Housing: Changing Communities

Historically, “affordable” housing has been provided in undesirable areas. Before WWII, that might have meant slums next to the slaughter house or tenements on the river bank (rivers were like sewers then). After WWII, historic urban cores became undesirable as people moved to the wide-open spaces of the suburbs. Living in urban areas provided certain benefits to the poor including access to needed amenities and services. Urban communities are walkable - groceries, hardware, education and access to transit are nearby.

In the last 10-20 years, we’ve seen a renewed interest in city living. As demand has increased so have prices. In San Francisco, housing prices increased drastically as the influx of new tech workers bid up the prices of existing houses. This increase of wealth relative to the supply of housing is a key cause of gentrification. Locally, demand and investment have spurred interest in OTR. In 2002 there were 3,235 units of affordable (30% AMI) there. In 2015, that number was reduced to 869 (Community Building Institute). Currently, average rents in OTR for 850 square feet are over $1,600 per month and rising!

To combat the crisis of availability and access to housing in urban Seattle, where housing for median income has been halved since 2011, they built the “100k” houses. These well-designed houses were compact and, at $100,000, were designed to be affordable. The plan didn’t work however, as the houses were quickly grabbed up by dastardly gentrifying hipsters (who probably also met the affordability guidelines). Many communities have found urban, dense, walkable, amenity rich neighborhoods are attractive to a variety of demographics – poor, young professional, empty nesters and working classes.

Gentrification is a complex topic and there are different ways to look at it. The most commonly understood definition of gentrification is that it occurs as housing prices rise with increased demand. Often, increased demand can cause increases in rent without any new investment in the property. Frequently increased demand for housing in a neighborhood allows property owners and developers to make investments that increase the material quality of a neighborhood, therefore, rents are increased for both residents and businesses so that the developers can recoup their investments. Residents who own their own homes can benefit by the financial windfall but may still be displaced. Residents and business owners who can’t afford increased rents are forced to move. Aside from issues of fairness, this interrupts the continuity of community, potentially destabilizing it, and compromising its integrity. Small businesses that serve existing diverse communities can be replaced by businesses that serve new residents. A problem with this view of gentrification is that it makes it hard to distinguish between new investment that helps a neighborhood and new investment that harms a neighborhood.

A second way of looking at gentrification is that it is investment and investment is good. New development increases property values, it brings new job opportunities, retail services, and amenities like parks, and it also increases the city’s tax base. The problem is that this approach totally fails to acknowledge the existing social fabric of a neighborhood. The people who have lived together, sometimes for generations, can be forced out of their homes by outsiders with no connections to the people or places already there.

Yet another way to think about gentrification is that the problems people are describing with the “G-word” is better described as economic exclusion. People who live in low-income neighborhoods see new investment and development occurring in their neighborhoods, but that development doesn’t benefit them at all. For the existing residents, seemingly, all the new development brings is new investment, a loss of parking, and a loss of affordable neighborhood amenities. The new tech-related jobs that follow the investment are not accessible to people without advanced degrees, the locals feel that they cannot participate in the economy that is producing new investments in their neighborhoods. They are excluded, and this exclusion negatively impacts their lives. In the abstract, investment is good, but the impact of investment on residents can vary widely.

A member of the Congress for the New Urbanism (CNU) has come up with another way to think about Gentrification. Dubbed the “Jacobs Curve,” it looks at a neighborhood’s overall diversity – socioeconomic, racial, education , etc. and places it on the Y axis. The X axis is wealth.

Jacob's Curve.jpg

At either end of the wealth scale a neighborhood lacks diversity. A neighborhood can be so poor that the only people who live there are the ones who can’t get out, or it can be so rich that the neighborhood prevents anyone non-rich from moving in. Neighborhoods that are healthy, and well-functioning can exist at a variety of wealth levels. There is a gentrification point in the graph, marked “stop!”, where an increase in wealth (investment) begins to decrease a neighborhood’s overall diversity.

This model shows that neighborhoods in San Francisco or London have already passed the point of optimum wealth and diversity. In those places, the non-wealthy simply can’t afford to be there. Most of Northern KY’s river cities are at the other end of the scale. Given the historic poverty in a place like Covington, adding wealthy people today actually enhances the city’s diversity. There is a point were excessive wealth will negatively impact a neighborhood, and different neighborhoods will reach that point at different times.

While most of the river cities are pretty far from that point, new investment in certain areas is impacting the immediate neighborhood. For example, the area around Pike Street and Madison Avenue is transforming rapidly - restaurants that once served $2.00 tacos now have $10.00 cocktails and former parking lots used for outdoor events now contain up-scale mixed use developments. The neighborhoods are clearly changing. If we use the Jacobs Curve to look at these changes, it highlights the issue that most of Covington has been so poor for so long that adding new units for wealthier people increases the city’s socio-economic diversity. But now the next question is - how can a city make sure that new investment benefits all the residents, not just for the newcomers?

The gentrification article in Architectural Record has several answers to that question:

·         Have the public or non-profit sector invest in dilapidated housing maintenance so people’s homes don’t fall into disrepair

·         Prioritize disadvantaged communities first when it comes to housing and public health. Mitigate lead paint and remove other environmental hazards.

·         Invest in public transportation to improve access to jobs (and healthcare and education/healthcare)

·         Implement policy tools (like down payment assistance) to increase owner-occupant rates in disadvantaged neighborhoods. That way when property values increase the existing homeowners will also benefit and be able to make a choice about whether to stay or cash-in

Is gentrification inevitable? In a free market society, is it something we can or should control? Should we restrict rents, or sale of property in the name of fairness? Should we restrict the ability for a long-time resident who’s payed off their mortgage to capitalize on their investment? Can we control migration patterns in (and out of) our cities? Can we really restrict the natural tendencies of our cities to change over time? Should we? What period in a community’s evolution should we preserve – was OTR better in the 20’s? 50’s? 90’s? Our cities are living structures that change over time.

Whether or not gentrification is inevitable doesn’t change the nature of or need for housing for all income levels and family types. If anything it makes it even more a regional issue. Next week we discuss another regional issue at the intersection of housing and social issues: homelessness.