Reclaiming America's Inner Cities

Neighborhoods are being rebuilt through loans, equity, and grants

Politicians like to strut their stuff. Like puffed-up bantam roosters, they squawk about poor neighborhoods and bad housing in America's inner cities.

"Let the private market do it," screech the conservatives. "Not one penny of our taxes for low-income housing! No public subsidy for slums! Let those people show some initiative and do it on their own, like the rest of us."

"All wrong," cackle the liberals. "Affordable housing is a right. Make it available to everyone, with rent subsidies, and build row upon row of new projects in the inner cities."

While this debate has dragged on for several decades, a sturdy, practical movement of neighborhood organizations has quietly emerged, following a nonideological path of enterprise and responsibility that is beginning to change the face of some of our worst neighborhoods. The groups are called Community Development Corporations (CDCs), and together they constitute the community-development movement.

A CDC is a neighborhood-controlled, nonprofit corporation that has chosen the capital acquisition route to neighborhood renewal. Typically, it begins by taking over an abandoned apartment building or bombed-out commercial strip and puts together a package of loans, equity, and grants to finance reconstruction. The residents have to come together, set priorities, make tough decisions, and put themselves on the line, borrowing money that will have to be paid back later.

Yet the most important thing CDCs do is not, ultimately, to build housing - it's to reintroduce social standards and shared responsibility into neighborhoods demoralized by deterioration and despair.

IS it working? It is - better than almost anything else that's been tried over the past three decades. There are more than 2,000 CDCs in the US today. Some of the most discouraging and dangerous neighborhoods in the country - Fort Apache in the South Bronx, East Hough in Cleveland, Liberty City in Miami - have come back not because of government or the private sector, though both have helped. Instead, they have come back because CDCs crafted strategies to reclaim - block by block - their buildings, their neighborhoods, and their pride.

Conservatives like to rail against the subsidies these projects require. However, the subsidies are needed for two reasons:

Many of the families who live there have incomes too low to meet a rent that covers the cost of rehabilitation or construction.

It costs a lot to assemble land, hire contractors, and manage a reconstruction when you're doing it one abandoned building at a time, and when you can't promise a big construction firm a giant project with economies of scale and years of steady work.

These subsidies, similar in nature and intent, if not in operation, to subsidies for the middle class and wealthy in the form of tax-deductible mortgage interest, are indispensable ingredients of successful CDC projects.

Many liberals are unenthusiastic because they say CDCs "cream" the best clients and don't target enough housing to the poorest of the poor. They miss the point.

CDCs depend for success on tenants who can cut the mustard in terms of social and financial responsibility. Some are very poor, some are lower moderate-income, but all of them must pull their load. If you don't pull your load, the CDC will send you on your way.

Late with your rent? In CDC housing you won't get an impersonal, computer-typed letter three weeks later from an anonymous bureaucracy. You're likely to get a fast visit from the tenants committee. They will be firm and demanding because they are your friends, your neighbors, and your co-obligors on the debt on the building where you live. This unwillingness to tolerate irresponsible and disruptive behavior dismays some liberals who gravitate reflexively to the ideal of entitlements for all.

CDCs also succeed in another important way: They are able to engineer marked improvement in city services in their neighborhoods. Because they are organized and have a tangible and financial stake to defend, they learn to pull the levers in the polling booth and down at City Hall the way more affluent neighborhoods do. They develop political skills to advance their interests in ways that extend far beyond the immediate physical project they're sponsoring. As a result they win better police protection. The garbage gets picked up and the parks get cleaned up more regularly.

In June, a major coalition of 15 foundations, banks, insurance companies, and the US Department of Housing and Urban Development launched its third round of investments in CDCs throughout the nation. The National Community Development Initiative is now almost six years old. By the end of round three, nearly $250 million will have been committed, leveraging more than $2 billion.

This unprecedented alliance has strengthened CDCs, created new ones, and helped produce thousands of units of housing and scores of revitalized neighborhoods in 23 cities across the country - from Atlanta to Los Angeles, Denver to Philadelphia. These are neighborhoods we used to think could not be saved. Now we know that the only people who can save them are the people who live there. And we know that they are able and eager to do so - if we give them the tools.

Now that's something to crow about.

* Peter C. Goldmark Jr. is outgoing president of the Rockefeller Foundation, one of the partners in the National Community Development Initiative.

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