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Managing Community Change: A Dialogue on Gentrification

Moderator Katherine O’Regan and three panel participants sit behind a table in front of a background with the PD&R logo.
Assistant Secretary for Policy Development and Research Katherine O'Regan moderates a panel discussion of gentrification with participants Derek Hyra, Colvin Grannum, and Gil Kelley.

Gentrification is a form of neighborhood change that occurs when higher-income groups move into low-income neighborhoods, increasing the demand for housing and driving up prices. First defined more than fifty years ago, it currently affects many American metropolitan areas. Market pressures associated with gentrification have the potential to force longtime residents with low incomes to move out, challenging communities that want to create or retain economic diversity. On April 11, 2016, HUD Secretary Julián Castro spoke at the Office of Policy Development and Research’s Quarterly Update, which focused on how gentrifying neighborhoods can manage change in ways that keep communities inclusive, affordable, dynamic, and diverse. Castro highlighted HUD’s Prosperity Playbook initiative, which equips community planners with critical tools for creating shared opportunity for everyone. HUD also promotes inclusive growth through community development block grants, the HOME Investment Partnerships Program, and the newly launched National Housing Trust Fund. Castro’s remarks were followed by a panel discussion composed of researchers and practitioners who discussed the nature of gentrification; its impact on communities; and strategies to promote inclusive, sustainable change.

Gentrification and Its Implications

Gentrification is a sensitive and complex issue that sometimes generates heated debate in both public discourse and research. Although many assume that gentrification entails the wholesale displacement of vulnerable and low-income minority residents by high-income nonminority populations, this is not always the case, said Katherine O’Regan, HUD Assistant Secretary for Policy Development and Research. Gentrifying neighborhoods change, but that does not necessarily mean wholesale population change. Data indicate that between 2000 and 2014, gentrifying areas experienced large relative gains in income and even more dramatic changes in racial makeup, often with large relative gains in the nonminority population. In terms of displacement, however, population turnover in gentrifying neighborhoods is no greater than that in other low-income neighborhoods. The large relative gains in income observed in gentrifying neighborhoods may result not from the displacement of low-income residents but rather from an influx of higher-income individuals while lower-income residents remain.

Given the nature of this change, researchers must examine the impact of gentrification on low-income residents who stay. According to Derek Hyra, associate professor in the Department of Public Administration and Policy at American University, studies suggest that gentrification has the potential to bring benefits to low-income populations such as job growth and better access to jobs, role models, and greater political strength. On the negative side, gentrification can result in the political displacement of lower-income residents, with newcomers taking over civic associations and asking for things established residents don’t want, such as bike lanes and dog parks. Gentrification can also cause large relative increases in rental costs that make housing unaffordable for low-income residents. In this context, gentrifying neighborhoods present urban planners with both opportunities and challenges for the creation of diverse communities in which prosperity is shared.

Maintaining Diversity in Neighborhoods

According to Hyra, the preservation of existing affordable housing for low-income residents is a key strategy in maintaining diversity. Low-income housing tax credits, New Markets Tax Credits, and continued investment in viable public housing are all ways to promote affordable housing. Acquisition of building sites by city governments for the future development of affordable housing is another strategy suggested by Gil Kelley, director of citywide planning for San Francisco. Noting that redevelopment involves public-private partnerships, Hyra asserted that planners should ask developers whether they can maximize profit while still helping low-income populations. He pointed out, for example, that developers might find that inclusionary zoning that preserves neighborhood diversity or “authenticity” and makes them more desirable places to live can increase profit margins.

Promoting homeownership among moderate-income residents is another vital element in ensuring that neighborhoods remain stable and diverse. As Colvin W. Grannum, president and chief executive officer of the Bedford Stuyvesant Restoration Corporation, pointed out, moderate-income homeownership in the Bedford-Stuyvesant community historically has served as an important vehicle for upward mobility. Today, however, the needs of moderate-income residents tend to be ignored, and they often have the least amount of protection from the effects of gentrification. Rising home values result in increased property taxes, which could potentially force out many longtime homeowners who would otherwise wish to remain. Grannum stated that moderate-income homeowners also face harassment from speculators and “deed theft,” in which new deeds are forged and properties are stolen from unsuspecting homeowners.

Kelley, acknowledging the need to promote affordable housing, advocated taking a broader approach to neighborhood stabilization efforts. He asserted that in San Francisco, where gentrification has in fact caused the wholesale displacement of low- and middle- income residents, the city simply cannot build or subsidize enough housing units to meet demand, and a regionwide solution that takes an integrated approach to preserving manufacturing jobs, access to transit, and working with schools is necessary. HUD’s Affirmatively Furthering Fair Housing (AFFH) rule is potentially ideal for dealing with gentrifying neighborhoods because it requires meaningful engagement with communities and the requirement to think regionally, said O’Regan.

Building a Sense of Community

Although retaining low- and middle-income residents in neighborhoods is crucial for diversity, the benefits of gentrification can be realized only through the meaningful interaction of newcomers and existing populations and shared prosperity. As Hyra observed, however, micro-level segregation in the social fabric of gentrifying neighborhoods is an important obstacle to community-building efforts. Policymakers and community organizations can overcome micro-level segregation in a number of ways. Grannum cited the Restoration Corporation’s community-building efforts in Bedford-Stuyvesant through programs in the arts, including theater performances, music festivals, and an art gallery, that attract a diverse audience and maintain a sense of “welcomeness” for the African-American community. Grannum also stressed the importance of investing in neighborhood anchors such as schools and recreational facilities that can serve as vehicles for uniting the community. Hyra advocated the use of Community Development Block Grant (CDBG) program funds for promoting community-building activities. Preserving the interests of low-income small businesses is another important community-building strategy, stated Hyra. Extending U.S. Small Business Administration loans to small mom-and-pop stores allows them to stay in place and reap the benefits of income growth in their communities.

Resistance to change also inhibits the creation of inclusive communities. According to Grannum, established low-income residents often distrust planners and disagree with their arguments that change will bring improvements. This distrust is rooted in past urban planning efforts which did not take the interests of low- or moderate-income minority groups into account. These residents sometimes oppose change because they believe that it will not improve their communities or that it will only benefit higher-income populations. One way to meet this resistance, suggested Grannum, is to actively promote the economic benefits of programs such as shared bicycle use among low-income residents so that they embrace rather than shun the new programs. Another way is to show residents how amenities and improvements can benefit low-income populations. Churches, for example, might develop affordable housing on the underutilized land they own if they realized that developing it would benefit existing low-income community residents.

A Place for All

Gentrification presents both challenges and opportunities for planners. As Castro observed, “[T]here is no single red-button policy to push” to address gentrification’s many complexities. Smart policies that can take advantage of HUD tools such as AFFH and CDBG, however, can begin to capture the gains that change brings and create, as emphasized by O’Regan, “equitable gentrification.” If urban planners can revitalize without reshaping the identity of neighborhoods, Castro’s stated hope “that the American Dream is within reach for everyone living in our cities” can be realized.