An Urban Redevelopment Challenge: Restoring Inner Cities

by Joseph P. Muriana, Esq.

In April, Time magazine marked the 30th Anniversary of Earth Day with a special edition entitled “How To Save The Earth” and subtitled: “The Heroes For The Planet Who Are Making It Happen.” One of the featured pieces in this issue was on sprawl and growth, highlighting how the asphalt jungle is spreading by means of a global land rush that is gobbling up the space and resources needed for agriculture, wildlife, recreation and even contemplation. The magazine concluded that no one has an easy answer to eliminate sprawl, but they went on to suggest for strategies for containing it.

After reciting and rehashing the first three strategies which included setting strict growth boundaries and the government purchase of undeveloped land (both largely non-starters due to cost: fiscal and political), as well as the building of more mass transit lines in and around cities, the article finally proposed the restoration of inner cities as one of the four strategies that could make the most sense in the American context. Time magazine pointed out that development continually moves out of towns and cities while perfectly good urban property is left abandoned or dilapidated. Perverse incentives have often encouraged this trend: historically, the federal subsidies of interstate highways and of single-family homes through FHA, VA and tax deductions; the denial of mortgage credit in declining neighborhoods by banks and insurance companies; and bureaucratic governmental red-tape together with an absence of adequate and adequately focused governmental resources. All of which made it more expensive to reclaim an abandoned, underutilized or dilapidated urban site than it costs to build on virgin land outside the city, in surrounding urban/suburban areas. For decades population growth has put more pressure on our wide-open spaces; and thus Time suggested that before the human race gobbles up any more land, we could certainly make better use of what we have already taken.

It seems clear that this latter strategic vision involving the restoration of the inner city certainly makes the most sense from environmental, transportation policy, economy of scale, physical infrastructure and urban planning perspectives. It is a visionary approach that we have revisited from time to time when we are confronted with the stark implications of our voracious hunger for unsustainable development or of our longstanding neglect for the preservation and development of our own central urban areas and their people.

With the appearance of the Internet and its accompanying notion of virtual reality however, physical space appears to have an even more attenuated value; that is, until we look at what is not being addressed in the places where we (people) must still live or at the true human costs associated with such neglect. We see how drug abuse, increased gun violence, a failed and neglected environment all this even in the ever-expanding suburban and rural areas, accompanied by the vacuousness of the culture of limitless suburban sprawl and malls, (themselves now being abandoned) makes us often yearn to revisit the comparative vitality, complexity and richness of urban living.

This task, however, to reclaim urban neighborhoods and transform them, not merely into “boutique downtowns” for an urban elite, but once again into thriving neighborhoods for middle-class families, the working poor and even the outright down-and-out poor is a formidable challenge, but perhaps the most sensible option that is left. Well-off urban elites have always found it easy to navigate and share a “city” with the urban poor and the underclass. They can always “buy” the insulation and protection needed for their often grand but sometimes isolated survival in those “boutique neighborhoods” where they live or work. The challenge before us, however, is to build neighborhoods that can house and support mixtures of people in a vibrant way. The two policy areas that are most clearly in need of creative strategizing, resources and attention are urban housing development and urban education. We’re lucky in one sense, jobs are going-a-begging, despite a labor market mismatch between the mis-skilled urban poor and urban job options.

I believe that we are located at a time when this rethinking is once again possible. Not only can we learn from the lessons of the past and refashion different approaches to deal with the new future, but public resources exist that can be marshaled and redeployed to make this work. It will require political will, which must be forged anew, connecting urban, suburban and rural interests. But refining all the approaches and resources requires a grassroots community involvement as well as an openness to living in a new multicultural city: one that is committed to the success of its diverse neighborhoods, which themselves can serve as centers for different ethnic, cultural and economic groupings. Both public and private resources will be needed, and they must be married together. The old, disjointed, cookie-cutter programs will no longer work.

In past attempts to redevelop the inner cities of America we have also created a kind of urban sameness. Governmental programs often focus on only one type of developmental activity, e.g., housing vs. commercial development, to the neglect of others, and thus fail to promote and encourage more holistic, mixed-use approaches, to sustain real neighborhoods which require vitality, liveliness and affordability. This must become our task.

Back in 1983 Fordham University established an affiliate corporation known as University Neighborhood Housing Program, Inc. (UNHP), to act as a vehicle by which the University could become more involved in the efforts underway to rebuild the devastated Bronx. By 1988, it had forged a formal partnership with the large, local church inaugurated, community-based umbrella organization known as the Northwest Bronx Community and Clergy Coalition. The now two-member corporation was designed to preserve, develop and expand affordable housing opportunities throughout the 11 neighborhoods of the northwest Bronx, which included some of those considered by HUD to lie within the official South Bronx redevelopment area.

The primary strategy was to assist distressed multifamily properties, comprising 89% of the local housing stock, which were in danger of being overfinanced by speculators and predatory institutional and even government sponsored lenders, in order to preserve the long-term financial viability of this housing, as well as their affordability for the residents of these low and moderate income neighborhoods. Over the past decade, UNHP, through collaborative efforts with community partners, financial institutions, city, state and federal government, religious orders and other sorts of institutions, has directly made loans available to almost 70 multifamily buildings, leveraging close to $17 million in acquisition and renovation loans, with $1.5 million of its own resources. This was made possible, in part, as a result of the federal Community Reinvestment Act regulation that spurred institutional investment, along with HUD Section 8 rental subsidies, local governmental subsidized loans and real estate tax abatements. In addition UNHP has provided technical assistance to non-profit housing management and development companies which operate over 120 community-controlled, multifamily buildings. And it has acted as the development consultant on a $40 million gut renovation involving 12 large multifamily apartment buildings in the Mount Hope neighborhood.

All in all, within the neighborhoods on the north side of the famous Cross-Bronx expressway, where there had been hundreds of abandoned multifamily structures, it is now almost impossible to find any abandoned units. Here, unlike large portions of the remainder of the South Bronx, whole neighborhoods of multifamily housing were renovated and restored. The success achieved was the result of deep and intense collaboration over the course of many years by many community partners and institutions. Most recently, UNHP and the Northwest Bronx Coalition collaborated once again to obtain a $25 million Fannie Mae (Federal National Mortgage Association) forward commitment of mortgage dollars to the neighborhoods of the Northwest Bronx for smaller (5-30 unit) multifamily properties, in conjunction with three large New York based financial institutions and the New York City Pension funds.

These successes, however, now threaten to be eclipsed by a number of challenges that have been looming on the horizon for some time. The crisis is basically three-fold. In the first instance redevelopment efforts, when and if successful, are often victims of their own success. During the early stages of any redevelopment initiative, real estate speculators as well as conventional financial institutions stay out of the action until they are sure that there is money to be made. They basically take a wait and see approach. Once successful, everyone wants a piece of the action, driving up real estate prices. Careful underwriting is replaced with comparable value approaches, which are often deceptive, thus making it more difficult to replicate the success because the inflated values have now attracted overfinancing, even if the properties cannot support such inflated debt.

In the face of this threat, the second challenge has been the drastic reduction in governmental resources at all levels to subsidize responsible redevelopment, which must be a public/private effort in low and moderate income neighborhoods unless we are to invite a repeat, on a greater scale, of the gentrification and attendant homelessness of the 1980s. Without the government as a full partner, the attempt to rebuild low and moderate income urban neighborhoods in an attempt to house America will simply fail.

Finally, there is a critical need to more adequately coordinate and focus the panoply of public and private resources that are necessary to make this happen, so that it is unnecessary to string together a seemingly never-ending series of stop-gap funding sources to make a particular project work. In the alternative, there should be a streamlined process to fit together equity and debt financing (public and private), tax credits and abatements and rental subsidies in a coordinated manner that obviates the need to completely reinvent the process for each project. There must at least be sufficient resources in each separate funding stream to make the scrambling for resources less dire and problematic. This will certainly require reforging the political will to undertake this task, but this particular moment with a boom economy and full treasury offers a unique opportunity for rededicating ourselves to confront our inner cities problems once again. We have certainly acquired a good deal of experience with developing the ingredients for successful programs over the previous two decades.

About the Author Joseph P. Muriana is the Associate Vice-President for Government and Urban Affairs at Fordham University