November 08, 2017

Gentrification Without Displacement

Gentrification is a hotly contested topic that pits the benefits of increased economic activity and urban revitalization against displacement and disruption of exiting established communities. Gentrification is a process of urban development where higher income individuals move into a lower income neighborhood. This leads to higher income people capturing increased economic value in low-income neighborhoods while displacing existing low-income residents.  This paper includes a brief description of factors that encourage gentrification and population shifts into urban geographies. Then, the consequences of gentrification are discussed. Ultimately, we posit a strategy for increased value capture by existing residents in gentrifying neighborhoods.

British sociologist, Ruth Glass, first coined the term gentrification in 1964.  She was observing changes in the social structure and housing markets of inner London. One by one, many of the working class quarters have been invaded by the middle class – upper and lower … Once this process of ‘gentrification’ starts in a district it goes on rapidly until all or most of the working class occupiers are displaced and the whole social character of the district is changed.”  A 2008 study by University of Colorado researchers, defined gentrification as a census tract in the bottom quintile of annual average family income that increases by $10,000 in a ten-year period. Demographic shifts in gentrifying neighborhoods commonly follow the below pattern:

Numerous theories are posited to explain this trend.  Shifting cultural attitudes, after mid-20th century suburbanization and urban renewal programs, encouraged movement to the cities. The baby boom generation saw increasing female participation in the workforce, delayed child rearing, and a desire to be closer to jobs frequently located in the cities. Furthermore, inner cities offered increased amenities and the allure of excitement. These gentrifiers were often white-collar workers with more disposable income. This trend has continued through the present with additional cultural forces pushing urbanization. Further fueling movement into cities are empty nesters shedding their suburban homes for the amenities of city living and recent college graduates seeking work and urban cool. Environmental concerns associated with urban sprawl and fuel costs also contribute to increased urbanization.  In addition to these socio-cultural reasons, structural economic forces also drive gentrification.

Economic trends and policy decisions continually alter the fabric of urban landscapes. Federal policy decisions, including highway expansion and FHA insurance requirements that required redlining during the mid-20th century led to increased suburbanization and white flight from the inner cities. De-industrialization and the loss of manufacturing jobs further eroded the urban tax base. Working class inner city neighborhoods struggled to maintain the physical infrastructure of their neighborhoods. This coupled with the afflictions of poverty depressed property values. Thus, inner city rents were considerably cheaper than the potential best use of these centralized areas. This yields an economic investment opportunity to capitalize on the value gap. As the economy shifted towards knowledge based services, these neighborhoods became more desirable. Cities, as hubs for executive decision-making and firm headquarters, increasingly required proximity for deal making and business development. The economic imperative of proximity increased the attractiveness of inner city neighborhoods, making them fertile ground for development by the gentrifying class:

Factors Encouraging Gentrification

Pull Push
  • Employment opportunity
  • Diversity of population
  • Amenities (arts, culture, entertainment, culinary, education)
  • Walkability
  • Innovation, exchange of ideas, and random encounters
  • Family that reside in the city
  • Proximity to others fosters a sense of community
  • Expansion of entrepreneurial culture
  • Shift from production based economy to knowledge based economy
  • Commute times, traffic congestion
  • Cost of fuel
  • Empty nesters, no longer need the space
  • Generation Y characteristics and culture not supported by suburbs
  • Standardized architecture, visual redundancy
  • Lack of diverse amenities

Younger people without children and empty nest baby boomers are most likely to leave the suburbs for urban areas.

As demand for residential and commercial space increases, rents and land values increase. A higher income population, who can afford increased rents, enters the community. Existing low-income renters are unable to pay rising rents and are forced to move. A second tier of displacement occurs when assessed property values increase, thus increasing taxes, and forcing low-income single-family residence owners to move. This shifting economic and demographic landscape often creates tension in the neighborhood between the long-term residents and the new comers. Arguments exist extolling both the positive and negative effects of gentrification on neighborhoods. The table below offers positive and negative impacts of gentrification:

Positive Negative
  • Stabilization of declining areas
  • Increased property values
  • Reduced vacancy rates
  • Increased local fiscal revenues
  • Encouragement and increased viability of further development
  • Reduction of urban sprawl
  • Increased social mix
  • Decreased crime
  • Increased consumer purchasing power at local businesses
  • Displacement through rent/price increases
  • Secondary psychological costs of displacement
  • Community resentment and conflict
  • Loss of affordable housing
  • Commercial/industrial displacement
  • Increased cost for local services
  • Social segregation between new and old residents
  • Lack of agency and participation in neighborhood evolution
  • Effect on other neighborhoods to where the displaced move

Communities experiencing gentrification are historically marginalized and largely people of color. Wealth was syphoned out of these neighborhoods in the mid 20th century through suburbanization and racial containment policies and practices. America was simultaneously encouraging suburban home ownership through federally insured mortgages while systematically denying loans for black populations through redlining. Contract sales of homes in racially transitioning neighborhoods (white to black) sought to extract wealth from black residents, a lack of public sector services, and a police presence implored to contain not protect black residents increased marginalization.  This contributed to urban decay and concentration of poverty in minority neighborhoods. Gentrification, now seeks to take further advantage of these marginalized communities.  As cities become more desirable, wealthier individuals from outside the city are able to obtain and claim the wealth generation potential of low-income urban neighborhoods while excluding the local residents. Discriminatory lending practices such as redlining and predatory lending continue today, ensuring that existing residents are not able to capture the potential wealth of their own neighborhoods. Furthermore, in order to ensure maximum profit, new owners pressure existing low rent tenants to leave their apartments using illegal and subversive tactics. Such tactics include sending eviction notices, physical intimidation, ignoring repairs, and cutting off utilities. The aforementioned issues offer more than sufficient reason for the design of creative strategies to build wealth for residents within gentrifying communities. The graphic below offers a new vision for the gentrification process:

Gentrification without displacement is possible through socially conscious development that honors and recognizes all races, colors, and creeds as a necessary component to revitalization. This inclusive development is just and adheres to American ideals that there should be opportunity and access for everyone willing to work for it. Neighborhood revitalization with out displacement defines a new paradigm for American global leadership by counteracting a history of systemic racism. Residents who have weathered the storm of tough economic times should have the opportunity to gain from the increasing desirability of their neighborhoods. In order to do so, current landowners need to leverage their property into greater income streams. However, it is also important that existing renters are not forced out by rising rents. Unfortunately, it is likely that single property owners in these communities lack the financial resources, and development knowledge to maximize the use of their land. As mentioned, endemic racism in the banking system makes navigating the financial system challenging. In order to successfully maximize the value of the property the landlord can partner with a supportive developer.

In order to gentrify without displacement sufficient housing must be available for existing residents. To do so, adjacent parcels can be assembled so that a new taller and denser development can be constructed. In this scenario, new residential units can be offered that meet the needs of existing residents and owners, additional workforce housing, and market rate renters. Existing landowners can enter their properties into long term leases with the developer ensuring a continual income stream while retaining ownership of the property. In addition to the variety of housing options, these developments offer ground floor retail that provide amenities for residents and contribute to neighborhood vibrancy. Neighborhoods, like nature, thrive on diversity. The proposed development scenario demands both a diverse population and a mix of uses. Additional population can support new retail and increase available jobs. In this way gentrification can be a catalyst that benefits all members of the neighborhood.

Inner city neighborhoods have become increasingly desirable. This has lead to an influx of capital and wealthier residents often displacing existing residents. In order to obtain the positive benefits associated with gentrification, creative strategies must be developed to minimize displacement so that all residents are party to the benefits. Inner city revitalization is challenging, but through intentional strategic development, members of marginalized communities can be given access to the American dream and diverse communities can be sustained.

Going Forward

At this juncture, further research is needed in the following areas. Concerns exist with the relocation of residents during the construction process as well as the potential displacement of existing businesses. Engaging and convincing residents to participate in the development process also presents a challenge. Depending on the neighborhood, existing building topology may not be conducive to this plan. Additionally, transitioning neighborhoods are frequently on the radar of investment firms looking to purchase properties for short-term gain. Also, requiring further research, are the limitations of affordable housing laws and the ability to supply housing to populations whose annual earnings are well below average median income. These issues along with creative development strategies will continue to be explored.

In an effort to push forward a gentrification without displacement strategy, philosophically aligned partnerships must be developed.  For example, a partnership between the Bronx Cooperative Development Initiative (BCDI), a community organization, and Ernst Valery Investments Corporation (EVI), a real estate investment firm, is exploring a development without displacement strategy in the South Bronx. BCDI has established relationships with Bronx community members and institutions that can facilitate the strategy. Another promising pathway is an apprenticeship program initiated by EVI, where developers are trained to honor and uphold the principles of gentrification without displacement.

Strong communities also offer excellent services. Good schools are a requirement for strong communities. Gentrifiers tend to be single. Thus, a robust neighborhood development strategy should include family attraction and retention. A possible strategy to retain families in the inner city are tax code revisions that offer credits for families that commit to neighborhoods for a certain period of time while their children are in schools.  Revitalization that ensures fairness is complicated but possible. Further research will continue to develop and vet ideas and strategies for creating and supporting healthy vibrant communities.