Strengthening the Middle: Challenges and Strategies

for Rebuilding Middle Neighborhoods

Questions and Responses
Cornerstone Webinars – July 2019

Below are Alan Mallach’s responses to questions posed during this webinar.
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Q: What advice can you give local governments who are resource constrained on how they
might pay for some of these strategies?

Resource constraints are a constant reality in local government. At the same time,
there are a variety of ways local governments can leverage resources they already
have. Here are a few thoughts about approaches that can be used:

(1) Identify low-cost but effective strategies. Market building efforts, such as
increasing mortgage access, recruiting and training potential homebuyers,
housing fairs, etc. are low-cost, potentially high-return strategies, and some of
the costs can often be picked up by private actors, such as Realtors, lenders,
etc.
(2) Be more strategic about how to target existing resources. Every city spends a
lot of money in its public works department fixing streets, sidewalks,
maintaining parks, etc. Very few cities coordinate these expenditures with
neighborhood improvement efforts to maximize their impact.
(3) Use municipal debt strategically to pay for investments, such as land
acquisition, property improvement programs, etc. that bring back returns in the
form of higher tax revenues or other municipal benefits.
(4) Find partners willing to underwrite neighborhood investments. Hospitals and
universities may be willing, or even eager, to invest in neighborhoods near them,
and community foundations may be willing to support neighborhood activities.
The Wean Foundation in Youngstown helped found and has been a major
supporter of the Youngstown Neighborhood Development Corporation.
(5) Work with state government to increase support for neighborhood revitalization
and stabilization efforts, including tax credit programs such as historic
preservation tax credits, or tax credits for corporate donations of funds to
neighborhood revitalization programs. The state of New Jersey recently
 increased its cap on its neighborhood revitalization tax credit from $10 to $15
million.
(6) Engage citizens, particularly in terms of open space improvements,
beautification, etc.

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Q: How can citizens work with local government or private developers? Community land
trusts or community real estate investment cooperatives?

I think the format is far less important than the extent to which the organization they
create (1) is well-organized, with an adequate support base to exert influence; (2) has
a clear and achievable set of goals in its interactions with government and/or
developers, preferably based on a plan or vision for their neighborhood; and (3) has
the staying power to engage on its agenda over time.
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Q: Is there any existing literature or studies on revitalization of middle neighborhoods?

There is very little of substance that addresses the subject directly. Two publications
worth looking at are:

(1) The book edited by Paul Brophy, On the Edge: America’s Middle
Neighborhoods. Individual chapters can be downloaded from
http://middleneighborhoods.org/ (scroll down to ‘publications’ and it’s on the
right)
(2) My own report, America’s Middle Neighborhoods: Setting the Stage for Revival,
which can be downloaded from the Lincoln Institute of Land Policy website at
https://www.lincolninst.edu/publications/working-papers/americas-middle-
neighborhoods

A couple of good shorter pieces have appeared in Governing magazine and

Shelterforce:

https://shelterforce.org/2018/11/14/the-urgent-case-for-middle-neighborhoods-one-
of-the-most-overlooked-assets-in-america/
https://www.governing.com/topics/urban/gov-middle-neighborhoods-
government.html

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Q: If you can't implement all the market-building strategies you discussed, which ones
should you prioritize?

That is a tough question, because all of the different strategies relate to one another.
Perhaps one way to approach the question is to ask a different one “what are the
most powerful impediments to building a stronger market in my neighborhood?” In
some neighborhoods, the presence of vacant properties was a major barrier to
drawing homebuyers, and strategies that removed those properties had a strong
impact. In others, the problem was the amount of work that houses coming on the
market needed, which made them unappealing to buyers, even though there were
people who were interested in buying in the neighborhood.

In all likelihood, however, there are going to be more than one issue affecting the
neighborhood market, dictating more than one strategy. At the same time, while you
try to tackle the substantive obstacles to the market, it’s important to be also working
to get your story out, so that people throughout the region learn that your
neighborhood is changing.

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Q: If there are many suburban options with similar prices but higher quality assets (or
perceptions) how can an urban neighborhood compete or sell its uniqueness?

Cities and urban neighborhoods can’t ‘out-suburban’ their suburbs. That was the
lesson behind the failure of the urban renewal program many decades ago. Urban
neighborhoods have to define what is unique about them, and build on those features
They can be walkability, access to transit, old houses, an historic (and beautiful) park,
a walkable shopping street, etc. At the same time, it is critical that you acknowledge
and deal with the barriers to selling those assets, such as public safety or abandoned
houses.

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Q: As a community resident, not an organizational representative, what is the most

important action one can take to hold city leaders and planners accountable for the needs
of a "low priority" neighborhood?

This is a false dichotomy. As an individual community resident, you have little ability to
hold city leaders and planners accountable. Over sixty years ago, the famous
community organizer Saul Alinsky wrote, “A people’s program and the organizing of
the people into a people’s movement are the opposite sides of the same shield. One
cannot be divorced from the other.” To be able to hold city leaders accountable, and
to make sure that they respond to your agenda and priorities, you need to have some
power, and to have that you must build an organization. It can be an informal one - it
needs a structure, but it doesn’t need an office, paid staff, etc. - but it has to have a
clear sense of the neighborhood’s needs and what should be done. And, if the
organization claims to speak for ‘the neighborhood’, it is important that it truly be able
to do so, and not just speak for five or six people who already know each other, and
may or may not be representative of the neighborhood as a whole.

In my experience, most city leaders and planners are not bad people. They want a
better city, and better neighborhoods. They are constrained by limited resources, by
lack of good information often about what neighborhoods’ needs actually are, and by
many cross-pressures from organized interests. An effective neighborhood
organization recognizes these cross pressures, and how to work within them.
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Q: From Oregon here, where legislation has recently eliminated single family zoning across
the state. Within context of your presentation w/ focus on building sustainable strong
neighborhoods, how do densification pressures play in? (especially in middle markets)

Densification strategies are most effective in areas where there is strong housing
demand and where conventional single family zoning limits people’s ability to respond
to that demand by increasing the supply of housing, which pushes prices up. It can be
valuable as a way to create less expensive housing options, for example, in gentrifying
neighborhoods, through allowing accessory apartments, or (as in Oregon) allowing a
developer to build a less expensive type of housing while still making a reasonable
return on investment.

There is nothing inherently inconsistent between having a mix of smaller housing

types (duplexes, triplexes, etc.) and being a strong sustainable neighborhood. St.
Louis and New Orleans are two cities where it is common to see a mix of housing
types in many different neighborhoods, including many of the cities’ strongest areas.
Moreover, owner-occupied two and three family houses can be an excellent vehicle
for creating affordable homeownership and rental in a single package. At the same
time, there are risks in middle neighborhoods with weaker housing markets, less from
new development as from ill-conceived conversion of existing houses. Without
preventing all conversions, municipalities need to be extremely careful in regulating
them; limiting accessory apartments to owner-occupied properties, and making sure
that they are fully code-compliant. Similarly, community organizations, CDCs and local
officials should work to maintain high levels of owner-occupancy in two and three
family properties, including facilitating mortgages for homebuyers (some lenders are
reluctant to lend for these properties), providing training for prospective buyers, etc.

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Q: Can you elaborate on the Baltimore model that helped get small developers’ properties
quickly. What entities were involved in that process? A landbank?

The Baltimore program is called Vacants to Value, and the specific legal mechanism
that made it possible is a form of vacant property receivership. The text of the law can
be found in Baltimore City Building, Fire, and Related Codes; section 121 Vacant
Building Receiver. In essence, it provides that if the owner of a vacant property
repeatedly fails to restore it to use after repeated notices and citations from the city,
the city can ask a court to take the property for the owner and transfer it to a receiver.
The city created a non-profit entity, called One House at a Time (OHAAT) to be the
receiver. OHAAT takes the properties and auctions them to pre-qualified bidders; it
generally holds an auction every month, at which 30 to 60 properties are typically
made available. It’s the opposite of a land bank, in that the goal is to move the
property from the former owner to a new, responsible developer as quickly as
possible. The city’s land banking entity, the Division of Land Resources in the city’s
Department of Housing & Community Development, never touches the properties that
go through receivership.
For more information about this and about the Vacants to Value program, see the 2017
Community Progress report about the program at
https://www.communityprogress.net/filebin/Baltimore_Vacant_to_Value_Report_Final.pdf

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Q: How do you suggest neighborhoods get involved with their struggling neighborhood
school if its fundamentals are more a function of city-level and state-level factors (funding,
policy, standards, etc.)? Is there evidence that neighborhood involvement has changed a
school's trajectory?

I’m not as familiar with this area, and with specific examples, as in other areas. One
good source is a report, The neighborhood and its school in community revitalization,
available at:
https://www.hud.gov/sites/documents/DOC_9861.PDF

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Q: What indicators can you look for to determine if a neighborhood is ready to support new
infill development to create mixed-income communities?

The question of whether a neighborhood is ready to support new infill development is

basically a market question; namely, is there a market for new infill development at
price points that will make it economically feasible? A second question is, if the
answer is no, is the gap between the cost and the market price small enough that it
can be filled with available resources, particularly tax abatement? In Philadelphia in
2000, the city enacted a tax abatement program for new development which triggered
a lot of infill in some areas, particularly Center City, but not in others. Basically, it
worked in those areas where the value of the tax abatement was equal to or greater
than the market gap.

The best indicator is whether developers are acquiring vacant lots and building new
infill housing. Short of that, a market analysis that looks at market values in the
neighborhood and the cost of development could provide a good indicator. If the
market analysis shows that new infill development could be feasible, two key steps
are critical:

(1) If incentives, such as tax abatement, are needed, they have to be available in a
straightforward, timely fashion, so small developers can utilize them easily.
(2) Assuming a variety of vacant lots exist in the neighborhood, to determine the
following:
a. Are they realistically available to developers? If owned by the city, does
the city have a straightforward process for clearing title and making them
available at reasonable cost?
b. Are they buildable? Do city land use and building ordinances permit infill
development under reasonable standards? Do they have environmental
constraints that may make development unfeasible or more expensive
(for example, in some cities, when an old building was demolished, the
debris was simply dumped into the basement and covered with topsoil).