement than Oakhill Jackson as the medical facilities and the college have expanded their footprints. Poverty in that zone was stable between 2012 and 2016.

Tract #2700: Will whatever prosperity is brought to Opportunity Zones

 benefit poorer residents?

It will be interesting, then, particularly for those who care about their cities, to see how the Opportunity Zones program plays out. Broadly speaking there are three possibilities:

1. No impact on places or people. In these already-burgeoning areas, investors score generous tax treatment for actions they would have taken anyway. Essentially, they get rewarded for being physically near poor people. Nothing changes on the ground, but the U.S. government takes a significant revenue hit which will eventually be felt most heavily by the most vulnerable people.
2. Positive impact on places, negative impact on people. Tax expenditures spur increased economic development in Opportunity Zones, reflected on the ground in new and expanded businesses and new middle class residents. Poverty drops like a rock, but in part because poor residents can't afford the jonesed-up housing market, and are displaced to less expensive but harder-to-fix locations.
3. Positive impact on places and people. Tax expenditures spur increased economic development that creates jobs and career opportunities for existing residents, as well as attracting new middle class residents. Poverty declines, both within the district and nationwide, because we've addressed the problems rather than just displacing them. Maybe there is even some positive spillover to adjoining tracts.

Is there anything we can do to help outcome #3 happen, given the program's loose structure and capital-based incentives? "[T]he value of the tax subsidy is ultimately dependent on rising property values, rising rents, and higher business profitability," not inclusive housing (Looney 2018a), job creation or locally-based business. Research is inconclusive on cities' attempts to embrace new investment while regulating the negative effects on existing residents ("smart gentrification," cf. Cortright and Mahmoudi 2014, Grabinsky and Butler 2015). But it seems to me that it's up to localities like Cedar Rapids to manage the impact of Opportunity Zones, mainly by supplementing the federal tax expenditure with a more service-based approach aimed at local businesses and lower-income individuals.

SEE ALSO:

Economic Innovation Group page on opportunity zones


Don Hirasuna and Joel Michael, "Enterprise Zones: A Review of the Economic Theory and Empirical Evidence," Minnesota House of Representatives Research Department, January 2005

Adam Looney, "The Early Results of States' Opportunity Zones Are Promising, But There's Still Room for Improvement," Brookings, 18 April 2018

Matthew Patane, "Downtown Cedar Rapids Designated as an 'Opportunity Zone,'" Cedar Rapids Gazette, 21 May 2018 [includes map of OZs in Linn and Johnson Counties]

Smart Growth America's Opportunity Zone navigator: https://smartgrowthamerica.org/program/locus/opportunity-zones/

Smart Growth America webinar "Understanding Your Opportunity Zones", 26 June 2018: https://smartgrowthamerica.org/watch-the-recorded-webinar-on-understanding-your-opportunity-zones/ 

Brett Theodos, Brady Meixell and Carl Hedman, "Did States Maximize their Opportunity Zone Selections?" Urban Institute, 21 May 2018