The Negative (and Positive) Spillovers of Concentrated Foreclosure Activity in New York City

by Kristin L. Perkins
Postdoctoral Fellow

Foreclosures have negative effects not only for the people who lose their homes, but also for the neighborhoods where they lived.

In an article that recently appeared in Urban Affairs Review, Michael J. Lear, Elyzabeth Gaumer, and I conclude that, at least in New York City, neighborhood foreclosure activity during the peak of the Great Recession was associated with an individual property's risk of foreclosure, but not in the way that most previous research has assumed. These findings suggest that financial institutions' practices during the foreclosure process may have contributed to how quickly neighborhoods recovered from that crisis above and beyond the institutions' roles in causing it. The research focused on two key phases in the foreclosure process, an early phase when a lender filed a foreclosure notice after a property owner missed some mortgage payments, and a later phase when properties were actually scheduled to be auctioned. (In New York, the latter process often occurs more than a year after the former one.)

Although New York City's housing market fared better than many other markets during the recession, it was not immune to the problems associated with that downturn. Illustratively, in 2007 and 2008, there were nearly 14,000 foreclosure filings annually, double the number in 2004. In 2009, the number increased to over 20,000. The number of foreclosure auctions, however, was much smaller, ranging from 3,000 to 4,500 a year between 2007 and 2009.

This foreclosure activity was also highly concentrated. Between 2007 and 2009, over half of the city's foreclosure filings occurred in just nine of the city's 55 sub-borough areas (SBAs), all of them in Brooklyn or Queens. Moreover, over half of the city's auctions took place in just six SBAs. Not all specific areas with the highest concentration of foreclosure auctions, however, were among the areas with the highest concentration of foreclosure filings. Rather, the share of foreclosure filings that result in scheduled foreclosure auction varied considerably across boroughs, from less than 10 percent being scheduled for auction in parts of Brooklyn to more than 40 percent in parts of Queens.

My coauthors and I hypothesized that the number of scheduled foreclosure auctions surrounding a property that had received a foreclosure filing is positively associated with the likelihood of that property itself reaching auction, net of other factors. Since foreclosure filings do not necessarily involved a transfer of ownership, however, we thought they might not have as strong an association as auctions may have.

Drawing on data about individual property and neighborhood characteristics in addition to foreclosure activity, we found that levels of neighborhood foreclosure activity in both phases were, in fact, associated with an individual property's outcome, but in different directions. Holding constant individual property and neighborhood characteristics, as the number of nearby properties with a foreclosure filing increases, the probability that an individual financially-distressed property will be scheduled for foreclosure auction decreases. This pattern is reversed for properties in the later phase of the foreclosure process. As the number of nearby properties scheduled for auction increases, the probability that an individual financially-distressed property will be scheduled for foreclosure auction also increases (See Figure).

These findings also suggest that at least in New York, banks and loan servicers may have delayed the processing of foreclosures in areas with larger numbers of properties with foreclosure filings. They may have done so because foreclosed properties may not sell as quickly or as profitably as in more desirable areas where there are fewer distressed properties and/or where foreclosed properties sell right away. Future research should examine these practices in more detail, not only in New York, but in other states as well and, in doing so, underscore the importance of financial institution practices not just in the lead up to the Great Recession, but throughout the recovery process as well.

Successful Collaboration in Community Development: Easier Said Than Done

by Alexander Von Hoffman
Senior Research Fellow

What are the keys to successful collaborations of nonprofit housing organizations? A remarkable attempt to form a novel alliance by five such groups in western New York State reveals several keys to an effective collaboration. Each of the five organizations -- NeighborWorks® Rochester, West Side (Buffalo) Neighborhood Housing Services, Niagara Falls Neighborhood Housing Services, Arbor Housing and Development, and NeighborWorks® Home Resources -- were long-established in their geographic areas. Moreover, each belonged to the network of NeighborWorks® America, a congressionally chartered nonprofit corporation that provides grants, technical assistance, training, and organizational assessment to housing and community development organizations. Their experiences, which are documented in a recent Joint Center case study, shows both the problems and the possibilities of putting the idea of collaboration into action.

Buffalo, New York

Before going into details, it bears mention that it has become almost an axiom in the community development field that nonprofit organizations must "collaborate" if they are going to survive, much less transform low-income communities. And the idea of collaboration is appealing: two or more organizations agree to coordinate activities in a systematic way -- as opposed to carrying out a one-time joint venture. Such collaborations can range from a temporary partnership to outright mergers (or anything in between). But many practitioners and scholars believe such initiatives can address a host of serious problems. For most community development organizations, money is always short, and especially so in recent years as the federal government has reduced funding for the Community Development Block Grant (CDBG) program. In addition, many nonprofit groups appear to be financially weak, undersized, relatively unproductive, organizationally stagnant, or some combination of the above. By sharing business lines, programs, and administrative functions, smaller and financially weaker groups could become more efficient and possibly tap the resources and knowledge of stronger organizations. If so, they could stabilize their finances and begin to grow, which would allow them to devote more time and attention to serving their low- and moderate-income constituents effectively.

But as the new case study documents, putting these ideas into practice can be difficult. After extensive discussions, in 2012 the leaders of five western New York State groups devised the concept of a "collaborative merger." In this structure, each organization would become a subsidiary division of a new central organization. As subsidiaries, the five groups would maintain their separate identities, offices, and geographic service areas while increasing their capabilities and expanding the types and volume of business. The central organizations, which would be overseen by board members from each of the participating groups, would provide core administrative functions, and, in doing so, bring the efficiency and resources of a large organization to the work of what had been separate smaller groups.

Just as the groups were about to create the new entity, however, the alliance came to an abrupt halt. Many factors contributed to the breakdown of the process. The biggest obstacle was the difficulty of bringing five disparate groups together under a common structure. The organizations covered starkly different kinds of geographic territories. Three of the organizations (NeighborWorks® Rochester, West Side Neighborhood Housing Services (Buffalo), and Niagara Falls Neighborhood Housing Services) were rooted in cities. The other two (Arbor Housing and Development, and NeighborWorks® Home Resources) were rural entities with geographically extensive service areas.

Moreover, there were significant differences in the organizations' programmatic offerings. Arbor, the largest of the five groups not only provided residential services for people with special needs and victims of domestic violence, it also developed and managed low-income housing. The other four groups were traditional "neighborhood housing service" groups that emphasized homeownership counseling, lending, and community engagement. Over time, key staff and board members of the housing service organizations became increasingly concerned that if the alliance went forward, their organizations would lose their identities and be less able to perform their core functions. Ultimately, the concerns became so great that the groups' leaders decided not to proceed with the planned alliance.

That was not the end of the story, however. Following the original idea, albeit on a smaller scale, the three urban-oriented neighborhood housing service groups (NeighborWorks® Rochester, West Side Neighborhood Services, and Niagara Falls Neighborhood Housing Services) merged to form a new organization called NeighborWorks® Community Partners. Meanwhile, Arbor, which continued to be a NeighborWorks® member, has not only thrived, but has also expanded its service area as far as Pennsylvania and Albany, NY. The fifth organization, NeighborWorks® Home Resources, remained in business under the name Rural Revitalization Corporation, but has left the NeighborWorks® network.

The experiences of these five organizations not only underscores the importance of building trust among partners in any collaboration, it also offers several lessons for those interested in collaborating with other entities. First, prospective collaborators might do well to begin by collaborating on actual programs before they start building a grand organizational structure. Second, collaborators should take time to develop a common vision, which means wrestling honestly with with the differences that separate the participating groups. Third, and related to the above, communication - open and constant - is essential, as is the full and committed participation of all of the involved parties. The leaders of such efforts must go to great lengths to ensure that everyone - including staff and board members from all the organizations - understand and support the collaborative effort.

Finally, everyone must understand that bringing existing groups into a new organizational arrangement is not business as usual. It is an act of creation that will change the status quo. Such a collaboration requires extraordinary care to ensure that the participants recognize the process and the outcome as legitimate. And this in turn means it is essential to tackle difficult questions about management, sharing leadership, and the roles and responsibilities of staff and board members sooner rather than later.

Are Integrated Neighborhoods Becoming More Common in the United States?

by Jonathan Spader and
Shannon Rieger

The share of the population living in racially and ethnically integrated neighborhoods in the US has increased since 2000, according to our new Joint Center research brief. However, most Americans continue to live in non-integrated neighborhoods, and evidence suggests that some of the recent increases in integration may be the temporary byproduct of gentrification and displacement.

The new brief, "Patterns and Trends of Residential Integration in the United States Since 2000," assesses whether the nation's increasingly diverse population is fostering the growth of integrated neighborhoods or whether the choices people make about where to live are reinforcing existing lines of segregation and exclusion. Specifically, we use data from the 2000 Census and the 2011-15 American Community Survey (the most recent data available at the census tract level) to describe the number, stability, and characteristics of integrated neighborhoods.

Because there is no single measure for identifying integrated neighborhoods, our analyses applies two commonly-used definitions to define integration. The first approach—which we refer to as "no-majority neighborhoods"—defines integrated neighborhoods as those where no racial or ethnic group accounts for 50 percent or more of the population. While this definition identifies neighborhoods with a plurality of races and ethnicities, it may exclude some neighborhoods with relatively high levels of integration relative to the median neighborhood in the United States. For example, under this definition, a census tract that is 49 percent black and 51 percent white would be classified as non-integrated.

The second definition—which we refer to as "shared neighborhoods"—uses a broader definition of integration, identifying neighborhoods as integrated if any community of color accounts for at least 20 percent of the tract population AND if the tract is at least 20 percent white. While this definition might be expanded to include neighborhoods in which any two groups account for at least 20 percent of the tract's population, this definition requires that the neighborhood population be at least 20 percent white because of whites' long history of exclusionary practices as well as attitudinal surveys suggesting that, on average, whites are less willing that other groups to live in integrated neighborhoods.

Both definitions suggest that the number of integrated neighborhoods—and the share of the US population living in integrated neighborhoods—increased between 2000 and 2011-15 (a time when the white, non-Hispanic share of the population fell from 69.1 percent to 62.3 percent). The number of "no-majority neighborhoods" increased from 5,423 census tract in 2000 to 8,378 in 2011-15, and the share of the US population residing in such tracts increased from 8.0 percent in 2000 to 12.6 percent in 2011-15 (Figure 1).

Similarly, the number of "shared neighborhoods" increased from 16,862 tracts in 2000 to 21,104 tracts in 2011-15, and the share of the US population residing in "shared" tracts increased from 23.9 percent in 2000 to 30.3 percent in 2011-15. These figures are higher than the estimates for "no-majority" tracts, reflecting the broader definition of integration used to define "shared neighborhoods." Nonetheless, both definitions show increases in integration between the 2000 Census and the 2011-15 ACS.

Notes: "No-majority neighborhoods" are census tracts in which no racial or ethnic group accounts for 50 percent or more of the population. "Share d neighborhoods" are census tracts in which whites account for 20 percent or more of the population and any community of color accounts for 20 percent or more of the population. 
N=71,806 Census tracts.

While the share of the population living in integrated neighborhoods has increased since 2000, most Americans continue to live in non-integrated areas, with white individuals the least likely to live in integrated areas. While 12.6 percent of the total US population lives in one of the 8,378 "no-majority" tracts, these neighborhoods include just 7.2 percent of the nation's whites, compared to 20.3 percent of blacks, 20.3 percent of Hispanics, 30.9 percent of Asians, and 19.5 percent of individuals of other races and ethnicities (Figure 2).

A similar pattern is present within "shared neighborhoods." While 30.3 percent of the total US population lives in one of the 21,104 "shared neighborhoods," these neighborhoods include just 22.9 percent of the nation's whites, compared to 43.0 percent of blacks, 42.8 percent of Hispanics, 44.8 percent of Asians, and 36.5 percent of individuals of other races and ethnicities.

Note: Estimates show the percent of each group that live in integrated neighborhoods. White, black, Asian, and Other are non-Hispanic.

The research brief provides more specific details about the relative composition of integrated and non-integrated neighborhoods by race, ethnicity, and other demographic characteristics. Additionally, it describes the stability of integrated neighborhoods between 2000 and 2011-15, as well as the geographic distribution of integrated neighborhoods across central cities, suburbs, and non-metropolitan areas.

Taken together, this evidence offers support for the conclusion that the number of integrated neighborhoods has increased in recent years. However, it also highlights that this conclusion is subject to two important caveats. First, some portion of the increase in integration reflects neighborhood change processes associated with the gentrification and displacement pressures affecting the central areas of many cities. While some of these neighborhoods may become stably integrated areas, it is not yet clear how many of the newly integrated neighborhoods will become stably integrated and how many will eventually become non-integrated areas.

Second, integrated neighborhoods remain the exception rather than the rule in the United States. The 2011-15 ACS shows that fewer than one in three Americans lives in a shared neighborhood, with just 12.6 percent living in "no-majority neighborhoods." As the country moves toward a population in which people of color are projected to be a majority by the middle of the century, further growth will be necessary for such changes to produce a more inclusive society.

The Rise of Poverty in Suburban and Outlying Areas

by Elizabeth La Jeunesse
Research Analyst

A key takeaway from our latest State of the Nation’s Housing report is that poverty is both increasing and becoming more concentrated across the country. Moreover, while a third of the poor live in high-density urban neighborhoods, the number of poor people and poor neighborhoods grew particularly rapidly in the “exurbs,” low-density neighborhoods on the fringe of the nation’s metro areas (Figures 1 and 2).

Figure 1. The Number of People Living in Poverty Has Increased Most in Suburban and Exurban Communities

Figure 2. Much of the Growth in High-Poverty Neighborhoods Has Been in Suburban and Outlying Areas

According to the report, from 2000 to 2015, the number of people living below the federal poverty line rose by 41 percent, from about 33.8 million to 47.7 million. Additionally, the number of high-poverty neighborhoods (census tracts where the poverty rate is 20 percent or more) rose by 59 percent, and the poor population living in these areas increased by 76 percent to 25.4 million. As a result, 54 percent of the nation’s poor now live in high-poverty neighborhoods, up from 43 percent in 2000.

The growth in high-poverty neighborhoods was widespread, occurring in all but three of the nation’s largest 100 metros (Honolulu, El Paso, and McAllen, TX). Moreover, the rise of poverty was particularly rapid in the exurbs, where the number of high-poverty neighborhoods more than doubled between 2000 and 2015, and the number of poor people living in these neighborhoods grew by 164 percent, rising from 1.5 million in 2000 to 3.9 million in 2015. Such growth presumably was due to the fact that housing generally is less expensive in these areas, but the savings in housing costs are often offset by higher transportation costs and more time spent travelling to work and other activities.

Our new interactive chart shows that these changes were not uniform in the nation’s 100 largest metropolitan areas. To begin with, two-thirds of these metros underwent a rise in concentrated exurban poverty from 2000-2015. Moreover, the magnitude of the increase varied. For example, the number of high-poverty, exurban tracts increased more than tenfold in the Detroit, Greensboro, and Cape Coral, FL metros, and increased by a factor of five or more in 11 other metros, including Atlanta, Denver, Charlotte, Cincinnati, Kansas City, Las Vegas, Nashville and Orlando. Other large metros where the number of high-poverty, exurban neighborhoods more than tripled included Baltimore, Philadelphia, Pittsburgh, Portland, St. Louis, and Tampa.

For example, in the Atlanta metro, the number of low-density, high-poverty, exurban tracts rose from only 11 in 2000 to 72 in 2015 (Figure 3). Meanwhile, in the St. Louis metro, there were 28 high-poverty, exurban neighborhoods in 2015, up from 8 such areas just 15 years earlier (Figure 4).

Figure 3. Atlanta

Figure 4. St. Louis

While poverty remains highly concentrated in dense urban areas, several large metros now have unusually large shares of high-poverty, exurban neighborhoods. In the Atlanta, Charlotte, and Nashville metro areas, for example, nearly a quarter or more of all high-poverty neighborhoods are located in low-density, exurban areas. Poverty’s shift to lower-density areas was especially pronounced in the Charlotte area, where 41 percent of high-poverty tracts are now situated in low-density, exurban areas, up from just 15 percent in 2000 (Figure 5).

Figure 5. Charlotte, NC

Moreover, in several smaller metros across the South – such as Columbia, SC; McAllen, TX; Greenville, SC; Jackson, MS, and Knoxville, TN – well over half of all high-poverty neighborhoods are located in low-density, outlying regions (Figure 6).

Figure 6. McAllen, TX 

Use our interactive tool to see the change in high-poverty neighborhoods in the nation’s 100 largest metro areas between 2000 and 2015.

Download Excel files for additional data on high-poverty neighborhoods. (W-1 and W-15)

Download Chapter 3 of our State of theNation’s Housing 2017 report, which contains additional discussions on the growth of poverty and the spread of high-poverty neighborhoods.

Making Collaboration Work: Four Lessons from Chicago CDFIs

by Alexander von Hoffman
and Matthew Arck

Although many in the housing and community development field are excited by the idea of collaboration between organizations, such partnerships are often easier said than done. In practice, as our new case study of a partnership in Chicago shows, effective collaboration requires the partners to be thoughtful, nimble, and flexible.

The case study analyzes the work of the Chicago CDFI Collaborative, a partnership of the Community Investment Corporation (CIC), the Chicago Community Loan Fund (CCLF), and Neighborhood Lending Services (NLS). In 2014, the collaborative received a 3-year, $5 million grant from PRO Neighborhoods, a $125 million, 5-year grant program of JPMorgan Chase & Co. that supports community development financial institutions (CDFIs) pursuing innovative collaborations. The Chicago CDFI Collaborative used the money to restore abandoned and dilapidated housing in economically depressed neighborhoods, such as Englewood and West Woodlawn, which were particularly affected by foreclosures in the financial crisis. To do so, it provided loans and technical assistance that helped small-scale investors and owner-occupants purchase and rehabilitate one-to-four-unit buildings, which comprise nearly half of the affordable rental stock in Chicago.

The Chicago CDFI Collaborative helped a small-scale investor acquire and rehabilitate this home in the Chatham neighborhood on Chicago’s South Side. (Photo by Nathan Hardy.)

By 
By early 2017, the collaborative had lent nearly $25 million, acquired or financed the acquisition of 430 properties, and helped to preserve almost 600 housing units in low-income communities.  In interviews, leaders of the Chicago CDFIs identified four important lessons that emerged from their work.

1. Try new approaches

Although each member of the Chicago CDFI Collaborative is a well-established community lender, none of them had focused extensively on abandoned one-to-four-unit buildings. The new partnership enabled the officers of these groups to tackle this vexing problem on a large scale. The lesson, according to Robin Coffey, Chief Credit Officer of NLS, is that instead of “trying to play it safe” by simply expanding the volume of their current lending practices, collaborating CDFIs should imagine “how can we work together to change the way that we’re approaching something” so they can better aid residents of troubled low-income communities.

Some CDFI leaders might be wary of this approach because they perceive other CDFIs as rivals, but participants in the Chicago collaborative said that is not the case. In the CDFI field, Wendell Harris, Director of Lending Operations for CCLF, asserts, “there is so much work that needs to be done, there really is no discussion of us being competitors.”

2. Pursue many lines of attack

CDFIs must develop and carry out a multi-faceted strategy to overcome the multiple and systemic obstacles to revitalization in depressed neighborhoods. One way to do this is by targeting neighborhoods that have other revitalization programs already in place. For example, the Chicago CDFIs prioritized lending in seven neighborhoods where their organizations already were working.  Moreover, since NLS’s parent organization, Neighborhood Housing Services of Chicago, also dispersed grants from the City of Chicago that help low- and moderate-income homeowners improve the exteriors of their homes, NLS was able to direct some of those outside grants to the same neighborhoods targeted by the Chicago CDFI Collaborative. According to Coffey, this reinforced the coalition’s revitalization efforts. When a potential buyer saw improvements being made to other buildings, the NLS leader explained, he or she would conclude that the neighborhood was “not as bad as I thought.”

In addition, the neighborhoods selected by the Chicago CDFIs were part of a larger set of neighborhoods that received funding from the City of Chicago’s Micro-Market Recovery Program, which supports a variety of revitalization efforts. Adding the PRO Neighborhoods funds to these other tools, such as financial assistance and community organizing, Coffey noted, “made it that much more effective.”

3. Communicate regularly and in-person

Leaders of the collaborating CDFIs stressed that regularly scheduled, in-person meetings were a key to their success. Monthly meetings facilitated open communication, which in turn helped create an effective, adaptive partnership. Doing so in face-to-face meetings rather than conference calls meant that the partners had fewer distractions and were more likely to focus on the work at hand.

The face-to-face meetings also helped partners discover issues sooner than they might have otherwise, and, according to Coffey, gave them a “sense of urgency” to solve the problems that emerged in their discussions. Conferring in person, Harris added, encouraged the partners to share information about their networks of people in the field as well as details about properties that were under discussion. In one meeting, for instance, CIC’s representative told the group that it had acquired a building in a particular neighborhood, and NLS’s representative suggested an owner-occupant who would likely be interested in acquiring and rehabbing it.  

4. Expect the unexpected and adapt to it

Leaders of collaborating CDFIs must be prepared to respond to unexpected conditions on the ground. Going into the venture, the partners in Chicago initially thought the best strategy was to target long-vacant homes for rehabilitation. However, Coffey recalled, “we learned really quickly that getting people into homes so that they wouldn’t become vacant” was easier for the homeowner and better for the block. The partners also discovered that, despite the robust technical assistance provided by the Chicago CDFI Collaborative, many potential owner-occupants remained doubtful they possessed the expertise necessary to rehab long-vacant properties. To adapt, NLS’s leaders broadened their strategy to include run-down buildings that were not currently vacant, but were likely to become vacant if major repairs were not done in the near future.

The members of the Chicago Collaborative also encountered unexpected difficulty when they tried to carry out their core strategy to acquire and renovate large numbers of distressed properties in close proximity. In response, they expanded their efforts beyond simply acquiring foreclosed buildings to include buying tax liens on properties and purchasing and reconverting condominiums back into single properties. Without such changes, said Andre Collins, vice-president of acquisition and disposition strategy for CIC, the Collaborative would have rehabilitated fewer properties and preserved fewer affordable units than they did.

Taken together, these practices can help collaborative efforts succeed, which, Harris says, is particularly important because “it takes a collaborative effort to make things better.”

When Do Renters Behave Like Homeowners? High Rent, Price Anxiety, and NIMBYism

by Michael Hankinson
Meyer Fellow

In theory, renters and homeowners disagree about proposals to build new housing in their communities, particularly if that housing is close to where they live. However, in practice, this is not always the case. 

Rather, in a new Joint Center working paper that is based on new national-level experimental data and city-specific behavioral data, I find that in high-housing cost cities, renters and homeowners both oppose new residential developments proposed for their neighborhoods. However, in high-cost markets renters are still more likely than homeowners to support citywide increases in the supply of housing. Since changes in city governments over the past several decades have generally strengthened the power of neighborhood-level opponents to proposed projects, my findings help explain why it is so hard to build new housing in expensive cities even when there is citywide support for that housing.

NIMBYism and the Rising Cost of Housing

Since 1970, housing prices in the nation’s most expensive metropolitan areas have dramatically increased. Real prices have doubled in New York City and Los Angeles and nearly tripled in San Francisco. Driving this appreciation is an inability of new housing supply to keep up with demand. Even accounting for the cost of materials and natural geographic constraints on supply, the dominant factor behind this decoupling of supply and demand is political regulation, such as limits on the density of new housing developments and caps on the number of permits issued by a localities’ government.

                                               

These limits are a classic example of the NIMBY (Not in My BackYard) phenomenon. Even if residents support a citywide increase in the supply of housing, they may still oppose specific projects in their neighborhood. This seeming disconnect between views on citywide and local development policies creates a classic collective action problem for those policymakers who must find ways to reconcile the conflicting views.  

Photo by Michael Hogan/Flickr

Despite its popularity as a scapegoat, there is no individual-level, empirical data on how NIMBYism operates and among whom. Students of urban politics generally assume that homeowners have strong NIMBY tendencies not only because they benefit from rising house prices but also because they worry that nearby new housing units, particularly nearby subsidized housing units, might decrease the value of their home.

There is less consensus on (or studies of) how renters view new development. New supply may help ease prices for renters but their pro-development views may not be reflected in local policies because renters are less likely to become politically involved than highly motivated homeowners.  Alternatively, renters might not favor new projects if they believe the units will increase demand in their neighborhood, which, in turn, will lead to increased housing prices. To date, however, there has been very little research on how renters view development projects and whether their views differ from those of homeowners.

                                               

Measuring NIMBYism

To measure NIMBYism and general support for new housing, I collected two unique datasets. I conducted the first experimental tests of NIMBYism through an online survey of 3,019 respondents across 655 cities in 47 states. Respondents were asked about their support for development policies, including whether they would support a 10 percent increase in their city’s housing supply, with the question customized to each respondent’s city, stating how many homes and apartments currently exist and how many more would be built. Respondents also participated in an experiment where they were presented with two housing developments and asked which of the two proposals they preferred for their city. Each proposed development was described using several attributes, such as height and affordability level. To measure NIMBYism, respondents were also told how far each the of developments would be from their home, from two miles away to ⅛ mile away. By randomly varying this distance along with the other attributes, I was able to measure respondents’ sensitivity to proximity (NIMBYism), holding all other attributes equal.

To supplement this national survey, I also conducted a 1,660-person exit poll during the 2015 San Francisco election. Voters at 26 polling locations were asked their opinions on several housing-related ballot propositions similar to those presented in the national survey.

When Renters Behave Like Homeowners

As noted, renters and homeowners are expected to disagree on support for new housing, with NIMBY homeowners opposing citywide and neighborhood development and renters likely supporting the new supply. In line with existing theory, homeowners in my national survey largely opposed the proposed 10 percent increase in their city’s housing supply (28 percent approval), while a majority of renters supported the new supply (59 percent approval). Likewise, when asked in the experiment which of two randomly generated buildings they would prefer for their city, homeowners exhibited consistent NIMBYism, preferring buildings that were farther away from their home. In contrast, renters on average did not pick buildings based on distance from their home. If anything, renters preferred affordable housing that was closer to their home, displaying a YIMBY or ‘Yes in My BackYard’ attitude. In short, homeowners and renters tend to have very different attitudes towards both NIMBYism and the citywide housing supply.

However, in high-rent cities, renters look far more like homeowners. Instead of paying little attention to the location of proposed new housing, renters in expensive cities are just as NIMBY towards market-rate housing as homeowners. Moreover, this renter opposition to nearby development does not mean they support less new development overall. In fact, renters in expensive cities show just as much support for a 10 percent increase in their city’s housing supply as renters in more affordable cities. The main difference between these groups of renters is their NIMBYism.

Results from the San Francisco exit poll show a similar combination of supporting supply citywide, but opposing it locally. When asked about a 10 percent increase in the San Francisco housing supply, both renters and homeowners expressed high levels of support, at 84 percent and 73 percent approval, respectively. But, somewhat surprisingly, when asked if they would support a ban on market-rate development in their neighborhood, renters showed far more NIMBYism than homeowners, with 62 percent of renters supporting the NIMBY ban compared to 40 percent of homeowners.

NIMBYism and How We Permit Housing

Renters in high-rent cities generally both want new housing citywide but behave like homeowners when it comes to their own neighborhood. These scale-dependent preferences present a policy challenge for keeping cities affordable. Over the past 40 years, city governments have increasingly empowered neighborhoods to weigh-in on housing proposals through formal planning institutions. In doing so, these decisions have amplified NIMBYism and the ability to reject new housing, without maintaining a counterweight for the broader interest for new supply citywide. In other words, while most residents may support new housing for the city as a whole, both homeowners and renters are willing and increasingly able to block that supply in their own neighborhood, effectively constraining the housing supply citywide. This is housing’s collective action problem.

In separate research, I am empirically testing the effect of these strengthened neighborhood institutions on the rate of housing permitting since 1980. Likewise, I am conducting further experimental research on what types of citywide housing proposals are able to win the greatest support among both homeowners and renters. Hopefully, by measuring the tradeoffs between the ‘city’ and ‘neighborhood’ in the politics of housing, we can better address the deepening affordability crisis facing many American cities.

Neighborhood Change and the Right to the City

Adam Tanaka
JCHS Meyer Fellow

Adam Tanaka reviews Priced Out: Stuyvesant Town and the Loss of Middle-Class Neighborhoods by Rachael A. Woldoff, Lisa M. Morrison and Michael R. Glass.

This post is cross-posted from Metropolitiques.eu

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New York City’s Stuyvesant Town is the largest housing development in Manhattan, and also one of the most controversial and most studied. Adam Tanaka reviews the latest contribution to studies of Stuyvesant Town, by Rachael A. Woldoff, Lisa M. Morrison and Michael R. Glass. Gentrification and rent deregulation have changed the composition of the development, and longtime renters now coexist with younger and wealthier households. Woldoff et al. explore this coexistence using ethnographic methods, and situate the transformation within a broader shift to a neoliberal housing policy.

Stuyvesant Town and Peter Cooper Village as seen from the air over the East River looking north (cc) Alec Jordan/Wikimedia Commons

Stuyvesant Town: between myth and reality

Seventy years after opening its doors to World War II veterans, Stuyvesant Town remains by far the largest housing development in Manhattan. The project looms over the Lower East Side, with its 35 red-brick towers, 8,755 apartments and superblock design providing a marked contrast to the surrounding urban fabric. Stuyvesant Town also remains one of the city’s most controversial real-estate developments. In its early years, the project was a maligned symbol of urban renewal and racial segregation. More recently, the development sparked heated debates about the viability of middle-class housing in Manhattan as it was bought and subsequently foreclosed upon in the largest real-estate transaction and mortgage default in American history.

The project has also been the subject of considerable research. Historian Samuel Zipp’s Manhattan Projects (2010) explored the politics of development and the culture of early occupancy, while real-estate journalist Charles Bagli’s Other People’s Money (2013) drew attention to the financial speculation that drove the highly leveraged purchase of the complex in 2006 and the subsequent post-recession fallout. Priced Out: Stuyvesant Town and the Loss of Middle-Class Neighborhoods, co-written by Rachael A. Woldoff, Lisa M. Morrison and Michael R. Glass, also examines the most recent chapter of the Stuyvesant Town story. But rather than studying the elite politicking of private investors and public officials that animated Bagli’s book, Priced Out shifts its focus to the politics of everyday life within the complex.

In particular, the authors explore the impacts of rent deregulation on the social composition of this previously “stodgy” middle-class neighborhood. As younger, market-rate residents have gradually replaced older, rent-stabilized tenants, a “curious menagerie” has come to occupy Stuyvesant Town’s anonymous red brick towers (p. 3). Using ethnographic methods, the authors examine the intergenerational and class conflicts between the project’s various subgroups, and the role of management in exacerbating tensions. Criticizing the economistic focus of much housing scholarship, Woldoff et al. argue that it is impossible to fully understand transformations in the city’s housing market without examining how these changes affect the social dynamics of specific communities.

The book is structured in four parts. First, the authors provide a brief historical overview of Stuyvesant Town’s origins. The authors then describe Stuyvesant Town’s evolution from a racially segregated veterans’ community focused almost exclusively on child-rearing to an increasingly disparate mixture of rent-stabilized seniors and new market-rate renters, comprising students, professionals and young families drawn to the project’s convenient downtown location.

Inset chapters describe the policy context driving the deregulation of the city’s middle-income housing stock. The authors pinpoint New York State’s Rent Regulation Reform Act of 1993 and Vacancy Decontrol Law of 1997 as watershed moments in the transformation of Stuyvesant Town from a relatively stable middle-class community to a so-called “luxury rental” development. They situate these changes within a broader paradigm shift from a managerial urban housing policy with state-enforced rent controls to an increasingly neoliberal agenda promoting the “invisible hand” of the market at the expense of permanently affordable housing.

Daily life in a community in flux

The authors’ principal focus, however, is on how the transformation of Stuyvesant Town from community to commodity has impacted daily life. “What is it like for such different groups to live in Stuy Town together?” they ask. “Are all of these residents happy here? How long do they plan to stay?” (p. 3). These questions are explored through interviews with 49 residents across the range of subgroups living in the project. In-depth “vignette” chapters describe the experiences of representatives of the two resident groups perhaps most at odds with each other.

Chapter 3 tells the story of Ruthie, who has lived at Stuyvesant Town since 1948. Ruthie describes the transformation of the neighborhood from an age- and income-homogeneous community to a diverse set of groups with competing interests and expectations. While Ruthie herself is relatively indifferent to these changes—and highlights moments of collaboration between young and old—she relates anecdotes of other senior citizens who feel victimized by managerial decisions that they feel promote the interests of young residents at their expense.

Chapter 7 explores life at Stuyvesant Town from the perspective of Kara, a senior-year student at nearby New York University (NYU). Kara is emblematic of the trend of “studentification” in Lower Manhattan’s private rental sector. Pre-existing residents argue that they cannot compete with students willing to subdivide apartments and split the rent, particularly when such practices are encouraged by revenue-maximizing landlords. With college-based social networks and a short-term view of her residency, Kara’s relationship to Stuyvesant Town differs from that of long-standing residents. Like Ruthie, Kara does not recount any out-and-out conflicts between her and her elderly neighbors. She views the area without sentimentality, as a temporary housing solution rather than a community in which she has a deep stake.

Change at Stuyvesant Town: a neoliberal story?

While Priced Out’s ethnographic research is balanced and precise, giving equal weight to the various constituents in Stuyvesant Town’s “curious menagerie,” the book stumbles when trying to tie the story to broader political-economic and theoretical concerns. The authors situate Stuyvesant Town’s transformation from rent-regulated to market-rate housing within a structural shift from a Fordist–Keynesian to a neoliberal urban-policy paradigm. At first glance, this appears to be a plausible analytic framework. On closer inspection, however, it becomes clear that the authors’ use of a neoliberal framework is more of a hindrance than a help.

Critiques of neoliberalism tend to romanticize either the state or the community as the appropriate scale of social management; Priced Out does both. The authors contend that “New York City’s policies in the mid-twentieth century were in keeping with larger societal ideals grounded in justice and pragmatism, in which housing was viewed as a right” (p. 101). But the early history of Stuyvesant Town itself directly contradicts such a thesis. Not only did the project benefit from significant public subsidies to clear a low-income neighborhood in favor of a racially homogeneous, middle-class enclave—hardly a policy of “justice and pragmatism”—but its contractual arrangements guaranteed only 25 years of rent controls, tied to ongoing tax abatements, after which MetLife, a life-insurance company turned developer, could charge market rents—hardly a vision of housing “as a right.” While the authors argue that Stuyvesant Town was built due to “a need for middle-class families to have access to affordable housing in the city,” they fail to acknowledge that the project was as much—if not more so—driven by a rationale of fiduciary profit and the upgrading of Manhattan’s property values: nothing short of state-sanctioned gentrification.

It is not only the state’s historic role in social welfare provision that is uncritically embraced, however. Priced Out also romanticizes the notion of community as an ahistorical and morally upright social unit, without unpacking its complexities. Many scholars have explored the question of whether community—particularly middle-class community—is a necessarily exclusionary concept, a literature with which Woldoff et al. do not engage or even acknowledge (see Herbert Gans, The Levittowners, 1982; Suzanne Keller, Community: Pursuing the Dream, Living the Reality, 2003; and Robert Nelson, The Private Neighborhood, 2005, among others). Instead, they lament the disintegration of a previously homogeneous urban neighborhood, implicitly suggesting that cities work best when composed of a mosaic-like fabric of introverted communities.

Whose “right to the city”?

The authors deploy urban theorist Henri Lefebvre’s concept of “the right to the city” to assert the primacy of existing residents’ claims to the neighborhood over the rights of newer, richer tenants. The authors assert that, historically, “Stuyvesant Town provided a sense of place” and a “sense of stability,” qualities currently being eroded by market pressures (pp. 38–39). But who qualified for entry into that community in the first place? The authors admit that MetLife’s original leasing procedures were hardly meritocratic. Beyond the racial restrictions, many early tenants had professional or personal connections with the life insurers that fast-tracked their applications and left others to languish on the waitlist for years, if not decades. What of their “right to the city”?

In contrast to the original tenants, who apparently came in search of “the promise of community,” the authors castigate new, market-rate residents for using the development “as a foothold to begin an ambitious life in New York City, or as a stepping stone on the way to an aspirational, higher-status residence” (p. 184). This is also a simplistic dichotomy. Many of Stuyvesant Town’s early tenants were driven into the project by a desperate postwar housing shortage as much as any romanticized notions of community life—arguably exactly the same reasons why so many people are willing to pay exorbitant market rents to live in Stuyvesant Town’s institutional tower blocks today.

Many of the project’s early tenants also benefited from rent controls to build up savings and later purchase a home, using Stuyvesant Town as both foothold and stepping stone to homeownership—possibly the prime function of urban rental housing. There is nothing wrong—and indeed, much right—with arguing that pre-existing residents should have a greater right to the community by dint of longevity of tenure. But the authors do not grapple with the thorny issue of how to evaluate, let alone rank, rights-based claims to shelter, and they tend to romanticize the motives that drew residents to Stuyvesant Town in the first place.

Neighborhood politics: possibilities and constraints

The book’s most intriguing moments come when the authors engage with the multifaceted meanings and uses of Stuyvesant Town to different resident groups. They describe how Stuyvesant Town is appropriate for senior living; single-floor apartment layouts and elevators are convenient for mobility-impaired residents, while proximity to major hospitals in “Bedpan Alley” make trips to the doctor less stressful. At the same time, the authors show that many aspects of Stuyvesant Town’s design and location are convenient to younger residents. Students from nearby universities and young professionals working in Midtown are drawn to the walk-to-work location, while young families appreciate the lack of through traffic and the plentiful recreational facilities.

In the book’s closing pages, the authors also acknowledge the importance of politics—or the process of collectively binding decision-making—to the future of increasingly age- and income-diverse urban neighborhoods. “In order to achieve community in the city, the heterogeneous groups who inhabit the same space must establish strong relationships and unify politically in pursuit of their best interests,” they write, in a statement that could apply to urban governance more generally (p. 192).

Whether the pursuit of disparate interests can be achieved through political action is a promising avenue for further research, and arguably more fruitful than the authors’ reliance on an orthodox neoliberal framework. That said, any analysis of political organizing at the neighborhood scale must also engage with the role of both public and private sectors in structuring outcomes. After all, in the recent October 2015 sale of Stuyvesant Town to private equity giant Blackstone and Canadian pension fund Ivanhoe Cambridge, the new landlord’s pledge to maintain affordable rents in 5,000 apartments for another 20 years was as much a product of closed-door negotiations between investors and politicians as it was a result of direct community action.

Bibliography

• Bagli, Charles. 2013. Other People’s Money: Inside the Housing Crisis and the Demise of the Greatest Real-Estate Deal Ever Made, New York: Penguin.
• Gans, Herbert. 1982. The Levittowners: Ways of Life and Politics in a New Suburban Community, New York: Columbia University Press.
• Keller, Suzanne. 2003. Community: Pursuing the Dream, Living the Reality, Princeton: Princeton University Press.
• Nelson, Robert. 2005. Private Neighborhoods and the Transformation of Local Government, Washington, DC: The Urban Institute.
• Zipp, Samuel. 2010. Manhattan Projects: The Rise and Fall of Urban Renewal in Cold-War, New York, Oxford: Oxford University Press.

CDFI Cluster Demonstration Project

Alexander Von Hoffman
Senior Research Fellow

In December 2013 the JPMorgan Chase Global Philanthropy Foundation issued a call for proposals for groups of Community Development Financial Institutions (CDFIs) to coordinate financial programs to alleviate problems facing low- and moderate-income communities, small businesses, and individuals. In January 2014 the foundation announced awards, totaling $33 million over a three-year period, to seven CDFI collaboratives. At the request of JPMorgan Chase Global Philanthropy, Alexander von Hoffman profiled the characteristics, objectives, methods, and achievements of each of the CDFI collaboratives in the first phases of their work. 

Purpose and Problems of CDFIs

In working- and lower-class neighborhoods in the United States, stability, let alone opportunity, is hard to come by. It can be difficult to get a loan on fair terms to buy a house or expand a business, particularly where African Americans, Hispanic Americans, and immigrants live. In such areas, there is often no transportation to school, jobs, and shops. In some places a store with the necessity of life – food – is nowhere to be found.

Yet conventional banks are often reluctant to make loans for such specialized and sometimes risky purposes. Fortunately, in recent years, federally funded nonprofit lending organizations – known officially as community development financial institutions or CDFIs – have moved in to fill the gap in credit for these needs.

CDFIs are engaged in a demanding business. Their customers may be inexperienced in formal banking or have challenging circumstances – such as a recent home foreclosure, the launch of a new and untested business venture, or even the lack of legal citizenship status.

To provide credit in such situations requires that CDFI officers learn about their clients’ situation and craft appropriate solutions. They might have to customize a loan product or provide personal technical assistance. In more extreme cases, CDFI officers may have to seek out and educate people about the benefits of proper credit.

Given the nature of CDFIs’ business, many of them find it difficult to provide credit on a scale large enough to make a visible impact on low-income communities. Low balance-sheets, lack of operating capital, and insufficient revenue streams can prevent CDFIs from increasing lending activities or expanding their service areas geographically.

Successful CDFIs have found that one of the best ways to overcome these obstacles is to collaborate with other CDFIs.

The First Round of PRO Neighborhoods Awards

To jumpstart collaborations among CDFIs, in January 2014 JP Morgan Chase Global Philanthropy Foundation awarded seven CDFI collaborative clusters, including twenty-seven CDFIs doing widely different work in diverse locales. In the first phase of the foundation’s PRO Neighborhoods program (Partnerships for Raising Opportunity in Neighborhoods) these grants totaled $33 million over a three-year period.

Although the grant period has more than a year to run, our initial evaluation shows the awards have had a striking effect both on the ground and on the CDFIs themselves.

The award capital and its leveraged investment have helped CDFIs strengthen their balance sheets immensely. The seven collaborative clusters have so far raised more than $226 million, or almost seven times the original amount, to carry out their community development programs.

CDFI members of the clusters have ramped up scale of production and expanded their reach across new geographies and types of customers. They have also devised new methods of communication and lending practices suited to the oft-neglected needs of low-income clients.

The CDFI clusters have undertaken a remarkably wide variety of endeavors, including lending to small businesses that are minority-owned or in low-income neighborhoods, helping mobile-home owners purchase and manage their communities, increasing the provision of fresh healthy food, aiding and financing the minority and immigrant owners of low-rent apartment buildings in Chicago, and generating equitable transit-oriented development in the poor and working-class Latino neighborhoods of Phoenix.

The process of collaborating itself helped boost the participating CDFIs. By meeting, discussing, and coordinating with one another, leaders and staff members learned about obstacles in the field, ways to mesh business cultures, and best practices to achieve their desired results.

Having made a great impact on low-income communities and numerous CDFIs that serve such communities, the first round of the PRO Neighborhoods awards has demonstrated that funding CDFI collaborations can be an effective way to support a wide array of underserved populations. Furthermore, the awards is project has helped to lay the foundations for the growth of these CDFIs that will allow them to expand their programs into the future.