Managing the Negative Impact of Gentrifying Neighborhoods: The Last Decade Has Been Marked by a Nationwide Resurgence in Urban Areas. Driven by a Strong Economy, Strategic Public and Private Investments, and Increasing Urban Sprawl, Communities That Were Destroyed by Urban Renewal and Out-Migration to the Suburbs Are Once Again Becoming Desirable
LeVeen, Jessica, Partners in Community and Economic Development
The benefits of successful urban revitalization are widespread. Local governments can capitalize on renewed interest in urban living to attract higher-income residents, to revitalize the city's tax base and to reduce the concentration of poverty that has plagued many urban communities.
However, such revitalization may also be accompanied by the negative impacts of gentrification--a force that can impose social and economic hardship on the individuals with the fewest resources to adapt to change. The key challenge for local government, business leaders, community activist and residents is to maximize the benefits of the revitalization process while also ensuring that the adverse effects of gentrification are minimized.
What is gentrification?
Gentrification rose to the forefront as a national concern in the 1960s when government-funded urban renewal projects shredded the social fabric of inner-city neighborhoods. In contrast to the engineered gentrification of that time, recent gentrification is driven by a mix of public and private investment and regional economic forces.
The term is often used loosely and can have both positive and negative connotations. It may simply describe urban revitalization in a depressed urban neighborhood. Or it may be framed in the context of the decades of disinvestment and subsequent reinvestment in urban areas, seen as a takeover of a low-income community by wealthier residents and entrepreneurs.
According to a 2001 study by the Local Initiatives Support Corporation (LISC) Center for Home Ownership, gentrification is defined as "the process by which higher-income households displace lower-income residents of a neighborhood, changing the essential character and flavor of that neighborhood." Within this context, gentrification is acknowledged to have been historically associated with displacement of lower-income minority individuals by higher-income white residents.
The causes of gentrification
Gentrification has been a significant concern in a limited number of cities nationwide, and within these cities, only in certain neighborhoods. Neighborhoods with little vacant land or few unoccupied buildings are more likely to experience gentrification.
Regional housing market dynamics appear to play the largest role in determining whether urban revitalization will produce gentrification. LISC research has shown that gentrification is driven by an imbalance in housing supply and demand. In regions of the U.S. where housing prices have risen markedly in the past several years, real estate developers vie for low-cost land to maximize potential profits. In the communities where housing prices have increased dramatically, there is a rapidly growing shortage of affordable housing, particularly for the lowest-income residents.
Job growth in a region also creates the potential for gentrification, putting pressure on housing supply and increasing demand for previously undesirable housing stock. Even when jobs are located throughout the region, gentrification can still occur when other forces create increased demand for urban living.
Traffic congestion created by sprawling development has led to gentrification as individuals look for residential opportunities that will shorten their commutes. Others have been drawn back to the city by the cultural amenities, historic neighborhoods and unique architecture.
Public sector policies to encourage revitalization have also produced gentrification. To increase the tax base and attract higher-income residents, public officials have designed targeted incentives such as tax abatements and below-market financing to draw households and businesses to depressed communities. While incentives attract new investment, they can also change social and economic conditions in a community significantly.
Consequences for new and long-term community stakeholders
Although revitalization benefits many community residents, the costs of gentrification often fall on the lowest-income households. …