Invisible Drivers of Displacement

One of the best things about our work is the opportunity to travel and work alongside interesting and inspiring people. Back in 2015, one of those people was Eric Shields, who was working with the Indiana Economic Development  Corporation. While we collaborated on the Indiana Regional Cities Initiative, we started discussing the many ways that state and local decisions can influence quality of place, a key driver for economic success and a guiding principle for the program.

A few weeks ago Shields published a thoughtful consideration of public-sector roles and responsibilities in neighborhood change, in which he stresses that the role of subsidies, their intended and unintended consequences, ways to agree on objectives and measure success, and accountability and transparency must all be grappled with before they are used to preserve housing affordability for homeowners in Indiana.

Shields shared these thoughts in response to a proposal from Indiana State Representative Cherrish Pryor to provide property tax breaks to homeowners to balance reinvestment and affordability concerns.

Key questions for the public sector

The article, called Strong Neighborhoods Are Vital to Economic Success, poses important questions to the public sector. How can state and local government best balance market forces and residents? When are state or local governments best-suited to intervene?  Should property owners be required to return subsidies when they sell their homes? What other factors, such as the type of development, contribute to displacement?

The evidence reveals unseen drivers of displacement

This last question is one that I would like to focus on. Shields rightly points out that if subsidies are provided to homeowners, but new development does not include a mix of housing options, then “displacement is inevitable over the long term.”

A key question, then, is what drives resident displacement? From there, both state and local interventions can be developed.  Property tax abatement programs are based on the accurate assessment that property tax increases are a burden on existing residents, especially lower-income residents. Based on what we know about residential displacement, some other drivers to target could be:

1. Lower-income renter churn. In addition to longtime homeowners, renters are of course a community of concern with regard to displacement. One  primary driver of renter displacement is beyond price increases and stems from a deeper housing stability pattern: lower-income renters tend to move more often than middle- and higher-income renters for a variety of reasons.

The problem for lower-income renters arises when, at this “normal” churn rate, they struggle to find another unit to move into within the same  neighborhood. Therefore, programs designed to keep renters in their homes may miss the mark because lower-income renters face pressures beyond affordability that cause them to move around. Instead, programs that aim to preserve the number of units available at an appropriate price point within the same neighborhood, and perhaps marketed to neighborhood residents first, could help address this issue.

2. Changing business types. Displacement is caused not only by cost pressures, but also by neighborhood changes that alienate existing residents, called cultural displacement. Cultural displacement can happen in places experiencing racial and ethnic demographic changes, but can also happen in ethnically homogenous areas. The common thread defining cultural displacement is that the businesses that arise in changing neighborhoods to not feel welcoming or relatable to existing residents.

A classic form of cultural displacement occurs when a main street is suddenly awash in hip coffee shops, artsy boutiques, and quirky restaurants. Even if existing residents can afford to shop in these places, they are unlikely to see them as neighborhood-serving businesses. The policy question here lies in what kinds of businesses receive tax abatements, zoning variances, or other incentives, and how a City balances business attraction and retention strategies.

3. Crime rate changes. A recent study of decades of household moving and city crime rate patterns revealed that high-income and college-educated households are more likely to move to central city neighborhoods when those neighborhoods experience a three-year reduction in violent crime, while lower-income households and those without college degrees do not demonstrate the same phenomenon.

Because high-income and college-educated households are more willing  move to lower-income and majority minority neighborhoods following a reduction in crime,  these households would drive displacement even at normal household turnover rates because they would gradually make up a larger portion of demand for housing in the area. The result would be a neighborhood that has changed in its makeup, but not necessarily due to affordability challenges (although these can certainly happen at the same time). The policy implication here is to target displacement interventions to central city neighborhoods when they approach three years in crime rate reductions.

Neighborhood change and displacement are complex issues that deserve both an evidence-based approach to policy and an ability to implement new programs quickly. While examining the evidence is crucial, displacement is happening always and everywhere, and attempting to keep people in their homes and neighborhoods should always come first.

Three Questions to Demonstrate Impact

Last month, my colleague Chris Ellis shared some insight into Pay for Success as part of a larger conversation we’ve been having about innovative financing. Many of our clients are doing innovative work in the public and nonprofit sectors, and have found that thinking creatively about solutions often means facing challenges in securing the necessary resources to implement them. Pay for Success is one such promising model, and it relies heavily on the need to evaluate outcomes – which means that our approach to evaluation needs to be just as thoughtful and innovative as our approach to problem solving. Continue reading “Three Questions to Demonstrate Impact”

It’s Time to Face the Facts about Our Public Spaces

reese-092016We know how important quality of place can be in building better communities and stronger economies. But with something so subjective, how do we know when we are getting it right? And if we value inclusive growth, how can we be sure that quality of place can be shared?

As Commissioner of Philadelphia Parks and Recreation Kathryn Ott Lovell observes, “civic commons” in changing neighborhoods can be “platforms for economic and social integration” – a perspective she encourages as part of the now-national Reimagining the Civic Commons initiative. Continue reading “It’s Time to Face the Facts about Our Public Spaces”

Regional quality of place and the fight against blight

BlightBy now, the costs of blight and vacancy are well-documented in terms of unpaid local and school taxes, drained municipal resources, further disinvestment, and/or declining adjacent property values.  We have also seen in from our clients the key role that quality of place plays in retaining and attracting talent – a key driver for economic success.  No matter the size, competitive communities create places where people want to live and work, and blight can be a major blow in that endeavor.  Continue reading “Regional quality of place and the fight against blight”

Cultural diversity in the “fourth economy”

Diversity-Fourth-Economy

Building the “fourth economy” is all about combining traditional economic development tools with creative solutions to ever-evolving challenges.   The Fourth Economy Index is our framework for thinking about what sets communities and regions up for success: investment, talent, sustainability, place, and diversity.

Elements of these indicators came up again and again throughout three “21st Century Cities and Global Leadership” discussions at the recent Thrival Festival, focusing on questions like what might attract and retain talent in Pittsburgh and how to ensure that economic growth is sustainable.  And while diversity can mean many different things (and does as a metric in the Fourth Economy Index), one element of diversity that had an undeniable presence throughout the discussion was cultural diversity. Continue reading “Cultural diversity in the “fourth economy””

Balancing Energy, Air Quality, and a Sense of Place in Pittsburgh

Air-QualityOn Monday June 29, 2015 the United States Supreme Court brought air quality into the limelight when it ruled that the Environmental Protection Agency failed to fully consider the cost to energy producers of limiting air emissions.  While the need to balance the costs of regulation against the intended social benefit is nothing new, the highest court of law held the EPA to that standard just months after the Urban Land Institute reported in America in 2015 that quality of environment (including air and water quality) is the top community attribute priority for people choosing a place to live in 2015. Continue reading “Balancing Energy, Air Quality, and a Sense of Place in Pittsburgh”