Universally Speaking
Rahim Islam is a National Speaker and Writer, Convener of Philadelphia Community of Leaders, and President/CEO of Universal Companies, a community development and education management company headquartered in Philadelphia, PA. Follow Rahim Islam on FaceBook(Rahim Islam) & Twitter (@RahimIslamUC)
Rahim Islam
The Tale of Two Cities exist in every major city – Chicago, Philadelphia, Detroit, Los Angles, St Louis, New York, Miami, and Houston; there are definitely two Milwaukee’s. Why and what’s the common denominator?
All of these cities have a majority of minorities and/ or a large populations of African Americans.
All of these cities suffer from some of the same inferior conditions for Black people even though Blacks are the largest voting bloc.
These cities should be doing better for Black people, but it’s just the opposite – in many of these cities, even though Blacks have the majority numbers, Blacks don’t control the politics and where Blacks do control the politics, they’re dominated by someone else’s politics or they’re controlled by the county or the state.
The Black reality in America is that wherever you see large numbers of Black people in any one area, you will find a large concentration of those living at/or near poverty – where you start matters and Black people’s start in this country must not be forgotten and overlooked.
In part 2 of this article, I tried to articulate how we ultimately migrated to the Midwest, East and West Coast and now nearly 75 percent of Black people reside in 50-60 urban cities.
Over the past 50 years, white flight AND Black flight has made these cities much poorer and significantly shrinking its middle class.
Many of these cities have large, once prosperous, neighborhoods blighted and abandoned after years of economic disinvestment and real estate values depreciating versus appreciating.
In addition, these cities are saddled with numerous economic challenges related to its shrinking tax base (revenue) and the disproportionate social issues associated with many aspects of the poor community.
These challenges are real and perplexing for the political leaders of these cities, regions, and states.
These cities are challenged as to how to grow their tax base to, at a minimum, keep par with the cost to maintain the services to the overall city and its disproportionate population of low-to-moderate income families.
These issues are compounded by the fact that federal and state funding is shrinking and almost nonexistent coupled by failed urban policies by local politicians, civilians and business, and philanthropic leaders.
No matter how you cut it or what your political ideology is, it comes down to basic math – these cities don’t have enough revenue to grow, compete, or cover the growing cost to maintain the city (i.e. safety, healthcare, streets, fire, etc.).
The following are just two examples of the challenges that majority minority cities face:
Example: The education of black children is greatly underfunded because many of the neighborhoods they live in are in decline, thus these cities are unable to produce the optimal level of real estate tax revenue which funds nearly 50 percent of education in some cities.
When you have a disproportionate level of people living at/or near poverty levels, not only will real estate values not appreciate, but many of the residents are unable to pay the current real estate taxes.
Vacant properties, declining real estate values, and a disproportionate level of children and families receiving social entitlements (i.e. welfare, food stamps, child care, Medicare, Medicaid, public housing, etc.) are all directly linked to a failed education system.
Many of these neighborhoods don’t produce the type of revenues needed to cover the cost of maintaining these neighborhoods – this is why there is a constant cry for equitable city services. for these neighborhoods.
Yes, these cities do have neighborhoods that have appreciating real estate values – but usually it’s not enough to offset the lack of revenue that our poorer neighborhoods aren’t able to generate.
Also, if you do a costbenefit analysis, it is very obvious that low-to-moderate income neighborhoods don’t generate enough revenue to maintain themselves so their contribution to the education budget is not enough.
These cities also can’t afford to lose more of its high-income residents, so it appears that these neighborhoods “because they are organized“ they are able to demand (and they receive) the best services the city has to offer. This, many times, offends some of the poorer residents because many of the residents of these neighborhoods are white.
What is the true cost to educate a child today that has minimal social challenges – some say $15 – $20K annually, then Black communities can never catch up with this structural deficit.
Whites who have wealth are able to send their children to private schools so that they’re not impacted by this deficit (tale of two cities).
• Example: Business growth is a significant strategy for saving these cities, but this growth isn’t easy because the conditions for business investment are not adequate to sustain and/or attract new businesses.
The slippery slope for these cities lie in the fact that in order for these cities to generate enough revenues to cover its basic needs – they must raise taxes.
The problem is businesses need to have a lower tax structure to keep and entice new business investment.
Because business has become more global, they have choices and many times they will uproot their business and relocate to an area (domestically or internationally) that will give them the best competitive advantage (lower business cost) – sometimes they will move outside of the city into the suburbs.
In addition to the tax structure, businesses need other city amenities when considering whether to stay and/or invest, not the least are: the quality of the workforce.
There is a direct correlation to the quality of workforce and the quality of public education; the cultural amenities and a vibrant night life are critical amenities for the decision makers who determine where they place their businesses; crime and safety – when crime is high and areas are not safe or when the media portrays an area as unsafe, these conditions are not conducive for business; and the state of public education is also a key signal to the business community whether the environment is ripe for investment.
When businesses invest in these cities, jobs are created and ultimately city revenues are increased.
Access to jobs is critical to addressing many of the issues that urban cities face and business investment is mandatory (jobs don’t fall out of the tree).
If these cities are to attract and/or maintain a strong businesses presence in the urban cities, they will have to compete “unfairly” with the neighboring (suburbs) that have a number or distinct advantages that not the least of them is a tax structure and cost structure that is better than the cities.
A signal to “promised” neighborhoods is when you see retail centers with high-end retailers.
High-end retailers will only locate in areas where the residents have high levels of discretionary spending – so they don’t go to the poorer neighborhoods.
If retailers do invest in the poorer neighborhoods they are usually low-end retailers (bottom feeders).
Even when the cities can attract new businesses, especially retailers, they don’t locate in struggling neighborhoods.
If you were to compare the type and quality of the retail in high income neighborhoods versus the retail in low-to-moderate income neighborhoods, the gap is alarming which contributes to the.
Also crippling and structurally damaging for small business and specifically Black business, they are trapped between not being able to pay market rent in areas that are booming or not having a strong enough customer base as a result of too many buyers traveling outside of their community to shop.
There are so many examples that keep many urban cities from growing and when they do, the growth benefits the wealthiest of residents (tale of two cities).
There is an overall trend that is shaping America where the people who moved to the suburbs in the massive White flight and city exodus over the past 50-60 years are moving back to the urban centers and these cities are trying to optimize this potential economic benefit.
For a number of reasons, not to mention: being tired of the commute back and forth from the suburbs; high cost of transportation; their children having grown up and have left the homes and the parents no longer have a need for the home; the wealth that they have been able to build (i.e. equity in property, careers, etc.); and a desire to take advantage of the cultural amenities of urban cities that are non-existent in the suburbs – all of these issues and more contribute to this overwhelming demand that developers and cites are trying to cash in on.
In addition to the empty nesters, many of their children have abandoned the idea of having a suburban life and are choosing to live in the urban centers – they’re called “urban pioneers.”
They are introduced to life in the city when they attend college and universities in the cities and/or obtain employment as well.
Cities, employers, and universities have come together to develop strategies to ensure that they are able to address the “brain” drain which is the loss of students who matriculate in the city but leave after graduation.
Coupled with both universities and hospitals who have developed programs that incentivize their employees to relocate in the city also heightens demand.
There is a very big demand for market rate housing and cities are doing all they can to seize it, which furthers the divide between the haves and have-nots.
Because they have capital and wealth, Whites see this as their right, privilege and/or business as usual while Blacks, because they lack real and historical capital, see this prosperity as typical in that it will benefit everyone except them (the tale of two cities).
To halt the continued disinvestment and/or to attract adequate investment levels, to halt the exodus and attract new high income residents, cities are forced to offer economic incentives.
To support the supply for “market” rate housing which are primarily built in existing affluent areas, developers are offered tax relief subsidy “gap” financing which is also supported in the form of historic, new market, favorable loan terms, and direct tax relief.
The goal is to encourage developers to build high end housing that will attract high income residents.
If developers can make these projects work financially, they are then able to pass on some of their economic benefits to buyers.
Unfortunately, most of these buyers and/or renters are White residents with high incomes.
It is important to note that the original depopulation of many of these cities was the direct result of public policies that favored development of the suburbs and today it looks different but has the same impact – Blacks are not the beneficiaries.
The development and the ultimate population increases begins in areas where density is very low and higher density is wanted.
Developers will now turn their attention to: developing downtowns; converting large areas of real estate that was once a thriving business area that was abandoned (i.e. loss of industry, navel yards and army bases, etc.); and areas that are just underdeveloped.
Now you see the downtowns, waterfronts, and live, play, and work type themes being developed, which is producing thousands of new housing primarily for high income people.
Every once in a while you might see a sprinkle of “affordable” housing developed within one of these developments but it’s rare.
While everyone promotes the concept of a “mix” income community as a viable public strategy – this concept has been relegated to mean having rich White people and poor Black people living side by side.
As with capitalism, the last time I checked we live in a capitalistic society, when areas are on the economic rebound it creates pinned up value in surrounding areas; hence GENTRIFICATION.
The surrounding and nearby economic boom starts to invade into traditional poor and disenfranchised Black neighborhoods (these are the neighborhoods that have been designated blighted) that are significantly undervalued and ripe for development.
Where you start matters and Blacks lack the financial ability to take advantage of these new opportunities – they lack capital.
Now developers see these neighborhoods as the next frontier and because these neighborhoods have tremendous levels of vacant lots and vacant properties coupled with a higher level of renters, White developers who have access to capital are now ready to invest in these neighborhoods.
For many of them, it’s all about a profit they don’t see the historical disruption.
One of the real problems with gentrification is the massive displacement of poor Black people and the inability to achieve a healthy blend.
Gentrification has become the urban renewal term that inevitably leads to urban removal – the displacement of thousands of low-to-moderate income Black people in exchange for wealthier White residents and/or businesses. When gentrification occurs, not only does the income base increase, but real estate values increase that force higher rents and ultimately higher property taxes.
For the Black people that rent, because they never had control of their destiny anyway, they are immediately vacated when the real property owners sell their properties and/or begin to make significant investment in the renovation of the properties so that they can now charge a higher rent – the net impact is that those original renters are displaced.
For Black people who owned their homes but didn’t fully understand the value of their real estate, or sometimes due to life circumstances, they sell their properties to “cash” buyers for amounts that they never dreamed they could derive.
Unfortunately, in many cases, there are alternative financial strategies that would’ve allowed the seller to derive the financial benefit and also keep their asset – the net impact is that those original owners are displaced.
This shift is exacerbated because these neighborhoods had a high level of vacant lots and vacant properties that someone owned and these owners have come out of the woodwork and they too cash in and sell their properties making the neighborhood transition faster – when capital market targets a neighborhood (profits), its fast and furious.
Because of the racial overtones associated with gentrification, public officials and politicians are frozen and unable to do anything or do the right thing.
Many of the public policies are so short sighted, ineffective, and bias, they don’t take into consideration the historical significance why this phenomenon is even happening.
Many times those that are victims of gentrification (poor Blacks) are labeled as guilty as if they are unwilling to develop their own neighborhoods – nothing could be further from the truth.
In many instances, these are the best citizens fighting against all odds to maintain and save their neighborhoods when they have little to no resources, and it can be devastating to a resident who has lived in a neighborhood for 2-3 generations and they no longer can afford to stay.
There are proven ways to accommodate both the market force for development to coincide with need to preserve its traditional historical perspective – EQUITABLE DEVELOPMENT.
Government must take a stand to protect and preserve the affordability and utilize the massive tax benefits afforded to developers to be allowed to be used by existing homeowners and renters.
The same and sometimes more creative incentives must be afforded to developers of affordable housing and a significant investment in “workforce” housing must be available. In my next article, I will describe ways to combat gentrification that are both public and private driven.
