Community Economic Development in Social Work [Pilot project. eBook available to selected US libraries only] 9780231508575

Table of contents :
Contents
Preface
Part one. Settings and Framework
Introduction to part 1
One. What Is Community Economic Development?
Two. Social Workers and Community Economic Development
Three. The Making and Unmaking of Cities and Neighborhoods
Four. History of Community Economic Development: The Nineteenth Century to Lyndon Johnson
Five. History of Community Economic Development: Richard Nixon to Barack Obama
Part two. Strategy, Organization, and Success
Introduction to part 2
Six. Choosing a Strategy
Seven. A Taxonomy of Community Development Corporations
Part three. Tools of Development
Introduction to part 3
Eight. Investing in Human Capital
Nine. Building High-Performance Organizations
Ten. Real Estate: Developing Physical Capital
Eleven. Financial Capital: Business Development and Financial Infrastructure
Twelve. Lobbying and Advocacy
Part four. Putting It All Together
Introduction to part 4
Thirteen. Expanding Social and Political Capital
Fourteen. Special Challenges in Community Development: Racism and Regionalism
Fifteen. Community Building: A New Synthesis
Sixteen. Conclusion
Appendix I: Anymidwest city exercise
References
Index

Citation preview

C OM M UNIT Y E CO N O MI C D EVELOP M E N T I N S O CI A L WO R K

f o u n dat i o n s o f s o c i a l w o r k k n o w l e d g e

Frederic G. Reamer, Series Editor

f o u n dat i o n s o f s o c i a l w o r k k n o w l e d g e

Frederic G. Reamer , S eries Editor

Social work has a unique history, purpose, perspective, and method. The primary purpose of this series is to articulate these distinct qualities and to define and explore the ideas, concepts, and skills that together constitute social work’s intellectual foundations and boundaries and its emerging issues and concerns. To accomplish this goal, the series will publish a cohesive collection of books that address both the core knowledge of the profession and its newly emerging topics. The core is defined by the evolving consensus, as primarily reflected in the Council of Social Work Education’s Curriculum Policy Statement, concerning what courses accredited social work education programs must include in their curricula. The series will be characterized by an emphasis on the widely embraced ecological perspective; attention to issues concerning direct and indirect practice; and emphasis on cultural diversity and multiculturalism, social justice, oppression, populations at risk, and social work values and ethics. The series will have a dual focus on practice traditions and emerging issues and concepts. The complete series list follows the index.

Community Economic Development in Social Work Steven D. Soifer, Joseph B. McNeely, Cathy Costa, and Nancy Pickering-Bernheim

columbia university press new york

columbia university press

Publishers Since 1893 New York Chichester, West Sussex cup.columbia.edu Copyright © 2014 Columbia University Press All rights reserved Library of Congress Cataloging-in-Publication Data Soifer, Steven. Community economic development in social work / Steven D. Soifer, Joseph B. McNeely, Cathy Costa, and Nancy Pickering-Bernheim. pages cm. — (Foundations of social work knowledge) Includes bibliographical references and index. ISBN 978-0-231-13394-4 (cloth : alk. paper) — ISBN 978-0-231-13395-1 (pbk. : alk. paper) — ISBN 978-0-231-50857-5 (e-book) 1. Social work administration. 2. Community development. I. Title. HV41.S674 2014 307.1ʹ4—dc23 2014014344

Columbia University Press books are printed on permanent and durable acid-free paper. This book is printed on paper with recycled content. Printed in the United States of America c 10 9 8 7 6 5 4 3 2 1 p 10 9 8 7 6 5 4 3 2 1 Cover design: Lisa Hamm Cover image: © plainpicture/Christof Mattes References to websites (URLs) were accurate at the time of writing. Neither the author nor Columbia University Press is responsible for URLs that may have expired or changed since the manuscript was prepared.

contents

p r e fa c e  VII pa r t o n e Settings and Framework1 one



What Is Community Economic Development?3

Case Study: Bedford Stuyvesant Restoration Corporation two



Social Workers and Community Economic Development33

Case Study: New Community Corporation three



The Making and Unmaking of Cities and Neighborhoods65

Case Study: Warren/Connor Development Corporation four



History of Community Economic Development: The Nineteenth Century to Lyndon Johnson91

five



History of Community Economic Development: Richard Nixon to Barack Obama122

Case Study: Chicanos por la Causa, Inc. pa r t t w o Strategy, Organization, and Success169 six



Choosing a Strategy171

Case Study: Marshall Heights Community Development Organization

contents

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seven



A Taxonomy of Community Development Corporations214

Case Study: Coalition of the Hungry and Homeless of Brevard County, Florida, Inc. pa r t t h r e e Tools of Development255 eight



Investing in Human Capital257

Case Study: New Economics for Women nine



Building High-Performance Organizations288

Case Study: East Bay Asian Local Development Corporation ten



Real Estate: Developing Physical Capital315

Case Study: Intercommunity Mercy Housing eleven



Financial Capital: Business Development and Financial Infrastructure379

t w e lv e



Lobbying and Advocacy406

pa r t f o u r Putting It All Together423 thirteen



Expanding Social and Political Capital425

Case Study: Dudley Street Neighborhood Initiative fourteen



Special Challenges in Community Development: Racism and Regionalism449

fifteen



Community Building: A New Synthesis469

sixteen



Conclusion483

a p p e n d i x i : a n y m i d w e s t c i t y e x e r c i s e  493 r e f e r e n c e s  499 i n d e x  539

preface

and around the world have been devastated by the ups and downs of the global economy for over a generation. Economic factors in combination with scourges such as racism, classism, and sexism have created conditions such that countless inner-city neighborhoods could aptly be described as war zones. Burnedout and abandoned buildings, vacant and overgrown lots, drug dealing, murder, homelessness and hopelessness, adults and kids hanging on the streets for lack of jobs and boredom at school, failing public schools, general neighborhood blight, and myriad other problems persistently plague these areas. In some cities, civic leaders see the salvation of these areas in a kind of gentrification. A new baseball stadium is built. A waterfront is redeveloped. Houses are rehabbed. People with higher incomes start moving in. Police begin to patrol regularly, crime goes down, property values increase, businesses open up, and voilà, a hot new neighborhood is born. But the former population is gone. This kind of neighborhood change is not community economic development. It is development, even economic development, but it occurs because of unbridled market forces. In a very real sense, the community is left out of the development process. And in actuality, most of the residents who lived in these neighborhoods for years or even generations are forced out only to relocate to another devastated part of town. The existing residents do not profit from the redevelopment and gentrification of these neighborhoods; the speculators and middle- to upper-middle-class people who move there do. Community economic development is an alternative method of economic development: it is an antidote to development

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based on unbridled market forces, and it has demonstrated success in cities across the country in a wide variety of neighborhoods. This book presents to social workers the field of community economic development (CED), or, as some have begun to refer to it, community building. There is a rich history behind this practice, much of which has not been part of today’s social workers’ education and training. This is ironic because, in many ways, the story of this field of practice is the story of social work. The origins of the CED field owe much to social workers, especially community organizers, and CED methods are right in line with the mission and values of social work and the existing skill set of social work practitioners. Yet, with few exceptions, social workers infrequently take employment today in the CED field. Reversing this trend could bring the gifts of social work to one of the most important challenges to the continued success of CED in lowincome, culturally diverse communities. We believe that CED has entered a new stage of practice, a more comprehensive community-development approach to economic development that calls for a closer relationship between business and real estate development and family self-reliance and community empowerment—areas long the strength of social workers. Revealing the relevance of CED to effective social work practice is the primary motive for writing this book. In this book, we provide a framework of CED that social workers can use as a baseline for practice as well as innovative methods for incorporating social work practices and skills into the CED field. We explore how social workers’ core values for working with individuals, families, groups, organizations, and communities align with CED practice. And we demonstrate why coursework in CED practice should be fully incorporated into social work curricula across the country. The first step in understanding how to use CED methods is to understand what CED is, and we have devoted the book’s first section to explaining CED thoroughly and how it has evolved over the past several decades. For the purposes of this book, we define CED as the practice of revitalizing the economic, physical, and social infrastructures of low-income communities in ways that enable the residents of those communities to benefit from that revitalization; indeed, the CED process involves and empowers them. This people focus is essential. CED is not only about infrastructure improvements—these would make little difference in and of themselves

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if the community’s residents could not benefit from them. When a community is revitalized using a CED approach, the community does not act against but rather with the individual. In fact, the community acts with groups of people, as one individual can rarely revitalize an area alone. Codevelopment is the watchword in successful CED endeavors. Furthermore, CED benefits the community because the community’s residents retain the wealth from the revitalization rather than seeing the wealth flow to those who live outside the community, such as property speculators. CED practitioners use private sector tools and attract private sector investments to create a sustainable economic and social dynamic in the community. CED makes the community viable over the long term, reconnecting it to the mainstream economy and the social and political structures of its region through partnerships of organizations in the community and the public, private, and nonprofit sectors. Profits are recycled in the community and resources are replenished because reinvestment is sustained without major subsidies. The concrete benefits to the community might be reaped by individuals in the form of empowerment or housing or by new and viable institutions owned or controlled by a cross-section of community residents, such as local businesses. The endgame is a community that is economically viable and sustainable and people who successfully participate in the regional economy. In explaining how organizations accomplish these kinds of benefits to communities and their residents, we stress several major themes throughout this book. One is collective action or, as some people prefer to call it, community empowerment. With individual freedoms come both personal and community responsibility. And as people get involved in rebuilding their neighborhoods, they are empowered, and multiple benefits are also reaped by the community. True CED empowers neighborhood residents to take charge of the planning and rebuilding process. Using a CED approach to neighborhood renewal improves the quality of life for individuals and the community as a whole, thus encouraging residents to stay there. It produces a sustainable local economy in which market forces enable residents to improve their geographic space. It also prioritizes providing necessary social and human services for residents who are in need as the sense of community responsibility instilled through CED methods grows. Another key theme is that CED methods represent a balance between market forces and public benefit in practice; neither unfettered capitalism

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nor complete government intervention will produce thriving inner-city neighborhoods. CED practitioners seek a reasonable market-oriented approach to community development that employs the techniques of private sector development in partnership with private developers to bring as much conventional private investment to the revitalization of the neighborhood as possible. But CED also involves enough safeguards and public or government involvement to ensure that the major vehicles of CED—be it the community development corporation (CDC) or other development initiatives that rebuild the neighborhood—do not become desensitized to the community or vulnerable to the dangers of the marketplace. It is also important to note that CED is an evolving practice. The field is in constant flux, and it realizes a new level of maturity—and complexity—as each decade passes. Community builders are daily trying new experiments—some succeeding, some failing—that expand CED practices. Much information about what works and what does not is not recorded in any fashion, at least in one that would allow practitioners to find it easily. Keeping up with the latest in the field is a challenge even for experienced practitioners. This book provides a thorough introduction to CED, now when CED is at a crucial turning point. However, those who intend to practice in the CED field should continue seeking information about changes, experiments, and the evolution of CED techniques. The Internet certainly helps in tracking these changes and is an excellent starting point for CED study. CED practice is also multifaceted and comprehensive. It is multidisciplinary, calling on some of the skills one might learn in a variety of graduate schools: urban planning, business, and law as well as social work. As we shall see, the multidisciplinary and comprehensive CED approach is more often referred to as “community building,” and there are many positive examples of significant change happening at the local level across the country. Some of these will be highlighted, and we discuss the importance of this shift in the book. We postulate that a “new wave” of CED is on the scene, one that has been recognized only recently. Finally, we believe that CED is an effective method of addressing and ameliorating in concrete terms the issues of poverty, despair, powerlessness, racism, and income and gender inequality—the very issues that social workers face in their work with individuals, groups, organizations, and communities every day. CED organizations and projects put these issues

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at the forefront of their analyses of problems and in their mechanisms for planning and operating in order to overcome the “business-as-usual” economic, political, and social dynamics that disadvantaged communities experience in the first place. CED succeeds precisely because it challenges existing policies and practices through concrete projects and programs that produce immediate revitalization outcomes as well as by influencing the adoption of new policies at all governmental levels. Today’s social workers should be right at home learning to be effective CED practitioners and improving lives for low-income people in communities in the United States and around the world.

C OM M UNIT Y E CO N O MI C D EVELOP M E N T I N S O CI A L WO R K

pa rt 1

Settings and Framework introduces social workers to the field of community economic development (CED), also known as community building, and features four case studies of community development corporations (CDCs) that demonstrate CED principles in action. We first examine definitions of CED and then trace its four “waves,” during which its methods have grown more sophisticated and have evolved in response to policy and sociopolitical changes. The case of the Bedford Stuyvesant Restoration Corporation—one of the earliest CDCs in the country and still going strong today in Brooklyn, New York—highlights how CDCs can adapt and shift strategies over time to meet changing community needs. Next, we discuss why CED is important to social workers and the field of social work. What roles do social workers play in community-based organizations using a CED approach? What skills and training do social workers need to be effective at creating change at the neighborhood level in the face of poverty and other social problems? Monsignor William J. Linder, the founder of New Community Corporation—a highly successful CDC in Newark, New Jersey—was a social worker at heart. The case study of his work to launch New Community Corporation after civil unrest in Newark in 1967 illustrates the skills needed to effectively practice CED. the first section of this book

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Because so much of CED work takes place in urban settings (though CED has roots in rural areas as well and is currently being applied in rural areas), we then trace how cities and their geographic building units— neighborhoods—came into existence in the United States. Understanding how and why these cities and neighborhoods grew and flourished and then declined and deteriorated is crucial to implementing CED effectively. The case study of the Warren/Connor Development Corporation, a CDC operating in Detroit, Michigan, since 1984, well reflects the rise and fall and revitalization of cities as “white flight” changed cities’ population composition and the United States shifted to a service economy. From here, we explore the long history of CED in the United States and why understanding the policies and politics underpinning CED is so important to this field of practice. The case of Chicanos por la Causa, one of the oldest CDCs in the country, provides an excellent example for understanding the role of politics and a changing political and policy climate. Originally focused on meeting the needs of Chicano residents of South Central Phoenix, Arizona, Chicanos por la Causa has taken advantage of evolving policies and funding opportunities to become a statewide CDC and a provider of comprehensive services to all individuals regardless of ethnicity.

chapter1

What Is Community Economic Development?

is one of the true inventions and success stories of the last decades of the twentieth century and of community development in the United States. As the plight of U.S. cities in those last decades grew more dire—cities lost population, jobs, and their taxable bases and faced increased concentrated poverty, crime, drug abuse, and school failure—community development corporations (CDCs) and other nonprofit, community-based development organizations using CED methods were quietly and consistently saving individual neighborhoods (Gratz, 1994; Rubin, 2000). One historian heralded CED as “the most direct and powerful . . . of all the neighborhood-based fighting strategies that evolved in the United States” (Halpern, 1995, p. 127). Indeed, where a large number of CDCs and other community-based organizations operated in a given city, and especially where there was persistent support for them, they contributed so much to turning around the ominous trends that writers would come to talk about “comeback cities” (Grogan & Proscio, 2000). In Cleveland, for example, after twenty years of solid work and sophisticated support, more than two dozen of these organizations demonstrated a consistent and impressive track record of results. In one of the most dismal real estate markets in the country, the city of Cleveland’s housing values were higher than those of the region as a whole, and the neighborhoods with active CDCs had higher housing values than the city of Cleveland’s averages (Burns, Wing, Butler, & Weinheimer, 2001). c o m m u n i t y e c o n o m i c d e v e lo p m e n t ( c e d )

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Across the United States, the phenomenon of successful self-help organizations working at the neighborhood level to improve physical, social, and economic conditions grew from dozens of experiments to hundreds of pioneers to thousands of reliable, sophisticated institutions. They grew out of opposition to large-scale public projects such as highway construction and urban renewal, religious-institution-based efforts to save constituents’ neighborhoods, and nonprofit housing efforts. A social change movement became an industry as CDCs and community-based organizations became more sophisticated and sustainable. To effect change at the neighborhood level in cities across the United States, CDCs and other CED organizations combined their empowerment agenda and social goals with the sophisticated techniques of privatesector real estate development and finance and the best of public-sector neighborhood-level urban planning and social development programs. They formed alliances with city hall and business leaders with whom they may have once fought, and they developed partnerships with growing universities and hospitals, whose expansion once threatened the very neighborhoods the CDCs sought to strengthen. They cobbled together public, private, and philanthropic resources and sophisticated business and real estate investments that changed the nature of development finance in the United States. National and local foundations that once shied away from community development because it required granting such large amounts of money found that CDCs gave them more financial leverage than any of their other grantees. What exactly is community economic development? What are CDCs? Where do they come from? How do they succeed, and what are their strategies? What are their methods and tools of success? Where are they going? What is the role of the social worker in CED, and how do social workers prepare for employment and leadership in this phenomenal industry? Those are questions this text will answer. This chapter will examine the definition of CED and the basic concepts and structures of the CED field. It closes by summarizing the current state of the field, including today’s trend toward community building as the main focus of CED, and by describing some of the debates around and critiques of CED. The following chapters examine the evolution of CED in the context of the larger history of community development in the United States and the unique role of social workers and social work education in this field.

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defi n i n g c o m m u ni ty e c o no m i c d e v e lo pm e n t

The field of CED has been given short shrift in the academic literature. Most of the scholarly works documented in the literature are evaluations of CDCs (Mayer, 1984; Vidal, 1992; Walker & Weinheimer, 1998). In the literature on CED that does exist, academic writers often proceed without defining CED. Halpern (1995) devotes a whole chapter in his fine history of neighborhood initiatives to CED without ever defining the field. Rubin and Rubin (2008) also devote a whole book to the “community-based development model” without ever defining CED, describing the work of community-based organizations rather than defining them. In their fundamental text, now in its fourth edition, they portray CDCs as a vehicle for taking community control of housing, community development, and economic development, activities assumed to be understood by the reader. They portray CED as evolving from and being a manifestation of community organizing and community empowerment, as do Murphy and Cunningham (2003). Consistent and concise definitions of CED, when it is defined in academic literature, are hard to come by. For example, Sherraden and Ninacs (1998a) define CED as the process of “link[ing] social and economic development through the creation and regeneration of accessible institutions that empower and improve the life chances of community residents” (p. 1). Bruyn and Meehan (1987) focus on the key variables of empowerment, input, and the degree of control that neighborhood residents have in the overall process, but especially in the economic arena. Simon (2001) states nicely that “the core definition of CED embraces (1) efforts to develop housing, jobs, or business opportunities for low-income people, (2) in which a leading role is played by nonprofit, nongovernmental organizations (NGOs) (3) that are accountable to residentially defined communities” (p. 3). Yet another definition, this one from the former trade group for CED, the National Congress for Community Economic Development (NCCED), defines CED as “the economic, physical and social revitalization of a community, led by the people who live in and around designated geographic areas of that community” (NCCED, 2005, December, para. 3). The Encyclopedia of Social Work describes CED as “community development [that] has evolved into a competitive interdisciplinary field practiced in a variety of social and economic sectors, including downtown

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and neighborhood development, affordable housing, social entrepreneurship, workforce development, financial management, among others” ( Johnson-Butterfield & Chisanga, 2008, p. 380). Using the rubric of community practice, Gamble and Weil (2010) view CED activity as coming under the framework of what they label “social, economic and sustainable development” (p. 209). To them, sustainability is the key word of the their definition. Murphy and Cunningham (2003) offer perhaps the broadest definition, redefining CED as organizing for community-controlled development (OCCD), which they go on to define as “people coming together within shared living space to plan and deploy resources in ways that enhance the local community, enrich society, and advance social justice” (p. 6). Because CED has the capability of extending conventional investment and business practices of the private sector to previously excluded markets and neighborhoods, Halpern (1995) calls CDCs “a vehicle for reinventing capitalism” (p. 142). Peirce and Steinbach (1987), in their now classic report to the Ford Foundation, summarized CED succinctly in their title as “corrective capitalism.” The lack of a clear definition may be a product of the interdisciplinary nature of CED or, as will be demonstrated in chapters 4 and 5, the field’s being composed of organizations with different backgrounds and ideologies that have embraced common practices and joined together for purposes of public advocacy to meet common goals. A practitioner turned author, Temali, in conjunction with the Amherst H. Wilder Foundation (2002) defines CED in terms of its goals as: Actions taken by an organization representing an urban neighborhood or rural community in order to 1) Improve the economic situation of local residents (disposable income and assets) and local businesses (profitability and growth); and 2) Enhance the community’s quality of life as a whole (appearance, safety, networks, gathering places, and sense of positive momentum). (p. 3)

Rubin (2000) likewise points to the importance of goals and the sense of positive momentum or hope: “Development activist [sic] want their projects to symbolize to community members and outsiders that hope remains” (p. 18).

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We suggest that any definition of CED must include the following elements: It is a process of multifaceted comprehensive revitalization, building, or rebuilding to plan and implement a place- and people-based strategy that is community driven, democratic, and participatory. Furthermore, CED benefits the community, which retains the wealth generated from revitalization; uses private-sector tools; and attracts private-sector investment to create a sustainable economic and social dynamic in the community. CED also looks to make the community viable over the long term, reconnecting the community to the mainstream economy and social and political structures of the region through a partnership of the community with the public, private, and nonprofit sectors. Finally, the effects of raceand gender-based discrimination, among other concerns, must be factored into the work. Therefore, we define CED as (1) the practice of revitalizing the economic, physical, and social infrastructures and networks of a specific low-income community or set of neighborhoods that (2) includes input and direction from the affected residents, thus (3) empowering both the individuals and institutions within the geographically defined area; (4) benefits residents of that community; and (5) makes sure that various discriminatory practices are avoided in the work. h ow t h e d e f i ni ti o n e vo lve d f ro m a n a r r ow to br oa d p e rs p e c ti ve

It is important to recognize that definitions of CED evolved over many years as practice and programs changed, beginning with a narrow concept and later growing to be broad (see chapters 4, 5, and 7 for more detail). The exact origin of the term is unclear, but it began to be widely used during the War on Poverty in the 1960s, related to the creation of CDCs, and the term was current enough by 1970 to be used as the name of the trade group that the first CDCs formed in that year, the NCCED, as mentioned already. The first wave of CDCs resulted from a program of the Ford Foundation and the federal government begun in the late 1960s; these CDCs had a definite set of components set forth by the program (see chapter 7). A second wave of similarly motivated, place-based neighborhood revitalization organizations that developed outside of the original CDCs broadened the scope of CED and made the set of components less definite (Halpern, 1995). Still later, organizations that were less place based adopted the

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methods of CED to empower and benefit nongeographic constituencies, thus forming a third wave of CDCs (Peirce & Steinbach, 1987). Some, including the authors of this book, consider the plethora of single-purpose, nonprofit affordable housing organizations and faith-based organizations that exploded in the 1990s as part of this wave of CED (Brophy & Shabecoff, 2001). This text broadens the definition of CED still further to suggest that a fourth wave has emerged that is devoted to comprehensive community building (see chapter 15). r e l at ed f i e ld s and te rm s

CED should be distinguished from terms that are closely related and describe fields of work with which CED has some overlap. Brief definitions will be given here to distinguish CED. A more developed understanding of these fields will come from discussion of the history of community development work in the United States in chapters 4 and 5. Readers should consult more specific texts (e.g., Blakely & Bradshaw, 2002, on economic development) or the very fine glossary of CED terminology by the California Community Economic Development Association (2011) for additional detail. Community development is perhaps the oldest term encompassing a broad set of activities for creating all of the physical and social aspects of a thriving community and economy in an underdeveloped country or area. For example, the international Community Development Society (http:// www.comm-dev.org) uses the term this way, but it adds a heavy emphasis on participation of members of the community in directing the process. In developed countries, it has come to mean revitalization of areas that are not benefiting equitably from the opportunity, productivity, and prosperity of the developing economy and its society. In the United States, since the time of government programs for urban renewal, community development has come to mean physical- and housing-oriented revitalization activities, with some social service supports that are supported by federal government programs. Usually, community development in the United States is undertaken by local or state government or by some agency outside of the target community with some level of community participation. Economic development is a broad term encompassing all efforts to spur business growth or expansion. It is usually associated either with financial

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investment in infrastructure development that allows business to flourish with direct or indirect financial support for business growth and the facilities needed for such growth. It encompasses both the attraction of business not presently in an area as well as the promotion of the “homegrown economy.” Economic development in the United States is usually undertaken by state or local government or quasi-governmental organizations, with the government efforts organized on a state, local, or regional basis and involving the private sector. In developing nations, economic development is financed by international bodies such as the World Bank. Economic development has a slightly different meaning and is undertaken differently in socialist economies or in places with central, governmentcontrolled economies. Community organizing, particularly when it involves underdeveloped areas in developed economies, is a process of mobilizing the residents and indigenous institutions of a particular area and building an organization with sufficient recognition to control the decisions about development (and other policies) made by government and other large institutions. It is a process of political empowerment in a nonpartisan sense. While many community organizers have historically employed the conflict-based tactics of Saul Alinsky (1971, 1989), more recently some organizers are using Eichler’s (2007) consensus-based model of community organizing. Eichler argues for an approach to community organizing that focuses on finding common ground among parties via consensus. He contrasts his approach with the classic Alinsky conflict model of organizing, the less-well-known feminist organizing model, as well as the community building organizing model. The consensus-based and community building organizing models have far more similarities than differences, and they are not distinguished for the purposes of this book. Community participation refers to the formal and structured outreach and involvement of those affected by a community development plan (or other program) in the planning and evaluation of the implementation of that plan or program. Community organizing is directed by a representative organization of the residents themselves; community participation usually falls to some level of advisory power and is structured and controlled by the local government, program operator, or project developer. CED borrows elements of all of these fields of work and to some degree overlaps with them. The agenda of the CED organization is often a

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combination of community and economic development. Like community organizing, CED represents an empowerment of the indigenous community through an institution controlled by that community. Like community participation, CED aspires to a high level of engagement with beneficiaries of particular CED actions. In an international context, the term “social development” is prevalent. The United Nations (UN) Department of Economic and Social Development refers to social development as “the promotion of higher standards of living, full employment, and conditions of economic and social progress and development” (UN, n.d., para. 1). To the degree that social development is undertaken by NGOs, it closely resembles CED. In both national and international contexts, the more recent term, “community building,” is used to refer equivocally to all activities of community economic and social development, which are undertaken in ways that build the relationships and capacity of members of a targeted community and their connections to mainstream institutions and leaders. Community building will be the subject of a special chapter in this text (chapter 15) in which the authors promote it as a term for the most recent permutation of CED. t h e o r e t ic al p e rs p e c ti ve s o n lo c a l it y de v e lo pm e n t

What are the theoretical origins of the CED perspective? This might seem like an easy question to answer, but in reality, it is a topic of sometimes fierce academic debate. In their important book Theories of Local Economic Development, Bingham and Mier (1993) attempt to address this question. Drawing on the obvious academic disciplines of economics, political science, sociology, and urban planning and the not-so-obvious disciplines of geography, regional science, and public administration, Bingham and Mier use various theoretical perspectives and case studies to make a case that there is no one theory of CED but rather a series of seven “metaphors” that help explain its workings: (1) problem solving, (2) running a business, (3) building a growth machine, (4) preserving nature and place, (5) releasing human potential, (6) exerting leadership, and (7) a quest for social justice (Bingham & Mier, 1993, pp. 287–301). One of the key theoretical underpinnings of CED is the analysis of money flow and utilization in the community in a healthy local economy (Murphy & Cunningham, 2003). In the best-case scenario for a local

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Figure 1.1 Cash flow diagram. This diagram illustrates the flow of money as it circulates through a community with locally owned businesses (Murphy & Cunningham, 2003). Source: Pratt Institute Center for Community and Economic Development, © 1984.

economy, businesses and property are locally owned, people from the community are locally employed, money is saved and/or invested in the community, and goods and services are produced and/or utilized within the local area. Money circulates within the community and is aided by the multiplier effect, creating a positive balance of available economic resources (see figure 1.1). That is, a dollar that is spent in the community and stays in the community recirculates over and over again, which creates a ripple effect and keeps wealth in the community. This multiplier effect can be small or large, as much as sevenfold, depending on how often that hypothetical dollar keeps circulating. Once the dollar leaves the community, the effect is over. Conversely, in an unhealthy local economy, businesses are not locally owned, labor comes from outside the geographic area, goods are imported,

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and local capital—meaning money—flows out of the community. Landlords may be absent, resulting in properties that are not maintained as vigilantly as those with on-site ownership, frequently resulting in deteriorating conditions and lower local property values. This scenario leads to the death of a community if steps are not taken to halt the destructive economic erosion. When reinvestment is sustained, major governmental subsidies are no longer necessary. It is the multiplier effect in the healthy local economy that perpetuates the flow of reinvestment. This leads to an improved quality of life and produces an incentive for local residents to continue living in the area, setting in motion a cycle of economic and social improvement and health in the community. New businesses and additional jobs are thus created, and outside investment is attracted, too. t h e s t r u c tu re s o f c o m m u ni ty e co n o m ic de v e lo pm e n t

CED programs help stem the tide of a deteriorating local economy by revitalizing the community and establishing a healthy flow of money into the community instead of allowing the economic resources to leave the community. However, CED programs require funding to operate, in addition to local cooperation. What is the structure of a CED program, and how does it work? The success of CED lies in fashioning business ventures, real estate projects, and other profitable investment vehicles to attract outside capital and retain the cash flow and profit in the community. Unlike most social or educational programs, or even government public works programs, these engines of reinvestment must pay a bottom-line return to their sources of capital. To pay that return, they must generate more income than expenses. Other programs with which social workers are more likely to be acquainted usually have expenses that exceed program income and therefore require a regular operational subsidy from government or philanthropic sources. CED ventures usually do not have that kind of subsidy. Like all conventional businesses, they must become self-supporting. If they cannot achieve that “breakeven” point based on income, sales, or rents from the very beginning, they must use the conventional business financing technique of capitalizing the startup, that is, securing loans and/or investments of cash that will cover the program’s operating loss until the projected breakeven

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moment. Calculating the capitalization required and planning business or real estate operations on a monthly basis and over multiple years require private-sector knowledge and skills in business, real estate, financing, and capital markets. It is most especially here that CED differs from other kinds of social development or social work programs. It draws from, involves, and pays returns to the private sector. In securing capitalization for areas that have been abandoned by conventional lenders and investors, CED often has to find sources of public or philanthropic “investment” or subsidy. In that pursuit, CED is like other charitable enterprises, although the use of those funds looks more like business capitalization than it does charity. The simplest way to describe the use of subsidy is to cover or reduce the risk to the private investors who provide the lion’s share of the financing of a project. The payoff for the disadvantaged families and communities comes from the job and housing opportunities, the accumulation of wealth, and the revival of the market dynamics of the target community; that is, a very localized tide will float neighborhood boats. The ends are as charitable as those of youth development or family counseling programs (and are recognized as such by the IRS), but the mechanisms and financing are markedly different. Hence, the language of CED work is more often about ventures or projects or businesses than about programs or services or client support. The financial analysis of CED is more about sustainable profits, return on investment, and creditworthiness than about annual grants, balanced budgets, and charitable appeal. A clear example of the difference in practice is seen in “matching requirements” for receiving program funding. A social services program may receive grant funding with a “match” of 10 to 20 percent, that is, the granting organization will supply 80 to 90 percent of the funding if the organization raises and/or supplies the other portion. A 10 to 20 percent match is considered very good. In CED, however, the aim is to “leverage” an equity investment of 9:1; each dollar of social investment by the funding organization is expected to generate nine to ten dollars in additional money. If profitable ventures are the fruit of CED efforts, what is the structure that creates and attracts resources for them? Some CED endeavors may be loosely structured as community organizing campaigns or resident participation efforts targeted at influencing the redevelopment being carried out by others so that those projects meet community goals and direct the benefits of redevelopment to the community residents and institutions. More

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generally, however, CED efforts are led by some permanent, communitybased organization that owns and/or directly develops the ventures or projects. The work of development requires the expertise, relationships, and resources to spot an opportunity, plan the details of building and operating the project or venture, recruit and structure both private investment and public and philanthropic capitalization, and manage the process of starting up the venture or constructing the project. Since myriad public, private, philanthropic, and community institutions in a variety of fields (from finance, business management, and law to architecture, construction management, urban planning, social work, and education) are involved in the process, the work of development requires a high level of managerial and group facilitation skills. While CED efforts may have social goals, their mechanisms are those of private investment, real estate development, and housing. The operative theory is that “development and ownership of physical assets is central to impacting the community and individual success” (Rubin 1994, as cited in Ferguson & Dickens, 1999, p. 7), and it has been shown that “when community building/organizing activities were linked with physical rehab projects, in a concentrated area, the impact was significantly more visible and commitment to sustain the improvement was more widely owned” (Pew Charitable Trusts evaluation, as cited in Ferguson & Dickens, 1999, p. 7). This orientation is distinctly different from clinical social work’s focus on individuals. The most common vehicle for the implementation of CED programs is the community development corporation, or CDC. A CDC is a nonprofit organization that helps drive redevelopment in low-to-moderate income neighborhoods. CDCs are generally broadly focused on a multifaceted strategy for reviving and sustaining the community. Some, however, choose to focus on an area of interest, such as housing, or on one mechanism, such as microloans or microenterprise businesses, and to champion that focus. The CDC generally has a small staff (an average of six) and a budget between $100,000 and $500,000, and many are very small, with few staffmembers and budgets under $100,000 (Rubin, 2000). However, their effects can extend well beyond their limited staffing and budgets (Vidal, 1992; Vidal, 1997). The key to a CDC’s success is its board of directors, who are representatives of the community and local institutions, including neighborhood residents; inside and outside business persons; unrelated

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development professionals, lawyers, and bankers; and local government officials. The board provides input and direction for the community, recruits outside stakeholders, and assists with the implementation of the established goals. Building a strong CED organization is more important in the long run than any of the CDC’s individual ventures (Soifer, 2001). Where does the CDC or other community-based development organization get its resources? Originally, as will be discussed in more detail in chapter 4, CED programs largely relied on direct federal governmental subsidies and a couple of national foundations (most notably the Ford Foundation). Today, CDCs recruit financial support from a combination of private foundations, corporations, banks, entrepreneurs, and state and local government (often using federal funds devolved to them). The CDC persuades them to work together and to finance community revitalization efforts collaboratively. In effect, one role of CED-related organizations is to act as intermediaries, linking outside businesses, government, and philanthropic resources with the people and businesses of the community with related interests (Rubin, 2000). Importantly, one development since the early 1980s that has helped the CED field and CDCs in particular is the launching of intermediary organizations that link the CDCs with funding sources. Called community development partnerships (CDPs), they “bring together the human and financial resources of community-based organizations, national and local foundations, for-profit corporations, and governments to help rebuild lowincome communities (Glickman & Servon, 1998, p. 1). One of the effects of these partnerships has been to increase the capacity building efforts of CDCs across the country. Clearly, community building activities can be complex and require high levels of coordination between various elements in impoverished areas. Glickman and Servon (1998) do an excellent job describing five core elements of capacity building: “resource, organizational, network, programmatic, and political” (p. 6). The reader is referred to their Ford Foundation report for an in-depth discussion of these components. While assisting the production of affordable housing has been an important goal of CDCs, their reach has also extended into finances, jobs, commercial real estate, and social services. This expansion is a result of the realization and acknowledgment that CED also includes building the skills, assets, and resources of a community’s inhabitants and that poverty in America, by the last decade of the twentieth century, had become

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intensely concentrated in urban inner-city neighborhoods ever more isolated from the mainstream economy. A focus on building the social capital of the residents is now seen as critical to the success of the community’s revitalization—whether urban or rural, domestic or international—and the tools of building social capital through the work of CED are expanding (Kretzmann & McKnight, 1993). Through the work of such CED experts as Kretzmann and McKnight (1993), McKernan and Sherraden (2008), and Green and Haines (2012), a focus on community asset building has taken hold in the CED field. Recent changes in the CED field include more emphasis on the Asset-Based Community Development (ABCD) framework, an explicit set of tools for building community capacity (Soifer & McNeely, 2008). t h e n e ed f o r c e d

In spite of a general increase in American prosperity over the second half of the twentieth century, and without respect to the ups and downs of economic cycles, there remains a considerable population that has not benefited equitably from that prosperity. Sometimes defined by income—those below the poverty line or living on the low-level family budget established by the Department of Labor—and sometimes defined by racial or gender inequities of health, infant mortality, educational achievement, or mental illness, a portion of the American population is always “at risk,” or in deep need. Often those populations are not dispersed throughout the country but are concentrated in urban areas of low economic growth, deteriorated living conditions, and failing public institutions. A broad range of antipoverty and “social safety net” programs attempts to address the needs of these populations. Many of these programs are focused on the individual or the family without respect to the environment; others, including CED, are decidedly place based. The goal of CED is both to eliminate poverty for individuals and families and to reverse market failure and deteriorated conditions for the communities in which individuals and families live. As will be further described in later chapters, poverty in America shifted through the end of the twentieth century. When presidents John F. Kennedy and Lyndon Johnson announced the War on Poverty, poor people were largely rural, white, and elderly. In the last decades of the twentieth century, poverty was more concentrated in the inner-city neighborhoods

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of the country’s largest cities, and most of the poor people were children in female-headed households among people of color. These areas of concentrated poverty produced conditions in which multigenerational persistent poverty was more the norm than ever in the American experience of welfare (Wilson, 1987). Changes in the economy and urban sprawl of both residences and employment centers made it even more difficult for these people to access American opportunity. A dramatic reduction over twenty years in government support for programs serving these populations in neighborhoods further exacerbated the difficulties of overcoming the barriers to opportunity. CED has shown itself to be one of the few mechanisms even able to tread water against the stream of downward pressure. In some instances, CED has demonstrated dramatic success in addressing just these conditions. The American private real estate market also tends to disinvest in older areas adjacent to but not as bad off as the areas of concentrated poverty in the inner city; that disinvestment leads to further deteriorated conditions in those older areas, which also cry out for CED. Driving from the suburbs to the inner-city neighborhoods adjacent to downtown in most large American cities, one can witness concentric circles of progressive disinvestment and deterioration, the natural product of a marginally regulated real estate system with well-documented racial discrimination dynamics (Goetze, 1983). In times of strong real estate dynamics, new investment appears on the periphery. The middle area holds its own with the median level of investment and growth in asset value. The older inner suburbs and outer ring of the city are often experiencing the beginning of property deterioration and a stagnant investment climate. Then come areas with some abandonment or vacancy in residences and commercial property, the visible signs of a community in economic and social distress (crime, drug abuse, lack of jobs, underperforming schools, fragmented families). Progressive rings toward the inner city show more abandonment, worsening housing conditions, and a terrible social environment. CED is crafted specifically to address this real estate cycle, to create both positive conditions for the populations of all these neighborhoods and sustainable communities. Changes in the American economy away from manufacturing and toward a globalization of the economy have only made conditions worse for these areas of concentrated poverty and the marginally distressed neighborhoods of the middle city and older suburbs. The decline in

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well-paying, easily accessible semiskilled manufacturing jobs (Harrison, 1974) has created a bifurcation in employment: on the one side, lowpaying service jobs with little access to higher-paying service and knowledge-based jobs, and, on the other side, high-paying technology and knowledge-based entry-level jobs that lead to long-term employment in growing industries and companies. According to Blakely and Bradshaw (2002), CED could play a major role in helping rectify many of the problems in this bifurcated national economy if it was given a chance through federal monies, foundation support, and local initiatives. They further allude to the work of the Harvard business expert Michael Porter (1995), who counterintuitively argues that the inner cities are good investments for corporations and private investors who could be imaginative enough to see their competitive advantage and that their money would help market forces turn these communities around. It must not be forgotten that rural communities too have a need for economic and community development and that CED has been demonstrably successful in areas as diverse as Maine, West Virginia, New Mexico, and rural California. It is easier to imagine new developments occurring to help low-income families in an underdeveloped rural community, although resource institutions are often far away and the necessary partners widely dispersed. The strategies are different than in a failing urban region or a thriving region with a failing inner city, but the tools and CDC capabilities needed are often the same. Unfortunately, this book will not be able to address both urban and rural CED equally and focuses primarily on urban development. t h e s i g ni f i c anc e o f c e d wo rk

The effect of the work in this field in general and of CDCs in particular cannot be overstated. The physical bricks-and-mortar effectiveness of CDCs is well documented but may be the least significant accomplishment of this kind of work. Because economic and physical capital are only two forms of community capital, gains in human and social capital must also be measured for the true impact of what we are calling community building work to be adequately demonstrated. The NCCED, the CDC field’s trade organization (which, unfortunately, closed its doors in 2007), issued regular reports dating back to

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1988 on the state of the portion of the CED field that included only those community-based development organizations that met NCCED’s narrow definition for CDCs. The fifth and most recent such report, “Reaching New Heights: Trends and Achievements of Community-Based Development Organizations” (2005), documents some of the remarkable things that have been accomplished since this movement began over forty years ago. The highlights include the following: At the time of the report, there were at least 4,600 CDCs nationwide that met NCCED’s definition, and they had produced more than 1,252,000 units of affordable housing and three-quarters of a million jobs. While these results may be a drop in the bucket nationally, for this industry, they are quite impressive. Moreover, the median CDC had ten employees on staff, including an executive director. Unfortunately, average budget information is not available. However, federal funding in different forms was important to the sustainability of CDCs, and intermediaries still played a key role in pushing them to greater heights (NCCED, 2005). More than half of all CDCs examined in the NCCED report serviced urban areas. Also, more than half had their origins as a CDC rather than as some other type of nonprofit organization. There was a good regional distribution across the country. Most served low-income, very-low-income, or poverty-level populations (in fact, only 10 percent helped moderateincome people). More than one-half of all CDCs documented by NCCED were doing some form of commercial or industrial development at the time of the 2005 report. About 126,000,000 square feet of commercial and industrial development had occurred, including “day care centers, health care centers, youth centers, arts programs, and social service [programs]” (NCCED, 2005, p. 13). Microlending had become a major activity of CDCs and one of its key antipoverty strategies. As of 2005, more than 100,000 loans totaling more than $1.5 billion had been made. Also, community building had become an important theme for CDCs since the late 1990s, with more than twothirds of CDCs engaged in community organizing and advocacy activities. The top-ranking community building activities (i.e., 20 percent or more of CDCs saying they have engaged in the activity), in order of popularity, were homeowner counseling, budget and credit counseling, education and training, tenant counseling, youth programs, housing resident services, job skills training, job readiness training, homeless services, senior programs,

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emergency food assistance, job placement, community safety, transportation, setting up Individual Development Accounts (IDAs), and child care (NCCED, 2005). Other interesting findings include that one-quarter of all CDCs were faith based. The report concludes that in the last four decades, the CED field “has become more professional, more institutionalized, and better funded by a wider base of organizations” (NCCED, 2005, p. 3). By the end of the century, there were an estimated 12,000 communitybased development organizations, including the almost 5,000 CDCs that fit NCCED’s definition, and all told they have produced more than 30,000 units of housing annually, the major activity of most CDCs (Brophy & Shabecoff, 2001). In addition, they engage robustly in commercial and business development; workforce development; and the supports in health, child care, and transportation needed by their populations in order to matriculate in the employment market of today (Ferguson & Dickens, 1999). More than twothirds engage in some form of community organizing (Rubin, 2000). These findings are the tip of the iceberg. If the estimated number of 12,000 community-based development organizations is even approximately correct, one has to multiply the outputs documented by NCCED many times over to estimate the effects of CED. The CED industry is a very strong part of the nonprofit sector of the U.S. economy and has a much wider impact than the above numbers indicate through its multiplier effect on the local economy. To judge its overall impact on the economy is very difficult, but it would be fair to say that CED has revived the economy and competitiveness of thousands of urban neighborhoods and rural communities in the United States, most of which are in the most challenging areas of disinvestment and discrimination in this country. Moreover, the stories of the millions of people whose lives have been transformed by these efforts often go untold, but they are perhaps the most significant aspect of this work. Although the impact that these people have had on others is not readily measurable, the stories are out there for the asking and are being captured by a variety of techniques, such as ethnography (Briggs, Mueller, & Sullivan, 1997). The empowerment impact of CED may also be demonstrated by the large numbers of CED leaders who have gone on to successful positions directing public agencies or in elected political office, including the U.S. House of Representatives and Senate. As mentioned, the NCCED has closed its doors, but the phoenix has risen from the ashes. In 2006, the National Alliance of Community

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Economic Development Associations (NACEDA) was formed (http:// www.nceda.org). Representing twenty-four state and nine city trade associations, the organization was set up to support the work of CED associations, local CDCs, and practitioners nationwide (NACEDA, n.d.). We believe that CED is an effective method for social change, a powerful engine for addressing in concrete terms the issues that are often the focus of social work: poverty, inequality, and disparity; powerlessness; racism; gender inequality; and diversity. CED organizations and projects must necessarily include these issues in their analysis of problems and in the mechanisms for planning and operating if they are to succeed in the long run and overcome the “business-as-usual” economic, political, and social dynamics that disadvantaged the target community in the first place. CED seems to succeed on these issues especially because it involves challenging specific policies and practices and shaping new modes of action (Kingsley, McNeely, & Gibson, 1997). For example, engaging financial institutions in an analysis of institutionalized racism and the resulting discriminatory lending practices, then creating a homeownership program that requires that bank personnel be retrained and teamed up with a culturally sensitive, community-based housing counseling agency cuts through the issues more effectively than does holding an abstract “dialogue about race.” A project that organizes largely female and underpaid workers in office cleaning or home health care into their own cooperative business so they can better negotiate wages, quality control, and benefits directly alters the gender disparity affecting so many low-income, female-headed households in target communities. There is agreement among professionals that true CED helps empower residents to take charge of the planning and rebuilding process in their neighborhoods. The result of such resident involvement creates a vested interest in the community by those inhabiting the area and a personal capability that contributes to resilience in other areas of residents’ lives. As a neighborhood begins to rebuild, profits are recycled and resources replenished. This creates a “sustainable local market,” or “self-reliant communities,” a critical point for successful revitalization (Shuman, 1998). t h e cur re nt s tate o f af fai rs i n t he c e d fie l d

In their monograph for the Ford Foundation, Peirce and Steinbach (1987) identify three waves of CDCs: (1) the first generation (1960s), which they

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describe as “pioneering and expansive” (p. 19); (2) the second generation (1970s), which were “leaner and widely diverse” (p. 25) but similarly multifaceted; and (3) the third generation (1980s), in which there was a “reassessment of the ‘marketplace’ ” (p. 29) by constituency organizations and service providers who looked to housing and business development to expand their services to clients and who took on the tools and orientation of earlier CDCs. In addition to the frontline community-based development organizations, CDCs, and others, the field now boasts a rich panoply of support organizations at the local and national level. Local and national sources of specialized technical assistance now exist that reach virtually every part of the country, including service arms of university departments in planning, law, and social work (McNeely, 2004). In addition to local and national foundations and financial institutions providing funding, several large financial intermediaries formed in the 1980s in response to the growth of CDCs and the simultaneous cut in federal support for community development (Brophy & Shabecoff, 2001), most notably the Local Initiative Support Corporation (LISC), the Enterprise Foundation (now Enterprise Community Partners), and the Neighborhood Reinvestment Corporation (now NeighborWorks). These financial intermediaries deploy millions of dollars of investment every year, provide significant capacity building to local groups, and set the national policy stage for support of the field (Anglin & Montezemolo, 2004). Specialized departments of banks, foundations, and local governments round out a field that employed more than 400,000 people at the turn of the century (Brophy & Shabecoff, 2001). A more detailed map of the CED field is taken up in chapter 7. t h e fou rth wave — c o m m u ni ty b uil din g: t r en ds a nd p e rs p e c ti ve s

We argue that beginning in the 1980s and early 1990s and into the mid 2000s, the United States entered a fourth wave of CED, which many refer to as community building or comprehensive community initiatives (CCIs). This new wave of CED is more comprehensive and inclusive of providing family and individual support strategies to supplement the physical and economic agenda of CED. This movement toward more

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holistic, comprehensive community-based solutions in CED is parallel to and joined forces with a similar movement in the field of family and child support and antipoverty efforts from human service and educational organizations (Connell, Kubish, Schorr, & Weiss, 1995). Moreover, the fourth wave refers not only to a new set of organizations in the CED field, as the typology by Peirce and Steinbach (1987) depicts, but also to the comprehensive set of principles and practices being adopted by groups of the earlier three waves (Anglin & Herts, 2004). Community building is a broad term that includes the principles of CED and incorporates the functions of CCIs, which are discussed in greater detail in chapter 15. Community building utilizes activities and concomitant skills to revitalize marginalized communities from an empowerment perspective. It also takes into consideration the “person-in-environment” perspective, a staple of social work philosophy. Finally, the self-help nature of these newer initiatives, as well as the stronger community participation component of them, indicates a new depth in the field. The National Community Building Network (NCBN) was the nerve center for this activity and provided networking opportunities and resources for community builders. The organization lasted for twelve years (1993–2005) and then dissolved. At its height, it had 200 organizations and more than 800 members. This fourth wave has called for much more coordination, collaboration, and networking among the principal parties, something that clearly calls on the values, knowledge, and skills base of the social work profession. It also requires work from a perspective where place and family are critically important and where interagency collaboration across systems is necessary. This leads us to the notion of community building. Community building expands on current social work models. It takes into account the strengths perspective, which is inherent in the family preservation model and implicit in the group work model critical to social work. Simply defined in this context, this perspective focuses on a community’s assets rather than its deficits. But it also considers all possible perspectives in its analysis of problems. For example, a “troubled teenager” who uses drugs or joins a gang may do so because there are no healthy environmental alternatives. A community building approach considers community factors, such as a lack of supervised activities, in addition to neighborhood crime, unemployment, poor educational resources, and/or

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a lack of social services, as contributing causes to the young teen’s dilemma. In theory, once such deficiencies are identified, the next step would be to create and execute an action plan based on the community’s strengths and assets that would bring about comprehensive change within the community. The phrase “people-based, place-based” has been the watchword of the community building movement. This kind of approach must also include what has been considered the purview of community organizing and social planning, so that the fourth wave of CED is a multifaceted model that looks a lot like the mixing and phasing of Rothman and colleagues’ (1979, 2001) “old” and newly revised conceptualizations of locality development, social planning, and social action. It also involves collaboration among CED, human service, educational, and community organizing entities. Multicultural variables also must be considered in this scenario. Individual and institutional classism, racism, sexism, ageism, ableism, heterosexism, and other prejudices must be taken into account in both analysis and implementation if a comprehensive plan for a community’s problems is to be effective. No one approach can address all of the broken-down components of a deteriorating community. The multifaceted approach that community building encompasses is a strong starting point for community empowerment and improvement. As social work professionals look to the future, it may well be that an evolved prototype of community building will define how true CED is executed. (Community building is discussed in greater detail in chapter 15.) cur r e n t p o li c y d e bate s and c ri t iq ue o f t h e ce d f i e ld

The CED field has matured over the past forty years. It is no longer an experiment; there is among CED practitioners and intermediaries, financial institutions, and foundations that support them a very significant knowledge base of what works and what does not. However, this knowledge is not codified or part of the academic literature and is not easily available or generally accessible. A lot of new initiatives therefore repeat the mistakes of the past or have long and unnecessary learning curves. How then does one replicate the complex processes undertaken by successful

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CDCs? We understand what works, but we have difficulty institutionalizing that knowledge and taking it to scale (Schorr, 1997). Not everyone is pleased with the role of CED in today’s distressed communities. There is a vocal minority, ironically mostly from the left of the political spectrum, who feel that CED is basically a sellout to the forces of capitalism. These critics, who see CED as palliative at best, believe that CED cannot improve the lives of the poor, at least not alone. One of the more outspoken critics of CED is Stoecker (1996). He argues that, because CDCs are doing most of the work of CED and because most CED boards are not controlled by community residents, the kind of development engaged in by these groups is usually conservative in nature, not representative of the community, and often not even in the best interests of its residents. Although not many share this opinion, Stoecker and other critics do raise a valid point, one that should be heeded by those engaged in the CED field. While these critics do not particularly chide CDCs for being hesitant to criticize larger institutions for their negative effect on communities, they have noted the challenge that the growing professionalism and technocracy of the CDC has posed to genuine community accountability and the involvement of community members in the development process (Rubin, 2000; Vidal, 1997). However, to throw out the baby with the bathwater seems disingenuous to those who know that almost anything is better than what exists in most disenfranchised, impoverished communities. And CED done well, as illustrated by the numerous case studies featured in this text, puts the highest priority on community accountability and resident involvement. There is also a considerable criticism directed at place-based revitalization strategies in general, of which CED might be considered a part, because they have failed to transform the most deteriorated communities in large American cities (Lemann, 1994). When criticism is directed at CED in particular, CED advocates counter that small resources, inconsistently committed, even over a long period of time, are unjustly expected to turn back the impact of macroeconomic forces and exponentially larger government investment in sprawling suburban and exurban development that suck the economic life out of the inner city (Cisneros, 1993). With the national and international economy in a state of constant flux, it is difficult to assess, much less predict, how events at the national and international level influence local CED work. However, one thing seems

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fairly clear. Generally speaking in the United States, Democratic administrations at all levels of government are more open, both programmatically and financially, to CED initiatives and programs than are Republican ones. Be that as it may, home-grown, community-initiated CED projects—what some call self-help or local reliance initiatives—can make an enormous difference in the lives of ordinary people especially with the right kind of governmental support. It is our belief that what is being called community building holds the key to rebuilding America’s devastated urban and rural areas like no other effort we know. con cl usi o n

In the opening chapter, we discussed what CED is and is not and provided a comprehensive definition of the term. An overview of the CED field and the growing fourth wave of community building was presented, and a description of the primary vehicle for change—the community development corporation (CDC)—was introduced. It should now be clear why CED work is needed, and students should now be ready to delve into an in-depth exploration of this exciting field. Presenting the story of BSRC as the first case study in this book makes natural sense, as it was one of the first CDCs in the nation, and it still exists as a thriving example of CED work in action. Many of the themes introduced in this opening chapter are illustrated by this case: the nature of CDCs, the expanding field of CED work over the past decades, struggles with how to do “locality development,” the role of the federal government in supporting (or not supporting) these efforts, and the potential and limits of this work. How CED work can positively affect a community is clearly seen here, and the revitalization of a particular neighborhood in a city or region of the country is highlighted. Finally, the depth of public-private partnerships, and how to do (and not do) them, are illustrated. Of particular note, the importance of having a lynchpin project (in this case, Restoration Plaza) in CED efforts is pointed out. Moreover, as with most successful CDCs, the role it plays in helping to restore and/or build housing for its residents is noted. Encouraging small business ownership, providing social services, and creating a diversified funding base over the years all point to the necessary (though not necessarily sufficient) conditions needed for a successful CDC. Given that BSRC has been in existence

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for forty-five years now is a story in itself. To get a sense of the impact such organizations can make, one can simply ask the question: what would this part of Brooklyn look like today if this CDC had never come to be? bedf ord s tuyve sa n t r e stor at i on c or porat i o n Description

Origins Bedford Stuyvesant Restoration Corporation (BSRC) is one of the nation’s very first—and most successful—community development corporations (CDCs). During World War II, large numbers of African Americans migrated from the South to Bedford-Stuyvesant, a large neighborhood in Brooklyn, New York, where housing was more affordable than it was in Harlem. By the 1960s, the primarily African American residents of Bedford-Stuyvesant were facing poverty, substandard housing, inadequate public services, unemployment, race and gang riots, an inability to deal with increasing crime, and difficulties in municipal government (Pratt Center for Community Development, n.d.a). At that time, Senator Robert F. Kennedy was seeking a new approach to address the nation’s urban problems, and the Bedford-Stuyvesant community caught his eye after the riots of 1964 (“RFK in Brooklyn,” n.d.). In February 1966, Kennedy toured the neighborhood and met with community leaders and activists. Kennedy was struck by the poor conditions of “Bed-Stuy,” as it had come to be known. There were broken families, residents with little or no job history, a lack of federal funding, numerous vacant lots filled with garbage, burnt-out buildings, and abandoned vehicles on the street. Moved by his tour and impressed by meetings with community activists, Kennedy began to identify those he knew in the private sector and at foundations who might be able to help. His idea was to establish a community organization in Bedford-Stuyvesant that was nonpartisan and nonpolitical. He successfully recruited leaders of the Ford Foundation, Astor Foundation, and Taconic Foundation as well as business leaders from IBM, CBS, Welch’s Grape Juice, Equitable Life Assurance, National City Bank, and Lazard Freres to support and fund the new organization (“RFK in Brooklyn,” n.d.). With the help of New York’s senior U.S. senator, Jacob Javits, Kennedy went on to collaborate with neighborhood leaders to designate Bedford-Stuyvesant as a “testing ground” for a national model of community development supported by the Special Impact Program, a recently passed amendment to the Economic Opportunity Act of 1964 allowing for federal funding of community development projects in urban poverty areas (“RFK in Brooklyn,” n.d.). After facing leadership and management trials in its first year, the organization that began in 1966 as the Bedford Stuyvesant Renewal and Rehabilitation Corporation evolved into the BSRC in 1967.

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Structure BSRC’s Board of Directors consists of twenty-five board members (BSRC, n.d.a). It has approximately eighty full-time employees and fifty volunteers.

Funding BSRC’s original sources of funding came from private foundations including the Taconic Foundation, the Rockefeller Brothers Fund, the Edgar M. Stern Family Fund, the J.  M. Kaplan Fund, and the Ford Foundation (BSRC, n.d.d). Between 1966 and 1981, however, BSRC received a significant portion of the total $100 million appropriation from the federal Special Impact Program and relied on its relationship with this program for most of the funding needed to implement its initiatives (Pratt Center for Community Development, n.d.a). When the Reagan administration eliminated the Community Services Administration in 1983 and state and local governments replaced the federal government as the primary source of public financial support for CDCs, BSRC faced hardship and needed to downsize and even eliminate some of its programs (Pratt Center for Community Development, n.d.a). Since the late 1980s, BSRC has worked successfully to expand its funding base. Today, BSRC receives nearly $2 million each from the City of New York/City University of New York for NYC Justice Corps and the New York State Division Housing and Community Renewal (GuideStar, 2009a). It currently operates with a budget of more than $7 million. For the fiscal year ending June 30, 2009, BSRC had total revenues of $7,178,306, total expenditures of $7,575,089, net revenues of $396,783, and net assets of $13,203,528 (GuideStar, 2009a). In the fiscal year ending June 30, 2008, however, BSRC had much higher net revenues of $2,154,943; it appears that the recession at the end of the decade significantly affected BSRC’s financials. Strategy and Programs

Target Community Between 1940 and 1960, Bedford-Stuyvesant’s racially diverse population was in flux as the population transitioned from 75 percent white residents to nearly 85 percent African American and Latino residents. White homeowners fled Bedford-Stuyvesant, selling their houses at below market value to real estate speculators, who persuaded sellers that their homes would lose value as African Americans and Latinos moved in to the neighborhood. As white families fled and African American families migrating from the South began to make up the majority of the neighborhood’s population, banks began redlining residents and businesses, essentially refusing to lend to those in the neighborhood based on their race. Locked out of the housing market, African American families were forced to pay

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exorbitant rents for overcrowded, substandard shelter. Public services such as police protection, garbage collection, health care, and education deteriorated (Pratt Center for Community Development, n.d.a). Today, Bedford-Stuyvesant has nearly 153,000 residents (New York City Department of City Planning, 2010a). More than three-quarters of its residents are African American (compared with one-quarter of the population of New York City as a whole), and another roughly 20 percent are Hispanic (New York City Department of City Planning, 2010a). About 89 percent of residents are proficient in English, and for those who are not proficient in English, the most common languages are Spanish, Creole, French, and Chinese (New York City Department of City Planning, 2010a). Nearly half of all Bedford-Stuyvesant residents receive income support including public assistance, Supplemental Security Income, and Medicaid. About 20 percent of the residents own homes (compared with 34 percent of New York City residents as a whole), and approximately 80 percent live in rental housing (New York City Department of City Planning, 2010a, U.S. Census Bureau, 2009). The Community District Needs for the Borough of Brooklyn (New York City Department of City Planning, 2010b) report states that neighborhoods including Bedford-Stuyvesant are most in need of more funding to support arts and culture, child care centers, smaller class sizes and more educational resources, environmental protection, and health care. Many residents do not have health insurance, which leaves them without access to necessary physical and mental health services, especially in an area that has been plagued with HIV/AIDS. There is also a need for more housing and services for the increasing senior population. Several planning groups including the Mayors’ Commission on Economic Opportunity are working together to address community economic development and workforce preparation needs particularly designed to target underserved and underemployed men and women in Bedford-Stuyvesant.

Strategy BSRC’s strategy for comprehensive neighborhood revitalization grew directly from the victories of the civil rights movement and federal antipoverty programs begun in the 1960s. The civil rights victories created greater access to home ownership and personal wealth for a growing black middle class. The movement forced banks to pay attention to BSRC; key to BSRC’s initial strategy was to persuade banks to locate branches in the neighborhood to lend to the local black businesses and to provide BSRC itself with major real estate financing. The antipoverty programs funding BSRC provided the means to offer services. BSRC got down to the hard realities of housing, commercial development, minority business expansion, and wealth creation, deeply immersing itself in the

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particulars of community economic development and real estate strategies in order to provide comprehensive services. To retain homeowners, the middle class, and businesses in Brooklyn, BSRC recognized that it needed to improve the deteriorated physical conditions of the community. The declaration “Bed-Stuy is coming back” was trumpeted by BSRC to all of New York as BSRC undertook major commercial developments in the neighborhood, the first of which was Restoration Plaza (see below). When completed—with the first new innercity supermarket by a major chain, its first bank branch, a theater, and offices—it was a project of a scale that had not been pulled off by any African American organization or business in New York. BSRC was putting Bedford-Stuyvesant on the map by playing with the big boys. In the 1960s, BSRC intended to build local wealth dramatically through homeownership, business success, and employment. As federal antipoverty programs disappeared over the decades, BSRC needed to regroup, which it did successfully. It took on more workforce, health, education, and family support programs to help neighborhood residents succeed and capture the opportunities opened by civil rights victories.

Programs and Projects

phys i cal and c u lt u r a l e n v i r on me n t.  One of BSRC’s first projects, the 300,000-square-foot town square Restoration Plaza, is a multipurpose complex for education, commerce, and culture in central Brooklyn and has an estimated 1.5 million visits each year. Formerly an abandoned milk-bottling plant, the plaza now consists of several buildings that were combined into one facility in the 1970s. Since that time, Restoration Plaza has become home to the Billie Holiday Theatre, an outdoor amphitheater, Skylight Gallery, and the Youth Arts Academy, and it hosts weddings, outdoor concerts, and community events year round. BSRC also attracted commercial businesses to the plaza, including a Super Foodtown (a 25,000-square-foot full-service supermarket), an Applebee’s Bar & Grill, a Duane Reade pharmacy, and three full-service banks. In addition to encouraging economic development, the plaza fosters a sense of pride and identity in the community’s heritage and culture (Pratt Center for Community Development, n.d.a). An extensive restoration begun in 2006 and still underway will create more pedestrian access and dining and entertainment venues (BSRC, n.d.f).

h o u sing a nd foreclosure preventi on.  In 1967, BSRC created its own home mortgage pool to combat the effects of redlining by banks in the community. By the early 1970s, BSRC had made more than 850 home loans totaling $17 million. By the early 1980s, BSRC had developed more than 3,000 units of commercial and residential property by

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rehabilitating deteriorated and abandoned housing owned by the city (Pratt Center for Community Development, n.d.a). BSRC is a leading partner in the Coalition for the Improvement of Bedford-Stuyvesant (CIBS), which in 2009 received a grant from New York City Department of Housing in partnership with BSRC to expand the coalition’s home foreclosure prevention program. The grant supports the “Know the Facts, Don’t Lose Your Home” campaign for preventative education that warns residents about predatory lending, hosts quarterly town-hall meetings on foreclosure prevention, organizes workshops for first-time homebuyers, and provides educational trainings for current homeowners (BSRC, n.d.e). BSRC and CIBS prevent approximately 180 homes from reaching foreclosure and save approximately fifty homes from foreclosure per year in Bedford Stuyvesant (BSRC, n.d.b).

b u siness d ev elopm ent.  In addition to creating its own home mortgage pool, BSRC also created loan programs that provided more than $8.5 million in capital to more than 125 local businesses between 1969 and 1979. These enterprises created and retained an estimated 1,000 jobs in the community and attracted $13 million from conventional commercial investment sources. In 1984, BSRC established a revolving loan fund that continues to offer low-interest loans to small businesses (Pratt Center for Community Development, n.d.a). In 1998, BSRC created the Restoration Capital Fund (RFC), intended to support entrepreneurship and increase the presence of minority-owned businesses in the community that create jobs and contribute to Brooklyn’s economy. RCF offers fixed-rate business loans to startups and established businesses regardless of credit history (BSRC, n.d.g).

so cia l serv ices .  As a comprehensive CDC, BSRC provides a continuum of services designed to remove barriers to economic self-sufficiency, build household incomes, foster education, and help individuals reach their full potential. BSRC provides employment services including assessment, career counseling, job readiness training, job search and placement assistance, resume and cover-letter writing, and interview training to residents who are underemployed or unemployed, ex-offenders, and at-risk youth who have multiple barriers to employment (BSRC, n.d.c). Residents also are provided with free benefits screening, financial and legal counseling, social service referrals, financial literacy workshops, and GED preparation and adult basic education courses (BSRC, n.d.h).

env iro nment.  In 2010, BSRC combined forces with the Community Environmental Center (CEC) in an environmental sustainability initiative. CEC trained BSRC’s Justice Corps to paint a highly reflective material on the rooftops of BSRC’s residential properties.

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This reflective material reduces roof temperatures in the summertime, which can reduce air conditioning costs by as much as 50 percent, in addition to curbing CO2 emissions in the community (BSRC, 2010). In March 2010, BSRC started the first cycle of “green construction” courses, in which participants from across Brooklyn undertake ten weeks of training in green construction skills and weatherization practices to make homes more energy efficient. After their training, participants are given internships and job placements (BSRC, 2010). ma jo r su cces ses In 2010 alone, BSRC was recognized for its commitment to community development and affordable housing from the Brooklyn Community Foundation’s Brooklyn Do-Gooder Award, the Asian Americans for Equality’s Dream of Equality Award, and Bank of America’s prestigious Neighborhood Builder Award. Since its founding in the 1960s, BSRC has constructed or renovated 2,200 units of housing and repaired the facades of 150 homes on 150 blocks. Its home mortgage pool has loaned more than $60 million to nearly 1,500 homeowners. BSRC’s commercial and business development programs have attracted more than $375 million in investments to central Brooklyn. In addition, BSRC has placed more than 20,000 Brooklyn youth and adults in jobs (BSRC, n.d.d). Restoration Plaza remains the center of community life in central Brooklyn, and renovation and modernization of the plaza and ensuring a thriving arts community are critical to BSRC’s vision of neighborhood revitalization. The plaza’s Skylight Gallery continues to feature artwork from more than one hundred artists every year and provides opportunities for community artists to show their work. The plaza’s Billie Holiday Theatre productions sell more than 30,000 tickets per year and provide training opportunities for theater professionals. The Youth Arts Academy now offers classes in dance, martial arts, music, visual arts, and theater to approximately 400 students each year (BSRC, n.d.d). With nearly sixty financial supporters, BSRC has achieved a broad funding base that has enabled it to continue to evolve and provide the workforce, health, education, and family support programs it started in the wake of the civil rights victories of the 1960s.

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Social Workers and Community Economic Development

this chapter is about reframing the field of social work to own more explicitly and enthusiastically its charge to utilize community practice, in addition to direct clinical practice, to improve the lives of people in need. Under that framework, social workers are well positioned to practice in the interdisciplinary field of community economic development (CED) as well as the broader emerging field of community building, which incorporates both economic and social development. Social work, viewed through this particular lens, is actually all about community building, and social work is one of several disciplines that are instrumental in shaping CED and community building practices over the last several decades. The formation of the Association for Community Organization and Social Administration (ACOSA) in 1987 and the subsequent founding of its academic publication, the Journal of Community Practice, in 1994 were landmark events in the history of macro social work practice. A forum and vehicle were created to discuss research and work being done in social work on the topics of community organization, CED, and community building. A recent issue of the journal focused on community organization and macro competency practices for social workers. Two key articles in that issue provide strong support for a wider inclusion of CED content in social work programs. First, Fisher and Corciullo (2011) make an argument for broadening recruitment for and expanding community organization education in social work programs. This expansion would have important implications for CED; without expanded community organization and

i n m a n y ways ,

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other macro content in social work curricula across the country, there is little chance for broader CED education to take hold. In that same issue, Gamble (2011) does macro practitioners a great service by discussing and outlining the macro competencies necessary for social workers, according to the Council on Social Work Education (CSWE). One of the knowledge and practice areas identified by her is “community social, economic, and sustainable development” (p. 394). Thus, CED work is seen as a necessary skill for social work macro practitioners to master. This is not new; more than a decade before that, Johnson (1998) identified community development as a necessary component for “community-based practice” (p. 41). compat i b i li ty o f s o c i al wo rk and ce d p r ac ti c e and valu e s

To understand the role of social workers in the CED field today, it is important to understand the historical relationship between social work and CED. In the United States, social workers have had a reduced formal presence in the CED arena as it evolved over time. This in part is a result of their lack of training in increasingly sophisticated CED practices. Although many top graduate schools of social work do offer community practice specializations, only a handful of social work schools offer CED courses; according to Brophy and Shabecoff (2001), just fourteen of the hundreds of schools of social work in the United States offer CED courses. As of 2013, the authors are unaware of any changes brewing in social work academia that would result in a significant increase in CED course offerings. However, several social work schools are experimenting with new macro-focused specializations or concentrations with such names as “social entrepreneurship,” “community partnerships,” “downtown development,” and even “political practice,” which may indicate a growing offering of macro content if not yet specific CED content. The absence of widespread CED education may in part be a function of the philosophies underlying social work practice itself. As Soifer and Resnick (1993) point out, social work as a profession has historically encouraged its practitioners to use a service- rather than business-oriented approach to helping struggling communities. CED practitioners, however, typically

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must adopt a business orientation and entrepreneurial spirit to be effective. Many social workers are uncomfortable with and unskilled in the application of business principles, including the economic, real estate, accounting, and other finance-related functions that CED work requires. Businessoriented classes attract few social work students, and social work degree programs rarely require them. And, based on the authors’ experience of teaching CED practice in schools of social work, it appears that many social work students have a “math block,” if not an outright “math phobia,” that leads to an avoidance of numbers. (When students in one course taught by the authors were told they were required to buy a business calculator, they recoiled in fear.) One could also argue that there is an anticapitalist strain in social work teachings, intentional or not, that may also limit social workers’ participation in contemporary CED practice. Social workers are educated to help those who need assistance as a result of the poor’s experience of living on the bottom rung of a capitalist system. Disaffection with capitalism is an understandable result, and the acts of learning about and applying business principles could feel incompatible with social work. However, these business principles in reality provide some of the very tools social workers need to lift communities out of poverty and achieve social work goals. The perceived incompatibility of social work and business practices needs to be corrected if social work education is to prepare its students to be effective CED practitioners. In fact, the compatibility of the values and goals of social work and CED practice imply that social workers should indeed play a more active role today in CED practice. Social work’s core values articulated in the Code of Ethics of the National Association of Social Workers (NASW, 2008) include service; the dignity and worth of the individual, as well as his or her self-determination; and social justice. CED shares the same core values. Social workers are compassionate managers who are trained to understand and support the human bottom line. They possess knowledge that is requisite for the effective practice of CED, including knowledge of community organizing, social analysis, group practice, leadership development, family empowerment, community-based education through action, and theories of social change. Who better to use CED practices to aid struggling communities than social workers?

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a v ery br i e f h i s to ry o f s o c i al wo r k

Before taking deeper a look at CED and its relationship to the field of social work, let us first examine a brief history of social work. This will provide background for understanding how CED activities fit within the scope of the social work profession today. Chapters 4 and 5, which discuss the history of CED in detail, further demonstrate how the history of social work is tied to the history and development of the field of CED. Beginnings of Social Work (Late 1800s)

From its inception, social work has been about what is now labeled “empowerment” and “community building.” What many associate with social work, however, is the provision of direct service to individuals in need, or the case method approach to social work. The Charity Organization Societies (COS), which provided the first direct social work practice, focused on helping the downtrodden pull themselves up by their own bootstraps and inculcating them into middle-class values (Goodwin, 2004). COS organizations originated in the eastern United States during the 1870s with the intent to improve the organization of social services; a vast number of independent charities had formed to ameliorate the poverty caused by rapid industrialization, but they operated autonomously with no coordinated plan. COS founders wanted to reform charity work by requiring a paid agent to investigate each case’s “worthiness” before distributing aid. Furthermore, they believed that unregulated and unsupervised aid caused rather than cured poverty, so volunteer “friendly visitors” oversaw each individual’s or family’s progress. COS views dominated charity philosophy until the 1930s and influenced social welfare policy as it evolved during the Progressive Era (Goodwin, 2004). The case method approach as implemented by COS, however, had limited success. Delivering services to individuals via home visitation is still a part of the social work profession today, though in most instances social work perspectives on home visiting differ significantly from those of more than a hundred years ago. Concurrent with the rise of the friendly visitor movement was the rise of the settlement house movement, which focused on providing services to and empowering immigrants, the poor, and indigents—a latter-day community

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building skill. Classes were provided to teach immigrants English, to educate them in the ways of U.S. society, and to teach them necessary survival skills for living in this country. Moreover, settlement house workers would advocate on behalf of their clients, both individually and as a class. Hull House is a famous example of such a settlement house in Chicago. Hull House was co-founded in 1889 by Jane Addams and Helen Gates Star to welcome European immigrants to the United States. Hull House residents, most of them women, advocated for housing reform; helped establish the first juvenile court in the country; and lobbied for child labor laws, public education, occupational safety measures, and myriad other policies ( Johnson, 2004). Settlement houses still exist to this day, albeit in a limited and modified form. Unfortunately, Hull House finally closed its doors in early 2012. There are many causes for its demise, but it boils down to lack of money and no suitable plan to raise it along with serious mission drift (Cohen, 2012). Fabricant and Fisher (2002) explain the context for why a settlement like Hull House could shut down after so many years. Essentially, the drive to privatize and corporatize the provision of social services in the United States has had a detrimental effect on providers like settlement houses. The philosophical split that existed between the COS and settlement house approaches continues in the field of social work. Today’s social work is primarily divided into micro and macro practice, or clinical and community practice, or whatever terms one chooses to delineate a focus on directly helping individuals versus a focus on eliminating societal ills. Although it could not save Hull House, a refocus on community building in addition to or instead of direct service provision might benefit other settlement houses and nonprofit social service agencies in the future. Formation of the First Social Work Schools (Late 1800s/Early 1900s)

To provide training for the growing number of social workers, the first school of social work opened in 1898 at Columbia University in New York City (NASW, n.d.). The first schools of social work primarily taught the case method approach used by the COS organizations, and this approach dominated for several decades. Many other schools soon followed, and today there are more than 200 accredited Masters of Social Work programs

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and 460 accredited Bachelors of Social Work programs in the United States (Council on Social Work Education [CSWE], n.d.). Progressive Era (1910s)

During this very rich and fruitful time, COS organizations and settlement houses were rapidly appearing, and schools of social work were forming to keep pace. Settlement houses led the way during this period, helping shape local, state, and national reforms that greatly improved the lives of millions of Americans, many of them new immigrants and very poor. COS organizations continued to focus on changing individuals’ lots in life, and the highpoint of the COS movement was the publication of Mary Richmond’s seminal book Social Diagnosis (1917), which codified the case method approach to social work. Community Building Efforts (1920s)

During this decade, programs such as Community Chests (which fund community projects through individual community member subscriptions) and Social Planning Councils (which are groups of nonprofit organizations that focus on community development and social justice issues) flourished and contributed to building community. One little known but highly innovative project that focused on community building during this time was the Cincinnati Unit Plan (Fisher, 1994). This effort combined the best of the settlement house tradition with an ambitious attempt to organize the city of Cincinnati with block clubs and afterschool programs. This project was the brainchild of Jane Addams of Hull House, who convinced wealthy philanthropists to fund implementation of the plan. The project produced significant results but was short-lived and never replicated. Community Work During the Great Depression (1930s)

The Great Depression was a time of rapid growth for the field of social work. Once Franklin Roosevelt was elected to the presidency and enacted a collection of programs termed the New Deal to fight the economic depression, there was an explosion of pioneering community practice efforts by social workers. When Roosevelt appointed the social workers Frances

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Perkins as secretary of labor and Harry Hopkins as the executive director of New Deal programs, the Federal Emergency Relief Administration, and the Works Projects Administration, he elevated social workers into positions at the highest levels of government. By putting people back to work and allowing them to borrow federally insured money from banks, the New Deal programs also created a safety net for the bulk of society. During the depression, community building was typified by radical neighborhood and union organizing. Although the union organizer Saul Alinsky himself was not a social worker, his organizing efforts in the Back of the Yards in Chicago during the late 1930s was an innovative approach at coalition building and bringing diverse people together. His efforts continue to this day through the Industrial Areas Foundation (IAF), a national community organizing network, but social workers have merely a tangential relationship with IAF and other similar networks. Also during this period, the first social work journal, Social Work Today, started publishing (Herrick & Stuart, 2005). Social Work in Midcentury (1940s to Early 1960s)

Bertha Reynolds’s work led to one of the most outstanding accomplishments in the field of social work during this time period. Reynolds is known for her commitment to social justice, and she played multifaceted roles as an organizer, clinician, supervisor, and author (Kaplan, 2002). She is credited as one of the foremothers of strengths-based practice, outlined through case examples in her important book Social Work and Social Living (1951). All of her written work was thoroughly progressive in nature, and she typified the kind of community building work that occurred during this otherwise disturbing and bleak time in our country’s history, when Senator Joseph McCarthy labeled almost every progressive public initiative as “communistic.” Murray Ross’s groundbreaking book Community Organization (1955) finally put community building work on the same footing as casework in the field of social work. By framing and writing his book in a similar manner to Richmond’s casework study Social Diagnosis, he legitimized community organizing as a practice method for social workers. Consequently, the newly formed NASW recognized community organization as a legitimate social work skill a few years later. Then, in the 1960s, the CSWE formally

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recognized community organization and administration as critical practice areas within the field of social work. Another important component of what has now become known as community building must be traced back to social work group work, which had been an orphan within the profession until it was included in the social work curriculum in the 1940s. Group work (also referred to as mezzo social work practice) focuses on teaching social workers the norms of how groups form and function and also about how to utilize those norms in practice. So much of community building depends on being able to bring divergent groups together with a common agenda, so this contribution of social work to the field cannot be ignored. From the perspective of the authors, group practice is crucial to effective work in the community building arena. Big Changes in Social Work (1960s)

The 1960s were pivotal for macro social workers in the United States. In particular, the War on Poverty at home and the war in Vietnam abroad shaped a whole generation of students. Not only did students flock to social work schools to learn about community organizing and radical theories of society that diagnosed the problems of capitalist America, but the schools themselves also actively put more emphasis on the macro side of the field. Consequently, more and more social workers began to investigate how the larger forces of society did or did not contribute to their clients’ well-being. Despite the focus on macro social work, however, only scant attention was paid to CED practice at the time. This would come later. Though community organization in schools of social work finally received due recognition in the 1960s, the recognition was short-lived. Once the 1960s ended, students and schools reverted to primarily clinical casework, with most social work students preferring to enter private psychotherapy practice after completing their education. The Recent Generation (1970s, 1980s, and 1990s)

The changing economic and political times of the 1970s, the winding down of the war in Vietnam, and the rise of the “me” generation of the 1970s and 1980s intensified the emphasis on the individualistic case

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method approach to social work. With decreasing enrollment in macrolevel social work courses, many schools of social work, in order to enable their macro programs to survive, combined community organization and any CED coursework they offered with coursework in the growing field of social work administration. Consequently, many macro-level specializations were relabeled with such titles as “Management, Administration, and Community Organizing.” Others settled on titles such as “Community Practice” to incorporate everything in the curriculum that was not clinical in focus. The politically conservative times that started with the election of Ronald Reagan as president in 1980 did nothing to change this trend and exacerbated macro-oriented social workers’ sense of frustration and disempowerment to effect changes on a broader scale. Although CSWE was itself doing little to promote community practice, macro social work educators organized to create the Association for Community Organization and Social Administration (ACOSA) in 1987, a major step forward for the profession. Unfortunately, NASW has never created a separate community practice session for its members. The call for such a step is not new; Johnson (2004) has taken the profession to task for not following in the footsteps of Jane Addams and for losing its focus on community. Based on our experience teaching in social work schools, the 1990s witnessed continued political conservatism on social work campuses across the country. Most social work students continued to enroll in graduate social work programs in order to become clinical, or direct practice, social workers. Not only was there a mistaken belief among students that wages were better in clinical rather than macro practice, but students also felt they would have more control over their work environments if practicing clinical social work. Public sector and nonprofit organizations experienced difficulty finding qualified social workers. Social Work in the Twenty-First Century

By the beginning of the twenty-first century, it seemed to us that a correction to the imbalanced focus on clinical social work had begun. Some faculty at schools of social work began to speak out against the “therapeutic” trend in the field, warning their students that market forces were going to make it more difficult for them to make a living as individual

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psychotherapists. They stressed that earning a degree in social work as a means of becoming a psychotherapist rather than as a means of helping disadvantaged populations is not in the spirit of “real” social work. It appears to us that macro social work is indeed making a gradual comeback. While this is not a scientifically measured observation, we have seen evidence that a balance between micro and macro practice is returning to the profession and that students are increasingly showing interest and enrolling in macro social work courses. A recent article in the magazine of the University of Chicago’s School of Social Administration (“Rebuilding Communities,” n.d.) indicates that others have seen the same: The current interest in community and economic development is reminiscent of the 1960s when idealistic young social workers flocked to America’s cities to rebuild following some of the worst riots the nation has known. Today’s community developers are responding to an equally precarious, though less dramatic, set of conditions in our metropolitan areas. Working on a number of fronts, from banking to housing development, from youth services to health care and urban planning, social workers of all stripes are engaged in a growing movement to enhance communities and improve individual welfare. (para. 6)

However, there are only small numbers of social workers involved in broader community building efforts and few social work practitioners specifically doing CED work today. We know of no published study to this effect, but based on our knowledge of a cross section of U.S. community development corporations (CDCs), social workers are still few and far between. It would appear that CED and, more broadly, community building have not become major areas of social work practice despite the need for CED and community building social workers, the compatibility of mission, the common history, and the explicit inclusion of community practice as central to the profession of social work. Few social work students are aware of the opportunities to pursue careers in this field despite the fact that social workers and their skills are sorely needed and that students are increasingly motivated to study social work in order to create change at the community level.

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cr eat i n g a c o m m u ni ty b u i ld i ng – fo c use d s o ci a l wo rk c u rri c u lu m

We do not foresee this phenomenon changing until there is a paradigm shift, or perhaps a shift in perspective, in the social work profession. Let us explain: Virtually every aspect of social work practice, with the possible exception of strict clinical practice focused on individual psychopathology, can already be viewed through the lens of community building and already serves to strengthen distressed communities. Whether social work curricula are organized by fields of practice, methods, or special populations or are advanced generalist in nature, community building stretches across the spectrum. For example, in direct practice social work, a social worker could conceivably be working with a client on starting her own business or helping a TANF recipient with job search skills. Both of these are strategies for building human capital (see chapter 8 for more on human capital). If working with teenagers, a social worker could be helping a group get their GEDs and consequently expanding their collective human capital, too. In the health arena, a social worker might help neighborhood residents set up a low- or no-fee health clinic, which would involve building both human and social capital (see chapter 13 for a discussion of social capital). Helping adults start their own worker cooperative would also be an example of focusing on social capital improvements. Finally, one can imagine a social worker helping a client through a financial literacy campaign at a local community action agency and setting up an Individual Development Account (IDA) with him (see chapter 11 for more on building financial capital). We firmly believe the time is ripe for more universities to create Masters of Social Work specializations that have community building at their centers and that include CED coursework. It is important to note that integrating social work with CED is not a new proposition. The concept of CED has been embedded in the social work literature for years. Such an endeavor is consistent with the CSWE’s Educational Policy and Accreditation Standards (2008), and it is straightforward to justify such a program given these guidelines. According to the educational policy guidelines, the purposes of social work education are as follows: The purpose of the social work profession is to promote human and community well-being. Guided by a person and environment construct, a global

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perspective, respect for human diversity, and knowledge based on scientific inquiry, social work’s purpose is actualized through its quest for social and economic justice, the prevention of conditions that limit human rights, the elimination of poverty, and the enhancement of the quality of life for all persons. (p. 1)

The purposes above are thoroughly consistent with the intent of community building, and a curriculum can be designed, and in a few universities one has been designed, to meet them. Most important, offering an advanced generalist program would be the best use of a Masters of Social Work degree for making community building more integral to social work practice. This would allow for maximum flexibility across the practice ranges. Creating an advanced generalist program is better, for our purposes, than creating discrete programs organized by populations, fields of practice, concentration methods, or other means. Infusing content and field work on community building in the foundation curriculum, rather than relegating it to advanced curriculum for macro specializers only, has been shown to increase the number of students who enrolled in advanced macro courses and undertook a CED concentration ( Johnson, 2000). At both the foundation and concentration levels, the following competency areas need to be addressed in a community building–focused social work curriculum: (1) conducting oneself as a professional social worker, (2) applying values and ethics, (3) thinking critically, (4) engaging diversity, (5) advancing social and economic justice, (6) employing evidence-based practices, (7) understanding human behavior and the social environment, (8) advocating for social welfare policy and services, (9) responding to changes in the environment, and (10) working effectively at all levels—individuals, families, groups, organizations, and communities (CSWE, 2008). (1) Conducting Oneself as a Professional Social Worker

As do current social work curricula, a community building curriculum would ensure that social work students abide by the mission of the social work profession and understand the profession’s history. The curriculum would emphasize the need to commit themselves to developing as

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professionals and contributing to the development of the field, which community building social workers would be well positioned to do. (2) Applying Values and Ethics

The following is from the preamble of NASW’s Code of Ethics (2008): The primary mission of the social work profession is to enhance human well-being and help meet the basic human needs of all people, with particular attention to the needs and empowerment of people who are vulnerable, oppressed, and living in poverty. A historic and defining feature of social work is the profession’s focus on individual well-being in a social context and the well-being of society. Fundamental to social work is attention to the environmental forces that create, contribute to, and address problems in living. Social workers promote social justice and social change with and on behalf of clients. “Clients” is used inclusively to refer to individuals, families, groups, organizations, and communities. Social workers are sensitive to cultural and ethnic diversity and strive to end discrimination, oppression, poverty, and other forms of social injustice. These activities may be in the form of direct practice, community organizing, supervision, consultation, administration, advocacy, social and political action, policy development and implementation, education, and research and evaluation. Social workers seek to enhance the capacity of people to address their own needs. Social workers also seek to promote the responsiveness of organizations, communities, and other social institutions to individuals’ needs and social problems. The mission of the social work profession is rooted in a set of core values. These core values, embraced by social workers throughout the profession’s history, are the foundation of social work’s unique purpose and perspective: r
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This constellation of core values reflects what is unique to the social work profession. Core values, and the principles that flow from them, must be balanced within the context and complexity of the human experience. (p. 1)

All of the above is applicable to a social work program with a focus on community building. In fact, the authors argue that engaging in community building work is the best way for social workers to fulfill the mission of the social work profession. (3) Thinking Critically

A community building curriculum would teach social work students to analyze, assess, and design plans to revitalize communities, which would actively engage and foster students’ critical thinking skills. (4) Engaging Diversity

Community building focuses on low-to-moderate-income communities, many of which have large concentrations of people of color. Thus, social workers working in this field need to be knowledgeable about diversity issues and how to work competently with people from a wide range of backgrounds. A community building–focused program would integrate such material across the curriculum. (5) Advancing Social and Economic Justice

Working with populations at risk and eliminating economic and social injustices are fundamental functions of community building, primarily through empowering community residents to take charge of their lives and the communities in which they live. By employing a strengths perspective and building wealth in disenfranchised communities, community building strategies help turn around people’s lives and communities. (6) Employing Evidence-Based Practice

There are some good evaluations of CED practice in the field, and recent research is identifying what works (and conversely, what does not work)

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in community building. Social workers planning a career in community building have many resources at their disposal for finding out about stateof-the-art practices. (7) Understanding Human Behavior and the Social Environment

To be effective community builders (and, of course, social workers), it is necessary to have a grounding in various theories and perspectives on human development and society. Teaching on human behavior and the social environment enables community building practitioners to understand the ways in which human capital can be built and the needs of individuals and families in the community. (8) Advocating for Social Welfare Policy and Services

Education in social welfare policy is critical for social work students, but education is not enough. Learning how to advocate for effective social policies and programs at all levels of government is necessary, too. A community building curriculum would in particular address how policies aid and abet community building efforts. For example, how has the history of the federal housing program affected poor people? What is being done with local community programs today to deal with the affordable housing crisis? These are the kinds of issues that need to be explored for social work students who are becoming community builders. (9) Responding to Changes in the Environment

As policies, community challenges, evidence-based practices, and other issues evolve over time, social work students must learn to recognize these changes and adapt their practice to new contexts. A community building curriculum rich in the history of neighborhoods, communities, and cities as well as contemporary social issues confronting individuals, families, and groups would provide excellent context for developing this competency. (10) Working Effectively at All Levels

Practice courses focusing on community building must teach social workers how to be effective practitioners in the field. For example, if working for

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CDCs, social workers need to learn the skills necessary to work with individuals, groups, organizations, and communities in particular geographic locations and know how to assist them across various programmatic and service areas. Social workers must help clients in all facets of their lives, including finding housing, developing job skills, and learning how to save money, buy smartly, live a healthy lifestyle, and parent effectively. Of course, working with community groups, linking community resources, running programs, raising money, and other tasks are important, too. All of these skills must be covered in community building practice courses. Field Education

Field education is the lynchpin of a social work education. Luckily, just about every major metropolitan area, as well as many rural areas, presents numerous opportunities for community builder placements. Whether in a CDC or a broader community-based nonprofit organization, there are many opportunities for students to practice community building with experts in the field. One problem that schools of social work encounter, however, is that many of the practitioners at these organizations do not have social work licenses at this time; schools must be creative about field placement supervision to support a broader range of field opportunities. Including CED in Social Work Coursework

There are countless opportunities for social workers to participate in CED if they receive education and training on CED practices during their coursework. There are three primary questions for schools of social work considering whether to add CED material to the curriculum. why wi ll soc i a l wor k st u d e n ts b e i nt e re s t e d i n c e d?

CED offers social workers one of the most professionally rewarding opportunities they could ever have to make a tangible difference in the lives of people in need. The work often involves long hours, and salaries are not the highest among social work jobs, but the professional satisfaction derived from encouraging and witnessing the effects of individual and community empowerment cannot be quantified. Simply put, lives and communities are touched and changed for the better. The long-term effects of such positive

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change are transformational for community members. Moreover, the work is varied and challenging. Just about any role that a social worker may play—individual counselor, caseworker, group worker, community practitioner, advocate—is relevant to community building, and social work students are likely to be excited about the opportunity to study CED. s hould th e r e be soc i a l wor k fi e ld p l ac e m e n ts i n ced progr a m s?

Practical experience in the CED arena will generate interest in CED as a career path for social workers, and field placements are crucial to providing social work students with the training they need to become effective practitioners. Social work students often lack the awareness and practical information they need to assess CED as a viable professional choice; increased exposure and hands-on experience in this dynamic environment will offset the current deficit of available information and encourage social work graduates to consider the field of CED when identifying potential career tracks. CED programs need social workers, and awareness among students is the first step toward fulfilling that need. i f a s choo l of soc i a l wor k e n c ou r ag e s i ts s tudents to pa rt i c i pat e i n c e d pr og ra m s , what challe n ge s w i ll t he st u d e n ts fac e ?

The most pressing challenge for social work students will be to acquire the necessary skills to practice in the field effectively: quantitative and business skills are especially important. A related dilemma for social work students (and social workers in general) in CED will be using methods to perform community practice without compromising under the pressure of free-market capitalism. In general, CED practitioners accept the realities of market forces, though they attempt to mitigate blind acceptance of them. The very nature of CED work requires working within the current economic framework to create change rather than upending that framework. For example, the creation of partnerships and the fiduciary responsibilities of economic accountability to private sector investors are inherent in CED and CDC practices. That said, the CDCs have a responsibility to the neighborhoods they serve to temper the negative effects of unbridled market forces, and social workers can play an important role in that process.

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Yet another challenge for social work students is how to address the tension surrounding communities that, more often than not, are predominantly composed of people from disadvantaged groups when the community developers are not. Differences in class, race, and gender can cause friction that undermines the effectiveness of CDCs and the overall success of CED. Social workers fall squarely in the middle of that human mix. How does the academic world address this issue? There are two schools of thought on that subject, and they are diametrically opposed. One theory is to provide social work students with one or more specific courses on the subject of multiculturalism. The alternative theory is to take an infusion approach and incorporate multiculturalism and cultural competency and sensitivity throughout the curriculum. While there is no right or wrong answer, this book proffers the second approach as the preferred method within the field of CED and community building. Curricular Materials

CED curricular materials are available within the social work literature. Several important articles and books have shaped how the role of social workers in community development and CED has evolved. A few of the most important are highlighted here, along with critical journals and websites that students of social work and CED will find crucial in their studies. arti cles an d b ook s.

In his now classic articles “Three Models of Community Organization Practice” (1979), “Approaches to Community Intervention” (2001), and “Multi Modes of Intervention at the Macro Level” (2008), Rothman outlines the model of locality development as a core macro social work function. Locality development, often used interchangeably with CED, is the practice of scrutinizing a community from an empowerment perspective and recognizing the necessary collaborations between the neighborhood, government, and business to improve the life chances of community residents. The social worker’s goal within this model is to assist groups to actualize their self-chosen goals by serving as a teacher, facilitator, networker, and other roles that promote interaction and communication within the community. The self-reliance of community members is stressed. These articles provide the basis for nearly all future literature on social work and CED.

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Ewalt, Freeman, and Poole’s Community Building: Renewal, WellBeing, and Shared Responsibility (1998) has been an influential resource in the field for several reasons. First, it addresses social work practice in the areas of comprehensive community initiatives (discussed in more detail in chapter 15), economic revitalization, community selfsufficiency, collaborative community action, housing, schools, women, youth, and community health. Next, the authors employ and advance the term “community building” versus “community economic development” and “community organizing” to describe the inclusive process of comprehensively revitalizing distressed communities. Questions of policy coordination at the local, state, and federal levels are raised, as are the limitations that local programs experience when not receiving national support. And, most important, multiculturalism is emphasized throughout the narrative. Two additional books that explicitly focus on CED and social work have also been influential. Sherraden and Ninacs’ Community Economic Development and Social Work (1998b) focuses on creating jobs, building communities’ assets, and strengthening the social fabric of communities. It covers poverty, work, social capital, microenterprise development, and housing. Sherraden and Ninacs emphasize cutting across the micro-macro spectrum and working to empower people—especially in communities of color—at the individual, family, and community levels. Schorr’s extensive work Common Purpose: Strengthening Families and Neighborhoods to Rebuild America (1997) analyzes the successes of community development initiatives related to welfare reform, child protection, and education. In addition to publicizing several highly successful programs, Schorr unveils a formula for revitalizing America’s cities. Her four keys to “community rebuilding” are as follows: 1. Successful initiatives combine action in the economic, service, education, physical development, and community-building domains . . . [and] set out to foster a fundamental transformation of poor neighborhoods. 2. Successful initiatives rely on a community’s own resources and strengths as the foundation for designing change initiatives. 3. Successful initiatives draw extensively on outside resources, including public and private funds, professional expertise, and new partnerships that bring clout and influence.

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4. Effective initiatives are designed and operated on the basis of one or more plausible theories of change. (pp. 360–361)

Schorr’s principles are important because any community building effort must keep these in mind to be successful in the long run. Missing one of these keys can doom an otherwise worthwhile initiative to the dustbins of history. The book should be an essential text in a community building curriculum. journals a n d w e b si t e s.

ACOSA’s mainstay publication is the Journal of Community Practice. Over the years, the journal has published numerous articles both directly and indirectly related to the field of CED, even dedicating one issue to the subject, and that issue evolved into the aforementioned book Community Economic Development and Social Work (Sherraden and Ninacs, 1998b). The journal also has focused on the links between CED and community organization, providing a broad interpretation of how social services are provided through community empowerment. The Journal of Progressive Human Services, formerly Catalyst, has also contributed to the literature on CED. It has published occasional articles on CED-related activities and the provision of social services in a progressive manner. Both the strengths and empowerment perspectives have been emphasized, with a heavy dose of multiculturalism. The Community Development Journal has been the mainstay in the field of international CED for approximately fifty years. Other key journals that offer curricular material in CED are Social Development Issues and the Journal of International Social Work. The COMM-ORG website (comm-org.wisc.edu) has been an essential CED resource since the mid-1990s. This electronic vehicle calls itself “The On-line Conference on Community Organizing and Development.” It has several very important features for social work faculty and students, the most important for the purposes of this book being a regularly updated list of CED course syllabi and online articles on community organizing and development. This site, which is sponsored by the Department of Community and Environmental Sociology at the University of Wisconsin, provides a vital service to those interested in macro practice.

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commu n ity b u i ld i ng – f o c u s e d s o ci a l wo rk i n p rac ti c e

To revitalize poor communities, not only must social workers utilize the empowerment, strengths, and asset-building perspectives, but it is also absolutely essential that the overall effort be conceptualized as “community building” or as a “comprehensive community initiative” (CCI): [CCIs] contain several or all of the following elements and aim to achieve synergy among them: expansion and improvement of social services and supports, such as child care, youth development, and family support; health care, including mental health care; economic development; housing rehabilitation and/or construction; community planning and organizing; adult education, job training; school reform; and quality-of-life activities such as neighborhood security and recreation programs. (Ewalt et al., 1998, p. 3)

Without identifying a community building initiative as a community building initiative, it may become fragmented. Although the above is not a complete list of the elements of revitalizing a community, it does offer an idea of the types of activities involved. All of these activities, and many others, fall under the purview of community building social workers. While this list of activities represents a massive undertaking, nothing short of such an effort will work. And therein lies a dilemma. Federal initiatives to turn communities around, such as the recent Enterprise Zones, which encourage community development by offering entrepreneurs tax deductions to build and invest in distressed areas, are narrower and simply have not worked as planned, at least not over the long haul. Bringing a community back from the brink, much less turning a whole city around, is extremely difficult. Some in the field, such as Rusk (1996), argue that the latter is actually not possible, and his list of therefore doomed cities includes Baltimore, Detroit, and Philadelphia. Although we do not take such a dismal view, we do acknowledge that there are few examples of complete turnarounds at the neighborhood level, much less at the city level, probably fewer than one could count on two hands. Until the field has a replicable model that could be utilized in any city anywhere in the United States, CED practitioners still have

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a tough row to hoe, even armed with recent research on state-of-the-art practices in CED. If throwing money at distressed neighborhoods and cities does not work, what does? And what role can social workers play in collaboration with professionals of other disciplines in the overall revitalization of the areas many of their clients live? Schorr (1997, pp. 5–10) argues that there are seven key characteristics of successful revitalization at the program level: 1. Successful programs are comprehensive, flexible, responsive, and persevering. 2. Successful programs see children in the context of their families. 3. Successful programs deal with families as parts of neighborhoods and communities. 4. Successful programs have a long-term preventive orientation, a clear mission, and continue to evolve over time. 5. Successful programs are well managed by competent and committed individuals with clearly identifiable skills. 6. Staffs of successful programs are trained and supported to provide highquality, responsive services. 7. Successful programs operate in settings that encourage practitioners to build strong relationships based on mutual trust and respect.

Schorr goes on to say, “It is now absolutely clear that the attributes of effective programs are undermined by their systems’ surroundings, especially when they attempt to expand to reach large numbers. . . . The mismatch between the attributes of effective programs and the imperatives of prevailing systems is what stands in the way of the successful demonstrations becoming part of the mainstream” (p. 18). As we argue here and Schorr reinforces, “The history of efforts to replicate, sustain, and scale up from effective programs is dismal.  .  .  . The problems arise when the successful pilot program is to expand and thereby threatens the basic political and bureaucratic arrangements that have held sway over the decades” (p. 19). It seems, says Schorr, that successful efforts take off under the umbrella of a “protective bubble.” At the very least, this implies that without powerful support from someone or some entity (often government), the expansion of these efforts is doomed. How, then, can social workers nurture CCIs that succeed in transforming neighborhoods, then communities, and eventually whole cities across the United States?

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Successful community building requires a high skill level. Whether led by a charismatic leader, a powerful government official, or a seasoned social worker, taking a demonstration program that works and making it a success at any level is challenging. Such programs that are now national in scope are Head Start, an early childhood program that was an initiative of the Johnson administration’s Great Society programs in the 1960s, and more recent programs such as Homebuilders, YouthBuild USA, Nehemiah Homes, and the national community land trust movement. On a more local level, often-cited examples of successful programs and ones we have included in case studies in this book are the Dudley Street Neighborhood Initiative (DSNI), the Marshall Heights Community Development Corporation (MHCDC), and the New Community Corporation (NCC). Now that we have examined the history of the contribution of social work to community building, explained where the two fields overlap, and outlined how a graduate social work curriculum could be constructed around the theme of community building, the key question emerges: What will it take for the fields of social work and CED to align? The economic and political times certainly call for it. With the reshaping of the federal government’s role toward the less fortunate in society, it may be many years, if not decades, before the federal government again plays a very active funding role in local activities. And while the political climate could grow warmer, whatever neoliberalism emerges will likely not include the largesse of the past, that is, the unfettered turning on of the spigot of federal spending that occurred during the 1930s and the 1960s. Consequently, CED practitioners must be prepared to do more with fewer resources. While one solution to the lack of federal funds is the hard-headed business of cutting jobs, wages, and benefits to increase profits (and the equivalent trend in the nonprofit sector), another approach would be to rely more on social workers’ networking skills to bring about new interorganizational relationships (see Hardcastle, Powers, & Wenocur, 2011) to improve service delivery and resource capacity for the bottom third of society. The ideal practitioners to lead the fourth wave of CDCs and the community building movement in the United States are social workers. While we do not expect this to happen overnight, we argue that this is indeed true and lay groundwork for this shift. First and foremost, social workers have most of the necessary skills to be effective CED practitioners. While there are holes in almost all current

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social work schools’ curricula that have programs in the areas of CED and community building, they can be filled. Once a model has been successfully developed in one place, it can be replicated elsewhere. Eventually, we would like to see at least one school of social work to organize or reorganize itself around the theme of community building, as laid out above. Second, social work practice and community building are not only natural allies, but they also are moving more closely together in their concepts and theories. So many of the ideas inherent in community building overlap with concepts across social work, and so many of the skills required of practitioners in this area are inherently social work oriented. Third, there is the argument that no other professional field could be expected to have the combination of knowledge, skills, and values to carry off a shift in the CED and community building workforce. Social work as a profession is well positioned to provide leadership in this field in the twenty-first century. Community building efforts require people who can do the following things: practice effectively with individuals, apply knowledge of social services needed by and provided to special populations, build and/or run organizations, build coalitions and alliances, run groups, do intra- and interorganizational building, put together community resources, create budgets, raise money, do strategic planning, initiate charities, perform community planning, and effect social change. Of course, social workers are supposed to learn all these things, at least to some degree, during their graduate course of training. The advanced generalist social worker with training in CED could make an excellent community building practitioner. When returning to the definition of CCIs by Ewalt and colleagues (1998), the authors note that all of the activities listed are practice fields in which social workers are employed. What is the difference, then, between what the authors of this text are advocating and what social workers are already doing? In a word, it is a matter of perspective. In a way, the authors are arguing that social workers go back to an older model of practice—the settlement house model—in substance, if not in form. However, in doing so, the field must apply the historical lessons of the settlement houses, merge them with the best of social work’s casework tradition, and voilà, the new community builders of the twenty-first century emerge. Although that formula may sound simple, it is not. After all, communities have grown much more complex, and the problems confronted are

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more entrenched and intense. However, there is evidence that social work students can be prepared to work effectively as community builders when schools design curricula and field experiences from the best models available, and the field owes it to students and communities to do so. Is it hubris to claim that social workers can succeed where others have not? We do not believe so. Revitalizing distressed communities is like a Rubik’s cube—the solution is there, but the right combination and perspective are needed to solve it. The pieces are there, the individuals’ wills are there, and even the resources are there or can be found. What is missing? The recipe. And this is the unique role that social workers as community builders can play. The solution will require new connections, new alliances, and new configurations of old pieces, all put together in unique ways. It will take the public sector, the private sector, and the community all working together to make it happen. The investment in social capital will be especially crucial, and the other aspects of capital—physical, financial, and human— will follow. While there is no hard-and-fast blueprint (remember, social workers and community builders always need to start where the client is, whether the client is an individual or a community or city), the field knows enough about what has worked—and, more important, about what has not worked—that developing a comprehensive strategic plan with invested players should be doable. con cl usi o n

If they choose to, social workers can play an important role in CED and in redefining the field of community building in the twenty-first century. Social workers have the necessary values, knowledge, and skills to become major contributors, if not leaders and forerunners, in this arena. At least a handful of graduate schools of social work must take the lead and redefine and reorganize their curricula to make community building a focal point. Should social work programs graduate increasing numbers of social workers who see it as their mission to be community builders in all levels of practice, true community transformation can really begin. It is incumbent upon social workers to participate individually and collaboratively in CED programs by operating as a human bridge between the economics and logistics of community revitalization and the poverty,

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jobs, housing, education, and health needs of those individuals living in the community. Empowerment of local residents in distressed communities is necessary to accomplish comprehensive and lasting change, and social workers are uniquely poised to facilitate that goal. Like the Bedford Stuyvesant Restoration Corporation (BSRC), the New Community Corporation (NCC) has been around almost half a century. That in itself is remarkable. The story of NCC has many lessons to offer social workers; NCC’s work is so consistent with social work’s mission, ethics, values, goals, objectives, and practice that we would be hard pressed to find a better example of a successful CDC that clearly epitomizes what the social work profession should be all about. What makes NCC so impressive? Statistics tell one story, in particular the remarkable numbers of people the CDC serves, housing units it has built or rehabbed over the years, and people it employs. The diversity of its programs is another, from its Family Resource Center to its supermarket to its restaurant/jazz club. Organizationally, it is a model of a program that has stayed true to its mission since its inception. From so many perspectives, social workers have a tremendous amount to learn from this endeavor. new communi ty c or por at i on (n c c ) Description

Origins In the summer of 1967, race riots and civil unrest claimed twenty-six lives, led to 1,000 injuries, and caused $15 million in property damage as they tore through Newark’s Central Ward. By the late 1960s, thousands of African Americans had come to Newark, New Jersey, from the South, and white residents had fled the area, leaving a morass of unemployment, racial discrimination, poverty, property vacancy and abandonment, poor health, and disinvestment (Pratt Center for Community Development, n.d.b). The media and political leaders had written Newark off as one of the nation’s most hopeless cities (New Community Corporation, n.d.c). When the now predominantly African American Central Ward erupted after a brutal police beating of a black cab driver in the ward, violence persisted for six days, and the National Guard entered the city. The eventual founder of the New Community Corporation (NCC), Monsignor William J. Linder (then Father Linder), spent these days walking the streets of the Central Ward and its housing projects, delivering food to his neighbors, and transporting injured residents to hospitals (Pratt Center for Community Development, n.d.b). By then, the Central Ward “bore a closer resemblance to

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the bombed-out cities of Europe after World War II than to the largest city in New Jersey” (NCC, n.d.c, para. 3). Leaders in Newark’s Catholic churches, including Father Linder, gathered in the wake of the riots to determine how they could help reverse the chaos and despair in the Central Ward. The first formal steps the leaders took were to form a policy board made up of church leaders and leaders in the African American community of the Central Ward and to create a community development corporation (CDC) that could work from within the community (Pratt Center for Community Development, n.d.b). NCC was incorporated in 1968. Based on the results of a report on the causes of the riots of 1967 issued by the Hughes Commission, which was appointed by New Jersey’s governor, NCC decided to target the deteriorated physical conditions of the neighborhoods in the Central Ward and set about developing affordable housing for neighborhood residents. But from its earliest days, NCC did not focus on housing alone; it also developed a wide array of support and other services to improve the quality of life in the Central Ward. Today NCC is one of the largest CDCs in the United States, serving 50,000 people daily and operating more than 3,000 units of affordable housing (NCC, n.d.b). In addition to housing, NCC operates a family resource center, four schools, afterschool programs and summer camps, adult education programs, job training programs, a credit union, and several subsidiary entities as well as engaging in economic development (NCC, n.d.i).

Structure NCC is governed by a seven-member board of directors that includes Monsignor Linder (NCC, n.d.f). All other board members are community leaders who are people of color. Board members are asked to serve twenty-year terms to ensure organization continuity and stability as community change takes place over generations (Pratt Center for Community Development, n.d.b). NCC and its affiliate operations currently employ 1,300 people, more than 93 percent of whom are racial and ethnic minorities (NCC, n.d.b).

Funding NCC reports that it has an operating budget of approximately $120 million and owns real estate with a replacement value of more than $500,000,000 (NCC, n.d.b). According to its 2009 IRS Form 990 (GuideStar, 2009g), at the beginning of 2009, NCC had about $55 million in assets and about $34.5 million in liabilities, for a fund balance of slightly over $20.5 million. At the end of 2009, its assets decreased to about $46 million, its liabilities decreased to about $24 million, and it ended the year with higher net assets of $22 million. NCC received about $1.5 million in contributions and grants, almost $9 million in program service revenue, about $1.2 million in investment income, and about $2.1 million in other revenue (GuideStar, 2009g).

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Strategy and Programs

Target Community The original target population of NCC was Newark’s Central Ward, one of the five political wards into which the city is divided. The Central Ward comprises several neighborhoods in the heart of the city, including downtown Newark, and is home to 55,000 residents (City of Newark, New Jersey, n.d.). In Newark in 1950, the white population was 363,000; this dropped to 266,000 in 1960 and 158,000 in 1967. The black population rose from 70,000 in 1950 to 125,000 in 1960 and 220,000 in 1967 and became the majority in the Central Ward and Newark as a whole (Herman, n.d.). Once Newark’s central business district, the Central Ward grew more and more distressed. In 1967, nearly 40 percent of young black men were unemployed. Police officers in the Central Ward neighborhoods, who were mostly white, often abused their authority and harassed black youths, and calls for hiring black officers were largely ignored. More than 40,000 of the Newark’s 136,000 housing units were deemed substandard or dilapidated in 1967, and “arson for profit” was rampant during the 1960s. These conditions set the stage for the riots of 1967 and the creation of NCC (Herman, n.d.). The population of Newark today is slightly more than 270,000, and the greater metro area is home to more than two million residents (NCC & Bloustein School of Planning and Public Policy, Rutgers University, 2004b). Between 1950 and 1990, more than 160,000 residents fled Newark, one-third of them in the 1980s alone. The 2000 U.S. census revealed that Newark largely stemmed this outflow in the 1990s. Foreign-born residents now comprise almost 25 percent of the population; more than half of these immigrants entered the country during the 1990s. Eighty-five percent of the city’s population is African American, Hispanic, or another nonwhite racial group (Brookings Institution Center on Urban and Metropolitan Policy, 2003, November). Adults in Newark have the lowest levels of college education among large U.S. cities, and they are unemployed at high rates; many are absent from the labor force altogether. Nearly 30 percent of the population as a whole and 37 percent of children live in poverty (NCC & Bloustein School of Planning and Public Policy, Rutgers University, 2004b). Only 23 percent of the population owns their own homes—the lowest homeownership rate among large U.S. cities—and most homeowners are elderly. Forty percent of housing stock in the city is multifamily units, most of which are rentals. Almost 42 percent of renters spend more than 30 percent of their income on housing, which limits their ability to save for homeownership and inhibits asset development and appreciation in the inner city (Brookings Institution Center on Urban and Metropolitan Policy, 2003, November).

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Strategy NCC has been deliberate, strategic, and comprehensive since its founding. Father Linder and NCC’s earliest members focused on resident-led community development and the empowerment of residents of the Central Ward to work as a collective force. To organize residents, NCC employed community organizing strategies developed by Saul Alinsky, an organizer known for expertly mobilizing people and using conflict techniques to demand that public and private institutions help solve community problems (Pratt Center for Community Development, n.d.b). Father Linder, whom some consider a social worker at heart, was a charismatic leader and skilled at rallying community residents to engage in building their own new institutions in the Central Ward in the face of disinvestment by the city government. NCC continues to prioritize tenant organizing using Alinsky-style techniques to combat political apathy and build the community’s political power (NCC & Bloustein School of Planning and Public Policy, Rutgers University, 2004a). Although NCC was effectively engaging the community during its early years, the organization had very few resources with which to begin developing affordable housing, the Central Ward’s residents’ highest priority. Although NCC had the opportunity to apply for grant funding from the city, the board of directors strategically decided not to do so in favor of raising money on its own. The move enabled NCC to retain its independence and remain apart from local politics (Pratt Center for Community Development, n.d.b). As an officer of the Catholic Church, Father Linder was able to influence those who made policy in New Jersey and gain access to resources. In 1969, NCC partnered with influential white allies in Newark’s suburbs to create Operation Understanding, a project intended to build relationships between those living in the suburbs and the residents of the Central Ward. Operation Understanding soon created the New Community Foundation, and the foundation undertook a grassroots funding drive that raised more than $100,000 for NCC’s first housing project, New Community Homes (Pratt Center for Community Development, n.d.b). NCC has continued to cultivate a diverse mix of funding sources with a focus on renewable resources rather than grants, which has enabled the organization to avoid dependence on any given funder and to remain mission driven. Partnering with several New Jersey businesses in the 1990s to increase its fundraising capacity has helped NCC weather difficult financial times and cope with an often overwhelming demand for services (Pratt Center for Community Development, n.d.b). NCC started with housing but articulated a holistic plan early on for the Central Ward. It aims to be as comprehensive as possible and provides services in the areas of housing, health care, education for children and adults, workforce development, job placement, senior outreach, food assistance, energy assistance, and a variety of social services.

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However, NCC’s comprehensiveness has presented challenges. Cutbacks in federal funding and increased debt because of rapid program expansion in the 1980s led NCC to contract, closing down five of its for-profit businesses, an old housing complex, and some health care services and reducing a workforce that was 2,000 strong at its apex (Guskind & Pierce, 1993). This cycle of growth and contraction has repeated itself over the last thirty years. NCC’s ability to adapt and survive financial crisis has been key to its ability to sustain itself through changing political and economic circumstances.

Selected Programs and Projects NCC’s New Community Family Resource Center serves as the hub and clearinghouse for all NCC programs. It serves thousands of clients annually, all under one roof, and is an integral part of NCC’s holistic community development strategy (NCC, n.d.i). According to NCC:

The Center serves as a centralized information and referral source for all services offered by New Community Corporation . . . [and] acts as an information resource for services offered by local, state and federal governmental and private entities. The Center makes referrals and also hosts external service providers who make presentations on subjects such as financial literacy, budgeting, banking, food stamps, health care, employment, energy conservation, rental assistance, homeless services, inpatient substance abuse services, [and] prescription assistance. (NCC, 2009, p.1)

affo rda b l e h o usi ng. NCC develops more property in New Jersey than does any other nonprofit developer. It manages more than 3,000 rental units and homes available for ownership and provides housing for about 7,000 people (NCC, n.d.h). NCC’s real estate department, which employs more than 250 people, manages the properties, provides security services, and organizes residents. NCC’s own construction company, Chelsea Construction, oversees the building of NCC properties. Many NCC properties are for people with mixed incomes; the types of properties include townhomes, condominiums, apartment buildings, and single-family homes. NCC has developed several properties specifically for seniors, people with disabilities, and people experiencing homelessness. NCC’s New Community Harmony House houses more than one hundred families without homes who require temporary housing. Families can stay up to nine months while NCC staff helps them find permanent housing (NCC, 2009). Many properties also feature onsite social services to improve residents’ quality of life and increase neighborhood stability (NCC, 2009).

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eco no mic d ev elopm ent.  NCC has been able to do what many CDCs only dream of doing—enact a holistic, comprehensive plan for community economic development. NCC has adopted a distinctive nonprofit/for-profit model of economic development that allows it to own for-profit businesses that provide job training and employment for people in NCC’s service area. For example, NCC owns a Dunkin’ Donuts and a number of other for-profit franchises in its Pathmark Plaza, a shopping center constructed in 1990 that features a Pathmark supermarket (NCC, 2009). These businesses allow NCC to provide important services for local residents such as food shopping, restaurants, and postal services. They also generate income used to support other projects and programs, and profits are infused back into NCC’s nonprofit operations (NCC, n.d.b). Several other NCC programs drive economic development in Newark. The New Community Federal Credit Union serves low- and moderate-income families and people of color who are underserved by banks and mainstream credit unions (NCC, 2009). NCC’s $4.5 million Workforce Development and Training Center is a one-stop center for job training and placement, computer skills training, GED classes, and adult basic education. Its five job training and placement partnerships and programs, including the well-known Youth and Adult Automotive Training Center, where people can train to be automotive technicians, have helped unemployed youth and adults find meaningful employment (NCC, n.d.d).

ed ucat io n a nd youth servi ces. NCC is committed to educating the youth within its service area in Newark. It operates two early learning centers, three charter schools, and several afterschool and summer programs. Programs such as Teen Learn and Earn, Teens Achieving Greatness, and the Newark Youth Leadership Program provide adolescents with opportunities to develop job and leadership skills (NCC, 2009).

h ea lt h ca re.  The New Community Health Care Complex is composed of several affiliated units: the Essex Valley Visiting Nurse Association, which provides skilled nursing and other therapies to approximately 500 clients annually; the Extended Care Facility, which provides long-term residential care; the Adult Medical Day Care Center, which provides supervised care to more than 200 clients; the Family Service Bureau, which provides mental health counseling; and Home Friends, which provides home-based help to elderly people (NCC, n.d.g). In addition, NCC operates a School of Licensed Practical Nursing (NCC, 2009). This division of NCC is one the largest, employing over 900 people, serving more than 4,000 clients per year, and operating with a budget of more than $30 million annually (NCC, n.d.g).

h ispa nic d ev elopment. The Hispanic Development Corporation, a subsidiary of NCC, was founded in 1991 in Newark’s Lower Roseville neighborhood to meet the needs of

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the city’s growing Hispanic immigrant population (NCC, n.d.a). The nonprofit operates an adult learning center and offers services such as citizenship assistance, English and computer classes, tax preparation, financial literacy workshops, legal advice and assistance with immigration paperwork, and the Gateway-to-Work program, which helps remove barriers to employment for immigrants (NCC, 2009).

a rts a nd cult u r e. Art and cultural programs have been a focus for NCC from almost the beginning of its existence. NCC sponsors numerous events, such as traveling art exhibits and celebrations of Black, Hispanic Heritage, and Woman’s History Months. NCC also owns and operates the Priory Restaurant and Jazz Club and rents space for community and corporate meetings and events (NCC, 2009). Major Successes NCC is recognized as the largest and most comprehensive community development organization in the United States (NCC, n.d.e). The breadth and scope of NCC’s operations are dazzling, and it has become one of the most diversified and successful CDCs in the nation. NCC has remained comprehensive even during periods of contraction and economic challenges, often able to leverage partnerships to continue to provide services. And perhaps most important, it has remained mission driven, not having jeopardized its mission in order to obtain funding (NCC & Bloustein School of Planning and Public Policy, Rutgers University, 2004a). Over the last decade, NCC has again expanded its scope of operations, building a new $25 million complex of townhouses and a $14 million mixed-income housing project using green technologies. It has opened on-site wellness clinics in two properties for seniors and now offers hospice care in its Extended Care Facility. Monsignor Linder remains active and was a recent recipient of a Lifetime Achievement Award from the New Jersey Housing Mortgage Finance Agency.

c h a p t e r  3

The Making and Unmaking of Cities and Neighborhoods

community economic development (CED) practitioners attempt to reverse the decline of neighborhoods and communities and to restore within them a sustainable economy. To learn how to accomplish those tasks and practice in the CED field, students of social work must develop some mastery of urban dynamics, in other words, how city neighborhoods grow, flourish, decline, and deteriorate. Even social workers who concentrate primarily on solving the problems of individuals and families need to understand the deteriorating environments in which many of those families live and their consequential effects on clients’ life chances. The propensity of a negative neighborhood environment to undermine individual- and family-focused intervention is well documented in the social science literature (Stone, 1996). Intervention strategies that focus on individuals and families alone, like those employed in the traditional social work casework model, are typically not enough to effect real change. Successful community building–minded social workers will employ a comprehensive intervention strategy based on data and experience with the local environment, one rooted in their conceptual understanding of the dynamics of the physical neighborhood. Urban dynamics are exceptionally complex and the product of interacting and competing forces, some internal to the urban center and some external, even global. In this chapter, the authors place neighborhood development and revitalization within the context of city growth and regional development in order to explore these dynamics. While studying urban dynamics, social work students should, if possible, take advantage of

as chapter 1 explains,

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web-based tools and games that simulate urban growth and development based on Forrester’s (1969) work on computer modeling of cities. Some are sophisticated academic planning tools (Batty, 2005); others are proprietary games on the open market (e.g., SimCity). These modeling games enable players to create a city from scratch and control its growth in response to a variety of forces. Most important, the simulations demonstrate the unintended consequences of rational planning decisions, the unexpected consequences of competing self-interests, and the nonlinear nature of cause and effect in urban growth and development. h ow ci t i e s g row

Most American cities grew up without a master plan or central direction aside from the occasionally thoughtful placement of public facilities around original town streets (Mumford, 1961). The abundance of land in the United States and rapid population growth of a young nation led to continuous expansion within its regions and across the country. Many neighborhoods and cities served as ports of entry: those who lived in the worst conditions were simply passing through on their way to new destinations in other parts of the country. Ultimately, the establishment and growth of American cities were profoundly shaped by population migration and the forces of commerce. Cities formed around ocean access and harbors receiving immigrants. As immigrants moved out, they established transportation routes and trading nodes, in some cases building over the paths and nodes previously established by Native Americans. The first cities in the interior of the continent sprang up where two rural roads crossed paths. Others formed along rivers or lakes where there was transportation by water. These new cites grew with undirected population growth as people moved in three common patterns: (1) along major radials from the center of the city, (2) in concentric circles out from the city’s core, and (3) next to the contours of some major geographic feature such as a river or mountain range. The radial cities began with residential development along main streets, whether perpendicular or spoke-wise (Shannon, Kleniewski, & Cross, 2002). Some retail and service businesses soon developed to satisfy the new customer base. Residential development then expanded to areas adjacent to the main street. When the population spread became exceptionally

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dense, major intersections were transformed from mostly residential to completely retail. Trolley cars and other means of public transportation were introduced along the radials to bring the residential population to and from commercial jobs at the core. As automobiles became more accessible, radial development moved faster, and residential subdivisions began to branch off of the main arterial, allowing retail to spread chaotically on the main arterial. Soon cities featured strips of small shopping areas with parking pads in front to serve customers and neon signs competing for the attention of passing traffic. By the end of the 1950s, there were more than 4,000 shopping centers big enough to have a department store and many thousand smaller ones (Rybczynski, 2010). The growth dynamic was much the same when population expansion followed a major geographic feature or mushroomed through several concentric waves, expanding in a gridlike pattern in all directions. Cities developed more quickly around factories in places where commerce focused on manufacturing (Rybczynski, 1995). Mills were built to take advantage of water streams, and then steam-driven plants able to operate a greater distance from natural bodies of water were developed. During the Second Industrial Age around the turn of the twentieth century, large manufacturing plants were established along waterways and railroad routes where there was easy access for the delivery of raw material. Walk-to-work residential communities formed around the plants much as company towns in rural areas formed around mines. Not all of this growth was incremental; captains of industry made major investments in creating huge plants, spawning large neighborhood settlements. When these developments coincided with the arrival of new immigrant groups from other countries or population migrations from rural areas in United States, the settlements took on a decidedly ethnic character. In the early years of almost all American cities, commerce developed, more population followed, and then local governments were formed and mandated to provide infrastructure (e.g., roads, water resource systems) and services (e.g., schools, police). Even when local governments were established early on, the boundaries of the city typically remained close, and population expansion flowed to unincorporated areas that were later annexed within expanded city boundaries ( Jacobs, 1961). Upon incorporation, the city government would then create infrastructure based on the patterns already established by the residents of the previously

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unincorporated areas, such as paving roads where the population had already created trails. Local governments were loath to become involved in the development of housing or the economy of these growing cities. It took the most egregious abuses of private landlords (Steffens, 1904) to lead to the creation of a regulatory framework that promoted public health and safety through building codes and zoning. But these were early twentieth-century inventions, and by then the basic dynamics of growth and change in most cities with regard to government involvement were already in place; the default setting for the public approach to community development was to let market forces do the work. The market-driven approach to housing was supposed to work like a conveyor belt: The rich move up to new, more luxurious housing. The middle class then moves from their more meager living conditions to buy the houses vacated by the rich. The poor then move from their hovels to the houses vacated by the middle class (Mayer, 1978). This approach is also referred to as “filtering” or “trickle-down” (Adams, 1987). The dilemma of the filtering model is that it endangers and heaps costs on the city’s poor and vulnerable residents while they are waiting for market forces to deliver adequate housing. The deteriorated and unattractive housing occupied by poor people may eventually attract new investment and more affluent residents after it deteriorates to rock bottom; however, while it is occupied by the poor, the short-term cost to children and families may be more than society will accept. Moreover, racism and other distortions of the theoretically pure market have locked certain areas and populations into market failure (Hughes & Sternlieb, 1987). ci t y p r o b le m s

Harsh and dangerous conditions existed in the industrial settlements. Migrants often did not speak English and came from rural cultures with little city living experience. The industrialists and the real estate developers were focused on packing as many people around the work center as they could, not in creating a high standard of living. Working and environmental conditions were poor and eventually became the focus of the work of journalists and novelists of the nineteenth century, such as Lincoln Steffens’ Shame of the Cities (1904) and Upton Sinclair’s The Jungle (1906).

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Many American cities also experienced great catastrophes. For example, the great Chicago fire burned from October 8 to 10, 1871, killed 300 people, left more than 100,000 people homeless, and cost $200 million in property damage at the center of Chicago (Chicago Historical Society, 1999). The San Francisco earthquake of 1906 ruptured along the San Andreas Fault on April 18 and instigated a fire that burned for four days. The death toll was estimated at approximately 3,000 from all causes (Hansen, 1996). These events reshaped the cities and created an awareness of potential catastrophes that led to more conscious planning. In the early twentieth century, reformers’ efforts to improve conditions led to housing and zoning codes. Progressive civic leaders commissioned the great landscape architects, such as Frederick Law Olmstead and Daniel Burnham, to create plans for parks, parkways, and trolley-car suburbs. The profession of planning was born for both public and private land use in real estate development. Largescale cityscape builders, such as New York’s Robert Moses, reshaped cities through highways and other public works projects (Caro, 1974). s u bur bani z ati o n and u rban re ne wa l

Thus far, this chapter has spoken of the development of the compact city, with its culturally rich working-class districts close to the core work industries and its better residential neighborhoods located just outside its borders. American cities might have remained compact and more like their European counterparts were it not for the ready availability of land. A big “empty” continent led to the mass consumption of land. The mechanization of southern farming, which replaced hand labor in cotton farming with machinery that required only a fraction of the previous farmhand workforce, and Jim Crow culture, which imposed legal and cultural boundaries that prevented African Americans from entering other employment, led to a massive migration of Southern blacks from rural areas to Northern cities, especially to growing industrial cities in the Midwest, such as Chicago and Detroit (Grossman, 1989). The increasing industrialization of farming after the Great Depression in the 1930s further reduced the need for farm workers as well as the amount of land required for crops. Cities that were chronically overcrowded as a result of European immigration and migration from farms were now surrounded by underutilized and inexpensive farmland. The widespread ownership of automobiles meant that new

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suburbs established on this land would not be limited to the extent of the trolley line. In addition, World War II demonstrated that concentrated populations were more likely to be targeted by air attack. Decentralization looked like the best policy to prevent such attacks, and suburbanization became the mechanism to get there (Whyte, 1993). In the 1940s and 1950s, local governments adopted a new role in supporting population expansion with policy. Government infrastructure investment in suburban roads, sewers, and electricity led to massive real estate development by private homebuilders. Homebuilders themselves forged new industry standards and discipline (Mayer, 1978). They collaborated with state legislators and local governments to invent subdivision law, which facilitated breaking large farms into small plots for individual suburban owners. The federal invention of the insured, long-term, low-down payment, self-amortizing mortgage opened homeownership to millions through the Veterans Act. Government financial incentives, such as homeowners’ federal tax deduction for mortgage interest, local property taxes, and accelerated depreciation for investors, ignited massive suburbanization (Gratz & Mintz, 1998). This rapid building in the suburbs depopulated the overcrowded cities. As city residents moved to the suburbs in the 1940s and 1950s, the highperforming economies in urban areas quickly attracted migrants from America’s rural areas and immigrants from abroad to take their places. The cities at that point did not lose net population; the core neighborhoods were just as overcrowded as before. However, the continued postwar migration of African Americans from the rural South to Northern cities added a new factor: Northern racism. More African Americans moved between 1920 and 1960 than the total number of Eastern and Southern Europeans who immigrated to the United States at the turn of the century. But these new migrants were not welcomed to the same “conveyor belt” of opportunity. Segregation in the real estate market was often sanctioned by the government; for example, the federal mortgage insurance program of the Federal Housing Administration (FHA) would not accept any houses in neighborhoods where African American residents made up more than 15 percent of the neighborhood population (Welfeld, 1998). Policies such as these limited African Americans’ choices and locked them into what came to be called “ghettos” while others continued to purchase houses in the suburbs.

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Initially, the suburbs of the 1920s and 1930s were new residential communities with retail services close at hand, but major shopping and entertainment venues were still located in the urban core (Rybczynski, 2010). Then in the 1950s, larger supermarkets in the suburbs replaced the corner grocery stores, and food vendors allowed suburbanites to shop close to home for consumables. Thus, the shopping center was born. New shopping centers in the late 1950s were anchored by department stores that had previously been located only in the core city. Movie theaters and entertainment venues such as bowling alleys soon found they could locate on major roads with large amounts of parking. However, in the 1960s, a new form of retail—the suburban mall— brought the downtown department stores and other shopping and entertainment venues to the suburbs in a way shopping centers had not by enclosing the whole shopping experience. The first enclosed mall was built in 1956 in suburban Minneapolis by the Dayton Company (Rybczynski, 2010). Shopping in the mall became the new American pastime for the entire family. Office buildings providing personal and financial services were built close to these locations, and soon downtown businesses were relocating their “back-office operations” to larger suburban office parks. By the early 1980s, planners were talking about “edge cities” (Garreau, 1991), which referred to a dying urban core surrounded by minicities of offices and retail establishments on their beltways. The most recent major change with regard to suburbanization came with the shift in the American economy away from manufacturing and toward the service, financial, knowledge, and entertainment businesses. With the explosion of technology, these businesses could be located anywhere and soon were appearing in edge cities and beyond (Harrison, 1974). The suburbs became the place to live, shop, relax, and work. In fact, during the economic recovery of the 1990s, 90 percent of all new jobs created were located in the suburbs. By the mid-1990s, when the majority of all jobs in a region were in the suburbs, futurists began to predict that regions, not cities, would become the new entity competing in the new global economy (Katz, 2000). In this new American economy, some of the most competitive regions in the United States were not located where the old cities had been. The opening of the South and Southwest to urban development coincided with suburbanization, largely as a result of the widespread use of air conditioning,

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government projects for water distribution, and defense spending. Migration from old cities to new urban areas in the Sun Belt meant siphoning off older and more affluent populations as well as growing families from the Northern and Midwestern cities. As the U.S. population migrated away from urban cores, older neighborhoods were severely affected. t h e r i s e o f th e m e tro p o li s

The new economy in America, the growing globalization of companies, and advanced communication systems changed the dynamics of cities. Theorists in the 1990s such as Neal Peirce avowed that neither cities nor nations were the new units of economic competition (Peirce, Johnson, & Hall, 1993). The race instead was between world-class metropolitan regions. New York and Los Angeles competed with Beijing, New Delhi, and Paris more than the United States as a whole competed with China, India, or France as a whole. The winners of the race would be cities, new or old, around which grew a thriving region. Regions with a deteriorating core that were not integrated into the metropolitan economy, however, would be competitively disadvantaged. A new “metropolitanism” policy framework gained hold that considered not only the “edge cities,” once the core of major urban areas, but also whole regions. This policy framework casts a region as one interconnected, thriving, organic economic unit. Government functions came to follow the same metropolitan design (Cisneros, 1993). As a result, addressing the growing concentrated poverty of the core inner city can only be accomplished by working inside and outside of the core. This includes controlling growth on the outside, fostering community development on the inside, and making the opportunities available in the region work for everyone and every place in the region. t h e n e w m i g rati o n

Migration to the cities from rural areas has historically been the driving force of population growth in American urban areas. Large numbers migrated and lived in the cores of cities in cheap housing and in crowded and poor conditions. They became culturally acclimated and integrated into the American economy, and many successfully left their inner-city

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neighborhoods for better living conditions as their economic circumstances improved. Contemporary migration now differs significantly from earlier migration patterns. For example, many immigrants now move directly to suburbs, skipping the urban core altogether. In many places, abandoned housing in the inner city is not filled by immigrants, even when there is immigration in the region (Nathan, Pagano, & Mahoney, 1992). More immigrants are from Asian and Latin American countries. Many were urban dwellers in their home countries. Asian business practices, cultural norms, expectations, and utilization of space differ from the patterns of early European immigrants. Latino immigration shifted the conventional paradigm of migration and neighborhood change through its size, retention of the Spanish language, the relatively high Latino birth rate, and nationality differences within the Latino population. All of these changes to migration patterns require a degree of cultural sensitivity that is not present in urban development policy. h ow n e i g h b o rh o o d s d e c li ne

The story of neighborhood decline begins with population migration. Prior to rapid suburbanization and later the American economy’s changes in the 1980s, continuous population growth in a thriving, compact, slowly expanding city meant that, as a group moved up and out, another replaced it. New forces that emerged in the 1960s changed that oversimplified picture. Let us start with a typical working-class neighborhood of the 1950s and sketch the pattern of change (Medoff & Sklar, 1994). This neighborhood is outside the deteriorated inner city and inside one of the more prosperous professional city neighborhoods or one of the older suburbs. Imagine a fairly dense residential community of owners and renters, including a mixed-income population of the lowest three quintiles of family income. Residential streets surround a main street retail strip that contains facilities such as a movie theater, grocery store and other food vendors, pharmacy, junior department stores, and clothing and shoe stores (Gans, 1982). In the early 1960s, there would have been a lot of movement in the neighborhood. More affluent and younger families move to the suburbs. The older homeowners stay. A new but smaller population of lower-income

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people moves in. Urban renewal, downtown expansion, terrible housing conditions, and some abandonment result in a significant depopulation of the inner city. People are pushed out into “middle neighborhoods” where the population is falling. Previously, families “moved up” into these neighborhoods only when they had succeeded economically in the workplace and accumulated enough resources to enable them to become homeowners. The newcomers, however, are often renters from a different race or ethnic group than the white people predominant in the neighborhood. The new population profile of the neighborhood has serious consequences for housing and retail and, subsequently, for public and private investment (Goetze, 1983). The new population inherits an aging housing stock, which, like all existing buildings, requires constant investment simply to keep up to date and functional. The new homeowners, being of lower income, do not have the resources for that investment. The existing homeowners, worried about the future of the neighborhood, take a wait-and-see approach and hold back on major investments. Or they are old enough not to want to make major investments or take on debt they would have to pass to their children. Landlords, especially those renting to lower-income families, gauge their investment in improvements against their economic returns and similarly hold back. “White flight,” which occurred when white residents fearfully moved out of neighborhoods as people of color moved in during the 1970s and 1980s, creates population change in this neighborhood so rapidly that no positive forces can keep up with it. Blockbusters and other fraudulent schemers further skewed the normal real estate market of the time: Through rumor mongering, they frighten older residents in this neighborhood into selling properties quickly for cash and then resell those properties at a substantial markup quickly, with little real improvement having been made (a practice called “flipping”) (Pietilla, 2010). Ownership by new residents is facilitated by predatory lenders and some federal programs, which leads to abnormally high foreclosure rates and subsequent property abandonment. As property values crash, there is less of a market for homeownership, and a new cast of landlords comes into the picture. These investors hope to gain as much as they can in rent without making any investment in property improvements before the bottom finally falls out of the building’s resale value. Density increases as rental units grow overcrowded or buildings are cut up to increase the number of units. Rental properties are

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resold quickly for cash between a series of lower-quality landlords, the bottom of the chain being the “bottom feeders” who hope to milk the last dollar before property abandonment (or, as happened in many cities in the 1970s, “arson for profit”). Good properties become obsolete. Without new investment, they even fail at building code compliance. With overuse and overcrowding, they rapidly deteriorate. When deterioration makes them unmarketable, the last remaining owners have so little to gain, they abandon the property, letting unpaid city taxes pile up liens until the property has negative value. If the region is overbuilding, as most were—that is, building more new units than the number of new families in the region— the city loses population, and abandonment accelerates (Gratz, 1994). On the commercial strip, the population change presages a shift in retail. Some businesses relocate to follow the customers. They are replaced by retailers more oriented to exploiting a low-income population. These new businesses change the retail mix, not always in a sustainable direction. The retailers on the strip are not organized enough to compete with suburban malls, where a common landlord imposes a carefully crafted plan for managing an appropriate retail mix and controls the hours, advertising, and behavior of tenant businesses. Retail changes further as national chains set up in suburban shopping centers and malls rather than in older city buildings. Many businesses worry about the future of the neighborhood, so they cut back on staff and building improvements. Gradually, the merchandise progresses downward from top of the line to economy, to bargain, to off-price, to schlock, and finally, to secondhand. Pawnshops and predatory lenders appear. The end result: Good retail locations are filled by social service agencies and other office uses while others are simply left vacant. In such a weakened condition, the neighborhood becomes a target for further debilitating private and public abuse. Midnight dumpers abandon refrigerators, rugs, mattresses, trash, tires, and even old automobiles (Medoff & Sklar, 1994). Former small manufacturing and warehouse facilities attract polluting users. Trash transfer stations and other environmentally dangerous uses for land are proposed by public agencies or licensed private companies. The new, lower-income population and deteriorating conditions require a higher level of public service. The local government demurs or pleads budget issues. Faced with the demand to replace aging infrastructure, the

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local government decides to invest in more affluent neighborhoods, choosing to latch on to a more potent political force that promises a higher tax return. Service cuts in the old neighborhood lead to more widespread public disinvestment. Private institutions in the neighborhood also fail to reinvest. Buildings deteriorate further; services are cut. Social clubs and other nonprofit recreational and support organizations follow their participants to the suburbs or wither away. Public schools fail. Religious institutions with congregations that moved away first ignore the local area in favor of the commuter members and finally move their sanctuaries to accommodate the commuters. Financial institutions refuse to lend in the community, a practice called “redlining,” completing the cycle of disinvestment. Racial discrimination and economic restructuring combined to deliver the final knockout punch to many inner-city and middle-city neighborhoods like the generic one we have just described (powell, 2000). People traditionally came to the city because it featured all of the entry points of economic opportunity. A thriving manufacturing economy depended on physical, labor-intensive commerce. Workers who were uneducated and unconnected—but willing—were able to find a job, receive on-the-job training, and ultimately receive promotions as they climbed up the proverbial ladder. The people of the neighborhood were both the poor and the workers who were saving enough to move up and out. The rapid deindustrialization of American cities, coupled with the location of new-economy jobs in the suburbs, left inner-city laborers without access to good jobs. The service economy may have replaced the industrial economy in terms of number of jobs, but it did not in terms of wages or the career growth that the past economy offered. Moreover, with the exception of the rapid growth of higher education and health care facilities in the cities, even the service jobs were more likely to be located close to the population growth areas in the suburbs. Five elements further combined to trap a disconnected, immobile population in concentrated poverty: (1) the separation of the low-income population in the inner city from jobs, (2) racial discrimination in the housing market that kept the population from relocating closer to jobs, (3) an economy that required education for advancement, (4) inner-city public schools that did not provide an adequate education, and (5) a large percentage of students who dropped out of school. Ironically, the growing acceptance of middle-class minority families in the larger regional real estate market—albeit limited by continuing racial

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discrimination—has further exacerbated the isolation of people living in poor inner-city neighborhoods. In days of greater discrimination, the African American community was more mixed in terms of income and work, as those with middle-class jobs were unable to move to more affluent neighborhoods. Local retail and service business were more likely to be owned by African Americans who lived in the community, especially in traditional African American neighborhoods. Teachers, doctors, ministers, lawyers, and insurance executives lived next to policemen, nurses, factory workers, and families on welfare. African American families, like their white counterparts, did aspire to move up in the housing market. As the middle class got that opportunity, cities in the 1990s found themselves losing their black middle class faster than their white middle class (Wilson, 1996). Not all neighborhoods experienced the full extent of the problems outlined above. Many neighborhoods were able to shift their population mix without the severe or permanent disinvestment cycle that prevented recovery, especially those that maintained an economic mix, stabilized a racially integrated population, and maintained a competitive level of homeownership. The neighborhoods that achieved renewal and revitalization did so through active community leaders using strategies based in theories of urban and neighborhood change. t h e o r i e s o f u rban and ne i g h b o rho o d c ha n ge

To attack quality-of-life issues and the deterioration of where people live, one must not only understand the dynamics that led to the deterioration but also have a theory of change for reversing or replacing those dynamics. Each major theory of change outlined below leads to a strategy corresponding to the urban dynamics it addresses. In this chapter, we examine each theory’s analysis of the causes of deterioration. Some community builders base their analysis and strategies on a single theory; most recognize that there are multiple dynamics at play in their neighborhoods and base their analysis and strategy on a combination of the theories. Pure Market Force Theories

Market force theories are based on changes in the value of property over time. A new building begins its life appropriately designed for its use. It is

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worth at least as much as was spent to construct it. Over time, as the building ages and its uses change, the building’s worth on the market decreases. Even accounting rules require investors or business owners to depreciate their physical assets, as if a portion of them were used up each year. Unless the amount depreciated is reinvested or reserved for future investment in the building, the building’s value will continue to decline. The same cycle happens for neighborhoods. Pure market theorists argue that this dynamic is a positive cycle at work: Deterioration of a neighborhood leads to the relocation of investment to another neighborhood, with the evolution in the old neighborhood of secondary, and less valuable, new uses and investors (Chekki, 1979). Next, tertiary users come, followed by dysfunctional uses and investors, until the market price of demolishing and rebuilding the old neighborhood becomes so much cheaper than developing in an undeveloped area that capital returns to the old area to rebuild again. Even pure market force advocates admit that there are problems with this cycle. The secondary and tertiary uses of the neighborhood property may be incompatible with other surrounding uses, or they may be offensive to the community. By the end of the cycle of falling value, the building or neighborhood may actually be hazardous to its users. After all, there are “bottom feeders” in real estate investment just as there are everywhere else. The best housing policy according to pure market theorists is “trickledown,” which is essentially the “conveyor belt” process described earlier in this chapter. Those at the top of the financial scale move up to newer, bigger housing, passing down their old dwelling to the next most affluent family on the scale. The process of moving upward results in everybody below acquiring better housing. The bottom layer of housing is no longer useful, and it is torn down for another productive use or for new housing construction. For this dynamic of market forces to function, there must be an easy supply of investment capital and places to invest in order to meet demand. When demand exceeds supply, prices will rise rather than fall; when that occurs, new uses or less profitable uses of land, such as affordable housing, will be squeezed out. If there is no capital, or if the direction of capital is clouded by prejudice or other biases that prevent investors from seeing the profit potential, new investment will not replace deterioration. As long as there is a ready supply of low-cost, undeveloped land outside the city with public subsidies for new investment, investment will go

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outward rather than return to rebuild the urban core, whatever the future cost to society as a whole. There are times when pure market force dynamics produce negative consequences beyond what society at large accepts as tolerable. When supply exceeds demand, such as when a rapidly sprawling region builds substantially more housing units than its increase in family units, there will be large-scale abandonment. Unfortunately, just before the final abandonment, some real estate investors will rent the worst of buildings to the most vulnerable users, and arson for profit may become a widespread practice. This last stage before reinvestment may cause more problems to society than is acceptable. Pure market theorists reject any intervention in this inevitable cycle of decline and reinvestment. They point to the role of slums as the entry point to the escalator of prosperity that is the “conveyor belt.” The poor will always concentrate someplace; they always have and always will. The successful ones move up and out. Those who migrate to thriving cities must be able to obtain inexpensive housing so that they can begin their inevitable progress up the economic ladder. Whether or not one embraces this theory, it does explain the underlying real estate investment dynamics that operate in American neighborhoods. In each neighborhood, to develop effective intervention strategies, a community builder needs to identify those bedrock real estate investment dynamics. Out Migration and Racial Change Theories

Certainly any theory of change must accommodate the reality of the suburbanization of America from the 1950s through the 1990s. One theory of neighborhood change, out migration theory, focuses on the flight of families with economic means to the suburbs as the cause of neighborhood deterioration (Goetze, 1983). In this theoretical framework, suburbanization is both a “push” and “pull” phenomenon. The factors that push families with economic means out of their neighborhoods are the deterioration of the housing stock and quality of life in the inner city; the decline of public facilities and education; and the mounting problems of drug abuse and crime, whether real or perceived. Racism, especially the discomfort of living in integrated neighborhoods, operates as a major force in pushing those of one race away from those of another (Pietilla, 2010). The pull factors that

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attract families to other neighborhoods include newer, better quality, and more modern housing in the suburbs; new and better schools than the city schools that were deteriorating after the initial stages of white flight and resegregation; and the promise of a suburban lifestyle. Whether the suburban dream rises from a longing for more green, spacious, and clean surroundings or is the product of real estate advertising, it is nonetheless the dominant force behind the incredibly successful American home building industry. That suburban development is highly subsidized by all levels of government, as will be discussed in chapters 4 and 5, only enhances its popularity. Not all migration, however, can be attributed to racism or suburbanization. There have also been major population shifts to new regions in the Southern and Southwestern portions of the United States since 1970 that have affected the deterioration of cities in the Northeast and Midwest. Some of this migration is a result of senior citizens who retire to warmer climates. Other population loss in the Northeast and Midwest has resulted from the migration of displaced workers from Rust Belt cities to growing cities in the South and Southwest. Analysts who favor out migration theories as the major cause of urban decline are quick to point out that both suburban and Sun Belt development was, and continues to be, subsidized by the government. Ironically, some of those now trying to sustain the attractiveness of the suburbs are adopting denser, citylike development patterns and reconfiguring urban malls to feature a “main street.” This very popular new urbanism calls for many ways of using a more urban design in suburban settings (Langdon & Steuteville, 2009). Racial Discrimination and Systematic Disinvestment Theories

Some theorists contend that population change is inevitable and normal. When race is involved in America, however, the situation is never “normal” (West, 1994). Some of the best-designed government strategies for housing and renewal have been undermined by the failure to recognize the power and persistence of racial prejudice. Segregated communities, however they manifest, are daunting proof that understanding the dynamics of racism has to be incorporated in both the analysis of deterioration and the strategies for improvement.

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The byproducts of suburban and regional migration are older, deteriorating neighborhoods where prices fall in relation to the decline in the population, without replacement by people of similar means. The downward spiral is accelerated by speculators, fear mongering, and property flipping, as described earlier in this chapter and collectively referred to as “blockbusting” in the days of white flight. Racism theories of neighborhood deterioration point also to investors and lenders actually creating marketplace discrimination (Mier, 1993). Market forces are not pure in America. In particular, racial prejudice drives investment decisions away from the normal cycle. The significant and persistent disparity between white wealth and black wealth is largely accounted for by low homeownership rates among African Americans. As is well documented (Oliver & Shapiro, 1995), a substantial portion of the low ownership rate is attributable to systematic racial discrimination, that is, the higher rejection rate of potential African American borrowers with the same characteristics and credit history as potential white borrowers. Historically, even the government was a part of this pervasive housing discrimination. Indeed, the FHA restrictions cited earlier in this chapter persisted into the 1950s. In the 1970s, neighborhood organizations documented a widespread pattern of systematic disinvestment by financial institutions based on geography, as the institutions eliminated designated areas of cities for lending (Naparstek & Cincotta, 1976). The neighborhood organizations discovered that financial institutions and those who insured their mortgages had created criteria that precluded lending in major sections of cities: The prices were too low, the houses were too old, and the population was too black or Latino. Some institutions had even created maps in which the boundaries of these areas were outlined in red (hence the term “redlining”). Based on these change theories, the solutions to urban and neighborhood decline are to vigorously enforce laws that are established to eliminate racial discrimination and to create incentives for reinvestment in geographic areas punished by past discrimination. Quality-of-Life Theories

Quality-of-life theories hold that residents in inner-city neighborhoods would stay and improve their houses if the quality of life in these

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neighborhoods was desirable. These theories are based on a simple premise: Improve quality of life, making it competitive with that of suburban locations, and housing investment will naturally follow. Instinctively, many homeowners and long-term residents of neighborhoods have embraced this theory. The forces that lead homeowners to leave and landlords to hold back on investment lead to the decline in commercial areas that serve the neighborhood. This lack of public financial support results in deteriorating streets and sidewalks, problems with trash disposal, lack of upkeep in the park and recreation facilities, failures in the public school systems, and rising crime. By eliminating those negative living conditions, homeowners and residents have been encouraged to remain in their neighborhoods. The Comprehensive Community Revitalization Program in the South Bronx in New York City in the 1990s provided a highly visible success for this theory and led to extensive comprehensive community planning with CDCs throughout the country that had previously focused mainly on housing (de Souza Briggs, Miller, & Schapiro, 1996). In fact, some now argue that the future of cities’ economic development lies in having the kind of quality-of-life amenities that attract highperforming professionals who are avidly sought by companies who in turn realize competitive human capital is the cutting-edge of their business success. If the city attracts professionals—the creative class—businesses will follow or be founded by them (Clark, Lloyd, Wong, & Jain, 2002). The arts and artist communities play a big role in creating the kind of culture that attracts these highly sought-after professionals (Florida, 2002). Concentrated Poverty Theories

From the 1970 U.S. census forward, demographers began to identify a different kind of urban poverty in America (Wilson, 1987). The relocation of job growth and expansion in retail services to the suburbs left people in poor neighborhoods at the bottom of the economic ladder without any practical ability to reach the higher rungs. In an earlier era, a young person from a poor family in a tough neighborhood could drop out of high school and still get an entry-level job in a manufacturing industry where he or she could realistically aspire to a middle-class income. Those days are now gone, leaving those without high school diplomas in core city neighborhoods without options for participating in the mainstream economy.

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The change in the American job base from manufacturing to the knowledge and service industries has excluded people without formal education from much of the job market. Concentrated poverty theories posit that the combination of suburbanization and racism in housing markets contributes to the proliferation of high-concentration poverty areas. For example, when the mainstream economy became both geographically and figuratively inaccessible in the United States, for the first time in the history of welfare, more than a small percentage of the public continued to use public support across generations (Wilson, 1987). Public schools and mediating structures such as churches, fraternal organizations, and political clubs that once served to move the inner-city poor populations up the economic scale failed or became nonexistent. Gender discrimination combined with racial prejudice further limited the economic options for the concentrated population of largely female-headed households. Poor white families, while in many cases equal or greater in number to poor people of color, were not concentrated in particular areas but were dispersed throughout the region. They succeeded more readily in finding opportunities in the mainstream economy to escape poverty. Based on these theories, the method of diffusing the poor by making housing available in areas of high opportunity, rich in jobs, high quality of life, and good schools, appears to be one of the options that would help prepare the next generation to succeed. con cl usi o n

CED is a remedial strategy to combat urban and neighborhood decline. It addresses the damage done by private market forces and public neglect. The deteriorated neighborhood conditions addressed by CED have been a long time in the making; they are not undone quickly, particularly with limited resources. In fact, the inappropriate infusion of even massive resources might make an immediate change but would have no lasting effect if the resources are not deployed in a way that restores sustainable investment and opportunity dynamics. Diagnosing the issues of and developing a CED strategy for a particular community requires an understanding of the history of American cities and their neighborhoods. Because there is no universal agreement on the

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underlying causes of neighborhood deterioration, a community building practitioner must select from among the current theories of change or formulate his or her own. In finding the right approach and tools, one needs both a general understanding of the growth and decline of cities and a specific analysis of past programs and projects. This chapter laid the groundwork for this general understanding. The chapters contained in section III describe the kinds of strategies that a community needs to formulate and offers social work students a community building toolbox for revitalizing deteriorating neighborhoods. The strategic analysis and practice of every CED practitioner will be enriched by delving into urban design in the history and practice of community planning. A basic urban planning textbook is a useful reference to have at hand. An understanding of cities can be found in classic texts such as Lewis Mumford’s The City in History (1961) and Jane Jacobs’s The Death and Life of Great American Cities (1961) as well as in more contemporary writing on the history of urban planning (see Rybczynski, 2010), the new urbanism and suburban sprawl (see Duany, Plater-Zyberk, & Speck, 2000), and metropolitanism (see Bullard, 2007). The case study that follows this chapter focuses on the Warren/Conner Development Corporation (W/CDC) and is a prime example of neighborhood organization generated in response to the deterioration of Detroit, Michigan, following white flight. Detroit saw perhaps the most pronounced and complete white flight of any city in the country. W/CDC’s emphasis on community cohesion and investment as a starting point was a direct response to their analysis of the disintegration of community caused by such dramatic turnover in population. warren/conner d e v e lopm e n t c oa li t i on Description

Origins Warren/Conner Development Coalition (WCDC) was founded in 1984 by a large coalition of Eastside Detroit residents, neighborhood associations, local businesses, and institutional leaders after a two-year planning process facilitated at the community’s request by the newly opened Samaritan Health Center. Initially, a community board, one staff person, and a full-time volunteer ran the agency. In 1984, when a prison was proposed for the area, they immediately began working to understand all the implications—positive and

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negative. This effort included sponsoring bus tours to other similar prisons, an action that was perceived negatively by those who had proposed the prison project. As a result of community action, the prison was placed elsewhere. In addition, the fact-finding and organizational efforts made by the WCDC community had established a framework for future endeavors. It was clear that an informed and empowered community would ultimately lead the Eastside to the revitalization they ultimately desired (WCDC, n.d.d).

Structure WCDC’s staff has fluctuated over the years from a small cadre in the 1980s to as many as forty-two in 2006 and as low as twelve in 2013. The staff is led by an executive director, a deputy director, and coordinators of its several divisions. Maggie DeSantis served as executive director from the founding of WCDC until the present writing in 2013. The board of directors, elected annually by dues-paying members who live, work, volunteer, or do business on Detroit’s Eastside, is composed of three sections of members: six business representatives, five institutional and partner representatives, and seven residents (WCDC, n.d.b). WCDC has an active membership and participant base of fifty-plus Eastside neighborhood organizations, hundreds of residents, scores of small businesses, and many large and small agencies and institutions serving the Eastside.

Funding WCDC manages an annual budget of approximately $2 million for its parent and subsidiary corporations (WCDC, 2013). WCDC and its subsidiaries own, manage, or retain an interest in 250,000 square feet of commercial and recreational property. WCDC owns its 30,000-square-foot, renovated community center at the corner of Harper and Conner Streets. Known as the Care Village Collaborative, the building is home to twelve Head Start classrooms, the Dominican Literacy Center, the Eastside Technology Hub, the Detroit Eastside Community Collaborative, Clear Corps, and the Murphy Family Health Clinic. WCDC also owns its own headquarters on Connor Street. WCDC receives grants from a variety of local and regional foundations (33 to 38 percent over 2010 to 2012) as well as government grants and contracts (16 percent in 2010, 6 percent in 2012) (GuideStar, 2011). While it was one of the six lead agencies in the Annie E. Casey Foundation (AECF) Rebuilding Communities Initiative (RCI), WCDC received funding for seven years, from 1994 to 2001 (AECF, 2002). WCDC is a part of the Black United Fund campaign through which federal employees have the opportunity to make direct contributions through payroll deductions. WCDC is also supported by private donations through membership fees of $25 per person and $100 per organization and through tax-deductible donations from community members. It also

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accepts donations of services for which they would otherwise need to pay. These services include accounting, graphic design, event management, media/public relations, business planning/management, journalism, front desk support, website design and management, computer/Internet instruction, and construction/building repair (WCDC, n.d.f). Contributions and fundraising account for 10 to 17 percent of revenue. Further earned income accounts for 36 to 40 percent of revenue, including interest from an endowment fund. WCDC was the first neighborhood organization to be selected to participate in the Van Dusen Endowment Challenge Grant program. WCDC receives annual interest income from an endowment fund of approximately $600,000. Strategy and Programs

Target Community The target community is Detroit’s Eastside, which contains 80,000 residents, 95 percent of whom are African American and 48 percent of whom live below the poverty line. The community is composed of mostly single-family homes, but more than one in ten is vacant. In some areas, more than 90 percent of businesses are gone. The area is home to the Daimler-Chrysler factory, which itself is surrounded by abandoned auto plants. The Eastside has numerous community organizations, but the community was hit hard by the loss of auto jobs (AECF, n.d.b). The area lost population first in the dramatic white flight from Detroit in the late 1960s and 1970s. It again lost population during the Michigan population’s out migration with the demise of the auto industry.

Strategy WCDC has always been primarily a community empowerment, community education, and community planning effort, initiating programs where needed to implement plans or act on community organizing victories. It set forth in its mission statement: “WCDC acts as a catalyst to influence the transformation of Detroit’s Eastside through facilitation, collaboration, community education and systemic change” (WCDC, n.d.e, para. 1). In many cases, WCDC has acted as an incubator for new programs and organizations and as a convener and facilitator of collaborations among many organizations to implement plans and community agenda. The leaders of WCDC believe that the multiplicity of organizations and collaboratives offers more opportunity for indigenous leadership and has a better chance of creating a critical mass of activity to address disinvestment and economic development goals than any single organization that designs and controls all programs in a community. Unlike many community development corporations (CDCs), WCDC has never engaged in developing affordable housing but has remained focused on commercial and industrial development, jobs, community facilities, and the community environment.

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WCDC positioned itself as the catalyst for other developments and as a persistent voice of the community. WCDC is often cited as a successful example of community control of development and leadership in community reinvestment (Rabinowitz, 1990; WCDC, 2012).

Projects and Programs WCDC’s program activities include those that it operates directly and the collaborations it fosters and facilitates.

rea l estat e.  WCDC has three real estate subsidiaries. Detroit East CDC is a community shareholder cooperative that was founded in 1987. Its mission is to create jobs, eliminate blight, and encourage community investment. Two hundred and fifty Eastside shareholders raised and invested $2 million to assemble five acres of land on Eastside’s Mack Avenue. Over time, the original building was renovated to house the secretary of state’s office. Further development languished until 2000, when WCDC partnered with a private developer to launch a $20 million, five-phase plan to develop the four corners of Mack Avenue at Alter Road into Mack-Alter Square. The square features a Wow convenience store and gas station, an Aldi Food store, Rite Aid, First Independence Bank, President Tuxedo, Chicken Shack, and H&R Block (Archambault, 2005). Eastside LAND, Inc., was created in 2000 to facilitate commercial development in three target areas: Mack and Alter, the Warren-Conner District, and the Mack Corridor. W/C Development, Inc., is a completely owned nonprofit subsidiary of WCDC that serves as a holding company for a community center, Care Village; WCDC headquarters; and three community parks. Eastside LAND, Inc., is a sponsor of West Village Manor, a historic mixed-use commercial building with sixteen apartments on the second floor, and a new supportive housing project (WCDC, 2013).

d et ro it neig hb orhood partnershi p east ( dn p e ) .  Formerly Rebuilding Communities Incorporated, DNPE is a community-based program designed to help residents and block clubs organize to influence positive changes to make Detroit’s Eastside neighborhoods safe, supportive, and productive environments for families. In the late 1990s, WCDC led a broad collaborative planning and program development effort funded primarily though AECF’s six-city RCI. The program gave birth to several of WCDC’s programs and partner collaborations but wound down after 2001. In 2012, WCDC decided to revive some of those efforts. (WCDC, n.d.c). DNPE built on and incorporated the success of the RCI program into Project LEAD. Project LEAD, which focuses on skill building for new leaders and supports collaboration, strategic planning, leadership, and advocacy, was started in 1990 and by 2002 had

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graduated 600 people. Many instructors were residents. Under the RCI, WCDC drew upon community leaders for staff positions as natural pool of talent. The VISTA (Volunteers in Service to American) program hired community leaders for two-year staff positions and produced people who now hold critical positions at WCDC and other Detroit organizations (McNeely, Aiyetoro, & Bowsher, 2002). DNPE is the home for several projects including the Eastside Farmers Market, the Walking Against Blight program, and the Lower Eastside Action Plan (LEAP), a planning effort by WCDC and seven other community development organizations to find productive uses for large areas of vacant properties across many lower Eastside neighborhoods. LEAP identified seventeen actionable projects and established several key partnerships to implement them (WCDC, 2013).

pa rt nersh ip fo r economi c i ndependence, i nc . ( p e i) .  PEI was a division of WCDC with the mission to improve the capacity of businesses and residents to meet their mutual economic needs. PEI began as a pilot in 1993 and has evolved into the Detroit Empowerment Zone’s Eastside Community Self-Sufficiency Center. PEI worked to eliminate barriers to successful employment, connecting PEI members to established community resources, helping them acquire the skills necessary to compete successfully in the labor market, then offering and encouraging options for continual personal and professional development. In 1998 the program was funded through the Empowerment Zone and Ameritech (WCDC, n.d.e). In 1998 PEI, in collaboration with the RCI, opened a computer lab to provide customer service representative training through Ameritech. PEI created a partnership among elementary schools, the Detroit Board of Education, and a branch of the public library to provide GED classes and worked closely with several employers and Wayne State University for commercial drivers license training and with trade unions to offer construction skills training.

yo ut h o n t he edge  .  .  . of greatness, i nc. ( yoe ) .  YOE was established in 1985 and was named a National Exemplary Program in 1995. In 2012, YOE was redesigned to focus more on youth leadership development (WCDC, 2013). Prior to that, it provided afterschool enrichment programs five days per week for youth ages eleven to thirteen during the school year. YOE also offered a six-week Summer Enrichment and Employment Program for youth ages eleven to seventeen. The programs were based on two fundamental principles: (1) that youth should be supported so they can create a brighter future for themselves, and (2) that young people can be leaders and contributors in the community. Components included homework assistance and supplemental educational

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services, substance abuse prevention activities, life skills instruction, conflict resolution education, parent involvement, social and cultural enrichment, and community leadership and outreach. YOE is a Michigan-licensed substance abuse prevention program, in addition to a supplemental education service provider labor market (WCDC, n.d.e). Once a separate corporation, when YOE was redesigned in 2012, it moved back inside WCDC (WCDC, 2013).

Collaborations and Projects Facilitated by WCDC Detroit Eastside Community Collaborative (DECC). DECC was a consortium of more than twenty Eastside community development organizations and institutions dedicated to a broad agenda of community improvement in rebuilding. WCDC convened and facilitated the collaborative in its role as the lead organization for the RCI.

t he co nner creek greenway project. The Conner Creek Greenway is a nine-mile shared-use path that stretches along Conner Street from Eight Mile Road to the Detroit River with the trailhead at Milbank and the terminus at Mahares Park. Five of nine sections have been built (DECC, n.d.)

p ro ject g row / e ast warren avenue farm ers mar k e t.  Project GROW nurtures community farming and the development of food-related businesses on the Eastside in partnership with Greening of Detroit and Michigan State University’s Cooperative Extension Center and includes the East Warren Avenue Farmers Market.

ch a nd l er pa rk prom i se coali ti on. This coalition is finding ways to bring a stateof-the-art community and performing arts center to thirty acres set aside at nearby Chandler Park. The coalition has already secured a charter school with a “conservation campus,” a new baseball diamond and football field funded by the National Football League, and commitments from the county and city to maintain the park (WCDC, 2013).

low er ea stsid e alli ance. The project is a collaboration of seven organizations, including WCDC, working for sustainable revitalization projects.

t he ea stsid e t e chnology hub. A partnership created in 2009 by WCDC with the Michigan Department of Labor and Economic Growth and the Dominican Literacy Center, the hub provides individual, computer-assisted instruction to unemployed and underemployed adults. Its forty computer stations are used by 1,000 people per year for Internet access and computer-based classes (WCDC, 2013).

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w in fa mily resource center east. WIN is a comprehensive educational, nutritional, and substance abuse program for children and parents.

mack av enue busi ness associ ati on. The mission of this association is to improve the quality and vitality of the Mack Avenue Corridor. Current activities include matching façade improvement grants to upgrade the exterior of business sites, technical assistance for businesses, removing litter and cutting grass and weeds twice per week, and boarding up vacant properties.

t he ea stsid e industri al counci l. Created by WCDC, this active network of hundreds of Eastside manufacturers is now regarded as one of the strongest business organizations in Detroit. Major Successes As stated on the WCDC website: “WCDC’s track record ranges from positively impacting over 2,000 young people; putting over 700 people to work; creating over 200 jobs; generating almost $20 million in private sector investment; catalyzing the creation of several important organizations, including U SNAP BAC and the Detroit Eastside Community Collaborative; creating several replicable program models; and serving as the “starting point” and incubator for the professional careers of scores of Detroit leaders and activists” (WCDC, n.d.a, para 2).

c h a p t e r  4

History of Community Economic Development T H E N IN E TEENTH C ENTURY TO LY ND O N J O H N S O N

related to social welfare, poverty, housing, community development, and neighborhoods is complex. This chapter and the following one present an overview of the growth of the community economic development (CED) field. Specifically, this chapter discusses the origins of CED in four movements— university extension service, settlement houses, civil rights, and American labor—and the evolution of CED toward community building. It will continue with the New Deal, post–World War II housing policy, community organizing in the 1960s, the John F. Kennedy administration, the War on Poverty, rural economic development and housing, and the Lyndon B. Johnson administration. Particular emphasis is placed on housing, community development, economic development, and urban policy, as they formed the core agenda of the CED field as it expanded and gained its own identity. Chapter 5 continues with the Richard Nixon administration up to the Barack Obama administration. There are three purposes for presenting this historical review. First, it helps establish the basic vocabulary, practices, and framework of the field. Second, it enables the CED practitioner to see one’s own practice as part of a larger and longer movement arranged around a core set of values. Social workers will be able to identify how these values align with the values of social work. The empowerment-oriented practitioner can use the history to help community-based leaders understand that their struggle for equity and community empowerment is part of

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a long movement that enriches and supports them. Finally, this history represents a sequence of problem-solving attempts to address the issues, inequities, and social dynamics that continue today in distressed communities. One can examine the historical record to understand the analysis and prescriptions of the past to learn what promoted success, what doomed projects to fail, and the dangerous unintended negative consequences of seemingly positive actions. The chart accompanying these two chapters (figure 4.1) details the influence and progeny of the university extension service, settlement house, civil rights, and American labor movements in the twentieth

Figure 4.1 A history of community development policy in America Source: DTI, © 2001.

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century and the lineage of the later-arising practices of community organizing and CED. To retain its simplicity, the chart incorporates two limitations from the original, which was first featured as part of a video on the history of CED developed by the Development Training Institute (now the Center for Leadership Innovation) in 2000. First, it primarily uses federal policy on community development as the indicator of larger social experimentation from the New Deal through the 1970s. Second, it eliminates lines of interaction drawn between different approaches and programs because the density of the lines would have obscured the main contents of the chart.

Figure 4.1 (continued).

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Figure 4.1 (continued).

t h e o r i gi ns o f c o m m u ni ty b u i ld in g

The roots of the contemporary community building movement stretch back to the late 1800s. By the turn of the century, “community building” or “community development” manifested in four distinct movements: (1) university extension service; (2) the settlement house; (3) the civil rights movement, particularly in the South; and (4) American labor. Each of these four movements’ central ideas influenced and modified the course of the other movements.

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Figure 4.1 (continued).

University Extension Service Movement

In the late nineteenth and early twentieth centuries, universities began to connect with their surrounding, usually rural, communities. This outreach movement was driven by the economic upheaval that resulted from both the mechanization of agriculture and the rural population’s flight to the cities, which left many rural communities in distress. The universities’ response was to take their expertise into the community, and this became known as the university extension service movement. The movement had a two-pronged

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approach. First, university staff worked with community residents to identify community problems and develop a plan to solve them. Second, university specialists, who were called extension agents, guided communities through the plan’s execution. The educators named this process “community development” and defined it as a process of marshaling all of the leaders and resources of a community to analyze its problems, determine its future, and implement specific strategies to change deteriorating economic conditions. The university extension service became a permanent fixture of community building in rural communities with the passage of the Smith-Laver Act of 1914. This legislation required land grant colleges to provide extension services, and it allocated funding for the services through the U.S. Department of Agriculture. The first National University Extension Association was convened in 1915, and it led to the formation of the Community Development Society (CDS), now an international federation. In the late 1920s, the emphasis of CDS members was on community problems arising from technological improvements in farming and the industrial approach to agriculture. Since the 1960s, many CDS members have used an economic development approach to community revitalization that emphasizes infrastructure, industrial facilities, business attraction, and development financing, further expanding the universities’ conception of the community development discipline. The CDS’s training programs, which certify community developers, have emphasized the community building process as the first step—and core—of community development. Concern for rural life was not limited to the universities. In 1908, President Theodore Roosevelt appointed the National Country Life Commission to study the crisis of poverty in rural America and to make recommendations to the government. The first National Country Life Conference was held in 1919. It brought together community developers and rural leaders and fueled an expansion of cooperative extension services. Many states created their own Country Life Commissions, and in some cases Country Life Foundations, that provided grants and assistance for rural redevelopment. Settlement House Movement

During the late 1800s and early 1900s, urban areas experienced their own population crises, as waves of rural European immigrants came to America.

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Settlement houses were initially created to help exploding inner-city populations adjust from rural to urban life and to assist immigrants with the complications and limitations of language barriers. Each settlement house facility sought to aid immigrants in the immediate surrounding neighborhood to become part of society’s mainstream, hence, a “house” in a particular “settlement” of people. (See chapter 2 for a discussion of the settlement house movement’s contributions to early social work.) At first, funding for settlement houses came primarily from affluent philanthropic individuals, but churches and fraternal organizations increasingly began to reach out to the immigrant population. Settlement house workers physically moved into the immigrant neighborhoods so that they could provide services and assist immigrants in creating their own problem-solving approaches. These workers were among the first to recognize the neighborhood as a distinct functioning unit. They realized that the neighborhood was also a vehicle for mobilizing local resources and coordinating outside charitable resources. Settlement houses became synonymous not only with services and language classes but also with agitation for social change. Immigrants joined forces with the muckraking journalists of the day who sought societal reform on behalf of those who dwelled in the slums. The journalists Jacob Riis and Lincoln Steffens, for example, successfully campaigned to have New York City adopt the first housing code in the United States. Other egregious health, sanitation, and workplace conditions, as well as the plight of children, drew the attention of these reformers not only in New York but also in other cities (Knight, 2007). Civil Rights Movement

The twentieth-century civil rights movement brought the widespread recognition of racism as a cause of social problems. It also provided an affirmation that the deprivations experienced by black people violated constitutional rights and were therefore matters of justice, not charitable discretion. Several organizations early in the 1900s contributed to the movement toward equality and justice. In 1909, the founding of the National Association for the Advancement of Colored People (NAACP) represented the creation of the national rather than local civil rights movement, shattering the conventional wisdom that civil rights for black people was a “Southern

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problem.” The Urban League, founded in 1911, provided a bridge between the civil rights movement and the settlement house movement. The Urban League applied many of the strategies of settlement workers to working with the expanding population of African Americans who moved from the rural South to Northern urban centers. The civil rights movement evolved differently in the North and in the South. Southern civil rights activity was predominantly based in black churches and often led by preachers. It focused on overcoming the impact of oppression, such as that resulting from Jim Crow legislation and the privately sponsored terrorism of the Ku Klux Klan and other hate groups. In the North, civil rights activity took on a different character, encompassing the limited union organizing of the Brotherhood of Sleeping Car Porters. Culture flourished in the Harlem Renaissance and was echoed in black centers across the Northeast. During the events leading up to the passage of civil rights legislation in the 1960s, the legal doctrine that justified U.S. systems of segregation— “separate but equal”—evolved. Although segregating U.S. society had resulted in discrimination and the creation of a two-class system of citizens, one positive consequence emerged. A vigorous economic sector of businesses owned by black people sprang up as a result of a remarkable self-help effort, and black institutions providing education services and economic opportunity were built. Understanding this dynamic is key to understanding the development of CED later in the century. Values underlying later civil rights activities contributed to what would eventually come to be known as community building: a reliance on the community’s resources; a sense of quiet pride in the building of assets, even if those assets are not recognized by mainstream American society; the central, driving values of justice and equity; and the consciousness that vicious issues related to American racism were at the core of many of its problems. American Labor Movement

The labor union movement of the late nineteenth and early twentieth centuries added two important elements to the framework of community building. First, like the civil rights movement, it vigorously asserted that the issues existing in oppressed communities were matters of rights and

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not charity. Second, it employed two important methodologies: mass participation and direct confrontation. These methods empowered the movement’s participants to change social and economic inequalities. t h e n e w d e al

The Great Depression in the 1930s wreaked havoc on the United States. In an effort to hasten the country’s recovery, President Franklin Roosevelt proposed and Congress enacted several federal programs from 1933 to 1938 that provided relief, created jobs, and stimulated economic recovery. These initiatives were collectively referred to as the New Deal. The programs of the New Deal had two long-lasting effects on the structure of modern communities. First, the programs became the foundation of later federal assistance programs for low-income citizens, such as welfare, unemployment insurance, Social Security, and public housing. Second, the programs’ underlying methodologies have been consistently applied to community building, though often with mixed results. For example, during the New Deal, the federal government created subsistence homesteads under the National Industrial Recovery Act (NIRA) and constructed new communities under the Federal Emergency Relief Administration (FERA). Whole communities were planned, complete with residential, commercial, and manufacturing uses and with education, recreation, and family services. These experimental approaches to community development established the important precedent of direct intervention by the federal government. In a subsequent period of urban renewal, however, many of these New Deal projects and services were discontinued until the 1960s. The home construction industry emerged during the New Deal and World War II. It promoted subdivision and zoning regulations, primarily passed through local governments. These regulations solidified planning methods that enabled the vigorous creation of residential subdivisions on rural land. The combination of public and private housing and community development efforts of the 1930s and early 1940s set the stage for federal efforts in the postwar period that resulted in intense suburbanization and urban renewal. It also changed conventional thinking. Before 1930, trust in market dynamics was the driving force behind community development. During the New Deal era, local governments were reluctant to enter actively the realm of community development, instead preferring to

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enact policy that facilitated private business activity. Although the federal government also was reluctant to participate actively in the community development arena, the New Deal programs shifted the federal government’s role from one of restraining private sector excesses to buttressing its weaknesses. Greater governmental emphasis was placed on assisting the home construction industry by restoring credit mechanisms that supported deposit and mortgage insurance mechanisms. However, while subsidized housing was part of the New Deal, it was only a small part. Housing was largely relegated to private business, a policy that remained dominant until the 1960s. p o s t wa r h o u s i ng p o li c y Housing and the Suburbs

The Servicemen’s Readjustment Act of 1944, commonly referred to as the “G.I. Bill,” contained provisions for the home financing plan for veterans called the Veterans Mortgage Program. The program provided mortgage insurance for 100 percent of the mortgage amount with no down payment, lower interest, and long terms. The 4 percent, thirty-year Veterans Administration–insured mortgage not only allowed easy access to home mortgages, but by 1965 it had also contributed to the reduction of the annual cost of home ownership from 30 percent of median income to 21 percent. As a result, the increase in home ownership between the years of 1940 and 1956 topped that of the country’s entire preceding existence. In addition to subsidizing home financing, the federal government created federal income tax deductions for mortgage interest and local taxes. It simultaneously constructed national highways, effectively creating the mechanisms for the largest internal migration in American history, that from the cities to the suburbs. The migration caused a crisis of deteriorating neighborhoods and housing conditions for those left behind in the cities in substandard “wartime” conditions. Democrats and Republicans joined to pass the landmark Housing Act of 1949, which committed the country to “the goal of a decent home and suitable living environment for every American family.” The act also authorized the Urban Redevelopment Program, which provided federal funds for the demolition of slum housing in cities that established an urban renewal authority.

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Although the Housing Act of 1949 was relatively comprehensive in scope, political leaders remained reluctant to displace the private sector’s dominance in the housing industry. The U.S. Congress under President Harry Truman declined to include in the act a direct federal loan program for housing authorities and a housing program for low-income families ineligible for public housing. Even the Slum Clearance Program (later called “urban renewal”) financed urban demolition rather than development to provide an incentive for private builders to invest in urban areas instead of the more easily developed suburbs. The private sector–public funding model of home ownership was not the only housing problem in postwar America. The New Deal had laid the groundwork for what became a “two-tract” housing system: governmentsupported home ownership for the middle class and limited “special” governmental programs for low-income renters. A Commission on Housing appointed by President Dwight Eisenhower examined the failures and inequalities of the two systems. The commission’s report led to the passage of the Housing Act of 1954, which had several significant provisions. First, the law acknowledged that private mortgage insurance mechanisms of the Federal Housing Administration (FHA) would not work for the inner city, so it established special insurance for housing in urban renewal areas. Second, the law also allowed private financing under the restructured Federal National Mortgage Association (FNMA, or Fannie Mae). By allowing private investors to meet the demand for home mortgage money, Fannie Mae placed no demands on the federal budget. However, investor demands to limit risk soon pushed Fannie Mae and the FHA away from acting in the older areas of cities, diluting the intended benefits of the legislation. Urban Renewal and the Cities

The 1954 Housing Act required urban renewal authorities to submit a workable program for redevelopment after slum clearance in an attempt to correct the unilateral destruction of inner-city neighborhoods. The controversy over community destruction and its racial implications fueled action by progressive planners, settlement house and community workers, and civil rights leaders. Their unified response to “federal bulldozers” and “Negro removal,” as they termed this community destruction, resulted in

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improved relocation benefits for renters and citizen participation in planning in the reauthorization of the Housing Act in 1961. Subsequent efforts incorporated into Housing Act reauthorization bills, such as rehabilitation efforts (1964) and the Neighborhood Development Program (1968), supported minority empowerment by requiring plans and community participation wherever urban renewal was initiated (Rohe, 2009). The controversy and reform of urban renewal led to the realization that redevelopment was not just about housing and private sector financial incentives. It also demonstrated that national models and uniform federal regulations were insufficient tools to meet urban renewal’s broad needs. On the positive side, a holistic concept of community and social cohesion emerged during this era. An era of intense citizen participation and community control began, which became a critically important component of community organizing and the 1960s civil rights movement. i n cu bat ing c o m m u ni ty ac ti o n

During the 1950s, three activities shaped the concept of community action in ways that would define the dynamics of the federal community development programs of the 1960s: economic development in Appalachia, the campaign against juvenile delinquency, and the Ford Foundation’s Gray Areas Program. Appalachia

The Appalachian Region is a 200,000-square-mile rural area that stretches along the Appalachian Mountain line from southern New York to northern Mississippi. It includes all of West Virginia, and parts of twelve other states: Alabama, Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, and Virginia. Coal mining was the dominant industry in parts of Appalachia, especially in the states of West Virginia and Kentucky. The increased mechanization of coal mining in the 1950s and early 1960s had a devastating economic effect on the industry. In response, the United Mine Workers and university extension service community developers attempted to call public attention to the plight of miners and the need for redevelopment of

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the Appalachian region’s economy. They proposed two plans for redevelopment to the federal government: (1) governmental intervention in the market dynamics of the region to forestall additional rural dislocation and (2) local community planning intervention coupled with worker retraining and a new transportation infrastructure. Implementing these plans would produce a vital and sustainable manufacturing economy that would offset the downsizing of the coal mining workforce. Such place-specific and broad economic development by the government had never been tried, but the pivotal role of the West Virginia primary in Kennedy’s presidential election gave these community advocates unique access to the White House. In 1963, Kennedy formed a bipartisan federal-state committee, the President’s Appalachian Regional Commission (PARC). PARC established a comprehensive program for the economic development of the Appalachian region that was endorsed by the Conference of Appalachian Governors and U.S. Cabinet-level officials. The PARC Report was the basis for subsequent legislation under President Johnson. Submitted to Congress in 1964, the Appalachian Regional Development Act (ARDA) was passed early in 1965 by a bipartisan coalition (Appalachian Regional Commission, n.d.). Juvenile Delinquency

Another social warfront arose in the inner cities during the 1950s and 1960s: juvenile delinquency. With too much time on their hands and no place to go, the young people in low-income areas were restless and bored. Unemployment among black teenagers, for example, more than tripled from 1948 to 1963; school vandalism indicators rose from 70 to 100 percent in the 1950s (Piven & Cloward, 1971). Gangs developed to provide a sense of family on the streets, and where the gangs went, crime followed. Youth workers, journalists, and politicians paid attention to this disturbing trend. Among the most promising approaches to addressing the problem of gangs was the deployment of “street workers.” Their mission was similar to that of the earlier settlement workers: Meet those in need in their own environment (i.e., the streets), earn their trust, and facilitate positive growth. By working with gangs in their own setting, the street workers challenged and facilitated the shift in gang activities from delinquency to positive endeavors. The outreach efforts were based on the theory that

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juvenile and gang delinquency was a result of adolescent energy gone awry in the absence of adult supervision. A key component of the street workers’ efforts was to accept the gang members on the members’ terms and to work within the gang dynamic. The street workers met with some success, often effectively transforming adolescent gang members from part of the problem to part of the solution. In retrospect, at least part of the street worker approach’s success was because the street workers were not hampered by the restraints of typical juvenile programs today. Youth workers realized that changes were necessary in the institutions that had been created to serve the troubled youth. They became proponents of radically altering the methods and governance of educational, recreational, and juvenile justice institutions. Although it was met with resistance, by the end of the 1950s, the Juvenile Justice Program had been established within the Department of Justice under the Juvenile Delinquency and Youth Offenses Control Act. Two themes that emerged from the program were (1) the positive power of mobilizing the creative energy of “victims” or “problem people” on their own behalf and (2) the need for radical institutional reform. The Gray Areas Program

During the same time period, the Ford Foundation (FORD) embarked on a series of programs dedicated to creating innovative methods of successful urban renewal before communities were faced with demolition. In its highly structured demonstration program, the Gray Areas Program, FORD invested in six failing areas, five urban and one rural. Subsidized teams of professionals assisted community leaders in identifying, assessing, and analyzing the communities’ problems using the best research resources available and in creating experimental approaches for solving the problems. Each of the six “gray areas” was given the necessary resources for implementing experimentation on its most problematic issues. The Gray Areas Program in New Haven, Connecticut, was perhaps the most successful. The town’s leadership, including its newly elected mayor, Frank Logue, established an independent nonprofit organization named Community Progress, Inc. (CPI). CPI’s board of directors included representatives of established government, social service agencies, educational agencies, and the community. CPI was staffed by qualified political

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maneuvering and program development professionals. Armed with a series of successful programs, CPI affirmed the assessment of the street workers: Community members were fully capable of providing insight into the causes and solutions of their neighborhood’s problems. Additionally, CPI concurred that conventional institutions needed to change if they were to address the urban renewal crisis. t h e eme rg e nc e o f c o m m u ni ty o rga n iz in g

During the New Deal and postwar period, two significant events contributed to the formulation of community organizing as a professional field: (1) the work of Saul Alinsky and (2) the evolution of direct action strategies. Saul Alinsky

Saul Alinsky was educated as a criminologist, but he is known for his work as the father of community organizing. His reformist efforts began in 1939 when he organized the Back of the Yards neighborhood on the southwest side of Chicago. The Back of the Yards Neighborhood Council, also formed in 1939, is credited as being the oldest community organization in the United States. The heart of Alinsky’s philosophy and genius was applying and adapting the organizing strategies of the trade union movement to a geographic constituency, a neighborhood. He likened neighborhood residents to members of a community union who would organize to form a powerful institution (i.e., the neighborhood council) that would be recognized by management (i.e., public and private institutions) and would have the power to negotiate its demands (i.e., community policy). Alinsky held that the objective for those without power should be to acquire power, in order to hold those in power accountable. In Alinsky’s analysis, there were only two kinds of power—money and numbers. The powerful had the money while the powerless potentially had the numbers. He also believed that the particulars of community development were not in and of themselves important but rather that it was participating in the community development process that mattered. The importance of the particulars of any community’s needs was thus its value for motivating a community to build an organization and acquire power (Alinsky, 1989).

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To put his philosophy into action, Alinsky depended on participation and community involvement. The actual process of building a community organization was one of mobilizing its members to overcome their fear and defeatism to take action on defined issues that could be won. From victories over these winnable issues, Alinsky built a psychology of success and enlarged the base of participation in a neighborhood. As simple and successful as his concept was, Alinsky became more famous for his tactics: conducting no-holds-barred campaigns of confrontation, personalizing issues, exploiting the media, and springing the unexpected. The reaction to Alinsky was vitriolic. For the first time, the term “militant,” previously reserved for radical labor union organizing, was used in a community context. In 1940, Alinsky established the Chicago-based community organization the Industrial Areas Foundation. Its original purpose was to serve as an umbrella organization from which other community organizations could be run (Independent Television Service, n.d.). The organization, which is still in existence, does not promote a specific ideology but describes its chief purpose as “power” and its chief product as “social change.” Alinsky’s interest in duplicating the Back of the Yards experience in other communities coincided with the attention the civil rights movement was bringing to black neighborhoods in the early 1960s. Those who saw racial discrimination as a call for significant social change imagined community organizing in African American neighborhoods as a powerful tool. In 1960, Alinsky began working in the black community of Woodlawn in Chicago. After the University of Chicago announced its plans to bulldoze the entire Woodlawn area in 1961, the community came together in protest. Several prominent black churches gave seed money to organize the Temporary Woodlawn Organization (TWO), later named the Woodlawn Organization, and the organization succeeded in blocking the plans. In 1965, Alinsky moved on to Rochester, New York, in response to the black community’s invitation to take on Eastman Kodak and its racially discriminatory hiring practices. Using tactics ranging from buying stock to give community residents a seat at the table to forming picket lines, the local organization, FIGHT (an acronym for Freedom, Integration, God, Honor, Today), ultimately won employment concessions from Kodak (Alinsky, 1971). Until his sudden death from a heart attack in 1972, Alinsky was a force to be reckoned with in the politics of social change.

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None of the Alinsky community organizations in the black communities survived in its original form, but some did survive. TWO, for example, became a community development corporation (CDC) through funding from FORD and federal programs. Ironically, it engaged in providing services to the community, which Alinsky had eschewed as encumbering organizations’ true organizing spirit and acquisition of power. Direct Action Strategies labor’s com m u n i t y ac t i on .

Alinsky was not the only labor movement theorist applying organizing tactics to communities. Jack Conway, an assistant to Walter Reuther, president of the United Auto Workers (UAW), convinced Reuther to invest in a series of “community unions” in minority neighborhoods with substantial populations of autoworkers. Conway believed that the community was a more appropriate setting than the workplace for the union to assist its minority members on issues of discrimination and quality of life. Conway also imagined that the organizing effort would bring a broader base of support for the political action agenda of organized labor itself. The most notable and surviving examples of the UAW community union experiment are the Watts Labor Community Action Council (WLCAC) and the East Los Angeles Community Union (TELACU). Both subsequently received substantial federal funding through the 1960s War on Poverty and became a part of FORD’s CDC program and, in TELACU’s case, the federal government’s CDC program. ci vi l ri gh ts c on fr on tat i on s.

The 1954 court case Brown v. Board of Education forever changed the legal landscape of the civil rights agenda by ending state-sponsored racial segregation of schools, but it was lunch counter sit-ins and student boycotts that changed the constituency and tactics of the civil rights organizing effort. The Southern civil rights activity of the 1950s and 1960s brought a higher level of racial consciousness to community building. The surge in Southern civil rights activity was led by black ministers and large numbers of younger black people, especially college students, who employed the tactics of mass participation and nonviolent civil disobedience. Participants soon learned the potential of gaining national attention for the cause by

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using the mass media. New organizations such as the Congress of Racial Equality (CORE), Southern Christian Leadership Conference (SCLC), and Student Nonviolent Coordinating Committee (SNCC) soon joined older black advocacy organizations and quickly obtained credibility. t h e k en n e dy ad m i ni s trati o n A Legislative Overview

The Kennedy administration’s legacy includes several political acts that directly or indirectly affected social change and/or community building. Although several of these have been previously discussed in this chapter, it is helpful to review them briefly in the historical context of the Kennedy era. One of the first pieces of key legislation under President Kennedy was Executive Order 10925 of March 6, 1961, which created the Committee on Equal Employment Opportunity. It mandated that projects financed with federal funds “take affirmative action” to ensure that hiring and employment practices were free of racial bias. The affirmative action order served as the impetus for community organizers to rebel against unfair hiring practices, and it motivated the mobilization of those receiving unfair treatment. Early in the Kennedy administration, the Justice Department adopted and gave a substantial increase in funding to juvenile justice programs that were taking a community building approach to gangs and juvenile delinquency. In June 1963, President Kennedy introduced what would eventually become the Civil Rights Act of 1964, which was enacted after his assassination. This important piece of legislation fueled the civil rights movement in the United States. PARC, as previously discussed, led to the passage of the Appalachian Regional Development Act under President Johnson in 1965. President Kennedy also established the Peace Corps, a domestic volunteer corps. The Peace Corps, while not specifically targeted to community building in a domestic sense, reflected the Kennedy administration’s approach of unleashing voluntary resources to address social problems. It also reflected the well-intentioned naiveté—as well as arrogance—of the best and brightest of Kennedy’s advisors, who believed American ingenuity and money could solve any problem in the world.

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Housing

The Kennedy administration focused much of its financial resources for inner cities on housing needs. As a result, the Housing Act of 1961, a reauthorization of the Housing Act of 1954, was enacted. The Housing Act of 1961 created below-market interest rate subsidies known as the 221(d)(3) and 221(d)(4) programs and enabled the government to step in to purchase housing project mortgages. Public housing for the poorest families was expanded, and 100,000 units of low-rent public housing were added for the lowest income families. As a result, the below-market subsidy mechanisms established a second mode of “poor people’s housing” that was separate from the conventional real estate industry and the income mix that had previously characterized minority neighborhoods. Even though President Kennedy allocated $2 billion for urban renewal, the increased federal spending under the Housing Act of 1961 emphasized physical development as the answer to housing problems in poor neighborhoods. Although the direct federal development support did help fill the vacuum left by the departure of the private sector from these neighborhoods, the public housing and government programs that replaced the private sector functions created an even larger divide between poor families and mainstream markets. While President Kennedy is often remembered for the community action and community process emphasis of the War on Poverty, the truth is that funding for physical development came first, in housing and urban renewal as well as in economic development. t h e j o h ns o n ad m i ni s trati o n

President Johnson worked hard to fulfill the mandates left unfinished by President Kennedy’s assassination and continued to do so during his elected term in office. He is credited, and perhaps remembered the most, for the War on Poverty. War on Poverty

President Johnson’s War on Poverty, a multifaceted approach to eliminating poverty often referred to as the “poverty program,” was part of his Great Society legislative agenda. The Economic Opportunity Act of 1964 (EOA)

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was its centerpiece. President Johnson appointed Robert Sargent Shriver as the director of the Office of Economic Opportunity, which was charged with carrying out the provisions of the EOA legislation. EOA programs included community programs such as VISTA (Volunteers In Service To America), the Job Corps, Head Start, Adult Basic Education, Family Planning, Community Health Centers, Congregate Meal Preparation, Economic Development, Foster Grandparents, Legal Services, Neighborhood Centers, Summer Youth Programs, Senior Centers, and others. The EOA also established more than 1,000 Community Action Agencies (CAAs), also called Community Action Programs (CAPs), that were empowered to implement the Great Society programs, thousands of which still exist today. The actual language of the EOA that spoke to the importance of community action was a requirement to provide for the “maximum feasible participation of the residents of the areas and the members of the groups” involved in the local programs. Although Congress struck the phrase “maximum feasible participation” from the EOA before it was passed, its spirit remained. As Nicholas Lemann notes in The Promised Land (1991), the central elements of community action in the Johnson administration’s poverty programs appealed to political decision makers who had roots in juvenile justice, community organizing, and foundation-supported community development. The premise behind community action in the poverty program was a mixture of different strategies for addressing poverty that, in theory, were not diametrically opposed but in practice had inherent conflict. For example, one goal was to mobilize all the resources of society, public and private, including businesses and corporations, private individuals, religious institutions, foundations, and nonprofits. Another goal was to enable the poor to have significant power over the mechanisms for addressing poverty, including the resources mobilized from other parts of society. Herein lay an inherent power conflict between the affluent and powerful who controlled those resources and the impoverished who saw themselves as having been victimized by those same powers. On the one hand, the poverty program wanted to work through the major institutions affecting the poor, like school systems; on the other hand, bringing about institutional change was inevitably resisted by those institutions (Clark & Hopkins, 1969). The mixed objectives of community action produced mixed results. Success was uneven at best. For some, the poverty program was a refinement

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of learning and further application of the best thinking of the day. Others joined Senator Daniel Moynihan in criticizing the failure to follow a linear process that could produce a predicted outcome. In his book Maximum Feasible Misunderstanding (Moynihan, 1969), the title of which is a tonguein-cheek reference to EOA verbiage, Moynihan somewhat ingenuously criticized the community action theory as the “foisting of a set of untested social development hypothesis on unsuspecting policy makers in the guise of proven methodologies” (p. xx). It is important to note that during the most affluent period to date in American history, most Americans of the 1950s, particularly white Americans, had been unaware of America’s poverty crisis. The prizewinning television documentary on migrant worker conditions in rural Florida presented by Edward R. Murrow, Harvest of Shame (Friendly, 1960), and the startling book by Michael Harrington, The Other America (1962), was a rude awakening to mainstream leaders who thought of themselves as caring and progressive. The response was swift and widespread. While the religious community responded first, virtually all mainstream institutions quickly began exploring projects that might help address the conditions of poverty. Many of the private endeavors also embraced community action. Whatever else may be said in evaluating the War on Poverty, it established community action, community building, and community development as central to the policy discussion and practice of addressing poverty. The rapid proliferation of thousands of community development field tests produced both remarkable success and scandalous failure, regardless of whether their exploration was disciplined. Most experiences, however, produced results that were positive overall: solid changes in mainstream institutions that better served the poor and minorities or, in many cases, reached them for the first time; a new understanding of the need for, and permanent mechanisms of, community involvement; an increase of blended private and public resources for coordinated activity; the awakening of optimism and access to talent and leadership in poor and minority communities that had been dormant or limited in its scope; and a remarkable awakening in dozens of professions of a new interest in and creative practice for the poor. Some say the war failed; poverty won. Others opine that stemming the tide of increases in poverty was at least a partial victory. Regardless, the awareness of poverty that was raised among the public can never be taken back.

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r ur a l ec o no m i c d e ve lo p m e nt and ho usin g

In 1965, Congress created the Economic Development Administration (EDA). A division of the U.S. Department of Commerce, its mission was to “generate jobs, help retain existing jobs, and stimulate industrial and commercial growth in economically distressed areas of the United States” (U.S. EDA, n.d., para. 1). Three program concepts emerged from the EDA and have become permanent fixtures of American community development policy: (1) the acceptance of a direct government role in economic development; (2) the emphasis on public works, industrial park creation, and business attraction as the major strategies of economic development; and (3) the establishment of an “overall economic development plan” as a mechanism for strategy design and community participation. It was not until 1969 that Congress amended the EDA to encompass urban impact areas. For the first time in the nation’s history, economic development had been added to the agenda of community development and citizen participation initiatives. Rural communities also saw the relationship between community building and housing grow. The expanded housing thrust of the 1960s incorporated the “self-help housing” approach that had been pioneered by church-based organizations. Self-help housing called on groups of people to organize, contribute substantially to the construction of their own houses, and to work together on one another’s homes. j o h n s on c o m e s i nto h i s own

Having won the election of 1964 in his own right, Johnson was prepared to renew his intense interest in poverty unfettered by the Kennedy brain trust, whom he considered to be Eastern upper-class brats who knew little of poverty firsthand, as he did. Johnson’s answer to social crisis was one deeply rooted in New Deal thinking, public works expression, and patronage politics. It seemed perfectly clear to him that a major answer to the problem of poverty was money. Housing and HUD

In a move to make community development a more central and permanent role of the federal government, Johnson’s Housing Act of 1965 created

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a new Cabinet department, the U.S. Department of Housing and Urban Development (HUD). He consolidated programs that had been scattered among different federal agencies without Cabinet status into this department and sought a major increase in production of housing for the poor. Model Cities

Lessons were learned from the shortcomings of Kennedy’s early poverty program. Programs needed longer-term funding and a centralized focus. The limited funds had been too thinly dispersed, which precluded concentrated, comprehensive work. Programs lacked sufficient involvement from local city halls, resulting in mainstream municipal spending that was unrelated to federally funded poverty efforts. Yet, many programs worked. Resident involvement inspired better development; combining programs multiplied program effectiveness. The federal leaders of Johnson’s poverty programs proposed an experiment for “model neighborhoods” in which the lessons of Kennedy’s poverty program could be tested in a few controlled experiences and then applied full scale. Shriver, the director of the Office of Economic Opportunity, and Johnson not only embraced the idea but also advocated expanding the number of communities that would be involved. Model Cities, as the program came to be called, was not to be a limited experiment but a full-blown national program. It received $27 billion in funding distributed among ten agencies in the 1969 federal budget. The Models Cities’ framework flowed directly from a conceptual textbook of community action and emphasized community participation and control, comprehensive approaches to poverty, coordination of the delivery of services, systems change, and innovation. The Model Cities program took these themes to a new level by increasing community involvement, broadening program activity, and planning for a longerterm development. There were also two additions to the original Model Cities proposal. First, analysts suggested conducting a comparison study between a coordinated, comprehensive, long-term financing plan and the smaller financing amount that had previously been distributed through Kennedy’s poverty program. Second, the analysts proposed a system of balanced power, with a community council on one side and the local government’s chief executive

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officer and cabinet on the other. The intent was to avoid the frequent confrontations between community leaders and elected public officials that had occurred historically during the community participation process. It was loosely envisioned that each side would have mutual veto power over plans within the Model Cities area. What happened next were lessons in exploitation and big government unintentionally gone awry. The United States was still reeling from urban riots in the late 1960s. Seeing National Guard troops in the streets of many of U.S. cities left an indelible mark on the consciousness of Americans. The mainstream political establishment, in an attempt to pacify, rectify, or maybe even buy off the public (depending on one’s political views), responded immediately. The goal became to increase black home ownership as quickly as possible, and the Section 235 and 236 Programs, which addressed minority home ownership and indigenous nonprofit ownership of rental property respectively, were established in the Housing Act of 1968, a reauthorization of the 1961 housing legislation. Abuse and failure were the consequences of such a grand gesture. Money in the Section 235 Program flowed through whatever mechanisms generated the highest volume and numbers. Whatever positive effects the program had on building the assets of African Americans ( Johnson & Sherraden, 1992) has to be balanced with the unintended side effect of destroying neighborhoods. Realtors used scare tactics and other blockbusting methods to increase the volume of property available to first-time black homebuyers. They infiltrated predominantly white and integrated neighborhoods on the edges of ghettos and incited white flight. Adequate screening and support of homebuyers were sacrificed for volume (Pietilla, 2010). Virtually the whole west side of Chicago, the east and inner west side of Detroit, as well as other similar urban neighborhoods, experienced a cataclysmic change. The process was so corrupt that many realtors, mortgage bankers, and FHA officials went to jail for exploiting and abusing the program. Like closing the barn door after the proverbial horse is gone, the neighborhoods disappeared forever. The Section 236 Program, which provided for nonprofit ownership of rental property, also fell victim to the “increase numbers at any cost” directive. This program was seen as an untapped vehicle to increase property ownership in the black community, so the federal government aggressively pursued black nonprofit institutions (e.g., fraternal organizations,

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churches) as sponsors for large-scale subsidized apartment properties. To compensate for the organizations’ inexperience in property management, HUD included the services of a consultant in each property deal. The consultant’s job was to assist the sponsor with planning the project as well as aiding in the application, negotiation, and acquisition phases of securing the property. For this service, the consultant received a 1 percent commission, payable at the time of the property’s closing. The consultants were motivated to close deals and were effective at getting projects through the commitment pipeline to construction. However, as soon as the deal was done, the consultant moved on to the next project and the next commission, leaving an inexperienced nonprofit organization to manage the property. The result was chaos, and many projects failed. The federal government shouldered the negative financial impact of a high rate of foreclosures as well as a growing hostility toward nonprofit housing corporations among the public and federal agency staff. The Model Cities program became yet another casualty in the War on Poverty. In theory, the concept behind it was sound: comprehensive, coordinated service delivery; job training; economic and physical improvement in a concentrated neighborhood; and careful, long-range planning with an adequate reserve for implementation. The political pressures on the Model Cities program to produce largescale results quickly also condemned the program to failure. For example, it called on community institutions to increase the volume of housing production by 400 to 1,000 percent in just a year or two. The complications of achieving volume overwhelmed the program’s capacity and spirit. The government could not, or did not, continue to provide the massive, longterm resources that were needed in order to continue. Johnson’s attention subsequently shifted from the domestic housing agenda to the Vietnam War. Without adequate resources and federal support, the Model Cities program was ultimately canceled in 1974. ci t i ze n parti c i pati o n

One of the positive results of the upheaval of the 1960s was an unparalleled increase in the number and influence of neighborhood organizations and the prevalence of community participation in them. This was at least partially thanks to Johnson’s Great Society legislation, which included

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regulatory requirements for citizen participation in the planning, implementation, and evaluation phases of the development of all programs. Housing

The Housing Act of 1964 now emphasized rehabilitation and code enforcement, tools of revitalization rather than demolition, as well as new construction tactics. In 1968, the Neighborhood Development Programs (NDPs) were created, opening the door to a participatory process that survives to this day. NDPs had two primary requirements: (1) that urban renewal plans be established in individual neighborhoods versus citywide and (2) that a specialized citizen participation committee, known as a Project Area Committee (PAC), be established in each NDP area. The PACs likewise had two requirements: (1) PACs had to contain a democratic body that was elected by residents, property owners, and business operators within the particular NDP area and (2) community development funds were to be spent on improving the PACs’ technical and organizational support to increase the likelihood of their success. Lawsuits filed on behalf of PACs charged that the PACs were receiving inadequate attention and resources from local agencies that were necessary to fulfill their mandate. As a result, the regulations were changed, and PACs were given grants to hire staff and technical consultants of their own, instead of having to rely on the time and advice of city employees. Environment

Another key piece of citizen participation legislation was the National Environmental Policy Act of 1969 (NEPA). NEPA was enacted to, among other things, “declare a national policy which will encourage productive and enjoyable harmony between man and his environment” (U.S. Department of Transportation [DOT], n.d., para. 4). This legislation was intended to encourage and facilitate public involvement among agencies on issues that affected the quality of the human environment. The Council on Environmental Quality (CEQ), the federal office responsible for overseeing the implementation of NEPA, codified public involvement, requiring that agencies make diligent efforts to involve the public in preparing and implementing their NEPA procedures. This included public notice of

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NEPA-related hearings, public meetings, and the availability of environmental documents to the public. For example, the Federal Highway Act of 1956 (later amended in 1958) established the biggest public works project in the history of our country, that of building an interstate highway system. Naturally, the highway project created property acquisition issues across America. In concert with NEPA, the Highway Act included public involvement during the location and design process on specific transportation projects. Urban Planning

Professional planners began emphasizing local participation during urban planning, program development, and service delivery. Citizen advisory committees were established in an effort to include citizen input by those who were affected by or who were intended beneficiaries of public programs. City and local politicians began to recognize the inherent potential of citizen participation. For example, Boston’s mayor from 1967 to 1983, Kevin White, established “little city halls” in every neighborhood. New York City experimented with a neighborhood-level interagency “cabinet” that was headed by a full-time coordinator who functioned as a quasi mayor. The result of the municipal efforts was a growing national recognition of “advocacy planning” as a specialty within urban planning, as well as a change in societal awareness of the need for and value of citizen participation. expa n s i o n o f c o m m u ni ty o rg ani z in g

Separate and apart from federal government programs and dictates, residents of inner cities began utilizing community organizing methodologies. The status quo was the frequent target, whether embodied in public or private institutions. Saul Alinsky

As previously discussed, the organizer Saul Alinsky dominated the evolution of community action methods, so much so that that virtually everyone since—Alinsky follower, Alinsky dissenter, or neo-Alinsky revisionist—has

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defined him- or herself with respect to his theories. Training programs in Alinsky community organizing techniques sprang up all over the country. Religious leaders expanded the Alinsky methods into middle-class America, where church and synagogue denominations had significant membership rolls and assets. The methods also spread to welfare reform activists, such as George Wiley, the founder of the National Welfare Rights Organization; Cesar Chavez, a champion of migrant workers’ rights; and Betty Friedan, the co-founder of the National Organization for Women. National Intermediaries

Supporters of community organizing were influential in creating a new dynamic in community building, the national intermediary. A national intermediary was a national organization with a model that could be replicated in local communities. The local organizations were independent chapters or members of the national organization. However, the national organization frequently gave the locals seed money for their startups. Alinsky’s IAF and the Center for Community Change were two such national intermediaries. National People’s Action and the National Center for Urban Ethnic Affairs evolved later, with a focus on neighborhoods outside the inner cities. back l a s h

The community action approach of the poverty program in the 1960s generated plenty of controversy. As members of local CAAs took control of the poverty program, their power base developed. In fearful response, Congress earmarked new funds for National Emphasis Programs (NEPs). The NEP requirements for disbursing funds undermined the CAAs’ discretion to allocate funds. The Green Amendment of 1967 further restricted the powers of the CAAs. It stipulated that local officials held the authority for granting a local organization the CAA designation. Without such official recognition, the organization could not receive funding from the Office of Economic Opportunity (OEO). More than 95 percent of existing CAAs fell within the guidelines of the Green Amendment, but some CAAs in major cities were suddenly controlled by a mayor and/or by a public agency. The next blow to community-based power occurred when the Quie Amendment of

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1967 stipulated that one-third of CAA boards of directors had to be made up of elected officials and another one-third from the private sector, leaving only one-third for community members. In the South and Southwest, urban programs became enmeshed with armed youth gangs and so-called militant black power organizations. The Southern conservatives who had traditionally opposed the programs were quickly joined by many Northern white elected officials. The idea that armed black youth were empowered and part of facilities and activities receiving federal support was controversial. Programs were restricted or eliminated in a political frenzy. ci v i l r i g h ts i n th e late 19 6 0 s

Civil rights legislation enacted in the 1960s affected voting rights and also spawned executive orders, administrative regulations, and a plethora of legal actions to change government program operation. This spotlighted an inherent conflict: The federal government, through its community programs, gave new legal rights and power to beneficiaries and minority communities, but local government agencies (e.g., welfare departments, housing authorities, and police) were frequently at odds with these same communities. In essence, federal government–backed communities were pitted against local government entities. Among local officials, these conflicts caused and/or intensified an antipathy for federal programs, a sentiment that persisted even after community activists themselves became public officials. cdcs

Lessons from poverty and economic development programs led to another new concept: CDCs. Pioneered by community-oriented planners and economists, civil rights leaders, and foundations, CDCs were made a federal program through an amendment to the Economic Opportunity Act in 1966. The early visionaries of CDCs saw the existing poverty programs as providing necessary social services but failing to address the hard economic realities of poverty. They felt previous urban renewal efforts had been so government dominated that they were ineffective. The CDCs’ goal was to attract minorities with significant business and financial experience that could bridge the gulf between the community and the private sector.

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FORD shaped its policy framework around and program commitment to CDCs, based on a monograph it commissioned by the economist Jeff Faux, CDCs: New Hope for the Inner-City (1971). Simultaneously, FORD and the federal government launched programs for planning and implementing CDCs. The government restricted the use of CDC grants to economic development activities, although it fostered a comprehensive approach to planning and strategy. FORD preserved the comprehensive view of community development and allowed its grantees to engage in housing, employment training, and social services, as well as economic development. s i g n s of th e ti m e s

To evaluate the War on Poverty in a vacuum as a controlled social experiment is unfair; it must be viewed within the context of the times. The civil rights movement and the political aspirations of minority leaders permeated programs in most communities. The budgets and activities of the poverty program gave minority leaders a forum, resources, power, and access they had previously been denied. Many used the opportunities afforded by poverty programs to change the policies and staffing of major social, health, educational, and local governmental institutions permanently. Program staff members and voluntary leaders went on to become elected officials. To treat civil rights and political gains as unintended consequences of the program would be to misread the tenor of the times and the conscious intention of the political supporters of the War on Poverty. The community action movement launched many grassroots and minority leaders into influential political roles. The advancement of minority leadership, the goals of the civil rights movement, and the poverty program went hand in hand, especially in the South. These were lasting contributions of the program. The political dynamics of the War on Poverty and the Model Cities program also cannot be judged without considering the explosion of black identity. An assertive ethnic movement characterized by phrases such as “Black Pride,” “Black Power,” and “African identity” erupted in the late 1960s. The identity movement, meant to correct past oppression and suppression, fragmented the liberal community, often along generational

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lines, in both the white and black communities. It also provided fodder for the conservative opposition that had always disliked the poverty program and Model Cities. Thus, to evaluate the programs fairly, it would be necessary to find some method of isolating the effects of historical ethnic identity issues within the consciousness of society during those times. Chapter 5 continues this history of CED, from the Nixon administration up to the Obama administration.

c h a p t e r  5

History of Community Economic Development RICHARD NIXON TO BARACK OBAMA

overview of community economic development (CED) presented in chapter 4. Specifically, this chapter surveys the reshaping of CED during the Richard Nixon administration, the rise of ethnic identity in the 1970s, the practice of redlining, and the evolution of neighborhood revitalization. Although the development of the CED field diverges from that of federal programs and funding following the Nixon administration, the chapter uses the administrations of Jimmy Carter, Ronald Reagan, George H.  W. Bush, Bill Clinton, George W. Bush, and Barack Obama as demarcation points in CED history. Indeed, the history of CED is one of the origins of ideas and practices in social movements and community-based initiatives. Those movements and initiatives were followed by government response, which has sought to incorporate the best in CED policy and programs. This cycle has been repeated as government efforts have been followed by reaction and/or refinement of its work in communities, and this has led to another round of federal government initiatives around CED. this chapter continues the historical

t h e n i xo n ad m i ni s trati o n

President Richard Nixon came to office determined to cut federal domestic spending on antipoverty, urban renewal, housing, employment and training, education, and welfare programs. He offered local politicians a compromise: In exchange for fewer federal funds and smaller budgets, he would give them more control over how they spent the federal funds they received. The offer

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was to consolidate existing categorical grants; up to that point, for each particular area of work such as employment or housing, the federal government offered a variety of individual programs for which sponsors had to apply individually and that were funded separately, and the federal agencies dictated how the program funds were to be spent. Now for each area of work, the funding for individual programs would be merged into a “block grant,” one lump-sum grant that entitled the state or local government to a lower amount of funding, typically determined by a formula, with looser spending restrictions. It would then be up to the state and local government to fund multiple programs of their own choice or even invent their own programs within broad guidelines. All of the states’ and cities’ resentment of past and current federal regulation, direction, and interference surfaced, and the deal was struck. Although the Nixon administration won support from elected officials on the transition to block grants, it locked horns with Congress and was unable to make the changes it desired to existing federal housing and development programs quickly. Therefore, Nixon issued an executive order that placed a moratorium on housing expenditures, freezing even projects that had already received federal commitment for redevelopment. The impasse between Nixon and Congress was not resolved until the Housing Act of 1974, which merged existing urban renewal programs into the Community Development Block Grant (CDBG) and consolidated a variety of housing programs into the Section 8 rent subsidies program. Within a few years, employment and training programs were also consolidated under the Comprehensive Employment and Training Act (CETA). In the course of the mergers, overall funding was cut. To offset partly the loss in funds, a general revenue sharing program was invented that shifted a small portion of federal tax revenue to the states with few strings. The War on Poverty itself saw the greatest cuts as antipoverty categorical programs were repeatedly reassigned to Cabinet agencies. Programs funding efforts to organize for social change were replaced with those funding casework and individual welfare. At the local level, financial support for community-based efforts, direct action, and institutional reform was reduced or eliminated from the budget. Discouraged, progressives at the federal level maintained a low profile or left. Nixon’s antipoverty initiatives focused on minority business development, creating direct local counterparts for minority business development, minority banks, small business investment companies (SBICs), and procurement set-asides.

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r i s i n g eth ni c i d e nti ty

In the 1970s, Chicanos, Native Americans, and other minority groups were finding a voice in expressions of ethnic identity and power. Community organizing efforts outside of the inner city became closely aligned with— and in some cases identical with—the movement among white ethnic populations to assert their cultural character and to demand that public policy address the needs of their populations. Like the Black Power and Chicano movements, the white ethnic movement dissented vigorously from the “melting pot” image of American society that asserted the power of a tapestry of diverse cultures but also assimilation. While some saw these ethnic voices as a backlash against civil rights, most of the movement organizers, such as Monsignor Geno Baroni, had a progressive vision for a coalition of all ethnic groups that depended on each having a sense of identity, confidence, and capability for confrontation and coalition politics. They envisioned a multiethnic movement mobilizing the population Nixon termed the “silent majority” to become a vociferous ally for federal policies on behalf of all urban populations. With the support of the Ford Foundation (FORD) and the Catholic Church, Baroni established a National Center for Urban Ethnic Affairs (NCUEA). Baroni also founded the National Neighborhood Coalition, a collaboration with African American Carl Holman of the National Urban Coalition and Chicano Raul Yzaguirre of the National Council of La Raza. The purpose of the National Neighborhood Coalition was to orchestrate a common policy agenda to advance with the Ford administration. The coalition also lobbied the administration agencies, winning support in the Ford years for a number of demonstration and research programs that provided attention and vital resources to neighborhood revitalization strategies. Some of these, such as the Economic Development Administration and Office of Minority Business Enterprise investment in neighborhood commercial revitalization projects, paired activity in minority communities with urban ethnic neighborhood revitalization. o r g a n i zi ng m ove s to th e “ o u te r c it y ”

The adaptation of community organizing techniques to the antiwar, consumer, and women’s movements showed that social change organizing did

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not necessarily need to be place based. These movements also witnessed a shift in community organizing techniques among very low-income people from Alinsky’s emphasis on organizing organizations with the power to bargain collectively on a broad agenda to the welfare rights model pioneered by George Wiley of organizing individuals for individual rights and benefits under government programs. During the Nixon and Ford administrations, volunteerism shifted from local causes to larger consumer and environmental movements. Organizing in the neighborhood sense of the practice appeared to be waning. Nonetheless, a surge of community-based organizing efforts during this time expanded outside the inner city, where they began to have an effect on public and private policies. t h e di s c ove ry o f re d li ni ng

Community organizers next turned toward the private sector. While courting private lenders to make mortgage and business loans in viable but economically threatened neighborhoods, organizers accidentally discovered the practice of redlining. Redlining was a process to deny credit to entire areas of a city based on perceptions of risks by private lenders and the secondary market financing mechanisms, such as the Federal Housing Administration (FHA). The implications of this full-scale geographic discrimination angered and motivated organizers. They gained the attention and support of Senator William Proxmire, the chairman of the Senate Banking Committee and an inveterate populist. With help from national intermediaries such as NCUEA, the Center for Community Change, the Presbyterian Self-Help Development Fund, the National Training and Information Center, and the Catholic Campaign for Human Development, there was sufficient data from different cities for Proxmire to use as leverage to counter the financial institutions’ denial of redlining practices. Resident community organization leaders from around the country were soon as sophisticated in their presentations as bank lobbyists, most especially Gail Cincotta, a housewife from Chicago who emerged as the national spokesperson for the local groups. The groups and the senator’s staff proposed an appealingly simple idea to undercover redlining practices: They said to the banking industry, “Just give us the information.” In response, Congress enacted the Home Mortgage Disclosure Act, which required financial

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institutions to report the geographic origins of their deposits and the destination of their investments. The activists then asked for prescriptive action. The response was the Community Reinvestment Act (CRA), which required financial institutions to meet the credit needs of the communities from which they took their deposits. Before long, reinvestment coalitions at the local level were negotiating formal agreements with major banks and lending institutions to commit specific amounts of money for housing and business loans. Meanwhile, those responsible for acting on the redlining issue were creating new program approaches to meet the needs of fairly stable but threatened neighborhoods—areas not as economically and physically devastated as the inner city, but those undergoing physical and economic changes that undermined the communities’ viability and quality of life. Neighborhood organizing activity outside of the inner cities emphasized revitalization and rehabilitation rather than redevelopment. Neighborhood Housing Services

One of the most significant and lasting models of neighborhood revitalization that developed during this period is the Neighborhood Housing Services (NHS) organization. Initially, NHS was crafted in Pittsburgh to respond to the lack of federal funds for urban renewal. The program emphasized the need for every sector to reinvest in the community and designed program elements for each participating partner to give the assurances needed to increase investment. For instance, public agencies agreed to bring neighborhood services back to a high level and to provide housing inspections to spur property improvements. Residents agreed to organize the community, assist inspectors, and make the personal investment necessary so that every house in the neighborhood would support a standard of value. The savings and loans organizations agreed to make every bankable home improvement loan and to provide technical advice and fundraising assistance to create a high-risk loan pool for residents with poor credit who were not bankable. Local foundations contributed to the high-risk revolving loan fund. It is worth noting that in the end, through careful structuring, the so-called high-risk fund demonstrated a respectable track record, even by conventional standards.

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FORD introduced the Federal Home Loan Bank Board to the NHS of Pittsburgh and provided funding to help the bank board replicate the process of forming an NHS organization in three additional cities. Within a few years, an interagency federal experiment program received support from FORD and the U.S. Department of Housing and Urban Development (HUD). At the end of the experimental period, a new federal independent agency was established, the Community Reinvestment Corporation (CRC). The NHS approach demonstrated not only a significant change from urban renewal, both in its geographic location and in its program strategies, but it also pioneered a new method of federal operation in neighborhood development: a local model created without federal resources; careful replication and adoption by a federal agency playing an information, catalyst, and seed funding role; slow and deliberate replication; and attention to unique local circumstances and process elements of developing a local organization and program ownership. Community Crime Prevention

Neighborhood activists were able to make gains through congressional support of community-based initiatives during this same period. Most notably, they succeeded in making community organizing and community crime prevention a key element of the Nixon anticrime effort, the Law Enforcement Administration Act (LEAA). Urban and Neighborhood Policy Demands

Community-based neighborhood revitalization efforts were gaining so much attention that progressive foundations and Congress were increasingly willing to support their efforts. Distressed that the Nixon administration refused to address the plight of the cities, Congress began demanding an urban policy. In 1975, Congress passed a requirement that the president make an annual report on urban policy. Almost immediately, congressional supporters of neighborhood activities introduced a proposal for a National Commission on Neighborhoods. Although not passed until the end of the Ford administration and not appointed until the Carter administration, the congressional initiation began in the mid-1970s.

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t h e ca rt e r ad m i ni s trati o n

The Carter administration successfully capitalized on the positive track record of neighborhood activists during the Ford years. It also captured the momentum that had been launched by neighborhood organizers and their allies in Congress. The neighborhood agenda was incorporated in a number of legislative initiatives that had previously stalled. National Neighborhood Commission

The National Neighborhood Commission appointed by Carter attempted to give form and focus to the “neighborhood agenda” that had emerged through the neighborhood revitalization and community reinvestment organizing of the early 1970s. The commission members, however, were grandiose in their vision of a neighborhood agenda. They held hearings across the country and commissioned two volumes of case studies of successful neighborhood projects that demonstrated the capability of neighborhood organizations. Unfortunately, when it came to making recommendations, the commission members were unable to reduce a broad agenda of hundreds of suggestions to a concise, actionable agenda. Even the so-called short list of their recommendations featured 114 actions (National Commission on Neighborhoods, 1979). The commission’s final report was delivered to Carter, but no legislation was introduced as a result. Fortunately, many of the recommendations of the commission were administrative in nature and were carried out by neighborhood activists during the course of the Carter administration. Unfortunately, the positive effects of those changes was to be as short lived as the administration. Neighborhood Programs

Legislatively, there were many gains for community activists in 1977: 1. Community development was expanded in agriculture legislation 2. The Neighborhood Reinvestment Corporation (NRC) was created as an independent agency 3. Priority was given to community-based sponsors in the amendments to CETA

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4. Citizen participation and neighborhood revitalization were given emphasis in revisions to the CDBG 5. The Community Development Corporation (CDC) program and the Office of Community Services were given strong budgetary support 6. HUD created an office of neighborhoods from existing funds and the Neighborhood Self-Help Development Act 7. By an administrative act, EDA created an Office of Special Projects for community-based development 8. The National Cooperative Bank was created by Congress as a financing mechanism for business co-ops, community-based cooperative endeavors, and community development credit unions, and most CDCs became eligible to borrow

In addition to the above, to extend the Volunteers in Service to America (VISTA) program’s success as a catalyst of new community organizations, the Carter administration added “mini grants,” which were direct monetary awards to new organizations employing VISTAs. Within a year, there was a surge in new neighborhood organizations, but the boom was shortlived as midterm congressional elections produced a more fiscally conservative Congress. Urban Policy

The first of a series of presidents who ran as an “outsider” to the Washington, D.C., establishment, Carter arrived without a team or clearly articulated domestic policies. The activists who were brought into the administration came with clear ideas from their various movements. In addition, local governments loyal to the Democratic Party contributed experienced and successful state and local government managers. The first major piece of Carter urban legislation came from traditional Democratic Washington think tanks: the Urban Development Action Grant (UDAG) Program. UDAG focused on urban renewal but was driven by an agenda that was decidedly focused on economic development and “downtown redevelopment.” One new recommendation arising from the program was to use federal subsidies to leverage private investment in neighborhoods. That policy concept began a theme of federal-private partnership that remained an element of urban policy into the 1990s.

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Shifting the Government’s Community Development Role: Partnering with the Private Sector

HUD gave community-based organizations special priority in employment and training funding under Carter. Congress awarded HUD grants directly to neighborhood organizations that became developers of housing and economic development projects. The Neighborhood Self-Help Development Program was a national network for funding and training. The program also served as a bridge between the neighborhoods’ revitalization efforts and community development techniques. By the end of the Carter administration, the number of community-based organizations actively engaged in housing and economic development had grown from slightly more than 100 to almost 1,000. A special projects office established in the EDA contributed to the expansion of development capability at the local level. The EDA, HUD, and the U.S. Department of Labor also teamed up on a number of demonstration projects to show the capabilities of community-based organizations and to bring together employment, training, housing, and economic development to promote a more comprehensive approach to neighborhood revitalization. t h e r e agan ad m i ni s trati o n

When Carter lost his reelection bid in 1980, Ronald Reagan came to Washington with a radically different agenda that included dramatically reducing federally subsidized social services and curtailing activism. The cuts were drastic. The federal budget for domestic initiatives was tremendously reduced. Meanwhile, federal support was increasing for the suburbs. The economic recovery was spurring further suburbanization and home building, and increased defense spending favored suburban areas. The cuts in direct federal spending for subsidized housing was matched by huge increases in the federal tax expenditure for home mortgages resulting from high interest rates. Under the Reagan administration, HUD, HHS, EDA, and the U.S. Department of Agriculture shifted from the neighborhood-oriented focus of the Carter administration and backed away from their support of community-based development. The CDC program was converted from a

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general support program for designated CDCs to a project-specific, competitive pool open to any community-based development activity. The Neighborhood Self-Help Development Program was eliminated. Community-based organizations needed to look to the private and nonprofit sectors for program funding rather than to government sources. As federal support for housing and community development was reduced, ineffective administrations were installed at HUD and EDA. The Small Business Administration shifted from direct activity to support businesses to making loan guarantees primarily. Outside of the government, organizing at the neighborhood level substantially declined. In the absence of adequate public funding, private financial supporters such as foundations found themselves dedicating their resources to the rising crises of homelessness, hunger, and disease. They shifted support that had been available for community organizing to address more basic human needs. Nonetheless, gains were made in some aspects of organizing. The Catholic Campaign for Human Development expanded its financial support for community organizing. Some of the organizing activity found a new focus in constituency organizing (e.g., women, youth, new immigrant populations) and followed a similar path to that of earlier neighborhood organizing and development. In 1981, the Community Services Block Grant (CSBG) was passed, rescinding the Economic Opportunity Act and the Green Amendment, which enabled designated local agencies to receive funds directly from the Office of Economic Opportunity. Under the CSBG, local Community Action Agencies (CAAs) recognized by the Community Services Administration (CSA) were eligible for CSBG funding. Overall funding was reduced, however, as the new system of eight block grants consolidated more than 200 federal programs. Under the block grants, states had the power to distribute the funds. The CSA as an independent agency was abolished, although the number of CAAs themselves increased (Garson, n.d.). Other programs moved to cabinet agencies or were eliminated. Though political pressure at the state level kept most of the block grant money in the hands of CAAs, a majority of CAAs had become entrenched in social service delivery organizations and focused on direct service rather than social and community change. The CDC program became a discretionary program of the secretary of Health and Human Services and was opened to all nonprofit organizations with a development project.

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Although VISTA was kept as a program and an independent agency, the mini grants program created by the Carter administration were eliminated. The Congressional Response to the Reagan Cuts

Two cardinal principles of Carter administration policy had become ensconced in urban revitalization efforts even through the Reagan administration: (1) the concept of partnership among government, private, and neighborhood/nonprofit sectors and (2) the emphasis on community-based nonprofit development organizations. Local government and nongovernmental activists continued to emphasize leveraging private investment and neighborhood organizations as developers. Congress passed the Neighborhood Development Demonstration Act, which authorized HUD to make matching grants to neighborhood organizations that raised local money for neighborhood projects. The program was supported by Republicans who liked voucher programs and by Democrats who wanted to see resources go directly to neighborhood organizations. Although never very large, the program preserved a neighborhood focus. Community Reinvestment

Advocates found remarkable success in the Congress on community reinvestment. As financial institutions sought broader powers and savings and loans organizations required a federal bailout, neighborhood activists exacted increased community reinvestment requirements as a price of passage. In 1987, the Home Mortgage Disclosure Act was made permanent. CRA was made more forceful in the 1988 Bank Powers Act and again in the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). commu n ity -bas e d d e ve lo p m e nt br oa de n s

Activist housing and economic neighborhood groups doubled in number to 2,000 during the Reagan administration. Programs became prominent in regions of the country where they had been absent, and more diverse organizations and ethnic groups were served using private sector techniques and investments. Private philanthropy increased the amount of its

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support by 400 percent, and the number of foundations providing support increased by 1,000 percent. Neighborhood development organizations during this time owed their origin to nongovernmental roots and even to government protest. CDCs and neighborhood groups blossomed in a steady stream of successes. Although they were small scale, communitybased development programs emerged in the early 1980s as a consistent mechanism for physical, economic, and residential redevelopment of communities. At the same time, however, major reductions in federal funding were undermining public sector efforts and removing the subsidies that had made inner-city development attractive to the private sector. Public expenditures in housing and community development declined by 80 percent in the early days of the Reagan administration, taking the largest percentage cut of any federal program. Neighborhood-based organizations and nongovernmental advocacy groups during this time were a natural organizing and delivery mechanism for the new public-private partnerships, and soon a group of new nonprofits joined neighborhood organizations as real estate and business developers. When homelessness became a part of the American fabric for the first time since the Great Depression during the 1930s, social service providers increasingly found themselves in the business of providing shelter and employment. They saw in neighborhood organizations practitioners using skills in real estate and business development and saw the potential to address two issues that were plaguing their social service work: (1) initial capitalization that could replace the constant pressure they experienced to raise an annual subsidy and (2) real estate and business projects that were not only permanent and self-sufficient but also were potential profit centers for cross-subsidizing social service operations. Frustrated by referring youths with whom they worked to dead-end job training programs and short-term employment, youth-serving organizations found themselves starting up businesses. Homeless shelters began seeing a new group of clients—families with children newly experiencing homelessness—and concluded that the only permanent solution to homelessness was the creation of more affordable housing. Many envisioned a continuum of care from nightly emergency beds to transitional housing to group homes to permanent rentals and homeownership in independent settings. The shelter organizations collaborated with the nonprofit neighborhood developers and/or themselves became developers. Organizations

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working with women who were victimized by domestic violence recognized that the same continuum of care and housing was necessary for their clients, and soon they were also acting as developers. Specialized Intermediaries for Community-Based Development

In the early 1980s, a series of private intermediary organizations arose and garnered attention and clout. The intermediary concept attempted to solve the problem of the reluctance of a variety of foundations, corporations, and financial institutions that were attracted to community-based development but hesitant to deal directly with so many local groups because the funders themselves lacked the expertise to evaluate and improve the capability of these inherently small, local organizations. Under this concept, a new organization could be formed with the requisite expertise and the participation of the funders or their surrogates in governance to serve as an aggregator of funds to be redistributed with care and control, literally an “intermediary” between the sources of funding and the community-based development organizations themselves. The intermediaries could also launch a more sophisticated approach focused on seeking financing in the secondary market, using a methodology taken from the nongovernmental neighborhood sector: combining public, private, and community resources to finance projects that brought jobs and services to city neighborhoods. Three intermediaries took the lead in this effort: the Local Initiative Support Corporation (LISC), the Enterprise Foundation, and the Development Training Institute (DTI). local i ni t i at i v e su pport c or por at i o n .

FORD created LISC to marshal private sector resources in a national pool to support the financing needs of CDCs and neighborhood development organizations. LISC focused on making loans for project development and supplied consulting and predevelopment financing. enterpri se fou n dat i on .

The Enterprise Foundation provided financial support and capacity building to a wide variety of nonprofit housing efforts addressing the shelter needs of “the country’s poorest families,” including providing access to private capital along with other financial intermediaries.

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developm e n t t r a i n i n g i n st i t u t e .

DTI, supported by national and local foundations, was created to train the top staff members of community-based organizations. The focus of DTI’s training was in private sector financing techniques and strategic neighborhood development activity. Their efforts were bolstered by enough historical data to address credit concerns of secondary market sources. Financial institutions solicited investment funds for predevelopment loans. Creative financing sources, such as religious institution pension funds and local private donors, were also utilized. Soon, a national network had grown up under the rubric of Community Development Financial Institutions (CDFIs). Through their collective efforts, the intermediaries had formed a permanent national infrastructure to sustain and expand local efforts and to recruit a broader set of financial partners. Downscaling Economic Development

Community-based and philanthropically supported organizations took a leadership role in the absence of the UDAG grants program and the large reduction of the EDA. They realized that, for most low-income people with no capital or business experience, even small businesses were too big to start. Soon, microenterprise, a mechanism successfully used in Third World development, was being imported to the United States by nonprofit developers and those organizations serving constituency groups such as women or immigrants. More than a financing mechanism, microenterprise development emphasized self-sufficiency, peer support, and community building among budding entrepreneurs (Yunnus, 2007). The Rise of Housing Partnerships

Progressive voices in the private sector soon began marshaling private resources. When the Reagan Tax Simplification Act of 1982 eliminated real estate tax shelters, a low-income tax credit was passed that included a setaside of 10 percent of all tax credit money at the state level for nonprofit developers. Thus, a new federal approach to support neighborhood groups emerged: set-asides in major programs being decentralized to state and local government. The tax credits reinforced a widespread movement of

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collaboration among private sector investors, capable neighborhood-based development organizations, financial institutions seeking to meet their CRA obligations, and local governments seeking leverage for CDBG funds and state bond financing. The Rise of the Underclass

In the 1960s, concern for the poor drove the War on Poverty and resulted in the government programs of the 1970s. In the 1980s, a new analysis of poverty showed a disturbing trend: An increasing percentage of the poor were permanently poor across generations and were also increasingly concentrated in areas in which virtually the whole population was composed of people with low incomes and low educational achievement, high numbers of children born to unmarried parents, and households that were suffering from a number of other social pathologies and frequently headed by single unemployed women. The concentration of poor people of color was in areas where the economy and institutions were isolated from the mainstream of society. This new segment of the population came to be called the “underclass.” The emergence of the underclass was interpreted differently by liberals and conservatives. While both agreed on the facts of the problem, conservatives saw the underclass as a phenomenon to be addressed at an individual level. Liberals, preferring the term “persistent poverty” to underclass, believed social factors were largely responsible and argued for the need for institutional change. Leading national foundations increased investment in the analysis of these new dimensions of poverty, the identification of policy alternatives, and the improvement of programmatic endeavors to address the poverty and social conditions of the very poor directly. The Rockefeller Foundation, for example, set aside $65 million over five years for a deliberate program of social science research, policy forums, and local analysis and action. The investment by Rockefeller and other foundations brought the issue of poverty back to the attention of the public and spawned a new series of local and comprehensive approaches for direct action on poverty. The Reawakening of Comprehensive Approaches to Poverty

The “new” poverty analysis of the early 1990s demonstrated that no single categorical service could possibly help people in persistent poverty get out

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of their situation; only a multifaceted, coordinated approach had a chance of succeeding. For some, coordination meant better case management; others coupled case management with services based on the understanding that those suffering need to be active, empowered agents of their own transformation. Once the province of community organizers, “empowerment” was being increasingly adopted as a value by other types of organizations. This approach sought to decrease the dependency mentality of “clients” or “problem families” and to institute methods that increased their capacity to live their lives better. Jody Kretzmann and John McKnight (1993) of Northwestern University encouraged an asset orientation to assess individuals and neighborhoods rather than a problem or deficit orientation. Jack Kemp, Bush’s secretary of HUD from 1989 to 1996, picked up the empowerment theme and incorporated it into a free-market analysis, resulting in the concept of an “enterprise zone” for economic development. The empowerment concept ultimately resulted in the passage of the Empowerment Zones and Enterprise Communities Program under the Clinton administration. Rural Crisis Turns to Community Building

Rural communities were affected in the 1980s, too. The number of family farms rapidly decreased, and rural natural resource industries declined. However, community leadership forged a collaboration between the towns and institutions, refocusing economic opportunities and embracing their assets. Comprehensive Action on Poverty

In the late 1980s and early 1990s, several research projects on poverty sponsored by the Rockefeller Foundation began implementing demonstration programs. The Urban Strategies Council of Oakland demonstrated a new approach to community-based initiatives. The council acted as a citywide catalyst to address poverty by (1) reforming public and private institutions’ reach, (2) comprehensively addressing population needs through incorporating authentic voices of the poor, and (3) creating collaborations among all stakeholders and delivery institutions. The council chose not to become a service deliverer itself in order to maintain objectivity and credibility as an arbitrator and researcher.

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Soon, collaborations that imitated the council’s “community building” model began springing up in other cities. The Surdna Foundation of New York marshaled private foundations to join its demonstration project, which used already successful CDCs as vehicles of redevelopment. Several community foundations launched their own programs to apply the experiences of the Rockefeller and Surdna approaches. FORD created the Neighborhood Family Initiative, which joined community foundations and inner-city community organizations in five cities to address the needs of poor families comprehensively. The Center for Community Change acted as intermediary advisor to the projects. The Annie E. Casey Foundation (AECF), a foundation dedicated to the betterment of families and children, focused its poverty efforts on public agency reform. It recognized the need for changing the movement of reform to a “bottomup” approach versus the traditional “top-down” approach. AECF added new components to ongoing programs and invested in a long-range community building initiative in five successful CDCs, thereby combining people-oriented welfare and service programs with the place orientation of CDCs. t h e g eo rg e h .   w. b u s h ad m i ni s trat io n

Reagan’s HUD secretary was so inactive and ineffective, he was nicknamed “silent Sam Pierce.” After his election, Bush appointed Jack Kemp as HUD secretary, and progress was made in HUD once again. HUD

Kemp became a strong voice in the Bush administration for addressing poverty as HUD secretary. He expanded HUD’s economic development role, created new programs to encourage tenant management and tenant ownership of public housing, and promoted an enterprise zone approach to city and economic development. Kemp divested the secretary position of practically all discretionary authority, leaving only formula block grants and competitive bidding as means of awarding HUD funds. He also initiated a number of programs called HOPE I, II, and III to convert rental and foreclosed housing to homes available for ownership.

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Congressional Initiatives

In Congress, community-based development advocates were successful in extending the low-income housing tax credit and its nonprofit set-aside and increasing direct federal support for programs for homelessness. A clamor for broader action on housing resulted in the National Housing Task Force. In 1990, the task force led to the creation of a new federal housing program, HOME. Though emphasizing the role of local government, flexible delivery mechanisms, and local comprehensive plans, HOME set aside 15 percent of all funds at the city and state level for nonprofit developers. A strong technical assistance component of the program also had a special set-aside devoted to community-based developers. Community-Based Development Comes of Age

In the private sector, the Rockefeller Foundation created a new financing mechanism for community-based developers, the National Community Development Initiative, which created a $65 million fund from eight foundations that were distributed to twelve cities through LISC and the Enterprise Foundation. Increasingly, local support expanded from project financing to general operating support and training. Local and national foundations blended funds in a common pool to provide multiyear general operating support for successful CDCs. While the funding commitment covered several years, each year’s funding was released based on the accomplishment of specific production, organizational improvement, and community building goals established by the grantee organization in its own strategic planning process and negotiated with the funding collaboration. By the end of the Bush administration, community-based development organizations had become a major feature of all significant public and private urban policy and program frameworks. Special funding was given to NRC and DTI to forge a comprehensive plan for human capital in the field. That two-year effort generated research and analysis on major human capital problems, produced a comprehensive plan, and organized the first industry-wide collaboration in the field. The Human Resources Consortium, composed of fourteen national organizations and local representatives, launched a national pension plan

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and began work on an action agenda in five major areas of human resource development: recruitment and retention, compensation and benefits, education and training, career development, and personnel practices. Churches Become Prominent

The late 1980s and early 1990s saw other changes in community-based efforts. Black churches significantly expanded their activities to address the poverty of inner-city African American communities. The Industrial Areas Foundation (IAF), Saul Alinsky’s national institution discussed in chapter 3, radically altered its community organizing approach from a neighborhood federation defined by geography to a federation of institutions, largely churches. Both efforts brought churches more to the fore as mechanisms of addressing empowerment and poverty issues. The result was a higher degree of private support for religious efforts than had ever been possible before. t h e cl i nto n ad m i ni s trati o n

As president, Clinton brought the “middle way” approach to the federal government that he had used so successfully to shape a centrist but aggressive policy framework for the Democratic Party while he had been governor of Arkansas. His first task was putting the economy back on its feet; the second was reforming government and its programs. Clinton came to office at the time of an economic recession that included a “bust” in the rapid escalation of value and expansion in the high-tech world, the so-called dot-com boom. Economic policies of the Federal Reserve and the Clinton administration, including the passage of the North American Free Trade Agreement (NAFTA) and a reduction in the federal deficit that had substantially increased under the Reagan and Bush administrations, sparked a remarkable recovery that lasted into the early 2000s. The creation of robust economic growth, up from 2.8 percent to 4.0 percent, the creation of 2.7 million new jobs and a reduction in unemployment from 6.9 percent in 1993 to 4.0 percent in 2000, and a reduction in minority unemployment to its lowest level on record had a dramatic effect on the framework for and the practice of community economic development, as it did on most aspects of the country.

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Communities were more prosperous, and community economic development became increasingly more possible. Clinton’s approach to government and its programs was a combination of a liberal belief in the power of government and a conservative view of the need for a reform of the New Deal framework begun in the 1930s. His approach embraced entrepreneurship, the capitalist belief in the power of markets, and a partnership of the private sector with government. The creation of the Corporation for National Service early in the administration demonstrated Clinton’s belief in the potential of a broad call to all members of society to join in addressing society’s problems. In social and educational programs, as well as in economic development, the Clinton administration applied tried-and-true research by experts (Rubin & Stankiewicz, 2003). Every department and every program was to be subject to a program led by Vice President Al Gore to reengineer or reinvent government for results and accountability. But Clinton also believed in the power and responsibility of the president to lead a formal National Urban Policy, a requirement Congress had previously assigned to the president but that had been ignored since the Carter administration. The results of the National Urban Policy were dramatic changes in housing and community development; expansion of homeownership; the creation of the empowerment zones; community development financial institutions; and the expansion of CRA, welfare reform, redesigned work programs, increased educational financing, and an emphasis on regional approaches to urban development. Housing and Community Development

The Clinton administration was committed to aggressive federal leadership on community development efforts and expanded funding. HUD was revived from a demoralized agency at the end of the Bush administration to a center of energy and innovation, first led by former San Antonio Mayor Henry Cisneros and later Andrew Cuomo. These HUD secretaries moved on every front in the agency: public housing, affordable housing assistance, homelessness, community development funding, CDCs, economic development, and urban policy. For public housing, resources were made available to local agencies to address abuses in and the deterioration of public housing. The radical reforms allowed public

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housing authorities to beef up security, rid the projects of drug dealers, install computer-learning centers, and rent housing units to police officers and teachers in the local community. Under the Clinton administration, Kemp’s HOPE program was modified to include HOPE VI. The purpose of HOPE VI was to fund public housing authorities’ demolition of high-rise public housing and to replace it with lower-density, mixed-income, mixed-use projects that were developed by the private sector and large nonprofits. Despite some liberal opposition favoring one-to-one replacement of units as they were demolished, HOPE VI moved forward to eliminate virtually every dense highrise project in the country. Tenants who were displaced and chose not to come back were given Section 8 vouchers. Critics pointed to the net loss of publically owned units, but virtually all of the lower-density, mixeduse, mixed-income projects that replaced the old 100 percent low-income high-rises succeeded beyond planners’ dreams. By the end of the Clinton administration, Congress passed a HUD request as part of the Quality Housing and Work Responsibility Act of 1998 for major reconstruction of public housing, allowing all local public housing authorities the freedom to develop HOPE VI–type mixed-income, mixed-use projects under its general authority and funding. Outside of public housing, HUD under the Clinton administration upgraded each aspect of other support for affordable housing. It fell to HUD to implement the HOME program enacted in 1990 in the waning days of the Bush administration. Essentially a block grant for local agencies to shape to fit local needs, the program was heavily promoted by Cisneros, who built local expertise for best practices and increased the budget of the program. HUD during this time was especially effective in mounting a 15 percent set-aside for nonprofits classified as Community Housing Development Organizations (CHDOs) as well as a broad technical assistance program for local governments, private developers, lenders, and CHDOs. Even older programs in homeless services and the CDBG got new life under the reengineering-for-results approach taken by the Clinton administration. HUD required a unified, coordinated plan from all applicants for any funds to serve people experiencing homelessness and facilitated nationwide adoption of the best-practice approach to services: a “continuum of care” spanning emergency shelters for temporary residence,

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to transitional housing, to permanent homes for those on the street. For the CDBG, similarly, they asked local governments for a comprehensive plan for community development and housing as a condition of the use of these flexible funds. Facing the expiration of federal support for privately developed affordable housing under a program begun in the Johnson administration, HUD tackled the redesign of housing support for those privately developed complexes and invented a “mark-to-market” financial restructuring method that allowed many of them to continue as sources of affordable units. Without radical change and new money, many of the projects would have faced demolition or, if they were in now-attractive locations, conversion to market-rate housing. HUD also reached out to other mechanisms the federal government could affect for affordable housing. In 1993, Congress amended the legislation that created Fannie Mae and Freddie Mac to require these government-sponsored entities to meet affordable housing goals. In response to industry criticism and pressure from Congress, the financial regulatory agencies consolidated their review process with respect to community reinvestment and gave significant attention to financing community-based development. Encouraging Private Sector Investment and Homeownership

The Clinton administration expanded and made permanent the LowIncome Housing Tax Credit for rental housing. The administration also moved forcefully to promote the CRA. Again in response to industry criticism and pressure from Congress, the financial regulatory agencies consolidated their review process and gave significant attention to financing of community-based development. In response, the financial services industry invested more than $1 trillion in the middle years of the decade, compared to only a few billion in the first decade of the act (Di Lorenzo, 2005). Congress and the administration also increased their pressure on private government-sponsored entities, most notably Fannie Mae and Freddie Mac, to generate higher levels of affordable homeownership in the markets. As a result homeownership reached its highest level to date, 67.7 percent, reaching this level in some cases by expanding subprime lending to moderate income buyers (HUD, 1998).

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CDCs and Nonprofit Housing

CDCs and other nonprofits got new federal attention from HUD under Cisneros and Cuomo. The renewed homeless programs were virtually all carried out by nonprofits like the one Cuomo himself had headed in New York City. Congress amended the HOME program to allow 5 percent of the funds to be used at the discretion of local authorities for the general operating support of CHDOs. Federal HUD funds were added to the National Community Development Initiative (NCDI) created a decade earlier by foundations, and a number of new initiatives were launched that gave financial support to nonprofit developers and their networks. In addition, Congress passed a special program for the Colonias of the southwest, effectively incorporating nonprofit community-based development into rural policy. The interplay of increased government support for housing and the emphasis on nonprofits, both by the Clinton administration and by national intermediaries and foundations, resulted in a dramatic scaling up of the housing development capability and production levels of the nonprofit housing sector. The administration not only invested in the capability of the nonprofit development sector but also commissioned the documentation and evaluation that provided proof of their effect on low-income neighborhoods and management capability (Walker & Weinheimer, 1998). The unprecedented partnership of the public and private sectors made the 1990s a heyday for nonprofit housing developers, who became the dominant producers of affordable housing throughout the country during the decade. Some large-scale regional and even national developers emerged, both nonprofit housing groups such as Bridge (in the San Francisco Bay Area) and Mercy Housing (headquartered in Denver) and socially oriented for-profit developers such as McCormick and Baron, later McCormick, Salazar, and Baron (von Hoffman, 2012). CED and Community Building

The 1990s saw a continuation of the shift that began in the 1980s toward intermediaries outside of government serving as the major infrastructure for supporting the CED field and the growing emphasis on comprehensive community building. Unlike the resistant Reagan and Bush

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administrations, the Clinton administration responded wholeheartedly, creating more robust public-private-philanthropic partnerships. Expanded programs in many federal departments used some elements of a comprehensive approach and implemented nonprofit delivery and capacity building for community-based efforts and local public-private-neighborhood partnerships. The positive environment enabled the major intermediaries in traditional CED (LISC, Enterprise Community Partners, and Neighborhood Reinvestment) to grow and replace other mechanisms as the permanent framework for financial support, innovation, capacity building, and policy advocacy for the field. Habitat for Humanity and YouthWorks expanded and also received federal support from the programs opened up by the other intermediaries. The emphasis on nonprofit delivery mechanisms and public-privatecommunity partnerships dovetailed nicely with the ascendancy of comprehensive approaches to community development and alleviation of poverty. In the late 1980s, policy initiatives for comprehensive action had begun in the philanthropic and nonprofit sectors. During the 1990s, they not only gained considerable momentum outside of government but also gained strong support from the Clinton administration. The use of the concept and term “community building” expanded rapidly, locally and nationally. For example, the Cleveland Poverty Commission won widespread private sector support for a strategy of “village councils” that mobilized the energies of poor neighborhoods on their own behalf. The comprehensive solutions to concentrated poverty that had been promoted by national foundation-led initiatives in the 1980s expanded, spearheaded by the Rockefeller and Annie E. Casey Foundations. Intermediaries in workforce and youth development, family support, and community building grew. PolicyLink, headed by Angela Blackwell, a former Rockefeller Foundation vice president, launched. A specialized intermediary was founded and grew rapidly in promoting best practices and advocating a community building policy agenda. By 1992, representatives of local grantees and national foundations in three “comprehensive community initiatives” were meeting, inviting other local community building efforts not associated with the initial foundation-led experiments, and creating a new network, the National Community Building Network. Even as affordable housing support and production grew among CDCs, all the CED intermediaries began emphasizing the need for more

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comprehensive solutions to the issues of distressed neighborhoods and vulnerable families. They encouraged evaluation and reflection that showed the need to go beyond simple bricks-and-mortar building and promoted and funded best practices, especially for the many single-purpose housing developers and CHDOs that had been part of the “third wave” of CDCs. A new agenda began to appear among housing and community-based developers that included creating computer centers and assisted housing services to overcome the technology gap and to assist with education and workforce development for the residents. Some CDCs, such as Codman Square in Boston, made health issues a new focus for community development, and some organizations that had begun to work on education found themselves in the housing and community development sphere, such as the Harlem Children’s Zone (von Hoffman, 2012). The theme of community building began to be seen frequently in other Clinton policy and program frameworks as well. For example, the private sector’s Council for Economic Development included this strategy in its 1995 statement on private sector response to urban problems. The strategy also appeared in many applications for the Empowerment Zones program. empowerm e n t z on e s.

The success of the Clinton administration in rejuvenating the economy meant that actions centered at the White House, U.S. Department of the Treasury, and the Federal Reserve seemed to realize the adage that “a rising tide floats all boats.” HUD, rather than the U.S. Department of Commerce or EDA, turned out to be the center for programs directed to areas that did not float. At the request of the administration through the Budget Reconciliation Act of 1993, Congress revised the Enterprise Zone concept created by Bush and Kemp, added direct federal grants to the existing tax incentives, and expanded it into the Empowerment Zone/Enterprise Community program (Liebschutz, 1995). Based on a competitive process, which emphasized sustainable, market-oriented, decade-long strategies; high levels of community participation in the program; and empowerment-focused implementation, the administration selected nine Empowerment Zones to receive both grants ($100 million each over ten years) and federal bond and tax incentives and ninety-five Enterprise Communities to receive only federal bond and tax incentives. The $3.8 billion allocated by the federal program was matched by $10 billion in private sector

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financing (Berger, 1997). The program emphasized the value of comprehensive community building and empowerment mechanisms in both rural and urban communities as the heart of recovery and revitalization. Flexible federal support was awarded to local efforts that demonstrated a clear strategy resulting from a process involving leaders of all sectors. In policy and program, leaders at HUD constantly emphasized comprehensive, flexible, long-term approaches and even began moving away from purely inner city–oriented urban policy toward a recognition of metropolitan regions as the drivers of economic growth and the need for regional solutions. The energetic reforms of HUD under the Clinton administration in affordable housing and community development would have gone further had a conservative Congress not denied HUD the budget increases they asked for these programs. HUD became a national leader in thought and housing administration but never received the funding levels it had before Reagan. Community Development Financial Institutions

Clinton recognized that attracting private sector investment sometimes means creating new quasi-private mechanisms in which conventional institutions can invest that produce a form of conventional business and wealth outcomes. Clinton had been inspired as governor of Arkansas by the success of the South Shore Bank in Chicago, and he facilitated replication of the community banking model in his state. Now, he took the initiative to the national level. The Community Development Banking and Financial Institutions Act of 1994 provided funding for communitybased banks and alternative development financing mechanisms. The program was to be administered by the U.S. Department of the Treasury through competitive applications. While a handful of CDFIs already existed at the time of the act, the technical assistance and planning grants that were newly available helped many new organizations develop or expand their qualifications for capital grants. The field grew rapidly, awarding more than $1 billion in financial and technical assistance (Benjamin, Rubin, & Zielenbach, 2004). By fiscal year 2003, there were 223 CDFIs with combined assets of $1.5 billion. Through fiscal year 2006, the U.S. Department of the Treasury had invested $820 million in those institutions (Fabiani & Greer, 2007).

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The willingness to use government money to generate private sector investment in order to stimulate the economy was a concept the Clinton administration extended to other areas based on the success of CDFIs and the work of foundations and intermediaries in economic development. Microenterprise, mentioned earlier in this chapter, became a program of the Small Business Administration. Then in the last minutes of his presidency, Clinton proposed his final major piece of CED-related legislation, an act that Clinton deemed the “most significant effort ever to help distressed communities by leveraging private investment”—the Community Renewal Tax Relief Act of 2000 (Rubin & Stankiewicz, 2003). Not only did he expand funding for Renewal Communities and Empowerment Zones, but he also created the New Markets Tax Credit, which provided incentives to private sector investors within economic development projects in any impoverished census tract in the country. Those incentives were also administered by the U.S. Department of the Treasury and tied closely to the CDFI program. Families and Workers

The comprehensive approach of the Clinton administration was also applied to family development and poverty programs. The U.S. Department of Health and Human Services (HHS) revised several communitybased programs that were housed in the Office of Community Services, but welfare reform was perhaps the most dramatic and long-lasting change the Clinton administration brought to HHS. In 1996, Clinton introduced the Personal Responsibility and Work Opportunity Reconciliation Act, which repealed the Aid to Families with Dependent Children (AFDC) program, a mainstay of the American social safety net since the New Deal. Clinton also replaced emergency cash aid with the state block grant program, Temporary Assistance for Needy Families (TANF), which had dramatic requirements for participants receiving assistance to be actively engaged in work, technical job training, or public service. States were required to set specific goals for reducing their welfare rolls and moving welfare recipients into gainful employment. Welfare recipients were given a maximum of three years of support at a time (with five years of lifetime support, total) to leave welfare for work, training, or public service. States that did not meet their reduction goals risked losing their federal support.

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At the time of welfare reform, there had been a sustained economic boom and business and job expansion. The economic recovery had created jobs and reduced unemployment at an unheard-of pace. Moving welfare clients to full-time employment was more easily imaginable in this nearly full-employment economy than it had been at any time since the early 1960s. Welfare rolls declined, payrolls grew, and poverty dropped. There even were signs of a reversal of the concentration of poverty evident in the U.S. censuses of 1970, 1980, and 1990 ( Jargowsky, 2003). However, the economic recovery and the movement from welfare to work were not without their negative consequences, particularly the continued deindustrialization of the United States, characterized by a shrinking manufacturing sector and the growth of service, knowledge-based, and technology-driven businesses. One key consequence was generally lower pay for unskilled workers than unionized factory jobs had paid. On this issue Clinton again demonstrated a combination of reliance on the private market with government intervention or support. One of Clinton and congressional Democrats’ responses to the issue of lower pay was to raise the minimum wage and expand the Earned Income Tax Credit, though the increase in both measures was fought and defeated or limited by the conservative Republicans who controlled Congress. Nonetheless, the 1993 expansion of the Earned Income Tax Credit was the largest ever passed, raising the federal credit for any low-income working parent with a child from 23 to 34 cents per dollar he or she earned (Rubin & Stankiewicz, 2003). Another response lay in retraining and better preparing workers. During the economic recovery, employers demanded more qualified workers, and displaced industrial workers pressed for retraining. Workforce Incentive Boards replaced Private Industry Councils (PICs), which had administered job training funds. A higher level of state participation, regional workforce development plans, and further consolidation of the various “streams” of federal support defined the new approach. Moreover, the Clinton administration recognized the need to support retaining people in the workforce once they entered and worked to created more flexibility for workers. They doubled child care funding through the Head Start program and passed the Family and Medical Leave Act, for example, which enabled workers to take unpaid leave without losing their jobs. Clinton also embraced Individual Development Accounts (IDAs), a mechanism for providing incentives to low-income workers to build savings accounts.

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Education

With additional resources available, the Clinton administration aggressively addressed public education, particularly in urban centers. New programs for the expansion of federal aid for schools with high concentrations of disadvantaged children, community schools, and charter schools, as well as a new emphasis on standards and testing, emerged. With the economy’s demand for more skilled workers, private employers and industry groups became more involved in public education. They adopted schools, funded special private incentive programs, and became active in education policy-setting bodies. The pressure for standards encompassed two goals: (1) accountability for this huge public investment and (2) assurance that the economy was getting the workers it needed. Sprawl, Smart Growth, and Regional Solutions

Both inside the Clinton administration and outside government, there was a growing emphasis on metropolitan regions, not just cities (HUD, Office of Policy Development and Research, 1995). Development dynamics had been operating in a regional context, and development programs needed to be addressed regionally. The function of cities in providing vitality through population concentration, innovation arising from diversity, and the accumulation of capital for the investment in new and expanded ventures now came from a larger geographic area that extended beyond the boundaries of the political jurisdiction of a given city. And cities, as such, still played the role of regional nucleus, functioning as an anchor and coloring regional identity. The booming economy and consumer confidence of the late 1980s and 1990s fueled the most rapid rate of suburbanization in American history, and retail business contributed to the migration as strip shopping centers were replaced by malls, megamalls, superregional retail centers, and big-box distributors of consumer goods. Superstores such as Wal-Mart took the big-box phenomenon to a higher level, displacing traditional retail both in small towns and in urban centers. While earlier suburban movements had drawn the residential population, retail business and entertainment locations outside of cities, as well as the shift from manufacturing to knowledge and service industries, meant a

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wider range of geographic locations were available to companies. The digital revolution severed the need for businesses to be concentrated in a central city. As the economy recovered, 90 percent of all the jobs created in the last decade of the twentieth century were located in suburbs. The burgeoning economy created new federal revenue, and Clinton enjoyed the first federal budget surplus in twenty-nine years (Viard, 1999). Prosperity under Clinton created higher local tax revenues for states, and many states, such as California and New Jersey, expanded their housing and family development programs with a special emphasis on nonprofits. Some states, like Maryland, imitated the Pennsylvania program that provided community development tax credits, an additional source of support for community-based development, by awarding nonprofits state income tax credits that they could sell to private corporations. The robust economy also created a real estate boom that would come back to haunt the country and the subsequent administration of George W. Bush. t h e g eo rg e w. b u s h ad m i ni s tratio n

As with the Clinton administration, the Bush administration had an effect on CED and the community building field through its actions on programs and policies both directly related to the work of the field, for example through community development, housing, and family support programs, as well as indirectly through the effect of its policies on the economy, most especially visible in the first decade of the twenty-first century’s worsening economic conditions, higher unemployment, and the mortgage crisis and its resulting foreclosures. Federal Programs for Communities and the Poor

Bush called himself a “compassionate conservative.” He saw the path out of poverty as the responsibility of individuals, not the government. He believed that the best way to help poor people was to reduce government programs because they created a culture of dependency and to allow people to help themselves (Kessler, 2004). Federal programs were inevitably ineffective, local government should be held more accountable, and the private sector and faith-based services were sufficient to meet communities’ needs (Silk, 1988). Economic incentives in the form of tax cuts and deregulation

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of business would reward all of those who could participate in the American economy. The few that could not would be taken care of by church charities or by state and local, not federal, government. The Bush administration therefore quickly reduced the budget for community development and housing, shrinking HUD and eliminating many programs. Small initiatives for faith-based institutions, most notably black churches, were proposed. Many faith-based organizations, in fact, had a relationship with the government long before the Bush administration, and most of those relationships were through nonprofit subsidiaries or spinoffs of the religious organizations themselves (Kramer, Finegold, De Vita, & Wherry, 2005). Bush sought regulatory revisions that would allow churches to receive direct federal support for providing human services (Fletcher, 2005). The Bush agenda of dramatically reducing domestic spending was realized following the terrorist attack on the World Trade Center in New York City on September 11, 2001. The surge of national unity was translated by Bush into support for tax cuts (through the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003) and the expansion of defense and antiterrorist security budgets later consolidated into the U.S. Department of Homeland Security. Followed in 2003 by the war in Iraq and its budget-busting expansion of expenses, these federal income reductions and expense expansions created just the deficit Republican conservative strategists desired to provide justification for broad domestic spending cuts (Lakoff, 2004). Each year, more community development programs were eliminated. In 2005 alone, the administration eliminated or severely reduced funding for 150 community development programs, including a 50 percent reduction in the CDBG (Weisman, 2005). In 2006, the administration proposed, but was defeated in, removing all community development programs from HUD’s oversight and turning them over to the U.S. Departments of Commerce and Labor—with even more drastic funding cuts. HHS, the U.S. Department of Labor, the U.S. Department of Education, and smaller agencies addressing community development, community building, and programs for the poor received deep cuts at the same time work requirements in welfare programs and other regulations were tightened (Hendrickson, 2004). Each year the administration advanced a new community development initiative but usually with little or no funding attached, such

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as a private sector incentive program called the American Opportunities Fund and a Competitiveness Initiative for innovation by colleges and universities (White House, 2006). Shifting Responsibility to the States and Local Government

While the devolution of federal programs and funding to the states was a hallmark of the reduction in domestic spending programs in the Reagan administration, the second Bush administration mastered the technique of devolving requirements to the states without any accompanying funding, called “unfunded mandates.” The mandates in Bush’s view were to bring discipline and accountability to local programs. The most famous of these was the No Child Left Behind Act, which imposed testing requirements on local school systems and required specific measures for “failing schools”— all with cuts to the Clinton levels of federal support for public education and a diversion of some funding to vouchers that would support private and charter schools (Imazeki, 2006). Housing Programs and Homeownership

Federal housing programs, never a favorite of Republican administrations, were hit particularly hard by domestic budget cuts. HOPE VI would have been completely eliminated had Congress not restored it for a few years. Funds for public housing, Section 8 vouchers, and homeless programs were substantially reduced (Fischer & Sard, 2008). Housing resources were reshaped to promote homeownership under HUD Secretary Mel Martinez rather than being targeted to create affordable rental housing for the most needy, reaching a record of $45 million in the HUD fiscal year 2005 budget. The initiatives, first announced by the White House in 2002, included a boost to programs for homeownership education; a reduction of federal regulations on home purchasing; HUD funding to help more than a half-million home-buying families with counseling services; the Zero Down Payment Mortgage, which allowed buyers to qualify for Federal Housing Administration (FHA) loans without having to come up with a down payment (the normal down payment would be rolled into the mortgage at a slightly higher interest rate than a standard FHA loan); adjustable rate mortgages (ARMs) with federal insurance; and a proposed

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Single Family Affordable Housing Tax Credit that would provide developers with nearly $2.4 billion in tax credits to build new homes or rehabilitate existing structures (Bergsman, 2004). To pay for these programs through the HUD budget, the Bush administration reduced the Section 8 housing voucher program by almost one million vouchers, reduced the number of public housing units replaced every year, eliminated community service and self-sufficiency initiatives under HOPE VI, and cut spending for housing devoted to those with AIDS and other disabilities (Dreier, 2004). One of the few community-based organizations to benefit directly from the emphasis on homeownership was Habitat for Humanity, which sought a tripling of its federal support. At the same time Bush was cutting HUD funds, in order to reach his stated goal of increasing homeownership among minorities by 5.5 million by 2010, the administration was requiring Fannie Mae and Freddie Mac to increase lending for low- and moderate-income homebuyer mortgages. Almost 60 percent of the loans offered by the two institutions had to meet these criteria by 2008. To meet the new goals, Freddie Mac and Fannie Mae would have to purchase 400,000 additional qualifying home loans during the four-year period. Buyer qualifications for many of these loans were relaxed below usual levels, called “subprime mortgages,” to meet these goals. By 2003, homeownership had increased by 68.3 percent. However, many of these loans were subprime, and by the end of that year, almost 6 percent of them had been foreclosed (Dreier, 2004). Unfortunately, the real estate market’s rapid rise at the same time as the Bush emphasis on homeownership created a financial bubble that burst during 2006 and 2007. Soon, the United States faced the highest rates of foreclosure since the Great Depression. Many new homeowners had achieved homeowner status by relying on unconventional and subprime mortgage products extended by mortgage brokers and unregulated financial institutions (Dreier, 2004). They were the ones most hurt when they could not afford or postpone the higher mortgage payments required by the subprime and other nontraditional mortgages, unlike some others who could refinance their houses that had increased in value over time. The Bush administration was slow to respond, and to solve the crisis it relied on the private market, in this case the mortgage servicers themselves. Leadership instead came first from community-based responses to the damage done to families who were losing their homes and to neighborhoods

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facing foreclosure-driven escalation of vacant houses. Not only were millions of homeowners losing their homes and their life savings invested in them, but the foreclosures were also decidedly concentrated, causing an abandonment of houses on such a scale that it threatened the stability of whole neighborhoods. Even neighborhoods with strong housing organizations were finding they were losing net units to abandonment after foreclosure while they were still attempting to produce affordable housing for homeowners. Local and finally state governments mounted some local programs to help and joined in the call for a more vigorous federal response. Cities could identify the real cost to their own budgets, which also included the increased security and fire protection needed as well as the loss of the tax base in neighborhoods threatened by massive foreclosure. The county treasurer for the Cleveland area and then the state treasurer of Ohio, for example, moved to prevent mortgage services from foreclosing and led land banking efforts. State bank regulators and their national association were more aggressive than federal regulators. Finally, the Bush administration proposed a small effort at FHA and included some relief in the Mortgage Forgiveness and Debt Relief Act of 2007 (White House, 2007) and created HOPE NOW, a coalition of banks and mortgage servicers that provided loan modifications to homeowners. Real estate was not the only area of the economy to go bust during this time, but it led the way to broad decreases in economic vitality and the value of the dollar—and to what some termed a recession. Areas of the country that had previously seen a real estate boom (e.g., California; Florida; Las Vegas; Washington, D.C.) saw the worst of the bust, but even weak housing markets such as those in Michigan and Ohio were not spared. By mid-2008, the Federal Reserve estimated the collective loss in home equity to be almost $880 billion of the nearly $3 trillion in net equity increase during the boom (Harney, 2008). Overall Economic Decline

However devastating the impact may have been of the direct reductions in federal expenditures for community development and other programs related to supporting low-income communities, the worsening of economic conditions for those of lower income under Bush’s economic policies was even more negative. The early success of the Bush economic measures was

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in triggering high growth in the income and wealth of the top quintile of the population by income, but this growth was accompanied by wage and income stagnation for the next two lower quintiles and a loss in the bottom two quintiles (Dreier, 2004). Unemployment and poverty, especially urban poverty and poverty among children, were on the rise again almost from the beginning of the Bush administration (Holt, 2006). As the American and world economies weakened, conditions for poor and low-income neighborhoods worsened. Perhaps nothing demonstrated the domestic failure of the Bush administration principle of small federal government as the disaster in New Orleans caused by Hurricane Katrina in 2005. While the ineffective federal response may have helped Americans see again the challenge of poverty and racism in the United States, it also revealed the insensitivity of the Bush administration to the federal role in helping the most disadvantaged. By the end of the Bush administration, the country’s economy had declined so precipitously that economists and the press were widely debating whether the nation was experiencing a second Great Depression. In the end, the term “Great Recession” dominated, indicating that it was the worst recession the country had ever suffered but for the depression of the 1930s. The economic collapse was disastrous for low-income communities. As the price of oil escalated in 2008, the economy further deteriorated. The race for the presidential election in 2008 seemed to demonstrate a general consensus that Bush’s policies had made economic conditions worse. CED and Community Building

The CED field and comprehensive community building initiatives took a beating under Bush, even though his emphasis on faith-based initiatives appeared to focus attention on just such nongovernmental mechanisms for community development. CED expansion slowed, and the reduction in federal support for housing and community development through local government created precipitous declines in housing and other production. The rhetoric of the private market was not matched by any initiative on its part to use the regulatory framework or bully pulpit to catalyze larger private investment in distressed areas, especially from financial institutions. In fact, deregulation of private business contributed to the mortgage crisis.

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The CED intermediaries had less success than before in shaping public policy and garnering federal resources for the field. They recognized the difficulty of convincing a conservative Republican-led Congress and White House and shifted more attention to state and local government and private foundations for resources. The losses, however, were dramatic. The dénouement of federal efforts, for example, helped contribute to the demise of the National Congress for Community Economic Development, which had been the most notable trade group of the CDCs from its inception in 1972 until it closed its doors in 2006. Emblematic of the decentralization was the persistence of state associations of CDCs and their creation of a new national network in 2007, the National Alliance of Community Economic Development Associations (NACEDA). Comprehensive community building professionals also hunkered down locally. The Annie E. Casey Foundation, one of the last national foundations explicitly making community building a priority, focused most of its effort on a couple dozen local areas. The devastation of New Orleans by Hurricane Katrina and the spectacular failure of the federal response also narrowed the attention and resources of national advocates of community-based solutions to the Gulf Coast. The national intermediaries all deployed resources to the area as well, limiting broader national initiatives. Metropolitanism

Sprawl, subsidized by government expenditures (e.g., in roads, sewer, water, school construction) and tax policy (e.g., by home mortgage interest deductions, enabling of utility expansion), gave birth to its own set of problems. Traffic and higher property taxes infuriated the exurban dwellers. Older suburbs began to show the same signs of deterioration that inner cities had experienced. Poverty, drug abuse, and crime increased in the suburbs. As sprawl acquired a bad name, a new set of policies became popular: smart growth, growth control, and metropolitan government. Many found that regional problems such as transportation, drug abuse, and affordable housing needed regional solutions. Soon think tanks were grinding out reports and conferences; activists were forming regional coalitions. The National Governor’s Association made “Smart Growth” its national theme (Katz & Wagner, 2008).

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Barack Obama brought to the presidency populist energy; a fairly liberal agenda; an appetite for government leadership in addressing domestic problems, including economic development and the plight of cities; personal experience as a community organizer; and a domestic policy advisor with a long history in housing (Pages, 2009). However, economic conditions inherited from the Bush administration, even before the inauguration, commanded almost the full attention of the administration and severely curtailed new initiatives. Nonetheless, the Obama administration has undertaken a plethora of initiatives for cities, CED, and comprehensive community building as well as creating an agenda for economic recovery programs. Economic Recovery

The Obama administration had a broad agenda for economic recovery from the Great Recession that included, among many other initiatives, rescuing the major financial institutions, bailing out the manufacturing industry, shoring up markets, extending unemployment and other benefits to those out of work, and resurrecting the housing market. Obama’s interventions in the economy succeeded enough to win him reelection in 2012. Economic growth was slow but steady, unemployment was declining, and consumer confidence was rising. While attending to the major economic infrastructure of the country, the Obama administration was also addressing the issues of cities and neighborhoods in the context of the recovery. The first and hallmark federal program of the recovery was the American Recovery and Reinvestment Act of 2009 (ARRA), with a $787 billion budget. ARRA included major investments for bailing out banks, companies, and the financial markets. ARRA also created the White House Office of Urban Affairs to ensure that cities recovered along with the economy and to direct new strategies for cities and metropolitan areas. ARRA also included specific housing initiatives, including the Neighborhood Stabilization Program (NSP), to address the foreclosure crisis both for individual homeowners who were unable to keep up with their mortgages and for neighborhoods affected by a substantial number of foreclosed homes. NSP had two rounds: the first by formula to

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cities and the second by competition to cities and/or nonprofits that proposed innovative strategies. For the administration, universal healthcare was as much an economic recovery issue as a matter of individual rights. The Patient Protection and Affordable Care Act (ACA) of 2010 provided insurance mechanisms that were opposed by conservative representatives in Congress. The ACA also emphasized underserved areas and provided some funding to be awarded competitively for locally generated innovation. Innovation, Comprehensiveness, and a Focus on Place

Competition among local entities to win funding by demonstrating innovation and best practices, seen in both the NSP and ACA, would become a hallmark of Obama initiatives in community development, community building, and other areas. In addition, the administration sought to overcome the lack of coordination of community development efforts among federal agencies, which was often mirrored by a lack of coordination among local government agencies and nonprofits. For too long, specialized departments, and even divisions within departments, operated within their own silos. Obama federal initiatives often involved more than one federal agency and required coordination among several local agencies to qualify. Moreover, an asset orientation was fast replacing the deficit model of previous federal programs; that is, applicants were expected to show the strengths and assets of the communities or clients on which they were basing their innovation rather than describing their deficiencies. Within these principles, the Obama administration launched an array of initiatives: 1. The Neighborhood Revitalization Initiative: a competitive, coordinated program of the HUD and the U.S. Departments of Education, Justice, and the Treasury to support neighborhoods in need to become thriving communities 2. The Partnership for Sustainable Communities: a coordinated program of HUD and the U.S. Department of Transportation to provide competitive grants to plan and implement sustainable approaches to city and metropolitan development

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3. The Strong Cities, Strong Communities (SC2) challenge: a partnership among a variety of federal agencies administered by the U.S. Department of Commerce’s Economic Development Administration, coordinated by a special office in the White House and focused on six cities, competitively chosen, to conduct local competitions for innovative comprehensive strategies for economic recovery 4. Promise Neighborhoods: a program of the U.S. Department of Education to provide competitive grants to local applicants seeking to replicate the nationally regarded Harlem Children’s Zone by creating a multiagency, comprehensive system to support children from “cradle to career” 5. Choice Neighborhoods: a program of HUD to provide competitive grants for planning and implementation to local collaborations of a multitude of agencies and organizations to revitalize neighborhoods with challenged public or assisted housing projects following a comprehensive agenda of their choice, utilizing the principles learned in the HOPE VI projects 6. The Social Innovation Fund: a competition run by the Corporation for National Service on behalf of a variety of federal agencies to identify local intermediaries in the nonprofit sector with promising plans and dollarfor-dollar matching funds for replicating innovations and best practices in economic opportunity, health, and youth

Some federal programs, such as HUD’s Healthy Homes, while not explicitly interagency, combined the agenda of several organizations, in this case, those in housing, health, and environmental protection (Miller, Pollack, & Williams, 2011). Others were competitions for innovation that were open to interagency and comprehensive approaches, such as the U.S. Department of Education’s Race to the Top initiative. The dominance of Obama’s focus on particular target communities or geographies and broad coordination across federal agencies was reminiscent of the Johnson administration’s Great Society programs (Savitch & Osgood, 2010). The federal initiatives and broad agenda were vigorous enough to trigger criticism from the conservative Right for federal micromanagement and wasteful and inefficient spending (DeHaven, 2009), a critique that echoed the prevailing principle of the Bush administration for small federal government. However, while Obama’s emphasis on cities and overcoming poverty was often attributed to liberals, his emphasis on innovation and competition had traditionally been attributed to

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conservatives. The difference was that federal initiatives were robust, and many programs included funding for capacity building to support local initiatives. There was also plenty of support within all of these initiatives for community-based development organizations and others committed to community building. Housing

To address the worst foreclosure problem the country had ever seen, the Obama administration launched an early delinquency intervention program for FHA-insured mortgages and the Homeowner Affordability and Stability Plan and, within that, the Making Home Affordable program and other programs. These programs provided funding for housing counseling and mortgage intervention for those who needed to lower their monthly payments, whose mortgages were underwater (that is, the remaining principal on the mortgage was in excess of the value of the house), or who were unemployed. These initiatives were neither aggressive nor substantial enough to prevent a continued increase in foreclosures that would continue to hurt individuals, whole neighborhoods, and housing market recovery. Banks under the federal government’s Home Affordable Modification Program especially were slow to reduce mortgage principals or otherwise recast the mortgages of homeowners in trouble (Standaert & Weed, 2010). Other initiatives of the Obama administration included adding a rural component to the McKinney-Vento Homeless Assistance Act, expanding programs for homeownership on tribal lands, and restoring funding for programs that provided services to people with HIV. It also sought to restore HUD’s budget but was thwarted by conservative Republicans who took over the House of Representatives in the midterm elections of 2010. The tradeoff for more housing programs meant a reduction in the CDBG, causing some advocates to question the depth of the administration’s commitment to community development (Holeywell, 2012). CED in the Time of Obama

The Great Recession dramatically reduced philanthropic giving and the budgets of government at every level, resulting in a crisis for the nonprofits that depended on them for grant funding. Moreover, CDCs and other

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nonprofits in CED were significantly engaged in housing and commercial real estate, precisely the segment of the economy that took the worst beating (Walker, 2002). Some organizations went under; others merged. CED intermediaries mounted significant bailout efforts, drew new funding, and encouraged greater diversification of funding sources, a trend that had already begun as more groups pursued comprehensive strategies. Expansion and innovation, however, were not dead. The nonprofit community development sector responded to the foreclosure crisis by generating a variety of initiatives of its own, including the purchase from financial institutions of bundles of foreclosed mortgages. The initial steps for this process were taken in New Jersey and were soon adopted nationally in the National Community Stabilization Trust (Hersh, 2009; Murphy & Falk, 2012). This initiative enabled local housing developers to rebuild neighborhoods broken by mass foreclosure. CDFIs expanded and became more sophisticated, provided a wider range of products, and helped stabilize CDC borrowers who were launching their own community development subsidiaries (Bugg-Levine, 2012). Moreover, what emerged as a consensus under the Obama administration was not an abandonment of housing but a reaffirmation of the importance of housing and physical development with the necessary coupling of it with more comprehensive approaches to community revitalization. Successful players in this arena were those that integrated strategies focused on individuals and families (people) with strategies focused on the community (place); were able to attract private capital; included workforce education and other human capital development in their programs; supported entrepreneurship, small businesses, and access to living-wage jobs; and were willing to focus resources on proven programs as measured by outcomes (Belsky & Fauth, 2012). con cl usi o n

The intent of chapters 4 and 5 has been to provide an overview of the evolution of CED and the public and private programs that surround it. All of the descriptions of individual programs could be expanded, and whole libraries exist on the domestic policies of the presidents. Fortunately for users of this text, the Internet provides ready access to a wealth of information about these policies and programs and the politics surrounding them.

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All of the federal agencies maintain their own websites, most with excellent histories of their programs and impressive resource libraries. For presidents of the digital age, even their White House web pages are still available. The other intention of these chapters was to present a historical context for programs so that they might be seen as solutions, hypotheses to address problems of the day. An enriching exercise for students of this text is to ask, “What problems are these programs trying to solve? On what data and analyses were practitioners relying? What did they fail to take into account? What were the unintended consequences of the actions they took to address a particular problem?” These questions hark back to chapter 3, a look at how cities grew and deteriorated, which explained the context for the problems that CED works to address. These questions also lead forward to chapter 6, an exploration of CED strategies and the process of analyzing a situation and choosing an appropriate solution. The case study that follows this chapter discusses Chicanos por la Causa (CPLC), one of the oldest and most successful CDCs in the country. CPLC was one of the first formal CDCs but grew out of the Chicano civil rights movement, illustrating the interaction of community initiatives, advocacy, and program development in the federal government. CPLC is also one of the most successful organizations in availing itself of the wide variety of programs over time that served communities, as illustrated in chapters 4 and 5. chi canos por la c a u sa , i n c . (c plc ) Description

Origins In 1968, several Mexican American students at Arizona State University from South Phoenix were leading a movement to build Chicano pride and take action on problems that plagued their own community and created the Mexican American Student Organization (MASO). Among the problems were racial discrimination, ethnic tension, and poverty (Ruiz & Korrol, 2006). They mainly focused their efforts on the university to meet Chicano educational needs. They staged a sit-in in the administration building until the school signed a contract to no longer discriminate against Chicano workers in the linen service. In 1969, the students Rosie Lopez, Alfredo Gutierrez, Arturo Rosales, and others joined forces with Chicano community activists they met in the Phoenix barrios. With the help of the activists Joe

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Lopez, Manuel Dominguez, Terry Cruz, and the farm worker organizer Gustavo Gutierrez, the students incorporated the Chicanos por la Causa (CPLC) (“Our History,” n.d.; Ruiz & Korrol, 2006; CPLC1969, 2010). The militant group’s initial agenda focused on education and politics. For example, a CPLC member ran for a position on an inner-city school board, the first electoral experience for members who currently comprise the core of the Chicano political leaders of Maricopa County, Arizona. They also organized high school walkouts in Phoenix to protest inadequate funding, lack of relevant courses, and the failure of the school board to address racial tensions between the Latino and African American students (CPLC1969, 2010). In 1970, the group went in a different direction when the Ford Foundation provided the group with funding and Ronnie Lopez became director. He helped reform the approach of the CPLC to be more accommodating when dealing with the government and potential funders. The organization then expanded its scope to include education, housing, economic development, and social services (Ruiz & Korrol, 2006). Tommy Espinoza succeeded Ronnie Lopez and guided the CPLC into its current state. He was a special assistant to the 1978 governor of Arizona and also helped create organization centers in Tucson and Yuma (Ruiz & Korrol, 2006). The organization estimates that over 100,000 people receive CPLC services every year through counseling programs, housing, senior citizen housing and recreation, domestic violence prevention, and economic development (Chicanos por la Causa, 2012). Today, the CPLC’s main lines of business have expanded to include education, housing, economic development, and social services (CPLC, n.d.c.).

Structure CPLC is one of the largest CDCs and the second-largest Hispanic nonprofit in the United States, and it has more than 800 staff members (CPLC, n.d.c.). CPLC’s board of directors consists of twenty-three members, including officers (CPLC, n.d.a.). CPLC has an extensive list of supporters and partners, including universities, banks, major corporations, and local governments (CPLC, 2010). Additionally, CPLC has offices in all fifteen counties in Arizona (CPLC, n.d.f.).

Funding CPLC’s initial financial investments came from the Southwest Council of La Raza, which is now the largest Latino civil rights and advocacy organization in the United States. Maclovio Barraza, an Arizona labor leader and board member of the Southwest Council of La Raza, introduced the CPLC to the Ford Foundation as a potential funder. In 1970, the Ford

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Foundation gave them full funding. In 1974, the Ford Foundation reduced funding in the wake of the 1974 recession, but within two years the CPLC earned 2 million dollars in federal funding (CPLC, n.d.d.). CPLC’s total revenue for fiscal year ending June 30, 2011, was $68,510,026, almost $27,000,000 more than the previous fiscal year (GuideStar, 2011). CPLC attributes its growth to several factors, including its strategic intercompany agreements that fund core staff with profits from real estate commissions and real estate deals. Additionally, CPLC generates administrative funding through its property management company, Tiempo, Inc. (“Finding Ways,” 2000). Tiempo is a for-profit subsidiary of CPLC whose purpose is to create affordable housing through the entire process of purchasing land for the construction and management of homes. These homes are in areas targeted for revitalization. They also acquire existing communities and change their position on the market (“Tiempo Inc.,” n.d.). CPLC estimates more than 88 percent of all funds received by their organization are applied to direct services (CPLC, n.d.e.). Strategy and Programs

Target Community CPLC’s target population originated as Latino students and community members in the barrios of South Central Phoenix. Today, with new direction and a greater funding base, CPLC also expanded to provide services to all types of Arizona residents regardless of ethnicity, race, creed, gender, or age. CPLC provides social services geared toward the elderly with programs such as Meals on Wheels, case management services, and senior recreational programs. They also provide social services to youth through programs such as Head Start and Summer Youth Employment. CPLC provides social services for children and families in need of child and prenatal care, as well as for families struggling with HIV and drugs. CPLC also helps the Latino population through immigration legalization procedures as well as in Head Start programs for migrant families (CPLC, n.d.f.).

Strategy CPLC initially started as a referral center for Chicano residents to help them access public services; they then developed their own services as they realized public services were inadequate (CPLC, 2010, Feb. 3). CPLC provides services for its clients in a holistic, all-inclusive manner. CPLC has a service or a program that addresses nearly all areas of the lives of the people they serve. CPLC strives to reach their objective of greater self-sufficiency by spearheading innovative initiatives coupled with unprecedented

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partnerships under the stewardship of diligent executive management and board of directors members (CPLC, 2010).

Housing CPLC targets low- to moderate-income individuals, families, seniors, and multifamilies who need help with housing counseling and other housing needs. These families must be located in economically distressed neighborhoods. In 1993, CPLC started the Self Help housing program to help very low-income families construct their own homes. The program targets families who otherwise could not purchase a home. Families help one another work on weekends to construct 65 percent of the home themselves. The reduction of labor costs makes the home affordable. If families are unable to make mortgage payments during the construction of their home, the payments can be subsidized (Chicanos por la Causa, 2010). Notably, CPLC, as the lead agency for a national consortium of fifteen urban and rural markets in eight states, was awarded HUD grants totaling $137 million for the revitalization of neighborhoods plagued by foreclosures and abandoned properties (Chicanos por la Causa, 2012).

Economic Development CPLC targets small and emerging businesses and targets land to build on specifically in economically distressed neighborhoods in Arizona. Some programs like Prestamos, a community development financial institution subsidiary of CPLC, focuses on supporting small business ownership, specifically for minority- and women-owned businesses. CPLC Prestamos has successfully funded over $20,000,000 in loans to small businesses in Arizona (Chicanos por la Causa, 2010). Prestamos Lending Company offers two main loans: the SBA Microloan and the SBA Community Express Loan. The Microloan addresses businesses looking for financing between $2,000 and $35,000. The Community Express Loan is for financing between the Microloan and standard outside loans in the range of $35,000 to $250,000 (“Business Lending,” n.d.b.) In 2009, CPLC launched a restaurant franchise business and employment services in a declining area in South Central Phoenix that had been neglected by the private sector. The CPLC Buckeye Commerce Center is now a major source of revenue and employment for the South Central Phoenix community. The center houses restaurants and nonprofit agencies, including a free computer facility for community members (Chicanos por la Causa, 2010).

Education CPLC provides early prevention and school enrichment programs geared toward at-risk youth, including several leadership programs and scholarship opportunities to middle and

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high school students in Arizona. They also created a charter school specifically for Latino students to increase academic rigor and graduation rates, as well as to infuse Mexican American/Haiki studies into the curriculum. These charter schools are held to the same academic standards as other state public schools (Chicanos por la Causa, 2010). Additionally, CPLC’s Arizona Migrant and Seasonal Head Start Program (AMSHSP) targets migrant and seasonal farm workers’ children aged zero to five and their families. The program serves 752 families with children at nine different centers in Arizona. The center-based program offers year-long full-day services including childcare, English as a second language (ESL), family literacy programs, oral health education, and mental health services. They also organize family activities and help model leadership and healthy family behaviors to inspire the children and families that AMSHSP serves (Chicanos por la Causa, 2010).

Subsidiaries CPLC has several wholly and majority-owned subsidiaries in the areas of construction, realty, community development, social services, and small business lending. CPLC’s partnership with these subsidiaries allows extensive services to be provided in the rural and urban areas of Arizona to individuals and families with low or moderate income levels. Some of these subsidiaries include Agudo, Chicanos por la Causa, Tucson Foundation, La Causa Construction, La Causa Development, La Causa Realty, Parenting Arizona, Prestamos Small Business Lending, Promesa, Shuttleport, and Tiempo (Chicanos por la Causa, 2010).

Major Successes CPLC is Arizona’s largest community development corporation, providing services in urban and rural areas of Arizona. Today, CPLC has expanded its services to include other areas in their region, such as Clark County, Nevada. Now over forty years old, CPLC has experienced phenomenal revenue growth and success (Chicanos por la Causa, 2010). Some of CPLC’s successes include the training of 150 people annually under the Workforce Investment Act (WIA) via the West Side Workforce Development Center (WWDC) and the development of affordable, single-family housing units for low-income families in economically distressed neighborhoods and the rehabilitation of homes under federally funded programs. In addition, the establishment of Xinachtli (Germinating Seed), a youth leadership development conference, born out of Corazón de Aztlàn and held annually, provides students from across the Tucson community an opportunity to come together and participate in leadership-enhancing activities and presentations. CPLC subsidiaries are also an important part of their success. For example, as of 2002, Tiempo, Inc., supervised 3,663 housing units. Additionally, Agudo Development LLC was

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formed in 2003. This organization provides full-service commercial real estate management and development to CPLC’s existing and future commercial properties/buildings owned and/or leased by CPLC. In 2005, Calli Ollin Academy (House of Knowledge), Inc., a charter school with three campuses, opened. Calli Ollin Academy offers high school students an alternative learning environment and provides them with a unique opportunity to receive what they have not received in the traditional education system. Also in 2005, the Carl Hayden Community Center opened to provide recreational and educational services to youth and seniors.

p a r t 2

Strategy, Organization, and Success for understanding the field of community economic development (CED), we turn to practice. This section starts with strategy—its importance, methods for setting it, and the options for an overall game plan for revitalizing a community. Without a strategy, CED practitioners run the risk of pursuing the expedient without creating a foundation for future work or generating effects in the community. Jumping right into starting programs runs the risk of letting the tools one has on hand dictate the architecture of the building. Successful CED practitioners also need to develop an understanding of the taxonomy of the players with whom they must collaborate—a wide variety of organizations with differing missions and cultures. If strategy sets the direction and rationale, these various organizations are the actors. This section includes case studies of two successful CED organizations that have set a strategic direction, mobilized the actors around them, and used programs and projects over decades to have a profound effect on their communities. The first is the Marshall Heights Community Development Organization (MHCDO), a second-wave community development corporation (CDC) operating in the Ward 7 area of Washington, D.C. Early in h av i n g l a i d t h e g r o u n d w o r k

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its existence, MHCDO set a course for developing affordable housing and was very selective about how and where to work in the community. The second is the Coalition of the Hungry and Homeless of Brevard County, a third-wave CDC that responded to the crisis of homelessness in Florida by networking already established organizations to carefully selected neighborhoods in which to build or renovate affordable and permanent housing for people experiencing homelessness.

c h a p t e r  6

Choosing a Strategy

200 acres of farmland to convert into a new subdivision. Now imagine that same homebuilder acquiring 10,000 acres of farmland to develop into a whole new town. Would that developer just show up one day with some earthmoving equipment and a bunch of carpenters to build homes on the fly? Of course not, in the same way that an army would not go to war without a battle plan and a successful sports team would not take to the field without a game plan. Unfortunately, many community development efforts have no overall plan. They are driven by the availability of funds or other expediencies that shape choices that “seemed like a good idea at the time.” Community development efforts are also driven by nostalgia and the dreams of community residents who have little exposure to alternatives. Community economic development (CED) practitioners need to emulate the suburban subdivision developer and new town creator: That person has a detailed vision of how the community will look in the end, what type and income of residents will live there, what mix of owners and tenants will live there, for which market segment to build retail outlets, and, finally, how the overall residential plan will connect to schools, recreation, and other amenities. This chapter first looks at the process involved in creating a community building strategy. What makes up a CED strategy? How do you create one? We then cover some of the major strategies pursued in community development, examine the shift from strategy to tactics, and analyze how to choose an organization type. The chapter ends with some practical tools that can be used in strategy development.

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t h e p r oc e s s o f d e ve lo p i ng a s tr at e gy Elements of Strategy

The first step in any process is helping all parties understand the process and the components of strategy. A strategy is a dynamic game plan for bringing about community revitalization over a period of years (Bryson, 2004). It is grounded in a thorough and data-based interpretation of market and community conditions, and it incorporates both creative imagination and the realistic appraisal of feasibility and resources. A strategy sets direction. It reaches for a clear and concrete image of the future community and lays out a series of steps that build on the others to produce that image. A strategy is inherently about choice and sequence. It is a dynamic plan, more like a business concept for marketing a new product than a static plan such as architectural drawings of a new house or a zoning map for a neighborhood. A strategy incorporates the following elements and often follows chronologically the steps illustrated in figure 6.1. vi s i on.

A vision statement is a concrete description of the community’s future for a ten-to-twenty-year period. That image is rooted in the values and history of the community, and it projects the aspirations of current stakeholders for the kind of place they want to live, raise children, play, do business, work, and invest. In built communities, it is often hard to imagine anything other than the physical form and population of the community that already exists or the spirit and market that existed in the past. To escape the constraints of both the present and nostalgic realities, the process must provoke the imagination of participants. Field trips and visits to other communities and sites and even a look at new suburbs can be very powerful. Other techniques are to ask community leaders to conceptualize the community before it existed or write a real estate advertising brochure for new residents or businesses for a designated time in the future. The description the residents create needs to be dynamic and concrete. One community sees itself as being intimately connected to an adjacent university and hospital, providing convenient rental and “starter” homeownership opportunities for those who work there. The hospital is a source of jobs and health care for the community, and the university is a source

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Figure 6.1 Typical community strategic planning process. This flowchart illustrates a process that begins with community visioning and leads to implementation planning.

of expertise and volunteers for its schools. The community will develop businesses that offer goods and services to hospital employees and visitors, bringing new capital into the community. The community forms a partnership with university leaders to convince public and private partners to invest in the community and for the university itself to buy goods and services from community businesses. Another community sees its competitive advantage as being located close to downtown and large employers, linked by many bus lines that converge from outer areas and flow through it. It seeks to revitalize and exploit several assets: two parks, a jogging and bicycling path it will build along an abandoned railroad and stream bed, several playgrounds, some of the best public and parochial schools in the city, and a commercial district. It does

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not currently have high-end housing that would help it hold on to successful middle-class families who want to “trade up.” However, there are a few former industrial sites that might be developed for people with a wider range of incomes, including suburban empty nesters who would like to be close to urban amenities. s i tuati on a n a lysi s.

Visionary descriptions of the target community are critical but can be unrealistic. To move from the vision to choices for action, the community needs to appraise the community’s current situation and the external forces that are impinging on the community. A common method for framing this analysis is identifying factors known as SWOT: Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis of a community needs to be dynamic, not static, and look for trends as well as describe the community’s present conditions. Participants in a SWOT analysis test their interpretation of the community’s dynamics using data; they collect data on community conditions and trends, utilizing both existing databases and original surveys. The data are then used to identify connections among interrelated issues that arise. This analysis facilitates pinpointing opportunities that can operate as leverage, ultimately resulting in action on one goal that has a ripple effect on others. A SWOT analysis is very different from a problem analysis, which often overlooks strengths, resources, opportunities, and power already existing in the community. The temptation is to be problem oriented when analyzing the community because it is often negative conditions that spur people to action. Government programs are also needs tested and needs based, resulting in participants feeling they must demonstrate how bad off they are in order to obtain program resources. A healthier approach to take is similar to the one taken by real estate developers: You can only build on strength. A SWOT analysis enables communities to identify their strengths. Kretzmann and McKnight (1993) have been the most vigorous advocates of a set of principles for approaching community strategy with a positive analysis of strengths rather than a deficit analysis of problems and weaknesses. They are also the inventors of a set of tools for AssetBased Community Development (ABCD). Their tools are designed to incorporate broad participation in identifying and analyzing community assets and resources. For example, young people involved in gangs

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were deployed using ABCD tools to map the assets of a community (Kretzmann, McKnight, & Puntenney, 1996). In addition to providing valuable information, their involvement supported the youth’s positive growth and development. Hundreds of young people fanned out across the community with cameras, tape recorders, and interview forms. They returned to pinpoint their newly described assets on a large-scale map of the community. From these strengths come imaginative strategies (Murphy & Cunningham, 2003). Students may now also utilize web-based tools for even broader resident participation in identifying issues and making contributions. For example, the Yorktown Community Development Corporation in Philadelphia set up its own online “chatterbox” to engage residents (Greco, 2012). In identifying strengths, opportunities, and weaknesses, community residents should not overlook the amenities that contribute to a quality of life that supports the desires, dignity, and success of present residents and will attract or retain those imagined in the vision statement. The South Bronx Comprehensive Community Revitalization Program (CCRP) method noted in chapter 3 (de Sousa Briggs, Miller, & Schapiro, 1996) has been turned into a formidable set of tools for analysis and strategic planning by the national intermediary, Local Initiative Support Corporation (LISC) and its Institute for Comprehensive Community Development (http:// www.instituteccd.org). Other tools for identifying strengths are more sophisticated. Economic analysis derived from data in proprietary databases is typically only available to private businesses. These analyses are used to drill down to the dismal economic statistics of inner-city communities, revealing more wealth and assets than would publicly available U.S. census data typically detect (Social Compact, n.d.). Harvard’s Michael Porter, the most well-known international expert on finding the competitive advantage of large corporations (1980), has applied competitive advantage analysis to inner-city communities. For example, there may be inner-city locations that are superior for certain types of businesses, such as a display construction contractor located near a downtown convention center. At first blush, the downtown location may seem undesirable—crowded, old fashioned, crime ridden— but the location seen from the competitive advantage viewpoint reveals that it is actually an asset (e.g., already built large spaces, close to the display site for last-minute changes, cheap labor; Porter, 1995).

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After ten years of active work with cities, Porter (1998; Porter, Schwab, & Sala-I-Martin, 2007) expanded his analysis and identified “clusters” of related businesses that are effective generators of jobs and prosperity. Metropolitan regions can grow their existing clusters (e.g., biomedical, computer technology, entertainment). Unlike Europe, the United States does not organize economic information about public businesses by these clusters but rather by “standard industrial categories,” which are more fragmented. A community would do well to contact economic development/ business growth organizations in its metropolitan region, its state economic development agency, and university centers focused on economic analysis to identify the growing clusters within its region. It is often difficult for communities that have been disinvested and isolated from the larger regional economy to understand the regional market conditions and identify the market niche in which their community can succeed in attracting residents and investment. A comprehensive analysis process needs to incorporate the tools and time for participants to come to this understanding. A community investment company based in Philadelphia, the Reinvestment Fund (TRF), pioneered analysis and categorization tools that are currently being utilized in the mid-Atlantic region. These tools help categorize neighborhoods within the context of their competitive position relative to the residential real estate market of an entire metropolitan region. TRF’s work is more fully described later in this chapter. It is also important for community members to move beyond the need to improve housing conditions for current residents and imagine a larger community with greater diversity. If they limit their vision to those now in need, they risk ending up with a community of nice houses, at best, but all poor people, or they become an importer of poor families for their growing stock of affordable housing. They will miss the opportunity to create housing options for a wider income distribution of residents and a more sustainable population mix. Similarly, they cannot be limited in business options to bringing back retail that used to be on their “main street” but that cannot compete with suburban malls. Again, they need to look at what is going on in their metropolitan region and figure out their niche in it. economi c t r e n d s a n a lysi s.

The economic dynamics in the community on which a particular community development corporation (CDC) focuses are not simply a product

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of economic decisions of those who live, work, and do business in that community, nor even those in the region. The macro economy shapes the availability of growth in jobs and business, the vitality of the real estate market, and the direction of investment. In considering strategies, community leaders need to identify present and future economic trends. They also need to monitor the larger economic environment regularly. Macroeconomic changes occurring after strategic plans are put in place can easily undermine even the best strategy. For example, an increase of 2 percent in home mortgage interest rates or a spike in foreclosures would have a negative effect on the revitalization of a community and would more than offset any positive effects resulting from doubling or tripling the capacity of a CDC. alternati v e st r at e gi e s.

With vision and analysis in hand, participants are ready to brainstorm alternative methods for moving from existing conditions to the future. Strategies are broad interventions that incorporate a number of tools or projects. They represent a sequence of activities that build on one another. When brainstorming, strategies need not be mutually exclusive, as multiple strategies may run concurrently or consecutively. Think of a strategy as an army plan to win a war, with tactics being specific objectives to capture or battles to fight. Which tactics need to be utilized, and in which sequence, through which approach (e.g., land, sea, or air)? Or, think of a strategy as the game plan of a chess player. Each move provokes a response from the opponent that must be countered, so the player must have in mind a series of moves and many alternatives ready to anticipate options the opponent might take. In community terms, a strategy might be attracting more middle-class families. The tactics might include building contemporary townhouses and making the local school into an award-winning institution. Alternative strategies would be to improve living conditions for present residents by eliminating abandonment and providing affordable housing, or to retain a higher percentage of college-educated young people who typically leave the community as they become more affluent. Alternatives might be derived from opportunities identified in the SWOT analysis. For example, the Unity Council (also called the Spanish Speaking Unity Council) of Oakland, California, identified the

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Fruitvale BART stop (a public transit stop) as an opportunity for a largescale, dense, mixed-use, transit-oriented development project for which the council could serve as the developer (Orozco, Schwartz, & Austin 2011). Sometimes new events turn a threat or problem into an opportunity. East Liberty Development, Inc., in Pittsburgh saw the city plan for a new transit center as an opportunity to turn a deteriorated shopping mall into a new $260 million transit-oriented development commercial success (Hagerty, 2012). The asset orientation of the SWOT might also identify strengths of the community that lead to unique strategies. One of the oldest communitybased development organizations in the country, the Zion Nonprofit Community Trust in Philadelphia, was born in 1962 following Reverend Leon Sullivan’s realization of the giving potential for an investment fund that lay in small contributions from many people in his congregation. Two hundred families joined the 10–36 plan, giving ten dollars a week for thirty-six weeks, giving the trust the equity it needed to attract bank financing first for a shopping center and then a housing complex (Bracey, 2011). evaluati o n of a lt e r n at i v e st r at e gi es .

It is not enough to imagine and then vote on alternative strategies. First, each alternative must be analyzed for feasibility, resources, and implementation time. The personnel capabilities and entities that would need to be mobilized for each option must be identified and evaluated as well, as does the specific set of relationships with institutions and leaders outside the community each alternative strategy will require. For example, a homeownership strategy requires relationships with mortgage lenders that a workforce development strategy might not; the latter requires relationships with major employers. Analysis of alternative strategies must also pay special attention to unintended consequences and potential synergies between strategies. choi ces an d se q u e n c e s.

The next step in the community strategic planning process is easy to name but difficult to execute. Community stakeholders must make choices between the alternative strategies that have been evaluated. They must choose among the most feasible, the most likely to garner support, and the most likely to move the community toward its vision. This discussion inevitably leads to choosing a sequence of strategies that build on one another

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over time in order to create momentum. The most important strategy for development may not be the community’s best first gesture, as an expensive strategy may not be possible until a lower-budget success is demonstrated first. For example, a CDC that wanted to do a major commercial development project in the middle of the community knew it would take years to pull off, so they started a block pride program first. The block pride program was funded by the local utility company to trigger façade improvements. This initial project was a quicker, less expensive strategy that could build involvement and visible change in the community while the group put together a project that would, in the long run, have a bigger effect. A realistic appraisal of the resources that are available or that can readily be secured is a powerful criterion in the winnowing process. A hard-nosed, pessimistic estimation and an unyielding discipline to force choices within budget will prevent the community from taking easy outs, such as avoiding tough choices by assuming that resources will appear. It also ensures that these tough choices are not avoided through rosy projections. goals f or i m ple m e n tat i on .

Once the basic strategies are chosen, time-specific goals are identified for implementing each of the strategies. Goals should be supported with concrete tactics, and within each more specific objectives are identified. An important component of detailing the objectives is to identify which objectives are to be assigned to which people or institutions. The resources each objective requires must also be delineated, as should the timeframe for the actual implementation of the objective. As a community is setting goals, it is the appropriate time to think about evaluating progress toward and achievement of those goals. What measures define the success of a particular goal? Evaluations typically report on activities or process, measure or describe outcomes, and project the effects on the population or area that will result over time. When the outcomes take a long time to produce or when the effects will not be seen for years, it is important to have discernible or measurable interim indicators of progress. Problem- or Issue-Based Strategic Planning

Occasionally, a particular community problem motivates the community strategic planning process. In this case, a skillful community organizer can

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Figure 6.2 Planning around community problems. This figure illustrates the planning steps for developing a strategy.

help community leaders understand the power of the strategic approach to identifying options for addressing the problem and putting it in context. The strategic planning steps then have a different character and sequence, as illustrated in figure 6.2. Structures for Attainment

Sometimes strategies require new configurations, new subsidiaries of existing institutions, or the creation of wholly new organizations. Increasingly, strategies need to be comprehensive, and the arrangements for implementation typically require collaborations among many institutions (Bradshaw, 2000). Many CDCs are the product of strategic planning in a community and founded to implement aspects of the strategic plan (Murphy & Cunningham, 2003). A full-blown business plan is often created to guide the function of these structures, drawing on the goals and resources identified in the process. The business plan projects each element over time, including outlining the financial, personnel, facility, production, and administration dimensions required. The components of the business plan are covered in more detail in chapter 11.

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An Empowerment Opportunity

Having a clear strategy for revitalizing or developing a neighborhood is as critical to selecting and using tools, projects, and funding as a road map is to a long automobile trip. The process of creating a strategy and making choices among alternatives is also a major opportunity for mobilizing community residents, giving them the opportunity to understand the issues and dynamics of the community and apply that learning to informed decision making (Kretzmann & McKnight, 1993). The very process of imagining, evaluating, and choosing options for the community is an exercise of power and leadership development. Participants become empowered through the development of knowledge, understanding, and skills (Murphy & Cunningham, 2003). In working on complex issues, there is always the temptation to rely on those with technical knowledge, such as planners, architects, and economists. In the public arena, there is the temptation to cede the process to those officially in power. However, an effective community strategy process includes community representation and builds a highly participatory, engaging process that enrolls community residents, property and business owners, community institutions, and major stakeholders both within and outside of the community. That said, advocates of participation need to be aware that simple participation, however broad and real, is not enough if it does not include sufficient education for informed decision making and bridge building across different stakeholder interests (Morse, 2011). Chapter 13 examines specific mechanisms for using the planning process to build broader engagement and education. Successful Strategic Planning

There are several key requirements for successful strategic planning. First, there must be a vigorous participant education process with real resources and devoted time. There must also be a common theory of change for the community, a theory that reaches back to what happened and what caused the present situation (Blakely, 1989). The overarching framework of strategy development and the resulting strategy statement is driven by the community’s theory of neighborhood change. Finally, there must be a hypothesis about the dynamics of success and ideas about which interventions will

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have the most leverage and anticipated effect. As they have gained more experience in strategic planning for neighborhoods, CED practitioners have come to the conclusions that follow. all s trategy i s i t e r at i v e .

Strategy has to be dynamic and regularly revised on the basis of action. In that sense, all strategy is provisional; only practice proves its worth. It is more important to think strategically and make decisions strategically than to have a strategic planning document. Unlike some land-use planning processes that start fresh with a blank slate using the traditional tools of urban planning, strategic planning for built neighborhoods is more about intervening in a set of ongoing forces such as the real estate market (Temali & Amherst H. Wilder Foundation, 2002). s tart wi th t he c om m u n i t y sta k e hold e rs .

Good strategies for neighborhood revitalization start with the community stakeholders’ dreams for the future and incorporate the values and culture of the neighborhood. A good process helps stakeholder representatives distinguish between a realistic vision for the community in five to ten years and wishful thinking or nostalgia for a residential or retail way of life that no longer exists. The process may start with intuition, but then participants inform themselves and reality-test their hypotheses with big doses of data analysis, field investigation (in the neighborhood and in competing communities throughout the region), and the insights of informed and specialized observers, such as realtors and investors in similar communities. us e a nei g hbor hood st r at e gy.

There is a difference between a strategy for a neighborhood and a strategy for a CDC. The neighborhood plan is comprehensive and includes many institutions not directly in the control of the stakeholders. A strategic plan for a CDC is more like a strategic plan for a business: It is limited to the mission and by the capabilities of the company. us e a com pr e he n si v e st r at e gy.

A strategic plan focused on economic development and neighborhood revitalizations is more comprehensive and positive than the problemsolving planning of issue-oriented community planning. The community

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problem-solving process may be broad in participation, but it is narrow in focus (see figure 6.2). It is usually centered on one specific, circumscribed crisis or topic in the community, such as the reduction of teen pregnancy, the construction of a new school, or alternative routes for a subway. i denti f y short - t e r m goa ls.

CED goals are always long term, so the development of interim indicators of effect on neighborhood conditions and market competitiveness are more important than in other work. Changes in simple neighborhood demographics are not enough. Extensive work has been done in the last decade on creating appropriate neighborhood indicators (National Neighborhood Indicators Partnership, n.d.) and the tools for using them in the community development context. Some indicators are taken from conventional business practice (e.g., analyzing housing impact by looking at realtors’ data for the number of days a house for sale stays on the market, comparing a house’s closing price with its asking price, etc.). be reali s t i c a b ou t r e sou r c e s.

The common postplanning lament, “There are not enough resources to implement the priorities in the plan,” should be interpreted as an admission of a failed planning process. It is difficult in a public process, or in one with a high degree of participation by beneficiaries, to agree on a realistic assessment of readily available resources and force people to make choices about priorities. Unfortunately, many professionals fear the repercussions of telling people “no,” so they allow participants to persist in holding unrealistic expectations, which is ultimately counterproductive to the process. Some facilitators use gamelike simulations to make choices about resource allocation; this is one method that can help participants see the effect of a sequence of choices over time so they can begin making tradeoffs that bring the plan within realistic expectations. Many good strategic plans can be found on the websites of leading community development organizations such as those featured in the case studies in this text. Because strategy is fluid and all plans are iterative, the presentation of the strategies themselves is constantly changing. The Resurrection Project in the Pilsen neighborhood of Chicago, for example, no longer posts on its website its several-year-old strategic plan but relies on its ongoing website content and annual reports to keep the presentation

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of its strategy fresh. Other organizations maintain their original plans or case studies of their earlier strategies as resources on their websites, such the Unity Council’s Fruitvale project mentioned earlier in this chapter (see Orozco, Schwartz, & Austin [2011] for the history of the organization and its strategies and Brunner Foundation [2005] for a case study). The authors refer readers to web-based resources rather than include a sample plan, which may have become so dated as to be irrelevant. s t r at e g i c c h o i c e s : ap p roac h e s to n e i g h b o rh o o d c h ang e

In developing overall strategies for community development, it is inevitable—and desirable—to operate from an overall theory of urban development, neighborhood deterioration, and revitalization (Chekki, 1979). Within the overall context of the evolution of urban conditions in America that was presented in chapter 3, leaders in neighborhood revitalization stake out different positions based on the degree to which they accept, are suspect of, or embrace market forces; the role they see for government, the private sector, and community groups and residents; and whether they embrace large-scale or more incremental approaches to revitalization (Blakely, 1989). The following seven theories of change represent a selection of some of the general theories in practice in the field of community development. Many leaders will not adhere to a pure form of one of these theories but will select an eclectic combination of elements that fits the conditions of the neighborhoods in which they operate (Taub, Taylor, & Dunham, 1984). Moreover, no model of neighborhood change operates in isolation from larger models of developments for whole cities. In the absence of a clear picture of the future role for American cities, or any city in particular, it is difficult for neighborhood leaders wholly to chart their own course. Market Reliance

Historically, American policy toward urban development has been to trust market forces and use the least amount of government intervention possible. After periods of intense government involvement, policy tends to return to the “default setting” of relying on or settling for what the market

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does. Even most government intervention in development is in support of or in partnership with the private market. Most Americans favor little government intervention and assume that trusting the market is either the right way or the best we can do. The problems of people living in deteriorating conditions aside, the “trickle-down” theory of market-driven real estate means that those who can afford it will move up to better housing, allowing those on the next income level down to move up to the housing left behind, and so on down the line, until everyone is better housed. The model assumes a surplus of units produced by the market for new consumers so that the least desirable and largest surplus is at the bottom, eventually being abandoned until its value falls so low that it becomes attractive to investors who redevelop it for the higher and better use (Welfeld, 1998). Leave the market alone, and it will produce these efficiencies. The pursuit of pure profit in real estate has led to terrible exploitation, shoddy development, and undesirable urban forms. As a result, the pure market does not actually exist in America anymore; government regulation and planning has been imposed on the market to produce more publicly desirable outcomes. Regulations include building codes, environmental restrictions, public health requirements, and open housing. Planning in this sense includes land use and zoning, capital improvements, master planning and sprawl control—all of which lead to their own form of regulation. One argument for these interventions is that they actually protect the market from its worst excesses and guide better, and eventually more sustainable and profitable, development. Many market advocates do admit that the market is not always so efficient, at least not in terms of a desirable timeframe. When there is not enough affordable surplus or if investors move slowly to do the right thing, people in the lower strata must remain in horrible living conditions. Moreover, investment opportunities for unscrupulous speculators are created at the bottom tier, which results in market gouging at the expense of residents. If the public wants to ameliorate these results, market advocates suggest shaping the market through tax policy and infrastructure investment rather than government-sponsored housing. Market advocates are also more likely to suggest strategies at the neighborhood level that involve expanding private business opportunities by “freeing the market” though tax reductions in target zones and

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implementing workforce strategies that help people catch up with the unlimited employment opportunities that the market advocates believe exist. The practice of conservative commentators in the 1980s noting how many jobs were advertised in the paper that unemployed inner-city residents could pursue was an assertion of the adequacy of the private market (Pease & Martin, 1997). Modified Market Reliance: Tax Policy and Incentives

Because the market is profit driven, the arrangement of taxes on real estate shapes many market decisions. Providing financial incentives for various kinds of real estate has been one method for the market to produce more publicly desirable outcomes with the least government intervention (Aaron, 1972). Unfortunately for cities, the last half of the twentieth century produced a tax policy that favored new construction and suburban sprawl. In real estate, as in other industries, the tax code has been an easy place to bury financial incentives that have nothing to do with publicly desirable outcomes and everything to do with easier profits for industry. Items such as specialized deductions, depreciation schedules and accelerated depreciation, and the definition or schedule for capital gains are decided behind closed doors by those with a special interest and expertise in what appears to most legislators, and the public generally, to be arcane minutia best left to experts. One important tax incentive that everyone understands is the federal tax deduction homeowners get for mortgage interest and local real estate taxes. In fact, the cost to the federal budget for mortgage interest and real estate tax deductions is five times what the country spends directly on subsidizing housing. It is so popular and its benefits so widespread that it is one of the “sacred cows” in the federal budget (National Low Income Housing Coalition, 2006). When tax incentives are not desirable enough, market advocates suggest that federal and local government investment in highways, roads, water and sewer, public works infrastructure, and school construction will fuel beneficial real estate development. These investments are easiest to undertake, of course, where there is open land. Market critics point out that tax and infrastructure investments, therefore, tend to support new suburban real estate development, which favors the rich and promotes sprawl. Market

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advocates counter that, if government desires development in other environments such as the inner city, then it should assemble parcels of land in the inner city and make them ready for development. This is termed the urban renewal approach, as described below. The tax incentive approach in CED has shown up most prevalently in programs for affordable housing development, which are driven by tax benefits to private investors such as tax credits for equity investment, accelerated depreciation to aid cash flow, and reduction of capital gains on sale. Urban Renewal Approach

This theory holds that the operation of the real estate market is not driven by pure economic decisions that produce a socially acceptable “trickle down.” Racism and other prejudices can lead people to make choices that are against their economic self-interest and provide the opportunity for exploitation. Therefore, advocates of equality and equity are rightly distrustful of policies that rely on the market alone, and neighborhood leaders are critical of the negative effects of the market on families, community safety, and real estate values. Contrary to the market advocates’ assumptions, not everyone wants to move up and out. Many successful families like the environment, culture, and community sense of their neighborhoods and would choose to remain if higher-quality options were available. Homeowners and responsible landlords are willing to fight to retain their equity value because they do not want to become “the last ones out” before the market strips their properties of all value. Unfortunately, vulnerable communities are ripe for fraud and exploitation as conditions deteriorate. As a result, only substandard housing may be affordable to low-income families in the worst of conditions. To remove and redevelop the inner-city slums caused by the advance of suburban development, especially after World War II, the American government decided to take the urban renewal approach suggested by real estate developers—acquire and clear parcels of land that make up innercity tracts and open them up for private development (Haar & Wolf, 1989). The approach included clearing neighborhoods for large-scale projects, attracting major developers and real estate investors, and embracing designdriven planning. James Rouse, a major force in suburban development and affordable housing, was fond of saying during this time, “dream no

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small dreams” (Bloom, 2004). City developers such as Robert Moses, who “for decades . . . did more to shape the physical environment of New York State than any other figure in the 20th century” (Gratz, 1994, p. 17), were the predecessors of the urban renewal directors of the 1960s such as Ed Logue, who tore down major neighborhoods in Boston and New Haven, Connecticut. When neighborhood opposition stopped this residential clearance in the 1970s, urban renewal approaches became limited to downtown sites and industrial park development. Urban renewalists point with pride to major office development in the core of downtowns that replaced the deteriorating nineteenth-century office buildings and retail businesses, including such stunning successes as Baltimore’s Inner Harbor and San Francisco’s Convention Center. For neighborhoods, urban renewalists have always been in favor of large-scale clearance that gives developers elbow room (Gratz, 1994). Replacement has been their mantra. The vision that has driven them has been that of a wholly new urban design and economic form. To them, the old form is obsolete, at best, and deleterious at worst. Where there were rundown four-story, walk-up tenements, now impressive high-rise apartment buildings have been built. Buildings were built taller to allow more people per building, leaving open land available for nearby green space and new public uses such as playgrounds. Abandoned nineteenthcentury industrial buildings used for old-style manufacturing were replaced with gleaming new high-tech office parks. Old, dilapidated, overcrowded residential buildings gave way to large developments of modern townhouses. New construction was set back from busy streets. Thoroughfares were converted to boulevards with safe pedestrian overpasses. Off-street parking was created to accommodate the car-centered family, and dying grocery stores were replaced with contemporary supermarkets ten times the size of the family store. Restoration approaches described in the next section of this chapter eventually gained the upper hand over wholesale clearance in most neighborhood planning in the late 1970s. However, urban renewal continued to be used in a few projects in most cities, particularly in the most deteriorated and least organized communities. A federal program in the 1990s for older large public housing projects, HOPE VI, resulted in the wholesale clearance of high-rises and their replacement with lower density, mixed-use,

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mixed-income developments with contemporary, almost suburban design (Naparstek, Freis, Kingsley, Dooley, & Lewis, 2000). In the late 1990s, the urban renewal approach made a comeback, especially in cities with weak real estate market demands and considerable abandonment. When urban renewalists attempted to attract the country’s major residential developers to city sites, they always got the same answer from the developers: “Give us enough land for a large-scale project.” The housing stock of older cities became obsolete, and the design of walkingfriendly retail corridors was no longer compatible with the modern retailing of dry goods or groceries. Big projects, large land, and big markets became necessary to attract retailers. Finally, the older industrial employers in “walk-to-work” neighborhoods, where jobs were provided by concentrations of small labor-intensive industries or by large manufacturers, became a thing of the past for America. Soon the urban renewalists were also arguing for clearance beyond public housing to make way for large-scale projects for institutional expansion, such as major universities and hospitals, the new job generators of urban centers. These projects were high-tech spinoffs of research and major residential development for institutional workforce housing. The jobs of the future have evolved into the high-tech and service industries (Harrison, 1974). Generating an adequate number of well-paying replacement jobs requires the creation of innovative facilities and attractive locations for growing businesses. Squeezing businesses into smaller buildings designed for nineteenth-century use does not work. If the city is not well endowed with effective public transportation, providing space for automobiles also calls for significant-scale projects. Advocates of urban renewal are not merely arguing that new is better. In projects of scale, with major reallocation of resources and reconfiguration of uses, they believe that even services—whether job training, education, or family support—can be provided more effectively and innovatively to those most in need. The theory is that highly participatory, equitable planning of big projects has the potential to give major institutions the expansion capability they are seeking, resulting in simultaneously being more invested in, and responsive to, their surrounding community. Because big projects have big margins, there is more room for building in the cost of social goals. Well-designed, big projects are thus able to contribute to the quality-oflife aspects of the community for both those within the project and the

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people in nearby neighborhoods. In a particularly well-publicized example, a public-private partnership arranged the clearance of over 100 acres of dilapidated but partially occupied neighborhoods adjacent to the Johns Hopkins Hospital and the Johns Hopkins University School of Medicine in Baltimore to make way for the construction of new laboratories and biomedical facilities, middle-class housing oriented to hospital employees, and some new affordable rental housing. The depopulated neighborhood was in effect replaced. The principles of this “new urbanism” favor new development based on principles of the old urbanism: high-density, mixed-use, pedestrian-friendly environments that would have been welcomed by city planners such as Jane Jacobs (see below; Langdon & Steuteville, 2009). There is some evidence that new residents coming to these wholly new built communities more quickly form attachments than those moving into scattered rehabilitated units in already existing communities (Brown, Brown, & Perkins, 2004). Restoration

One unintended consequence of the large-scale projects born of urban renewal was that the seeds of a revolution against urban renewal were sown. Jane Jacobs’ landmark work, The Death and Life of Great American Cities (1961), was a harbinger of a broad neighborhood revitalization movement. The loss to local culture of demolishing historic architecture and disbanding tight communities was apparent to many in the larger community. The displacement and disruption of thriving African American and other ethnic neighborhoods mobilized those groups and their advocates. Fed up with the forced choice between deterioration and demolition, community activists campaigned for and forged the tools of a new alternative: rehabilitation and restoration. The movement encompassed civil rights activists, historic preservationists, and champions of neighborhood culture and social ties. The movement began in protest but became the predominant approach to neighborhood redevelopment by the 1980s (Gratz & Mintz, 1998). Revitalization is the mantra of the neighborhood restoration movement. The vision that drives the movement is a vital community of diverse residents and local businesses inhabiting restored historic structures on traditional, pedestrian-friendly streetscapes. Revitalization encompasses

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a community with a vigorous and sustainable local economy that holds and recycles within the community its expenditures and investments and attracts capital and residents from without (see figure 1.1). This vital neighborhood adjusts to the new economy through a combination of indigenous job creation, workforce training in contemporary industries, and public transportation to regional opportunities. Rather than the large-scale, shortterm replacement strategy of urban renewal, neighborhood revitalization moves incrementally, strategically, and entrepreneurially. To succeed, revitalization must mobilize the people, businesses, institutions, organizations, and other assets of the neighborhood (Keating, Krumholz, & Star, 1996). Revitalization draws on the historic architecture and cultural character as assets and engines of redevelopment. The endpoint for revitalization is reestablishing in the community a sustainable market of commerce and reinvestment. Reinvestment must replace redlining (Murphy & Cunningham, 2003). The normal fluctuations of the real estate market must work in a positive direction. Market values for property must rise competitively with the region, but without the hyperinflation that results in the involuntary displacement known as gentrification. Diversity must be maintained in the population even as the population inevitably changes. Schools must work to produce graduates who go on to higher education, succeed in the new economy, and return to the community to raise their families. The environment must be safe and attractive for families with children. Retail and personal services must be readily accessible, preferably in the neighborhood. Public subsidy and public action are still necessary, but usually in smaller amounts than with urban renewal, over a longer period of time, and with surgical targeting (e.g., strategic property acquisitions or public space improvement). Subsidies can be highly leveraged with private investment or used for deep subsidy to preserve affordability and meet other social goals. The public sector is also called upon to play a flexible and creative role in revitalization, such as by designing innovative, mixed-use zoning and acting as the “honest broker” in negotiating development opportunities (Kromer, 2000). Historic preservation has become a powerful tool for neighborhood reinvestment. Once seen in low-income communities as the bailiwick of gentrification, outside-interest preservation mechanisms are now actively pursued by minority and low-income community developers. The historical physical fabric and culture of the community are wellsprings of strength

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and generators of new investment and entrepreneurial businesses, and they are major attractions for retaining existing community members and drawing future populations. Its physical fabric is not the only dimension of community to which the neighborhood movement has brought a revitalization perspective. Those vested in neighborhood movements discovered and mined the economic expansion potential of the “homegrown economy.” While the urban renewalists in economic development promoted a campaign of attracting major industries to new large sites, neighborhood developers were focusing on existing businesses in the community. This point of view was given a major boost by the work of David Birch (1987) in the 1980s. He demonstrated that half of new job creation was the result of expansion of major companies at existing sites and two-thirds of the remaining balance was attributable to the expansion of small firms. Relocation accounted for less than 20 percent of new jobs. Finding local firms, understanding their needs, and helping the firms address the barriers to expansion had major payoffs. More recent neighborhood-oriented professional analyses helped explain why neighborhood developers were succeeding in job creation: Porter’s (2000) insight into inner-city “competitive advantage” and sector analysis identified clusters of many local firms as the focal point for sustainable economic investment. The homegrown economy strategy has also been applied, but with more difficulty, to the retail sector. A majority of older neighborhoods have commercial corridors that once supported a wide range of locally owned stores, anchored by a junior department store or two. Not only can the current decreased population not support that amount of retail space, but retailing itself has also shifted toward larger stores, national chains, malls, and online commerce. Nonetheless, creative neighborhood developers have found a revitalization approach to “main street” that works to restore a sustainable commercial sector (Temali & Amherst H. Wilder Foundation, 2002). Restoration theories posit that the successful incremental revitalization of residential real estate, local manufacturers, and service businesses in the commercial core is not enough to make a sustainable community for families and children. Quality-of-life issues must also be addressed. Schools, recreation centers, religious institutions, and a plethora of fraternal and nonprofit organizations must be successful for a community to thrive. Crime, pollution, and dangerous traffic situations must decrease,

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and cultural life, community events, celebrations, and confidence in the future must increase. Community organizing, social development, and performance improvement in institutions are critical to success and require systemic investment. Success, however, can breed its own problems. Improving the appearance of, promoting investment opportunities in, and attracting new populations for underutilized real estate can set off a spiral of outside interest in the neighborhood from the more affluent, resulting in rapid price inflation in real estate that soon threatens affordability for the neighborhood’s original residents. Such gentrification has been around long enough that tools for protecting the original population and ameliorating gentrification without killing the improvement cycle are well understood (Kennedy & Leonard, 2001). However, often the issue is not addressed early enough for the tools to be effective at a reasonable cost. Fortunately, not every regional real estate market contains the preconditions for extensive gentrification. Each neighborhood needs to examine its own vulnerability to gentrification realistically. Many neighborhoods are such weak markets that the bigger problem is attracting any investment and new population. On the other hand, some neighborhoods can be niche markets where the inflation spiral can take off even with fairly depressed general market conditions. Critics of the neighborhood restoration and revitalization approach point to its small scale and long timeframe (Lemann, 1994). They wonder whether it will ever amount to enough change to overcome the macro forces that press neighborhoods and even cities into downward spirals or whether it is able to generate enough interest and investment truly to address a community’s needs. A public policy of investing major funds in “a thousand points of light” will never be as compelling, they say, as projects for new development of major scale tied to mainstream interest. In addition, the neighborhood restoration approach has never found as compelling a foothold in the public psyche as have new stadiums or convention centers. Moreover, neighborhood advocates risk being mired in nostalgia for forms of business and a way of life that may no longer be viable. While restoration advocates eschew large-scale development by outside firms as draining profits from the neighborhood, critics point out that most small-scale development means smaller margins of profit, at least for big companies, and less room to pay for amenities or the accomplishment of social goals.

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Market-Oriented Revitalization Strategies for Sustainability

The era of partnerships with the private sector has brought a new kind of thinking to both urban renewal advocates and revitalizationists. Rather than look to large government expenditures as the major or only factor in neighborhood revitalization, community leaders are beginning to seek ways to influence private market forces and private investment to create a sustainable neighborhood economy, one in which private reinvestment continues without public subsidy. Recognizing that the market is dynamic, the goal becomes intervening to influence the market. Because a sustainable market is one with a competitive economic base, planners now look for ways to create mixed-income, mixed-use communities, whether those in urban renewal–style large projects such as HOPE VI or neighborhoodscale commercial revitalization. Inevitably, making a neighborhood competitive means conducting analysis to find the appropriate niche in the regional market for the particular neighborhood and then identifying the regional competitive advantages for its population, business, and investment (Lang, Hughes, & Danielsen, 2000). In developing an analysis and strategy for neighborhoods, it has become important to recognize that there is no such thing as “the real estate market” in a region. Of course, there are real estate statistics for a region such as average property appreciation and median price; however, functionally, a region is a composite of many submarkets and niche markets. Each submarket appeals to a different population and offers a product tailored to their preferences (Toups & Carr, 2000). There are suburban subdivisions or neighborhoods dominated by young singles who will rent. There are starter markets for young families. There are move-up communities for successful families with growing children. There are retirement areas for the empty nesters. Real estate agents depend on this kind of analysis of the house, neighborhood, and buyer. Private companies provide sophisticated analyses of different kinds of buyers and markets within a region, using anywhere from a dozen to thirty types of psychographic profiles or psychodemographics. Neighborhoods and whole cities can also be seen to have different real estate positions, competitively speaking. There are hot markets, such as those of San Francisco, Boston, and Washington, D.C., of 1995 to 2005, where housing was in high demand, property values were rapidly

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appreciating, and prices were generating a crisis in affordability for even the middle class. In 2000, in cities such as Baltimore, Pittsburgh, and St. Louis, the market was much weaker, and housing prices that were lower to begin with appreciated slowly, or only in certain neighborhoods (Toups & Carr, 2000). Some weak-market neighborhoods are in thriving cities; some weak-market cities such as Baltimore are in thriving regions. Other weakmarket cities such as Pittsburgh and Cleveland are in regions that are losing population and, therefore, real estate value (Brophy & Burnett, 2003). Gentrification is an issue in hot markets (Wyly & Hammel, 2000). Rapid escalation of property values leads to high turnover, ever-increasing prices, and ultimately the involuntary displacement of vulnerable populations. Most weak markets work hard to attract more middle-class buyers and to raise property values. People who need affordable housing are not well served by a market in which there is no appreciation and new investment, much as they are ill served by intense gentrification. Planners have always attempted to categorize neighborhoods using statistical data in order to understand better the dynamics of neighborhood change, relying on a loosely articulated strategy positing that different conditions require different public sector tools. Taking a market orientation requires stepping up the analysis to include the criteria that influences private investment and homebuyer choices: private real estate and banking data. Moreover, the goal of the strategy is to influence the private market using scarce public resources rather than simply to direct public expenditure in its own right. The first large-scale attempt to use more market-oriented data was pioneered in Philadelphia by TRF, the highly successful regional community development lending intermediary. TRF learned to turn underwriting and feasibility analysis of community development projects into proactive tools for preparing the environment for investment. In 2001, the City of Philadelphia undertook a huge effort to address decades of decline. Known as the Neighborhood Transformation Initiative (NTI), the program was designed to renew and strengthen Philadelphia’s urban neighborhoods through specific public action. To guide NTI’s strategy, the city contracted with TRF to conduct an in-depth analysis of the city’s neighborhoods and their market value. With this project, TRF, for the first time, applied its innovative Market Value Analysis (MVA). The groundbreaking data analysis was revolutionary in its design and detail,

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and its results were noted in a variety of national journals and magazines including the New York Times and the Washington Post. By developing a taxonomy of market types and linking the taxonomy to the prioritization of public action (i.e., code enforcement, land assembly), TRF created a new kind of policy conversation regarding how government can best stimulate market forces in distressed neighborhoods. The Philadelphia MVA was designed to discover whether there were indeed areas of the city that share common housing market and population characteristics. The picture that emerged of the city served as a framework for its plan of action (n.d., paras. 1–2). TRF has since used its expertise in Camden, New Jersey; Baltimore; and other large cities. Other firms and city agencies now provide similar analyses, each with its own set of indicators. TRF and these others not only used all available census data that city planning departments typically use, but they also combined it with data from proprietary databases, administrative data from government agencies and utility companies, and real estate transaction information. Typical sets of information included in marketoriented analysis are: r
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Based on these data analyses, neighborhoods are then categorized according to their place on a continuum (usually in five to nine categories), from those able to compete in the region for homebuyers with the highest incomes and most choice to those least able to compete and in need of the most public investment to make them attractive for any private investment. Finally, each neighborhood is color coded by category and displayed on a map, using powerful Geographic Information Systems (GIS) software.

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For example, city staff in Cleveland created their own typology as a basis for the mayor’s policy for the use of all public investment and posted on the city’s website an analysis and set of conclusions for each of the city’s thirtyseven neighborhoods. The very title of the plan shows the adoption of a market-oriented approach, Making Cleveland a City of Choice: Strategy for Development and Revitalization in Cleveland ( Jackson, 2007). This market competition approach assumes that by establishing an appropriate categorization relative to market forces for each neighborhood, each neighborhood could match its condition with a particular strategy and appropriate set of tools. In most instances, the use of market-driven criteria and typologies has led local government to concentrate limited resources in a few neighborhoods in order to achieve significant results. Richmond, Virginia, developed the Neighborhoods in Bloom (NiB) program to address growing concerns about high crime and vacant, blighted properties. The city evaluated data to classify its neighborhoods into four broad categories based on their poverty rates, concentrations of abandoned buildings, levels of crime, and other factors. City officials coordinated a consensus-based neighborhood planning effort. Using these strategic plans, the mayor and the city council targeted the majority of Richmond’s federal housing and community development funds, along with resources of other city programs and other resources, to the six neighborhoods where they would have the greatest effect. These NiB neighborhoods have since seen significant reductions in crime and increases in property values and reinvestment. In 2002, the mayor and city council reauthorized the six original NiB neighborhoods and included one new neighborhood (Schilling & Friedman, 2002). Quality-of-Life Improvement: Providing Opportunity, Amenities, and Services for People

Neighborhood change theories focus on the conditions and marketability of the place, the neighborhood. Their thesis is that, if the place is improved, it will offer a better quality of life and more opportunity for people. This will build a psychology of confidence and hope, and people will advance. The work of CCRP in the South Bronx and the LISC Institute for Comprehensive Community Development were noted earlier in this chapter for taking a quality-of-life approach to change and creating planning mechanisms and implementation tools for strategies aimed at

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improving quality of life. Quality-of-life approaches put more resources into institutions that provide support for families and children than do the urban renewal and neighborhood restoration and revitalization approaches. Quality-of-life approaches may focus intensely on the needs of and opportunities for present residents, but they may also be oriented to making the neighborhood competitive. They make the assumption that, as families become more successful, they will either make the environment better or move to a better environment. In a low-income community, this approach would be termed an antipoverty strategy; in a better-off neighborhood, it would be called a service-intensive approach; and in a revitalizing neighborhood, it might be referred to as “marketing the amenities.” When focused on providing support for existing low-income families, the thrust of this approach usually involves giving a boost to those who are ready for the mainstream economy and providing remedial support to those who are not (Taub et al., 1984). This approach starts with identifying, on an objective basis, the needs of families and children in the community. Depending on the level of need for each family, the community would provide coaching, training, child care, transportation, and health care to those who are ready to improve their employment and help the families understand how to build assets, move to better housing, and even own their own homes. The community would intervene when the market discriminates in housing, employment, or credit and break down the barriers to opportunity. The best traditions of this approach build on the assets of individuals and families and empower them to take charge of their own futures, using the supports and services available. The needs assessment, however, must be objective enough to transcend a restatement of the existing services already provided by community service agencies. One way to ensure that the professional agencies are not self-serving is to involve the community’s residents who are benefiting from services in all stages of planning and implementation of service delivery. Moreover, specialized service delivery agencies should collaborate so closely and flexibly that the delivery across service lines is seamless. Because a multiplicity of services and supports must be provided, decentralized service is very helpful. The neighborhood becomes a convenient geographic unit of comprehensive service delivery.

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For those not yet ready to matriculate into the mainstream economy, the antipoverty approach organizes a remedial array of services over a period of time. Individuals and families master the necessary skills and improve their status to enter the mainstream. Because services have to be delivered over time, a stable geographic setting (i.e., the neighborhood) is an asset toward continuity. Moreover, it is commonly recognized in many of the helping professions, including social work, that individuals need to be treated in context. Context extends beyond the individual’s family and primary relationships to include the neighborhood and its institutions. While the ways in which a healthy neighborhood contributes to success are only beginning to be documented in the social science literature, the deleterious effects of a neighborhood’s physical, economic, and social conditions on various social service and educational program outcomes is well documented (American Planning Association, 1998). Discrimination and poor education may keep very competent people from the knowledge, skills, and relationships they need to succeed in the mainstream economy. Providing services helps them grab opportunities, build resilience, and enhance their social capital. Thus, the antipoverty or service-intensive approach is an opportunity strategy. It assumes that there are plenty of opportunities to be taken in the American marketplace if individuals can overcome their deficits and institutional barriers by utilizing their assets and their relationships. When they do, they may not stay in the neighborhood in which they began. Exposure to the outside world and other support may be necessary to help them move, if they so desire, beyond the geographic boundaries in which they find themselves. They may even move in clusters of families to nearby locations in better neighborhoods, as did earlier populations: The American way for most is up and out. More recently, the quality-of-life approach has been put to a different use by those interested in revitalizing distressed neighborhoods by attracting new more mobile and successful populations (Clark, Lloyd, Wong, & Pain, 2002). They identify their target market and look for the amenities that those people want, studying to identify successful locations both locally and nationally that attract the same type of people they desire. As noted earlier in this chapter and in chapter 3, contemporary thinking recognizes that hiring and retaining highly successful, creative professionals is the lifeblood of successful companies. Companies will move where those people locate. Those people themselves will create new

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companies. What attracts those people to a community are the culture and amenities of the place (Florida, 2002). Neighborhood strategists look for ways to accentuate and create the amenities that will attract the creative class. Artists are often the pioneers who will take the risk first and make moves that attract other creative people (Lowe, 2000). Art and artists help in the process of place making and are often the ones who were most in touch with cutting-edge ideas that can be imported into communities left out of the mainstream (Stern & Seifert, 2008). Therefore, attracting artists, promoting arts, and highlighting cultural creativity help neighborhood revitalization and are the primary focus of those using this quality-of-life approach. Social Safety Net

There are some people, of course, whose limitations keep them from being competitive in the economy as it is presently structured. Too often, they are concentrated in the same neighborhood or public housing complex. For these people, some advocate another strategic approach: American society should provide a social and economic safety net. Alternating swings in public policy determine whether the safety net is more closely woven or has big gaps. Where many people with limitations are clustered, a coordinated, decentralized service system provides the best access to and synergy among services. As far back as the origins of the settlement house, the power of the neighborhood as a geographic unit of delivery, coordination, and empowerment was recognized. This approach posits that, however limited, everyone can contribute something to others and to the common need. The neighborhood center approach of the 1960s and 1970s gave many neighborhoods a multiservice facility. The centers discovered that hiring neighborhood residents as paraprofessional workers was an effective extension of traditional social service delivery. Today, technology and sophisticated arrangements for interagency collaboration, such as the “patch” method imported from the United Kingdom by Iowa and other states (Richardson, 2009), better allow coordinated intake and case management, and this can dramatically improve the outcomes for challenged populations. Moreover, several experiments with highly disciplined evaluations have demonstrated the effectiveness of saturating an area of poor people with services even without the sophisticated collaboration methods.

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Alternative Economies

The neighborhood change theory of choice for some is to remove the neighborhood from the mainstream capitalistic system altogether. They believe the capitalistic economic system inevitably creates disparity and exploitation (Bruyn & Meehan, 1987) and propose to find a more democratic and equitable system, an “alternative economics” (Alperovitz & Faux, 1984). Their overall strategy is to retain as much economic activity within the boundaries and controls of the neighborhood or venture as is possible. They invent creative ways for the community to provide even the basic goods and services (for example, electricity) that most assume must come from large public systems. Ventures such as worker-owned food production through hydroponics and recycling businesses further illustrate the overlap between these neighborhood developers, the environmental movement, and the “appropriate technology” approach of developing nations (Schumacher, 1989). Bartering goods and services within the community enables even those with low incomes to obtain needed goods and services. In Ithaca, New York, a bartering system has even created its own currency to enable multiparty bartering. In this system, time invested in rendering services is valued and exchanged for goods provided by another party. This system of “time dollars” is being utilized in many neighborhoods across the country (see www. timebanks.org). Community credit unions are also a part of a communitybased banking system that contributes to neighborhood independence. Creating more equitable social relationships across the population and creating systems for mutual support are both the means and the end of alternative economics. Cooperatively owned housing and self-help housing through which groups of people collectively provide the “sweat equity” for one another’s houses not only produces shelter but also creates lasting community and leadership. Chapter 13 further explores these mechanisms of creating social capital. t h e n e xt s trate g i c c h o i c e s : o p tio n s a n d to o l s

The overall strategy is the game plan for winning the war; the approach to picking and winning battles is the tactics. The tactics of neighborhood revitalization are implemented via projects, programs, target areas, and

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activities. However elegant the program or however desirable the program is to external funding sources, all tactics must serve the overall neighborhood strategy. Neighborhood leaders can learn and identify tactics from other successful development initiatives. The temptation, however, is to replicate the example exactly. When examining others’ tactics for lessons, it is important to understand the rationale for the specific tactic or tool and the conditions that caused the CDC or other neighborhood to choose it. Then it can be adapted to local conditions. Some tactics others have used include: 1. Selecting a small area within a neighborhood to begin work in order to be efficient with modest resources. The CDC then demonstrates its success to stakeholders, partners, and the marketplace and learns firsthand what works. 2. Conducting major activity to change the market’s perception and awareness of a neighborhood, such as by launching a big development project (or “anchor project”) or creating a park, community center, library, school, or transit stop. 3. Creating a clear land development scheme and housing development plan that ensure the development of competitive residential products geared specifically to a target market. This scheme often attracts regionally successful, private sector developers on a scale beyond a CDC’s experience. 4. Creating carefully chosen “model blocks” with modest investment for a realistic level of exterior house and street-scene improvement activity that accelerates the ripple effect of an anchor project (if there is one); reinforces the anchor project (if there is one); and motivates, mobilizes, and invests in existing residents. 5. Deploying sophisticated land assembly techniques and vacant house approaches that implement the master land development plan, acquire the anchor project site (if there is one), control critical properties on model blocks, and prevent net losses in the target area from foreclosures. 6. Designing a marketing plan that specifically targets populations in the market using sophisticated market analysis. The plan identifies and promotes community assets to gain an advantage over other known areas in the region competing for the same populations, mobilizes the community—residents, businesses, institutions—and local realtors to promote the neighborhood, and uses sophisticated marketing to reach the target population.

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7. Designing a comprehensive development action plan that combines marketing planning with neighborhood planning techniques that begin with residents’ vision and values to identify realistic, immediate action projects. The comprehensive plan combines land use strategy with an overall development plan, combines public and private investment, and uses a market-conscious strategy to direct the choice of priorities in qualityof-life issues to focus on those most likely to retain and attract a niche and build value. 8. Implementing comprehensive approaches to building quality of life through partnerships that gradually and opportunistically become comprehensive. 9. Implementing neighborhood involvement in marketing planning and model block projects to build confidence and create neighborhood ambassadors. 10. Tracking effectiveness through selected indicators to learn what works; refine strategy and tactics; and build the confidence of stakeholders, investors, and residents. Some leading questions for identifying and choosing tactics include: 1. What mixture of place (quality of life) and people (opportunity) create market change or family income change? 2. How much affordable housing, retail services, personal services, industrial space, and infrastructure are available now? How much should be provided? 3. How much should job training, group income tax credits, income-building strategies, family budgeting, and saving and investing be emphasized? 4. How are community organizing, crime prevention, youth organizing in the form of gangs, substance abuse recovery, health care, and child care going to be addressed? 5. How much transportation will be available for jobs versus how much help will be provided for moving out to be near jobs? 6. How much work will be done to keep existing family formations in the neighborhood versus efforts to attract newcomers, relocation, and gentrification? 7. What housing products are needed for the target population? What financial products and what methods of advertising reach the target population?

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s t r at e g i c c h o i c e : th e ro le o f the c dc

The CDC—or other neighborhood organizations leading revitalization— is responsible for leading the overall strategy, acting like the land developer for a major new community in the exurbs. However, not every tactic or project can be or ought to be the responsibility of the CDC to implement. Neighborhood leaders have a responsibility to assess organizational capability and to choose the right role for the CDC in implementing the overall strategy and tactics. The continuum shown in table 6.1 shows the options for neighborhood leaders, arranged on a gradient of risk, technical resources, and financial strength. The linear display is not meant to imply that one option is more desirable than another. too l s fo r th e c e d p rac ti ti o ne r The Strategy Statement

The following outline is based on a market-oriented theory of neighborhood change and assumes the strategy focuses on identifying target populations, or niches, in the regional real estate market. Many of the more common market-driven approaches in use around the country assume that the desired outcome is to compete for those homebuyers in the region with the most income and the widest housing choices. A market-conscious strategy, however, could target a different—but nonetheless sustainable—niche in the homebuyer or rental market. For every homebuilder creating minimansions, there is at least one Levittown, the quintessential postwar homebuilder of starter houses. A Market-Conscious Neighborhood Strategy Outline the bi g pi ctu r e for t he fu t u r e : v i si on , va l ue s , a nd di re c t i o n

1. What are the dreams and core values of the community for itself ? 2. In what direction from present conditions does the community desire to move? 3. What image (vision) does this community have for its future?

Least direct Push for $ return to programs, the group policies, and specifications of projects that others do

Fewest special skills

Fewest Resources

Broker, space/ people, open doors, may get fee

Put the deal together; more exposure if the deal does not get done; may get fee

Sell/rent the unit(s); earn commission; invest time and credibility

marketer

Put up $ as loan; you may have collateral, but money is at risk

lender

a dv o c at e

least risk

fac i l i tat o r pa c k ag e r

Possible roles for community groups in development

ta ble 6.1

Put up $ as equity; not in control and $ at risk, but higher upside potential

minority investor

Help develop the project, find ways to fill the gap; can lean on co-developer for skilled help with all aspects of the project; have to subject social goals to feasibility study

r e a l e s tat e c o - d e v e lo p e r

Bring in a partner with a track record and capability for the type of business; higher risk than real estate

venture c o - d e v e lo p e r

most risk

Most direct Going it alone with all of the skills $ return to and $ needed; tak- the group ing all of the risk, potentially all of the profit; controlling all of the details; community puts all the demands on sole developer

Most special skills

Most Resources

r e a l e s tat e o r venture sole d e v e lo p e r

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a place i n th e r e gi on a l ma r k e t

1. 2. 3. 4.

What are the regional dynamics and trends? What are the target populations and market niches? What is the overall strategy to attract and hold those populations? What is the regional economic development direction, and what are the plans to get there? 5. What is the city’s position in the region? 6. What competitive advantages are available for the neighborhood? 7. Who is the competition for the target populations? communi ty c ha n ge mod e l

1. How does the community wish to change? 2. What is the composition of the community? 3. How did the community evolve, including the dynamics of change and the causes? 4. What does the community need to do to move toward the future? 5. What is the sequence of evolving interventions? i nves tment pot e n t i a l

1. 2. 3. 4. 5.

What multiyear investment is needed? Who are the stakeholders and potential partners? What constitutes “the case” for investment in the community? What are the sources and uses of a multiyear plan? What are the methods of recruitment and building allies?

comprehensi v e c ommu n i t y d e v e lopme n t

1. What is the multifaceted agenda for the neighborhood? 2. What organizations are available and could be recruited for partnership? 3. What methods of working together are available? benef i t pi ct u r e n ow a n d t he n

1. What improved prospects are available for families and children? 2. What is the future picture for present residents and for new residents? 3. What are the methods for connecting the community?

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empowermen t

1. 2. 3. 4. 5.

What are the mobilizing methods? What are the ongoing participation mechanisms? How will the participation mechanisms be taught? What problem solving and conflict resolution options are available? What leadership development mechanisms are in place for future generations? 6. How can participation efforts gain credibility and clout with larger power structures? s trategy s u m m a ry

1. What does sustainability look like? 2. What is the dynamic change model? 3. What is the multiyear sequence and relationship between investments and activities? 4. What are the outcomes? 5. What projects, programs, and specific investments are available? Leading Questions to Help Develop a Strategy

In order to develop the above strategies, communities should ask themselves the following questions. These questions are objective, and the indicators for answering them are measurable. For measurable indicators, it is important to assess the current value (i.e., a number, rate, or percent), including the prevailing rate for the previous four years. While it is important to evaluate the current state, it is more important to know (1) the trend and (2) how the community compares to other neighborhoods, to city averages, and to regional trends. 1. If successful, what is the concrete vision of the neighborhood in ten years? (Imagine verbiage in a real estate brochure for a prospective new resident, property investor, or a new business.) 2. What does the population look like? How many people will the community have? How many households? Will the profile of households remain the same, or will it differ in terms of ethnicity, age, children, and/or income? Who will be attracted to the community? Of the people who are there now, will they stay or will they leave over the next ten years? Will young

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people move out as they become adults? Will older people have to move as they require different residences and support? Are more poor people likely to be attracted to the community? More affluent people? If people increase their income, are they likely to stay or move? 3. Will there be more housing units or fewer than are presently available? Will the housing be different? If so, how? For example, will more attached houses be combined into bigger units, duplexes converted to singles, or new housing built that looks different? 4. Will new public facilities be built or existing ones changed or eliminated? How will public services be delivered? Paid for? 5. What are the biggest negative trends, obstacles, forces, or bad conditions that threaten the vision? 6. What are the biggest assets, opportunities, positive conditions, or trends that can move the community from where it is now toward the vision of what it can become? 7. What factors affecting the community need more research? 8. What partners are building in the community? Which partners are desirable? 9. Which conditions should be changed first? What actions will lead to the community’s vision? What are the important starting points and why? Are the starting points realistic? Are there resources to take the actions? Who will work on the projects, and are they capable, willing, and ready to do what is needed for the community’s vision? 10. How will new people in the target niche be attracted? How will the people already established in the community be encouraged to participate and to assist building the vision? How will vulnerable populations succeed or be supported in their meeting their needs?

An exercise in finding the best strategy for helping a community can be found in appendix 1. con cl usi o n

A solid strategy for community development is based on a theory of urban development, deterioration, and revitalization. It draws on the community’s history, culture, dreams, and values to build a vision of the

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future that defines the endpoint of the strategy. Good strategic planning identifies and tests a series of hypothetical strategies, with imaginative identification and rigorous evaluation. Only with a strategy in place are leaders able to examine and select the range of tactics, tools, programs, and projects so that the best sequence for achieving strategic impact and momentum can be selected. In choosing a long-range strategy, it is not enough to choose the course most popular with politicians, the latest crop of urban experts, or even community residents. While that input is valuable, it must be subjected to a thorough and ongoing strategic planning process that combines community values, dreams, and culture with informed intuition, market savvy and analysis, expert observation, and data-driven evaluation. The worst temptation is to let existing programs dictate strategy, as if the choice of tools by a homebuilder could dictate the design of the house. Similarly, the desires of funders or the availability of a particular type of money may be relevant but not determinative—not every expenditure is a strategic expenditure. The track record of limited success in community development in the second half of the twentieth century supports the understanding that is not enough for those who redevelop neighborhoods to forge ahead mindlessly, doing whatever seems like a good idea at the time. It is not enough to embrace the belief that conditions are so bad that most anything would be better (Rubin, 2000). There are simply not enough resources available, and it is wrong for the resources that are available to be wasted so casually. Practitioners need to be more careful and more strategic, using tools and tactics as part of a long-range plan in which each activity builds in a sequence of realistically achievable impacts. The Marshall Heights Community Development Organization, profiled in the case study that follows this chapter, is an example of an organization that was carefully strategic. This CDC did not necessarily begin with the most important problem in the community but rather identified a significant opportunity, the renovation of a deteriorated shopping center, that could become the catalyst for tackling a broad agenda that would successfully address other problems in the community. It was almost ten years after they launched that they ultimately engaged in a comprehensive community planning exercise to take the community to new heights.

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mars hall hei ghts c ommu n i t y d e v e lopme n t o rg a n i zat i o n Description

Origins The Marshall Heights Community Development Organization (MHCDO) started in 1979 as a forum for citizens to address concerns about housing and development with the Washington, D.C., government. It is now multifaceted, incorporating numerous programs and employment placement and job training services. MHCDO evolved into a nonprofit community-based organization that engages in various community development activities (MHCDO, n.d.i). In the beginning, in the 1980s and 1990s, Lloyd D. Smith was the president and chief executive officer of MHCDO. He took the agency from an annual budget of just over $100,000 to $5 million in that period of time (Lloyd D. Smith Foundation, n.d.). MHCDO’s ability to sustain itself for over thirty years is attributable to a combination of effective “community governance, collaborations and partnerships, and holistic approach to community development” (VolunteerMatch, n.d., para. 4).

Structure The organization’s governance structure includes a fifteen-member broad-based community board of directors. The board membership structure is set up to allow for well-balanced representation across Washington’s Ward 7 community and allows it to govern and make policy for the organization effectively (MHCDO, n.d.b). The executive and administrative staff includes the chief executive officer, senior accountant, operations and administration manager, junior accountant, and receptionist (MHCDO, n.d.f). There are also over thirty other staff working for MHCDO (GuideStar, 2009d).

Funding Starting out with approximately $125,000 in 1979, MHCDO acquired and renovated the Ward 7 community’s major shopping center, East River Park Shopping Center, and expanded it to 168,000 square feet in 1983. Substantial funding for this project was obtained over time from the Washington, D.C., government ($25,000), private investment ($500,000), and private and public loans ($2.5 million). By 1998, the East River Park Shopping Center had become the largest retailer in the area, and the property value increased fourfold to $13 million. At the time, the shopping center brought in revenues for other MHCDO programs and services and produced job opportunities for residents living in Ward 7 (Meyer, Blake, Caine, & Pryor, 2000). In 1994, MHCDO became one of ten CDC projects funded by the Annie E. Casey Foundation’s (AECF) Rebuilding Communities Initiative (RCI). The organizations were funded

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for six to seven years, and MHCDO received more than $2 million over this period of time. AECF provided significant technical assistance to the organization in the areas of child welfare, health care, community wellness, jobs and trainings, systems reform, and youth during this period (Meyer et al., 2000). According to its latest Form 990 (2008–2009) available from the IRS, MHCDO had total revenues of slightly over $3.5 million from October 1, 2008, to September 31, 2009. However, its expenses were more than $4 million, leaving the organization with a negative balance of more than $430,000. Total assets decreased in the same period of time from more than $6 million to about $3.7 million and, when balanced against liabilities, left the organization with negative net assets of over $780,000 (GuideStar, 2009d). MHCDO is facing a challenging time and is likely retooling its fundraising operations. Strategy and Programs

Target Community The target population is Ward 7 of Washington, D.C. Ward 7 is located in the city’s southeastern corner, known as Anacostia. The area is home to more than 70,000 people organized into twenty-nine different neighborhoods. The greatest concentration of children in the city lives in Ward 7 (Council of the District of Columbia, n.d.). In 2010, Ward 7 residents were 96% African American versus the Washington, D.C., average of 51% African American. That same year, the population was 2.3% Hispanic (9.1% Washington average), 1.4% Caucasian (35% Washington average), and .2% Asian/Pacific Islander (4.2% Washington average). Average family income in Ward 7 in 2009 was about $54,000, lower by more than half compared to the Washington average of about $113,000 for the same year. This was down by 7.2% since 2000. The poverty rate in Ward 7 was 25% in 2009, up from 22% in 1980. The average poverty rate across Washington in 2000 was lower, at 20%. The percent of children in poverty in Ward 7 in 2009 was 40%, compared to 29% in Washington on average. The unemployment rate in Ward 7 was 14% (11% average across Washington), up from 8.6% in 1980 (Urban Institute and Washington, D.C., Local Initiatives Support Corporation [LISC], 2011, September 7). The homeownership rate in Ward 7 in 2009 was 40%, up from 37% in 1980. The homeownership rate in Ward 7 was 5% lower than the Washington average for 2009. The rental vacancy rate in 2009 for Ward 7 was 5%, up from 3.9% in 1980. The average Washington vacancy rate the same year was higher, at 5.9% (Urban Institute and Washington, D.C., LISC, 2011, September 7).

Strategy MHCDO has cultivated a holistic approach to community development. The organization attempts to address the needs of the entire person for all residents in Ward 7; for example,

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MHCDO leaders argue that an agency cannot offer workforce development services without also addressing mental health concerns that may arise during training. MHCDO is also adept at establishing and maintaining partnerships with local and national institutions. MHCDO has a reputation in the community as an agency with its finger on the pulse of the needs of local residents. MHCDO’s strategic plan is to strengthen the organization’s relationship with the Ward 7 community, their delivery of programs and services, and their capacity for high performance. To accomplish these goals, MHCDO first strives to ensure that their infrastructure and systems and board and staff capacity are developed sufficiently. Second, MHCDO strives always to increase visibility in the community. Third, they maintain a positive relationship with key community and civic leaders in Ward 7 and the greater D.C. community. Fourth, they strive to stimulate business development and expand and sustain the supply of safe, affordable housing in Ward 7 by maximizing financing from public and private investments. Fifth, MHCDO strives to assist Ward 7 community members in increasing economic self-sufficiency (MHCDO, n.d.k).

Programs and Projects MHCDO’s major services focus on the areas of housing, workforce development, adult education, and family support.

h o u sing .  MHCDO offers supportive housing for Washington residents who are experiencing homelessness, at risk of becoming homeless, and working to become self-sufficient and in need of additional support not ordinarily available. They own and lease single-roomoccupancy and transitional housing with one- and three-bedroom apartments (MHCDO, n.d.l). MHCDO renovates and builds affordable homes, such as the Chaplin Woods development, a twenty-two-townhouse development designed to attract new homebuyers to the community. To fund these projects, MHCDO partnered with a mix of private and public agencies with similar goals for the community. For Chaplin Woods development, MHCDO partnered with the local Manna CDC, the national Bank of America CDC, LISC, the Enterprise Foundation, and the Washington, D.C., Department of Housing and Community Development (MHCDO, n.d.c). In addition to building and rehabilitating housing, MHCDO offers services to community residents. Emergency services such as rent, mortgage, and utility assistance payments for people with a documented emergency leaving them unable to pay are available to help residents maintain stable residences (MHCDO, n.d.d). MHCDO also offers free credit counseling and free foreclosure counseling to residents in Maryland, Washington, and Virginia, expanding its service area to enhance stability in the surrounding areas (MHCDO, n.d.g). MHCDO’s Homebuyers Club offers first-time homebuyers in Maryland,

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Washington, and Virginia a seven-week course on the process of purchasing a home. They also offer residents the opportunity to invest in Individual Development Accounts (IDAs; matched savings accounts) through a joint venture with Citibank (MHCDO, n.d.j).

wo rkfo rce d ev elopment. MHCDO provides a variety of employment and educational services to Ward 7 residents as well as their expanded service regions in Maryland, Washington, and Virginia. MHCDO serves residents who are seeking first jobs, new jobs, career changes, and those transitioning from school, welfare, or prison (MHCDO, n.d.m). The workforce staff specializes in assessment, career counseling, job search and readiness training, and job placement and retention. MHCDO serves as a job placement agency for employers seeking workers and workers seeking employment (MHCDO, n.d.e).

a d u lt ed ucat io n . MHCDO offers adult residents computer literacy training to learn how to type; use the Internet; and use Microsoft Word, Excel, and PowerPoint. MHCDO also offers a preparation course for the GED to adults. With economic stimulus funds released during the Obama administration to combat the recession, the Career Youth Initiative was created to help youth prepare for the SAT exam, learn life skills, or prepare for college or business. Residents between sixteen and twenty-five years old can earn up to $210 per week to prepare for the SAT (MHCDO, n.d.a).

fa mily su p p o rt.  MHCDO’s family support strategy focuses on exposing youth in Ward 7 to lifestyles and opportunities available to those outside of the community in addition to providing social opportunities for families—picnics, ice cream socials, and talent shows— and services that meet residents’ basic needs. MHCDO offers food and clothing distribution and the Capitol Area Food Bank (CAFB) Brown Bag Program. MHCDO partners with CAFB to provide seniors and low-income families with monthly bags of food and nutritional education. The food is donated to the agencies that distribute them. Major Successes MHCDO has successfully developed on its own or in partnership with other organizations a sixty-unit supportive housing facility, a 469-unit garden-style apartment complex, 220,000 square feet of retail and office space, and 20,000 square feet of warehouse and industrial space, and it has sold more than 150 homes to low- and moderate-income buyers (MHCDO, n.d.h, para. 2). In 2009, 1,682 clients were referred, walked in, or were otherwise served by the workforce development program. Of those, 1,493 attended a three-day orientation and received employment, training, and educational services; 215 became gainfully employed with 150 employed full-time.

c h a p t e r  7

A Taxonomy of Community Development Organizations

(the why and the when) and the tactics define the programs, projects, and tools (the what and the how), the next question is who. Who are the people and the organizations that carry out the work of community economic development (CED)? What roles do they play based on their missions, capabilities, and needs? Social workers practicing in CED are uniquely prepared to bring the right orientation to this interdisciplinary specialization in practice and to have the process skills for building relationships and collaborations among key institutions. This chapter is devoted to what social work professionals need to know about the cast of characters and organizations that play key roles in CED. As a result of community building and community development efforts, American communities have hundreds of nonprofit groups and agencies that address the issues of poverty, affordable housing, economic development, social development, community organizing, family life, youth development, civil rights, and a plethora of other issues and concerns. In fact, the abundance of nongovernmental organizations involved in these issues has been a distinct characteristic of community and social development in the United States, in contrast to Western Europe or urban areas in other parts of the world. If we add in specialized government agencies in each jurisdiction, there are thousands of entities at work in larger communities. At the community level, there are settlement houses and neighborhood centers, multipurpose social services agencies and health clinics, United Way agencies, boys and girls clubs, job training organizations, charter schools, adult education organizations, resident advisory boards in public and subsidized i f s t r at e g y s e t s t h e d i r e c t i o n

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housing, neighborhood councils, community development corporations (CDCs), minority business development organizations, nonprofit housing corporations, affiliated community organizations such as the Industrial Areas Foundation (IAF), unaffiliated block-level clubs and homeowner associations—the list goes on. Add to that multiple players from the private sector, such as real estate developers, banks, and business developers. Brophy and Shabecoff (2001) estimate that there are more than 400,000 people employed just among nonprofits and city agencies specialized in community development. cr eat i n g a s ys te m f o r c ate g o ri zin g o r ga n iz at io n s

How do community developers, planners, and community organizers make sense of this wide range of entities? Beyond the academic exercise of classifying groups of organizations for purposes of study, active community developers need to mobilize the forces of the existing community, bring together appropriate groups for common problem-solving activity, and understand the needs and dynamics of each of the institutions so that they get support to provide their best to community residents. Moreover, in an era of collaboration for more comprehensive activity, the community building convener must bring together disparate parties to be successful (Linden, 2002). An effective convener understands the unique characteristics of each of the participants. Even when working on a common activity, different organizations act and react on the basis of their own mission and goals. For example, several organizations may be working to rehabilitate a building for affordable shelter. A youth training organization uses work on the building as an opportunity to educate participants on a set of skills and work behaviors; the quality and cost of the building are important but secondary. A nonprofit housing organization focused on the building as an asset for families will be more concerned with the building’s long-term quality and affordability. And a homeless service organization sees its work on the building as a welfare service to residents. Understanding what motivates each type of organization and implementing strategy accordingly will improve chances for success. How then to best understand the universe of organizations? How does one sort through their different goals and purposes? The immediate

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temptation is to group organizations by field of work, such as youth, housing, education, elderly people, and so on. This “yellow pages” approach does organize the universe and often reflects the reality of people who regularly relate to one another based on their field of work. On the other hand, it promotes a kind of isolationism that is becoming as common in the nonprofit sector as it is in government, namely, that organizations segregate themselves by type of activity into separate silos, despite that clients’ and communities’ needs are holistic and cut across a variety of organizations. In this day of computer databases, it is easy to imagine a way to categorize each entity on a number of criteria so as to be able to query the database at any moment for a particular use or angle. As different criteria emerge, any one choice may be appropriate. The criteria for grouping organizations could include: r
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Harvard’s Ronald Ferguson and Sarah Stoutland (1999) suggest an alternative paradigm. They envision all organizations operating on or in a community as part of a single system. They then divide the universe into four levels (0, 1, 2, and 3) based on the degree of separation of the organization from residents of the community. Ferguson and Stoutland applied their categorization scheme to the workforce and employment field (see figure 7.1); the authors here have applied these levels to the CED field,

Figure 7.1 Levels of the workforce development sector. The four levels of the workforce development sector (Ferguson & Stoutland, 1999). These levels apply to other sectors in the community building field. Boxes are intermediaries and alliances; circles are other entities. Lighter lines separate levels. Source
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which is discussed later in this chapter, and the same levels generally apply in other fields of work. Level 0: Voluntary Community Organizations and Informal Networks

Because practicing CED effectively requires sophisticated approaches for project development and the ability to deal with private business institutions as equals, most successful organizations have professional staff. That said, purely voluntary organizations are often the birthplace of organizations that will later be professionally staffed, such as CDCs. In addition, there are numerous voluntary community organizations that work in conjunction with CDCs’ programs. Neighborhood organizations and homeowner associations also conduct neighborhood improvement activities that contribute to the community’s economic development. In commercial revitalization, voluntary organizations of merchants and property owners are essential. There are also informal networks of financial self-help and investment groups, especially in ethnic communities. A Level 1 professionally staffed community organizing group or CDC may well sponsor or support a variety of Level 0 voluntary organizations at the block and neighborhood level to build social capital or cohesion (see chapter 13) or to undertake a concrete improvement activity, such as a block watch program to reduce crime or a youth recreation league to reclaim and use a community park. Level 1: CDCs and Other Nonprofit Developers

On the front lines of delivering projects in the neighborhoods are those organizations that have staff and that are funded to do CED work. These include organizations such as CDCs, nonprofit housing organizations, and commercial revitalization organizations. In Ferguson and Stoutland’s portrayal of the workforce sector in figure 7.1, government agencies are normally relegated to Level 2, as they provide funding and policy guidance to Level 1 organizations, which in turn operate the programs. In community development, however, local government agencies that address housing, community development, and economic development straddle two levels. Like workforce agencies, they are at Level 2 when they fund and support

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Level 1 CDCs and housing organizations; however, they also directly operate programs and create projects at the neighborhood level. In these functions, they are at Level 1 along with CDCs and housing organizations. Similarly, financial institutions, bank-owned CDCs, and consortiums of banks offering home ownership financing in the neighborhood might function at Level 1 while also functioning at Level 2 to provide funding to front-line nonprofits. Collaborations of front-line organizations for more comprehensive programs also fall on Level 1 in community development. Supplementing the physical, housing, and economic development work of CDCs are a large number of nonprofits in such areas as family and children’s services, education, recreation, and services for senior citizens. In the private sector, banks that serve residents and businesses where they shop round out the Level 1 structure of the community. Level 2: Local Funders, Policymakers, Researchers, and Supporters

Above the front-line delivery institutions—whether government, nonprofit, or private—are a set of local institutions that provide funding, policy frameworks, research, advocacy, and capacity building for front-line CED work. What separates these institutions from Level 1 organizations is that they do not directly operate programs or create projects; they stand behind others who do. Examples of Level 2 institutions include community and private foundations, corporate philanthropy arms, university-based research and data analysts, government community development funding agencies, banks with financing programs for community projects, and local intermediaries that pool resources and share specialized staff. Local and state associations of CDCs also fit into this category. As the field of CED has become more developed and more recognized, the web of supporting institutions at the local level has grown. Where once there might have been a few university professors who helped communities with urban planning, there now might be a fully staffed neighborhood design center with resident planners, paid and pro bono architects, community service volunteers, and other development professionals. Where there were early in CED work only one or two disconnected private funders in a given area, later there were a dozen funders, actively coordinating their giving, and now a formal community development funding collaborative with specialized staff and many local contributors.

s t r at e g y, o r g a n i z at i o n , a n d s u c c e s s

220

Level 3: National Funders, Policymakers, Think Tanks, and Intermediaries

Level 3 institutions are similar to those in Level 2 except that they operate and are governed at the national level. National foundations, federal government agencies, major national research institutes, trade associations, and national intermediaries fall into this category. They often collaborate XJUI
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Johns Hopkins University’s Lester Salamon, an international expert on the structure of the nonprofit sector, has suggested that there are four competing paradigms within the nonprofit sector (Salamon & S. Wojciech Sokolowski and Associates, 2004). The paradigms account for the different sets of structures, motives, and dynamics among nonprofit organizations. They include: r
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All of these forces can be seen very clearly in the CED field. Salamon then describes each competing force with respect to a number of characteristics:

a ta x o n o m y o f c o m m u n i t y d e v e l o p m e n t o r g a n i z at i o n s

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role in society, strategy, style, principal reference group, structure, and management style. These paradigms explain why not all nonprofit organizations—even those in the same field of work—operate the same way or respond in the same manner to events, such as the reduction of government funding, new policies, or the insistence of funders on specific outcome measures. Tenants coming together in a self-help rehabilitation of an apartment building, or a CDC constantly involving the community in project development, reflects the paradigm of voluntarism. On the other hand, hiring a CED executive XIP
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In addition to the organizations special to the community development field described by the levels created by Ferguson and Stoutland, CED social work practitioners need to identify and work with organizations in allied fields of work if all dimensions of the community are to be revitalized. Table 7.1 provides a model for categorizing the organizations by the

r e l at i o n t o r e c i p i e n t of its work

Clients are the beneficiaries of charity or recipients of services

Artists are creative people to be nourished and allowed to flourish Students are to be nourished and assisted to achieve standards, and family members may be viewed as co-providers

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Community organizations Affiliates of national organizing groups (e.g., Industrial Areas Foundation) Block watch and community anticrime groups Community gardens Citywide planning and housing policy advocacy groups

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Owners and members pool resources to own and operate ventures

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Clients are victims to be protected and the potential beneficiaries of new policies

o r g a n i z at i o n type

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6. Comprehensive initiatives

5. CED organizations

p r o g r a m m at i c function of the o r g a n i z at i o n

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Broad collaborations are mobilized to address complex issues

Residents work with or comprise these organizations

Level 2 and sometimes Level 1 organizations receive support from these organizations

Comprehensive community initiatives

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National foundations The Urban Institute Brookings Institution Heritage Foundation Cato Institute Catholic Campaign for Human Development

Federations of organizations Neighborhood Design Centers The United Way Nonprofit management support centers Community foundations Local family foundations Trade groups within a field of work University research centers

Dudley Street Neighborhood Initiative Harlem Children’s Zone The Enterprise Foundation’s Sandtown-Winchester 1SPKFDU Some Empowerment Zones Savannah Youth Authority

226

s t r at e g y, o r g a n i z at i o n , a n d s u c c e s s

orientation of each type of organization to its participants or clients, as this factor often determines how easy it will be for organizations to work with the same clientele or participant base. The model uses selected characteristics outlined by Salamon to illustrate different paradigms that have to be negotiated in order for the organizations to get along. Ferguson and Stoutland’s layers are used to subdivide the organizations further, with most attention paid to Level 1 organizations. Then, the organizations are clustered primarily by their programmatic function: Ū
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Table 7.1 also provides specific examples of each type of organization. Social work students of CED would do well to become familiar with each type and explore the websites of or visit organizations to get a better sense of what they do and how they function. All of the types of organizations listed in table 7.1 are active in communities that are the focus of CED work. These organizations are all relevant in the CED field even though only some are specifically constituted for CED purposes. In addition to differences in how they view their constituencies and the types of programs they handle, the large groupings of organizations in table 7.1 have different dynamics that affect how they perceive collaborative endeavors and their needs. Table 7.2 explains key characteristics of organizations by their primary programmatic function.

Some minister or leader driven, others democratic at group level

Usually is or has a board elected from the designated beneficiary group or appointed by the agency

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Agency and client group satisfaction, the evaluation measures of the particular agency; often not evaluated externally but may participate in evaluation of the agency

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Service units provided, progress of participants

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Capitalization of projects and fees and grants for core operating functions

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Representative of the agencies involved, power sharing with the funder; may have a communitydriven structure

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l e v e l 1 (f ro nt-li ne ) o rg ani z ati o n s s p eci a l iz i ng i n c e d

This text focuses on the most common organizations directly related to CED. These organizations undertake or provide funding for revitalization and redevelopment of deteriorated and impoverished communities. They may be government agencies, nonprofits, religious organizations, or even private businesses. This book is most especially focused on nonprofit community-based organizations, and those are highlighted here. The authors retain Ferguson and Stoutland’s four-level characterization in presenting an expanded description of the most commonly encountered CED organizations. Government Community Development Agencies

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Nonprofit organizations operating in community development might be comprehensive in their agenda, or they may limit their focus to a single program such as affordable rental housing or neighborhood commercial revitalization. “CDC” is the most common blanket term used for organizations that are based in, and accountable to, a geographic community. cdcs .

CDCs are the community-based organizations most associated with CED (Rubin & Rubin, 2008). Their mission is the rebuilding of an

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table 7.3

Four waves of CDCs from 1968 to the present

years

wav e

1965–1975

First wave: CDCs sponsored by the FORD Foundation or federally sponsored and minority business development organizations

1975–1987

Second wave: Neighborhood development organizations and alternative economics groups

1987–2000

Third wave: Constituency groups (e.g., Asian immigrants, women), social service agencies, single-purpose development organizations (e.g., affordable housing organizations)

2000–

Fourth wave: Comprehensive community initiatives, community building, collective impact collaborations

impoverished community through the development of housing, commercial real estate, businesses, and local financial institutions (Sviridoff, 2004). Their objective is to restore a self-sustaining economy within the community in a way that benefits community residents and reflects their goals for the community. They operate somewhat like community organizing groups that mobilize and structure community self-help activities and also like private businesses that arrange infusions of capital into projects. As described in chapters 4 and 5, CDCs arose in the context of the War PO
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which are illustrated in table 7.3. Because CDCs form such a large part of the field of CED and because the term is used to cover many different types of organizations, it is important to understand the distinct characteristics of these three waves with a higher level of detail than was presented in earlier chapters. The Original CDCs: The First Wave evoluti on.

The first wave of CED was primarily composed of CDCs that were sponsored by the Ford Foundation (FORD) or the Federal Office of Economic Opportunity (FOEC); they shared the specialized form and components of CDCs as required by FORD and the FOEC. Community organizations

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such as minority business development organizations that did not qualify for either sponsor usually did not use CDC nomenclature during the first wave. However, similar organizations of later waves were often referred to as CDCs (Walker & Weinheimer, 1998). $%$T
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including many of the settlement house, social service, or community organizing efforts that preceded them in the same target communities in their fundamental approach to problem solving. These other efforts focused on better delivering the work of grant-funded agencies, mobilizing a public pressure force for public funding, or achieving basic rights through government regulation. CDCs used the real estate and business venture development methods of the private sector to attract significant amounts of private capital (in contrast to charitable gifts or corporate contributions, such as grants) as investments in ventures that would provide financial return to investors and the community as well as social benefits to the community (Faux, 1971). The other groups wanted to deliver successful services. CDCs wanted to restore the conventional market, which had abandoned the community, and to grow the wealth of the community. CDCs have often been referred to as practicing “community capitalism” 1FUFSTPO

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investment ventures (Sviridoff, 2004). Over the life of the FORD and federal programs, there were fewer than 100 neighborhoods across the country that received planning grants, and fewer than fifty that received JNQMFNFOUBUJPO
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Although later organizations achieved modest success without having all the elements of the original CDC model, all components of the model are needed truly to transform a neighborhood. Today’s CED practitioners need to understand these elements even if they are not available in any one program. While the components may be called by different names and be organized differently, they include the following: 1. 2. 3. 4. 5. 6. 7. 8.

Defined geographic area Community leadership Highly professional minority staff Experienced external technical assistance (oriented to capacity building) Multiyear core support Access to conventional private sector financing “No strings attached” equity Access to public sector project funding def i ned g e ogr a phi c a r e a .

A cardinal principle of the original CDCs is that they were focused on a specific community, a “special impact area” as stated in federal legislation, in which they were to create measurable changes in poverty and deterioration and to which they were accountable (Ellis, Brown, & Strandt, 1981). Most of the original CDCs were responsible for substantial geographic areas, comprising several subareas or neighborhoods, especially the rural CDCs, which often covered several counties. communi t y le a d e r shi p.

The original CDCs embraced the “maximum feasible participation” of the poverty program (Clark & Hopkins, 1969). They were to have strong boards and other forms of participation by indigenous community leaders. For the CDC to succeed in inspiring and uplifting the whole community,

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any successes needed to be seen as achievements of the community itself, a source of pride and self-empowerment. This connection was to be achieved through incorporating community leaders as paid staff and volunteers as well as board and committee members. Some CDCs sought to balance the lack of business capability and mainstream contacts of indigenous leaders by incorporating external leaders on the board or committees; others established external support groups to draw on the interests, commitments, relationships, and capabilities of outsiders (Berndt, 1977). hi ghly profe ssi on a l m i n or i t y sta ff.

Because many of the special impact areas had high degrees of poverty, there was a shortage of people in local communities who had the skills and contacts needed to operate organizations that used the venture development and financing techniques of mainstream, private businesses. As empowerment of the community was an implicit goal, having a highly capable staff that the community would recognize as “just like me” required hiring professionals who reflected the ethnic composition of the targeted area. Some CDCs made deliberate efforts to find such people who had grown up in the community or who shared roots in the targeted area (Sviridoff, 2004). experi enc e d e x t e r n a l t e c hn i c a l a ss i s ta n c e .

There are a wide variety of skills required for developing business and real estate. Most venture capitalists and real estate developers often keep only core capabilities in house. They retain a stable of specialist consultants for other needs depending on the type of project they are contracting to complete. Likewise, CDCs could not possibly afford to hire all of the skilled professionals they needed, nor did they need all of them full time. In addition, finding highly professional minority staff at the salaries the CDCs could afford was often difficult. As a result, CDCs needed to retain outside contractors for technical assistance. The contractors needed to be oriented to building indigenous capacity whenever appropriate. They also needed to work with community participation structures to raise the public’s understanding of business development and financing so that there would be meaningful community-based decision making. Because such contractors were often difficult to locate, the sponsors of the original CDCs assisted with funding to develop specialized national and regional DFOUFST
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multi year c or e su pport.

Having resources to attract and retain highly skilled minority professionals in business and real estate development required levels of funding and stability in funding that could not be achieved through the annual process of securing grants that was typical of poverty programs. CDCs and their public funders also soon learned that they would not be taken seriously by business partners and financial institutions if they could not demonstrate financial sustainability. Therefore, funders of the original CDCs pledged to provide significant three-to-five-year grants to support the core functions of the CDCs. Some of the original CDCs received multiyear core support of more than $1 million a year, a dramatic amount in that era (Ellis et al., 1981). acces s to c on v e n t i on a l pr i vat e se c to r f i na nc i n g .

The ability to launch a private sector venture, whether an operating business or a real estate venture, depends on the ability of the sponsor to find financing. The founder of the venture expects to invest only a small amount of the total money needed to start the business, usually because he or she does not have the total amount of money; the rest is borrowed. Because community organizations, particularly those in social services or community organizing, and churches who had sponsored the CDCs were unlikely themselves to have access to the kinds of private financing needed for these ventures, CDCs needed special assistance to gain entry to and establish credibility with sources of such financing, including banks, insurance companies, and institutional investors. “no s tri n gs at tac he d ” e q u i t y.

Conventional financing of real estate and business ventures assumes that the entrepreneurs bring their own resources to the table and put their own net worth at risk. This component of financing the venture is called “equity” and is similar to the portion of the purchase price that a borrower puts down when buying a house or automobile with financing. In a typical commercial real estate deal, the owners are expected to provide 20 percent of the value of the final project as the equity component. A unique feature of the original CDCs was that they were allowed to devote part of their federal or foundation funding to the equity component

a ta x o n o m y o f c o m m u n i t y d e v e l o p m e n t o r g a n i z at i o n s

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ŪŲűŪ  Typically, there are also many predevelopment costs involved in a project or venture before the feasibility and financial requirements have been sufficiently determined to allow the venture’s founder to seek conventional financing that will enable the project to go forward. These costs, including acquisition costs for real estate, are typically where entrepreneurs first spend their equity component. The sponsors of the original federal CDC program understood the need for early and patient capital and provided some funding for these very early stages of project development, before feasibility was clear and when risk was highest. If the project went forward, then that initial investment was rolled into the equity component of capitalization; if the project did not, that risk capital was written off. &YQBOTJPO
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was dismantled and its components moved to other federal agencies. Subsequently, the U.S. Department of Commerce, which inherited the CDC program, eliminated the general operating support component of federal CDC funding and converted the majority of the program’s budget to funds for individual project support. This conversion effectively preserved the equity component of the program, although access was limited to the original CDCs in the program. After 1980, the competition for specific project funding was opened to all community-based development organizations, not only the original CDCs. 1SFEFWFMPQNFOU
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acces s to pu b li c se c tor pr oj e c t fu n di n g .

Financing projects in deteriorating neighborhoods with high levels of poverty was not immediately attractive to conventional financiers. Development projects required unconventional financing. Development financing has more layers than the two layers typical of conventional deals: (1) debt combined with (2) equity. In contrast, a community development deal has two to three layers of equity and two to five layers of debt, some subordinate to others, in order to make up “gaps” in funding that would arise when working with traditional financial institutions. Through a combination of community organizing and political pressure institutionalized in the Community Reinvestment Act (CRA) and corporate citizenship, many traditional financial institutions did become investors in CDC projects. However, they found themselves in unfamiliar territory. For example, after the bank or other lender’s underwriters assessed a CDC’s development project, they were often unwilling to provide the CDC with the full amount of financing needed because the debt-to-value ratio did not satisfy the full amount of debt financing needed for the project. In other words, when using a traditional market-based approach, appraisals of the financial value of inner-city real estate often yielded property values much less than the full amount required for the CDC to acquire the property and do rehabilitation or construction. Therefore, even if the financial institution was willing to lend its typical 80 percent of the value shown in the appraisal, the loan might represent only 50 percent of the actual cost of the project, leaving the CDC with a funding gap. Sometimes the gap resulted from the social goals of the CDC. If the project were being operated purely as a conventional business or real estate endeavor, the venture might have sufficient income to cover costs and repay the financing provided by the bank. However, CDCs wanted to reach customers who could not afford the housing prices that would support that income, or they wanted to hire and train workers at a cost beyond what a conventional business would support. To fill that gap, CDCs needed to recruit a source of funding that did not require a financial return or even B
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a ta x o n o m y o f c o m m u n i t y d e v e l o p m e n t o r g a n i z at i o n s

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“set-aside” in each new federal redevelopment or economic development program that came along during the Johnson administration. The original CDCs found their special access to federal programs so useful that they soon used their political connections to access special setasides in other federal programs in employment training, subsidized housing, education, health, and social services. So successful were some CDCs in using their federal program capability that they became more known for multiservice delivery than for real estate and business development (Ellis et al., 1981). Moreover, the CDCs and their advocates would argue that amalgamating a variety of programs allowed CDCs to embrace providing a full range of resources needed by individuals and communities who faced multifaceted barriers to success, enabling them to have a more significant effect on poverty. t h e s eco nd wave o f c d c s

The Nixon administration’s termination of the nation’s poverty program capped the federal CDC program, but the administration’s new locally decided block grant programs gave newly evolving community-based development organizations even better access to funds than the centralized national federal CDC program would have. As a result, community-based development expanded (see chapter 5 for a fuller discussion of this transition). Locally initiated neighborhood organizations that never would have qualified for the original federal CDC program began consciously or unconsciously imitating the CDC approach by undertaking real estate and business development work as a logical follow-up to successful community organizing, advocacy planning, or housing endeavors. These became the second wave of CDCs, although few of them used “CDC” as their moniker (Stoutland, 1999). However, these organizations faced new funding challenges. The local block grant programs were shaped to support specific projects, not for general organizational support or multiyear, long-range strategies for neighborhood revitalization. These CDCs had no big, easy source of “no strings attached” equity, so their projects were more thinly capitalized than those of the CDCs of the first wave. Most were lucky to break even; there were no profits to support the growth of the organization or social endeavors. They tried to fill the gap between the cost of a project and the amount lenders would invest with church and foundation grants; better layering of

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multiple public subsidy sources; creative negotiation to get conventional financing sources to go beyond their limits of risk; and new sources of long-term, low-interest, high-risk investment from philanthropic and faithbased sources, also known as social investment. The CDCs became adept at exploiting CRA requirements for banks, and in fact, banks soon became big advocates for CED. Where they could, however, the CDCs accessed government support, using their community organizing clout and the credibility they derived from completing highly visible physical projects and from the support of well-placed private sector partners. In most cases, these neighborhood development organizations had no multiyear, firm core funding with which to attract highly skilled development staff. In response, they increased the business and real estate development skills of the people who were already in place: Community organizers, youth workers, clergy, and advocacy planners became effective real estate developers through undertaking training programs, asking for technical assistance, and simply learning from their mistakes. Some secondwave CDCs accessed the old specialized centers of CDC technical assistance, but, unfortunately, most of them did not know about—and were VOLOPXO
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for the New York City region, and the Southern New Hampshire University for New England led the way in creating comprehensive programs meant to turn out well-trained executives for second-wave CDCs. In 1977, experts in CDCs told federal officials that there were fewer than 100 nonprofit development organizations working successfully at the neighborhood level in the United States, although in reality, there were closer to 1,000 (National Commission on Neighborhoods, 1979). The second-wave CDCs had been a locally grown phenomenon; they flew below the national policy and think tank radar screens. Scurrying for scarce resources, creatively combining pieces of a puzzle never meant to fit together, and aligning themselves with local private sector partners, the second-wave development organizations had tremendous staying power and weathered changes in federal funding, political administrations at all levels of government, and downturns in the economy (Mayer, 1984). This resilience led to a dramatic growth in the number of organizations

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during the Reagan administration (see chapter 5 for more detail), when deep federal program cuts inspired the creation of new federal, philanthropic, and private financing tools (Yin et al., 1987). Although second-wave CDCs were deficient in designing programs with appropriate financial components, they were often more grounded in large-scale community participation than first-wave CDCs had been 8JFXFM

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mass-based community organizations or spinoffs of them. Having honed their negotiating skills with bankers, they were better at pushing the limits of conventional financing into true “development banking.” This was perhaps easier for second-wave CDCs to accomplish because they were usually focused on smaller geographic areas than were first-wave CDCs. In time, that would limit their agenda to small projects that fit their ability to sustain a staff with the range of skills they desired. The early success of second-wave CDCs, documented by the National Neighborhood Commission, led to some federal support during the Carter administration, such as HUD’s Neighborhood Self-Help grants and technical assistance program. The rapid growth in the number and sophistication of these groups under that administration and the cultivation by the federal leadership of increased private foundation and bank support subsequently justified the formation of private, national financial intermediaries to organize ongoing support and policy advocacy for them when the federal government eventually withdrew. t h e t h i r d wave o f c d c s

The expansion and success of the second-wave CDCs helped shape the congressional response to the national crisis of homelessness in the late 1980s, creating a new stream of federal funding for community-based affordable housing. Lacking national funding for other parts of their agenda, housing became the de facto specialization of CDCs (Stoutland, 1999). Moreover, the national intermediaries that arose to support the second-wave CDCs gave national visibility and credibility to the CDC approach. Soon, many new nonprofits formed specifically to access funding made available to develop affordable housing. These third-wave organizations tended to describe their mission only in terms of providing housing for low- and moderate-income families (Rubin, 2000).

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s t r at e g y, o r g a n i z at i o n , a n d s u c c e s s

If second-wave CDCs were smaller than first-wave CDCs, the thirdwave CDCs were tiny by comparison: The mean full-time equivalent staff for CDCs of the 1960s was 44.4 and for CDCs of the early 1990s was 3.7 (Stoutland, 1999). They were nonetheless highly productive (National Congress for Community Economic Development [NCCED], 2005), and the intermediaries helped a large number of small organizations become a “system” for producing a local supply of affordable housing after private developers gave up the work because of the absence of federal incentives (PFU[
ŪŲŲŬ  During the same period of time, many social service agencies, such as youth training organizations and constituency-based organizations like those focused on new immigrants, began to see the housing projects of third-wave CDCs both as a method for generating income to replace shrinking government dollars and as a mechanism for providing an additional service to their constituency. Social service and constituency-based agencies undertaking housing and business ventures joined the single-purpose housing organizations as part of the third wave of nonprofit development organizations. Like the second-wave CDCs, the third-wave organizations lacked a central program sponsor and the major financial components of the firstwave organizations. In addition, they had fewer community roots and community accountability than did the second-wave organizations that grew from community organizing or advocacy planning. They often were more oriented to providing a service to needy individuals than revitalizing a geographic area. When national microenterprise lending and Individual Development Account (IDA) programs joined housing as financial resources during the third wave, third-wave organizations grew rapidly and outnumbered the first- and second-wave groups by the turn of the century 4IFSSBEFO
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a ta x o n o m y o f c o m m u n i t y d e v e l o p m e n t o r g a n i z at i o n s

24 1

other than affordable housing and the affordable housing crisis pushed many second-wave CDCs into becoming almost exclusively affordable housing developers (Walker & Weinheimer, 1998). Some authors separate the second and third waves based only on the decades: the 1970s for the second wave and the 1980s and 1990s for the third wave (Stoutland, 1999). t h e fou rth wave o f c d c s

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24 2

s t r at e g y, o r g a n i z at i o n , a n d s u c c e s s

the revitalization of a particular geographic area. Instead, they focus on the development opportunities of residential real estate projects or the needs of an individual resident. Some are large-scale developers. In the larger San 'SBODJTDP
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new units every year (California Community Economic Development Association, 2011). Collectively, these large and small organizations are responsible for hundreds of thousands of affordable housing units across the United States. publi c hou si n g a u t hor i t i e s (pha s ).

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eligibility requirements for tenants, rent levels, and operating procedures down to the smallest detail. Chapters 4 and 5 describe the torturous path of public housing from its inception to its high-rises of the 1950s to the demolition of the same high-rises at the end of the century. In addition to owning large public housing apartment complexes and managing local 4FDUJPO
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24 3

expenditures within their designated boundaries for development projects. In some places, local government has created or given some form of official recognition for voluntary or elected neighborhood organizations to play a formal role in planning, zoning regulation, and government expenditures (Mayo & Craig, 1995). program- spe c i fi c d e v e lopme n t e n t it i e s .

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EFMJWery of virtually all federal urban development programs over the years, as well as state and local government-initiated programs. Some of these are local government agencies or quasi-government authorities, and some are freestanding nonprofits. For example, a program for technical assistance and financing of minority businesses leads to a minority business development organization or agency. A commercial revitalization program spawns a “main street” program, which is an incubator for investment funds for growth sectors of the local economy and neighborhood commercial revitalization. A housing rehabilitation and neighborhood marketing effort supported by the Neighborhood Reinvestment Corporation (now NeighborWorks) yields a Neighborhood Housing Service (NHS). The federal economic development program of the U.S. Department of Commerce leads to a local economic development agency with a citizen advisory committee. Employment and training programs of the U.S. Department of Labor yield a variety of job training and placement agencies. The government agencies running the programs do not usually create the entities, but the funding available leads to local initiatives to create eligible organizations. The sponsor agencies may encourage the formation of the local entities by providing advice or funding technical assistance. Single-program organizations described in this chapter look very much like third-wave CDCs. However, agencies using these tools to help individuals and families, such as the sponsors of IDAs, have continued to move in separate circles from CDCs and others oriented to revitalizing geographic areas. cooperat i v e s a n d soc i a l ow n e r shi p.

Cooperatives and social ownership mechanisms are a result of local people creating and pooling resources for collective ownership or financing of a project. Cooperatively owned businesses, co-op housing, and credit unions

24 4

s t r at e g y, o r g a n i z at i o n , a n d s u c c e s s

are some of the oldest and most well-known forms of common ownership by members of a powerful economic institution. A cooperative is a nonprofit organized under specialized state law and U.S. Internal Revenue Service (IRS) categories that allow its members to benefit economically from the organization and provide for “one member, one vote” governance. This is in contrast to an organization owned by stockholders in which the power of each member’s vote is related to the number of shares he or she owns. In producer cooperatives such as craft co-ops, all members contribute to the production of goods for sale. Marketing cooperatives, common among farmers, are a vehicle for individual producers to bring their goods to the market together. In consumer cooperatives, such as co-op grocery stores, members receive a rebate based on the volume they purchase. Co-op businesses can be created by people working together in a business (e.g., an office cleaning business owned by the employees) or by a number of businesses that need a common service (e.g., Land-O-Lakes, a marketing co-op for privately owned dairy farms). In all cases, the co-op structure allows members to achieve and control economic capabilities that would not be possible individually or in conventional capitalistic corporate forms. In cooperative housing, each resident owns one share in the co-op rather than owning his or her own apartment, and the co-op is able to negotiate financing as a whole. Owners each have one vote. Owners can sell their share in the co-op, but they cannot sell the individual unit: the unit itself is owned by the co-op. The National Cooperative Bank helps finance co-op housing, and it has a development subsidiary to push the boundaries of conventional cooperative financing and development. Newly invented forms of social ownership include community land trusts, Community Development Financial Institutions (CDFIs), and community development credit unions. Community land trusts raise funds to buy property for affordable housing. They transfer to moderateincome homeowners or developers of low-income rental property the right to build on the land while retaining the title to the underlying land and creating restrictions on future transfers. This preserves the future affordability of properties for targeted populations. CDFIs began as social investment pools from religious organizations organized to provide development financing for projects too risky for banks or the risky portions of development financing. One of the early

a ta x o n o m y o f c o m m u n i t y d e v e l o p m e n t o r g a n i z at i o n s

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CDFIs, South Shore Bank (later Shorebank) of Chicago was a fully charted and regulated financial institution. It expanded when bank and foundation capital infusions began making investments, and the bank multiplied exponentially after the Clinton administration created a federal program in the U.S. Department of the Treasury to support them. The number of organizations, their sophisticated skills, and the assets they command make them a significant players in CED as CDCs. As reported by the Opportunity Finance Network (n.d.), one of the national organizations of CDFIs, by 2012 there were approximately 1,295 CDFIs and other opportunity finance institutions currently operating in the United States, including: r
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CDFIs are eligible for a federal match of capitalization, provided the nonprofit financiers invest in designated community development activity (U.S. Department of the Treasury, 2013). Community development credit unions specialize in serving low-income communities beyond the reach of mainstream banks and credit unions and provide fair loans and financial education to people with imperfect credit. bank cdc s .

After years of supporting CDCs, some banks and other federally regulated financial institutions realized that community development lending was a specialization. They began hiring people from CDCs and intermediaries and training their own staff. In the early 1990s, the American Bankers Association recognized the specialization and created a division for it within the commercial banking area, with attendant training and national meetings for these specialists. Soon, leading banks aspired to community development projects that were beyond the capability or zone of interest of CDCs or in areas where there was no CDC. They applied for and were granted authority to create their own subsidiary CDCs, which could both undertake development and be borrowers of bank funds.

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local eco n om i c d e v e lopme n t age n c i e s .

Since the 1970s, cities have been active agents of their own economic development. Initially focused on urban renewal areas, downtowns, or abandoned large industrial sites, these agencies learned the value of the “homegrown economy” and expanded their work to include support for small business creation and the development of “main street” programs. To operate more flexibly with private business and to incorporate business leaders and expertise in their decision making, the agencies are sometimes set up as so-called quasi-governmental organizations, governmentally created nonprofits that are funded by the city and over which the city retains much control. l e v e l 2 o rg ani z ati o ns i n c o m m u n it y de v e lo pm e n t

The descriptions above cover the primary actors doing development projects in local neighborhoods and communities, what Ferguson and Stoutland (1999) term Level 1 organizations. But, as previously described, the full community development system has other levels of organizations that support those on the front line. Ferguson and Stoutland describe secondary and tertiary levels of these organizations. These organizations have different dynamics, powers, needs, and constraints than do the organizations that operate in direct delivery of services to residents. The major distinction between the secondary and tertiary levels is the location of the latter at a national level while the former are local or regional. The same types of organizations can exist at either level. Descriptions of types of Level 2 organizations in community development follow. Capacity-Building Organizations

There are a wide variety of organizations providing technical assistance and training or specialized services under pro bono contracts to front-line community development organizations. Examples of these are Neighborhood Design Centers organizing pro bono architecture and planning services; a local leadership training organization serving neighborhoods throughout a city; and a local university providing technical assistance, such as the University of Maryland Law School’s community development

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Some cities have membership organizations of local community-based development organizations, such as Chicago’s Rehab Network and the Cleveland Neighborhood Development Coalition. More common are state-level trade organizations of nonprofit housing developers and CDCs such as the Housing and Community Development Network of New Jersey and the Indiana Association for Community Economic Development. Some of the trade groups also mount capacity-building and training programs. Private Consultants

As the field of CED has grown, the industry of private consultants supporting it has also expanded, including many former executive directors and senior staff members of CDCs. Foundations and Other Funding Organizations

Community foundations, local private foundations, and corporate contribution offices focused on local concerns are also part of the support system for local groups and other Level 2 organizations. If there are no local financial intermediaries, an informal group of funders working collaboratively

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to support CDCs over a long period of time is crucial for the success of the MPDBM
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Among the organizations in Level 3 are national organizations supporting the local scene. National Foundations

For many years, FORD and a few other national funders had been alone in their support of CDCs. Many foundations viewed housing and urban renewal as the government’s responsibility or as program areas requiring levels of capital far beyond a private foundation’s capability. Deliberate efforts in the 1980s by leaders in CED such as David Ramage, then president of the New World Foundation, and by the Carter administration helped mobilize a broader base of foundations to support CDCs, leading to the formation PG
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The three largest national financial intermediaries are LISC, which focuses specifically on CDCs; the Enterprise Foundation, which focuses on affordable housing, including but not limited to nonprofit housing organizations and CDCs; and the federally funded Neighborhood Reinvestment Corporation (again, renamed NeighborWorks), which focuses on NHS organizations and other certified NeighborWorks organizations. All of the

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There are organizations that focus solely on capacity, concentrating on training and consulting to Level 1 and 2 organizations but providing them with only limited or no direct funding. They may also provide organization development supports, systems development, or data and policy analysis. Among these are the Housing Assistance Council for rural housing, DTI GPS
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but have a more decidedly advocacy bent, like the National Community Reinvestment Coalition, the Low Income Housing Coalition (both national and state affiliates), and the Center for Community Change. An ever-changing variety of university-based institutes and centers also provide valuable research. For example, centers with “community development” or “researcher services” in their name have been or are now in existence at the New School, Northwestern University, Baylor University, University of Colorado, University of California–Berkeley, University of California–Los Angeles, Wichita State University, University of Delaware, New Hampshire College, several branches of the University of Maryland, and hundreds of other institutions of higher education. One publication, Shelterforce, based in New Jersey, is a virtual research and advocacy organization itself. Explore any of these by searching on the web under their proper names. Entering “community development” or any topic related to CED in a browser will also turn up a variety of free-standing and academic research units.

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National Trade Groups

There have been national trade groups of CDCs, such as the National Alliance of Community Economic Development Associations, the nowdefunct NCCED, and CDFIs (e.g., the Opportunity Finance Network, National Community Capital). There are also other specialized national groups for public officials within the field, such as the National Association of Housing and Redevelopment Officials. con cl usi o n

The names and types of organizations working on neighborhood revitalization are constantly changing. As the field of nonprofit community development has matured, it has also become more complex, with secondary and tertiary support institutions at the local and national level. This chapter has presented a typical cross-section of the field in the early twenty-first century. Although researchers may be interested in the structure of the field, practitioners are generally more interested in identifying the organizations with whom they must work and in understanding organization dynamics. For what purpose are they organized? Whom do they purport to serve? How is decision-making power distributed in the organization? To whom do the various levels of staff report? What kind of people do they hire? What is the self-interest of the organization that would have to be served in collaboration (e.g., are their interests financial, managerial, or political)? Effective practitioners will develop their own taxonomy, their own organizational maps of the communities in which they work, and their own power analysis for each organization and the community as a whole. Following this chapter is a case study of the Coalition for the Hungry and Homeless (CHH) of Brevard County, Florida, a third-wave CDC. In response to the crisis of homelessness in Brevard County, CHH formed a collaboration to provide housing for low- and moderate-income families (Rubin, 2000). The case study illustrates well the evolution to third-wave CDCs focused more narrowly on housing from earlier first-wave organizations, such as the Bedford Stuyvesant Restoration Development Corporation or ChicaOPT
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coali ti on f or t he hu n gry a n d hom e le ss o f b re va rd c o un t y, f lori da, i nc. Description

Origins The Coalition for the Hungry and the Homeless of Brevard County, Florida, Inc. (CHH), is located in Cocoa, Florida. CHH started as a volunteer task force created in November 1998 to study the effects of the proposed relocation of the Daily Bread, a nonprofit program in Brevard County that provided free lunches to people experiencing homelessness or who are working and poor (Neale, 2008). Incorporated in 1989, CHH quickly grew into a networking agency of already established organizations that provide services to people throughout the county who are homeless or in need of food (CCH, n.d.a). In 1995, CHH expanded its mission to provide affordable housing to very low-, low-, and moderate-income people. CHH has since leased, purchased and renovated, or constructed more than 100 transitional and permanent housing units for agency clients. In 1997, CHH contracted with the U.S. Department of Housing and Urban Development (HUD) to provide housing for the homeless (CHH, n.d.a). In 2003 CHH became a certified Community Housing Development Organization (CHDO) in the state of Florida. CHH recently expanded its mission again to facilitate business management in economically depressed areas as well as to improve education for and social development of community members in Brevard County.

Structure A seven-person board of directors oversees CHH, including a president advocate, vice president advocate, treasurer, secretary advocate, principal engineer, and a community member. CHH also includes a paid executive staff of ten (CCH, n.d.b).

Funding CHH typically has an annual operating budget of approximately $2 million. In the fiscal year ending December 31, 2009, CHH had total revenues of $2,402,457, total expenditures of $1,503,558, net revenues of −$898,899, and net assets of $4,366,670 (GuideStar, 2009b). In the fiscal year ending December 31, 2008, CHH had net assets of $3,467,771; CHH’s net assets actually increased despite the recession at the end of the decade (GuideStar, 2009b). The organization is funded primarily through federal and state government grants and fees for program services (GuideStar, 2009b). It also receives a limited amount of

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funds from direct charitable contributions. Programs and projects of the coalition have specifically been funded by HUD, the Brevard County Board of County Commissioners HOME Investment Partnership Program, the Florida Department of Children and Families Homeless Housing and Assistance grant, and the U.S. Department of Veterans Affairs (Funders Together: Homelessness Ends Here, 2008). The Florida Community Loan Fund has provided nearly $1 million through lines of credit and multiple loan vehicles to CHH to purchase and rehabilitate homes and develop an apartment complex in northern Brevard County (Florida Community Loan Fund, 2007). Strategy and Programs

Target Community CHH primarily serves very low- and low-income veterans, elderly people, people with disabilities, and other people at risk of becoming homeless in Brevard County because of inadequate employment, income, and resources (CCH, n.d.d). The county is currently experiencing population growth and now has more than 500,000 residents. Compared with Florida as a whole, Brevard County’s residents have higher incomes, slightly higher numbers of high school graduates and people with bachelor’s degrees, and higher homeownership rates (U.S. Census Bureau, 2010). Unemployment rates in Brevard County (9.6 percent in March 2009) are comparable to the national average (9.7 percent; U.S. Bureau of Labor Statistics, 2009d). However, the county continues to experience an ever-growing number of homeless people. Florida has the third-largest homeless population in the United States. Approximately 44 percent of people experiencing homelessness have a disabling condition, and 39 percent have been homeless for more than a year (Florida Coalition for the Homeless [FCH], 2010). Florida is having a housing crisis; FCH has calculated that the more than 1 million extremely low-income households in the state whose residents earn an average of 30 percent of Florida’s median income must work 108 hours per week to afford a twobedroom apartment. The total monthly income of people with disabilities who depend on Supplemental Security Income (SSI) is not enough to rent a one-bedroom apartment, let alone cover other necessary expenses. Of the estimated 1,900 homeless people in Brevard County, approximately 1,200 are veterans, many of whom have disabilities and experience combat-related posttraumatic stress (Neale, 2008). The areas throughout Brevard that CHH has targeted for housing renovation and construction for its homeless population have experienced increasing crime, and their owner-occupied homes have gradually devolved into substandard rental units (Funders Together: Homelessness Ends Here, 2008).

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Strategy After working with homeless and low-income residents of Brevard County in the early days of its incorporation, CHH saw a strong need for more affordable and permanent housing, permanent supportive housing, and transitional housing in Brevard. CHH undertook projects that involved leasing, purchasing, and ultimately constructing housing in the community using layered grants (multiple small grants used in combination with one another) and other creative financing (Funders Together: Homelessness Ends Here, 2008). CHH carefully chose neighborhoods that they could revitalize with renovation and construction and have built new housing with the intent to create attractive and safe community environments for their residents (Funders Together: Homelessness Ends Here, 2008). To ensure the long-term ability of clients experiencing homelessness to achieve stable housing, CHH’s strategy has been to provide case management and other services directly to their resident clients in addition to constructing housing facilities. Along with providing direct services, CHH also prioritized developing a network of community service providers with which to partner to ensure that services are flexible, responsive to client needs, and accessible to clients where they live (CCH, n.d.c).

Selected Programs and Projects The When in Need (WIN) Program is CHH’s flagship project and jumpstarted the agency into housing in 1995. Through WIN, CHH leases or purchases and then maintains safe properties throughout Brevard County. Most properties serve as transitional housing for coalition clients until the clients have adequate income to secure permanent housing; the remaining properties serve as permanent housing for veterans who are not able to work as a result of their disabilities. The permanent housing project is referred to WIN/Vet and has been in operation since 2001 (CCH, n.d.g). The WIN Programs offer comprehensive case management and on-site support services. Residents are provided with food, clothing, furniture, cleaning supplies, and transportation depending on their needs (CCH, n.d.c). While clients live in transitional housing units, resident service coordinators assist them in securing affordable housing in the community and help them obtain down payments, utility deposits, rental assistance, and the supportive services they may need to remain in permanent housing. Because CHH’s clients, particularly veterans with disabilities, frequently have difficulty finding affordable permanent housing even after completing the WIN transitional housing program, in 2002 the CHH embarked upon its first construction project (CCH, n.d.f). In 2007 CHH completed Victory Village, which consists of twelve units of permanent rental housing for veterans designed to be affordable to those receiving only SSI,

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which the veterans typically receive when their disabilities prevent them from working. To accommodate veterans with disabilities, CHH installed special features in each unit, such as front and back porches, fully accessible roll-in showers, and dishwashers. CHH also configured the units to maximize privacy and provide a two-acre campuslike community for the residents (Funders Together: Homelessness Ends Here, 2008). To accomplish the construction project, CHH assembled a team that included an accountant with knowledge of multiple funding sources and new staff with backgrounds in construction. This team partnered with a contractor, architect, and attorney prior to breaking ground and also received significant technical assistance from the Florida Housing Coalition (Funders Together: Homelessness Ends Here, 2008). Rather than hire outside property managers for Victory Village, CHH opted to consolidate its administrative offices and provide their WIN and WIN/Vet services directly from an office on the Victory Village property to conserve funds and better serve Victory Village residents. CHH’s resident service coordinators have one-to-one relationships with each person residing in Victory Village and provide on-site case management services, access to food stamps, and assistance with SSI. CHH also ensures that residents get access to medical care, and resident service coordinators arrange for visiting nurses and nutritionists and transportation to and from health care appointments (CCH, n.d.f). In May 2009, CHH opened the Tropic Hammock Apartments, which consist of ten newly constructed affordable rental units for very low- to low-income families and veterans with disabilities. With this project, CHH intends to support the growing number of female veterans with disabilities and their children (CCH, n.d.e).

Major Successes To date, CHH has successfully leased, purchased, or constructed approximately 110 transition and affordable permanent housing units in Brevard County (Funders Together: Homelessness Ends Here, 2008). In 2009, CHH was awarded the Cocoa Chamber of Commerce’s Business of the Year Award (Small, Nonprofit Category). Victory Village was named a finalist for the 2007 Maxwell Awards of Excellence by the Fannie Mae Foundation in collaboration with the Partnership to End Long-Term Homelessness for its creative approaches to service delivery, including one-to-one case management, fully accessible housing, and on-site support services.

pa rt 3

Tools of Development covers some of the major tools and techniques used by community developers in community economic development (CED) practice. Once CED practitioners have decided on an organization’s strategy, they then select and deploy the specific tactics in this section for realizing the organization’s goals. The tools presented in this chapter are applicable in a variety of contexts, including work that is not related to CED. There are specialized professionals, national centers of expertise, bodies of literature, and funding sources available for using each of these tools in and of themselves. The chapters in this section are intended to provide social workers with a basic framework for understanding the applicability and the function of each of these tools. More in-depth knowledge and skill development would be appropriate for social workers who undertake extensive activities with programs using any of these particular techniques. This section begins with tools that call on the core knowledge and skill set of social workers: developing human capital—in this case helping people in the community gain employment—and building high-performance organizations—in itself another kind of human capital, the managerial and organizational capability of the community-based development organization. These are areas of work in which social workers, particularly those with the next set of chapters

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community organizing and administrative training or experience, will likely find that they can comfortably apply previously mastered skills. The authors then move to tools that may be less familiar to social workers but are essential to CED practice, such as real estate, especially residential development, and development of financial capital mechanisms and businesses, including microenterprise. The last chapter of this section discusses advocacy and lobbying, tools often overlooked in the mission of CED. This section includes case studies of three successful community development corporations (CDCs) that provide excellent examples of investing in human capital, building a high-performance organization, and applying best real estate practices. A fourth-wave CDC, New Economics for Women, is dedicated to enabling Latina single parents and their families in Los Angeles, California, to achieve economic self-sufficiency. The East Bay Asian Local Development Corporation, a second-wave CDC in Oakland, California, is renowned for outstanding management and is considered to be one of the best-managed nonprofit organizations in the United States. Finally, Intercommunity Mercy Housing, a third-wave CDC, has used effective real estate tactics to build or renovate affordable housing for nearly 3,700 low-income people in Seattle, Washington.

c h a p t e r  8

Investing in Human Capital

issues in community economic development (CED), especially for comprehensive community initiatives and community capacity building projects, is building human capital. Quite simply, human capital is the capacity of each individual to realize his or her dreams. More technically, it is “the abilities and skills that workers hold that affect their productivity. It may be defined broadly to include labor market skills, leadership skills, general education background, artistic development and appreciation, health, and other skills and experiences” (Green & Haines, 2012, p. 81). In this chapter, the authors examine a number of tactics social workers can use to empower people in local communities and enhance their human capital. These include workforce development, youth work, and the provision of direct services in substance abuse and mental health counseling, health care, education, family services, and the arts. The focus of this chapter is on examining various ways to help low- to moderateincome people become either gainfully employed or get better work and higher wages through intervention in the local economy; workforce development and youth work are the primary tools for achieving these goals. However, tactics such as providing mental health counseling, child care, family services, and even opportunities to engage in the arts are included because they enhance human capital by way of enhancing workers’ quality of life, an important concern to leaders in CED. In this chapter, these tactics are covered in terms of how they build human capital, and the authors return to the broader issue of enhancing quality of life in the neighborhood as a whole in chapter 13.

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wor k fo rc e d e ve lo p m e nt

As of February 2014, the official U.S. unemployment rate is 6.7 percent (U.S. Bureau of Labor Statistics [BLS], n.d.c). Many argue, however, that this official rate represents a low estimate of unemployment and that the actual unemployment rate is closer to 14.3 percent (BLS, n.d.a). This higher figure includes those adults who are discouraged and are no longer seeking work as well as certain categories of jobless people who are no longer counted in the official statistics. Furthermore, in poor communities, especially poor communities composed mostly of people of color, the unemployment rates are almost certainly even higher, often twice or more the rate for whites (BLS, n.d.b). Not reflected in the unemployment rate is underemployment, which occurs when employees have inadequate employment, including being overqualified for one’s position and being employed part time when a full-time job is desired. The underemployment rate was last estimated to be 18.3 percent ( Jacobe, 2011). The problems of unemployment and underemployment have long been more challenging in deteriorating communities, particularly communities made up mostly of people of color, than they have in the United States as a whole. Changes in the American economy in the 1980s resulting from globalization—jobs shifting away from the manufacturing industry toward the service, high-tech, and knowledge industries—have only made those disparities worse. Low educational achievement in these communities produces a workforce that is unable to obtain higher paying jobs in the service industries and almost incapable of gaining more than entry-level custodial positions in the knowledge and high-tech industries (Harrison & Weiss, 1998). The restructuring of the American economy has resulted in a tremendous displacement of workers even as new jobs are being created at the same time other jobs are being lost. To wit, during a period of great national job expansion from 1997 to 1999, during which unemployment rates declined, 7.6 million workers were still displaced from their jobs (U.S. Department of Labor, as reported in Murphy & Cunningham, 2003). This phenomenon is referred to as structural unemployment, distinguished from individual employment, which can occur as a result of changes in the economy but also for myriad other reasons. Racial discrimination, well documented as a barrier to employment (Annie E. Casey Foundation, n.d.b), has a double effect in the contemporary

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American economy on unemployment and underemployment. Many of the jobs being created to replace inner-city manufacturing jobs held by many people of color are in suburban locations that have few residents of color and little affordable housing and are too difficult to reach via public transportation (Blakely & Bradshaw, 2002). This has resulted in a spatial mismatch between those who need jobs and the jobs that are available (Dickens, 1999). The skills mismatch is dramatically exacerbated by the spatial mismatch. CED practitioners can do little to affect the macro forces that influence how many jobs are available in the general economy and the wages of U.S. workers in general. By this we mean that there is little daily work to be done to manipulate these macro forces. Little that community-based CED practitioners do, for example, will likely affect the wages paid by Wal-Mart. However, social workers and others in the CED field can and certainly should lobby for national legislation that would positively affect the direction of the economy. They can and certainly should work on city livingwage campaigns and advocate for policies on the city, state, and national levels that will affect the minimum wage and the number of working hours in a standard week. What social workers can do on a daily basis, though, is to help people recognize when their own plight is attributable not to personal troubles but public issues (Mills, 1959). Given the vagaries of the national economy and the long-term nature of legislative advocacy efforts, the question becomes how CED practitioners can help people become employed or more gainfully employed in the present economy and/or how it might be possible to grow jobs in the local economy for their constituencies. Workforce development—the central tactic of CED practitioners for building human capital—encompasses those activities that enable individuals to succeed in the workplace and employers to hire a skilled workforce. At the community level, workforce development comprises “the coordination of school, company and governmental policies and programs such that as a collective they enable individuals the opportunity to realize a sustainable livelihood and organizations to achieve exemplary goals” ( Jacobs, 2002, p. 13). There are generally two basic approaches to workforce development: (1) provision of skills training to help people become employed or get better jobs and (2) intervention in the economy. Providing skills training is the major thrust of most workforce development programs, such as welfare-to-work efforts, in which poor unemployed

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people must participate in job training and other work programs in order to receive public welfare benefits with the intent that these programs will lead to gainful employment. Skills training has also largely been the approach for improving employment rates and wages for the working poor, those who remain in poverty despite working because their wages are so low. The second approach, which has often been anathema in the United States, is sector intervention in the economy. Most other industrialized countries have some form of governmental economic planning, ranging from mild to extensive. The United States errs on the side of virtually no centralized planning, a hallmark of laissez-faire capitalism, while countries at the other end of the spectrum such as Cuba still engage in attempted centralized planning of the entire economy, a hallmark of the command economy, socialism, communism, and statism. While we do not explore sector intervention in the economy in this book, it is important to mention because many workforce problems could be mitigated, either somewhat or largely, if the United States engaged in more central economic intervention. Considerable progress has been made in the last forty years in understanding the elements of and constructing a workforce development system, both at the national and at the local level. CED practitioners should examine the components of such a system not only by considering the entire architecture of the system but also from the point of view of the person who is the ultimate beneficiary—the worker. Social workers in CED can play a vital role in arranging or creating providers of these workforce services at the neighborhood level. For example, if a community development corporation (CDC) is working on the rehabilitation of housing on a particular block in a certain neighborhood, it might be possible for CED social workers to make sure that those people doing the work are hired locally and perhaps even trained to become rehab specialists. Providing these services is central to CED work. Providing Services to Workers

The following components of workforce services are those most commonly identified by service providers, the U.S. Department of Labor, and research and support organizations in the employment field. One could imagine them being aligned chronologically, following the path of a young worker to a mature employee.

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outreach a n d i n ta k e .

The first step in the sequence of events from unemployment to a career is outreach to find people who are unemployed and an intake process to provide preliminary screening and appropriate referrals. One of the reasons that CDCs and other neighborhood organizations can be so successful in workforce development is their capability at this stage of the process; they know the community, are known and trusted in the community, and have the ability to find people who would otherwise be discouraged from entering any workforce activity, often because they had been through training programs in the past that did not lead to employment. An initial screening is often part of the intake process. Some people who are outreached may be ready for employment immediately, such as those who already have part-time jobs. Others are not even ready for the first step in the workforce pipeline that leads from screening to training to employment to career. Screening helps programs determine which barriers must be addressed before they can be in jobs or even in training. barri er r e mova l.

Many people who are unemployed have issues that prevent them from seeking employment, being hired, or even entering training programs. Some issues are as simple as having no identification; others such as chemical dependence are more difficult to address. The need for reliable child care that allows parents to pursue training or a job, for example, is an issue that can be identified early and solved. An organization at this stage in the workforce development process provides referral and often financial assistance to overcome these barriers. A neighborhood-based workforce intermediary (described later in the chapter) is uniquely qualified to assist at this stage, as it knows the clients and the range of service-providing organizations that might help clients resolve their barriers. workf orc e pr e pa r e d n e ss.

How do young people come to understand the world of work? In most middle-class families with one or two adult workers and an extended family of employed adults, orientation to the world of work comes almost unconsciously to young people as adults model worker behaviors. Working adults’ contacts become the source of part-time employment for teenagers

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in school. Working adults coach teenagers as they experience barriers and frustrations in their first employment experiences and teach them the problem-solving skills necessary to arrange their lives so that their behaviors and punctuality meet employers’ expectations. What happens to young people in families with no working adult and in extended families and neighborhoods where few adults work and few employment opportunities exist close to home? Someone else must consciously provide them with information about and an orientation to the world of work, opportunities for initial work experiences, and coaching in appropriate workplace behaviors and attitudes. This preparation may need to include skills as straightforward as conducting a job search, preparing resumes, and practicing interviewing or as complicated as understanding the expectations of employers from different cultural or racial backgrounds. The Opportunities Industrialization Centers (OIC), founded by the Reverend Leon Sullivan in Philadelphia in the 1960s, pioneered methods of teaching cultural and attitudinal adjustment based on racial pride and discipline for young inner-city black men. The Neighborhood Youth Corps (NYC), a program of the U.S. Department of Labor, provides grants to local organizations for part-time afterschool and summer employment. As federal categorical labor programs have shifted to block grants, as described in chapter 5, local workforce development systems have created their own versions of afterschool and summer youth employment. However, youth are not the only ones who need work orientation and preparation. Older young people and adults who have little experience in the world of work, particularly in the world of work located far outside their home neighborhoods, also need information, preparation, coaching, and problem-solving skills in order to understand and meet employer expectations. Part-time employment for both young and old, often while other training and job preparation is underway, is an important technique in workforce preparedness. bas i c and j ob- r e lat e d li t e r ac y.

Gone are the days in the United States when many jobs required mostly brawn. Almost all employment now requires at least basic reading and mathematical literacy. In addition, even the least technical employment opportunities these days may require basic computer literacy. For those who have not completed high school, part of the workforce development

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system involves providing methods for them to master reading and math and gain a Graduate Equivalency Diploma (GED). There are also computer-based literacy programs to help bridge the technology divide that often keeps residents of poor neighborhoods from the equipment and skills they need to develop computer literacy. Finally, there are job-specific literacy skills, such as the ability to solve the types of problems encountered at a particular job, the teaching of which is often provided by the employers. However, in a targeted intervention program, the workforce preparation system might also provide this education. educati on .

High school and college education is also a form of job preparation. Because 70 percent of jobs in the United States are now in the knowledge or service sectors, advancement beyond entry-level positions, and even often beginning at entry level, increasingly requires some level of post–high school education. Community colleges play a vital role in this part of the workforce preparation system. Close consultation with employers on the level of basic and job-specific skills required of graduates has become a hallmark of the most successful community colleges and even universities. job-s pecifi c t r a i n i n g.

Job-specific training programs range from trade schools at the high school level to the skills-specific programs one sees advertised on television. Freestanding government-sponsored or nonprofit training programs also provide the worker with knowledge and skills targeted to the growth areas of the local employment base. Some specific skill training is provided by the employers, as the private sector collectively spends a billion dollars per year on training its employees. A good public-private workforce development system at the local level closely involves employers in understanding the current and coming skill levels necessary to ensure competitive employees. It conducts the research necessary to identify growth areas in the region, whether public, private, or nonprofit. It may even provide some monetary support for employer-based training provided by employers to address the needs of targeted populations. In a volatile economy and volatile workforce, which seems to be the new constant condition of the global economy, ongoing training is necessary for individual workers to retain employment. The current orientation of

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training programs focuses on competency-based training and résumé building for employees rather than on specific job training, as the particular jobs of the moment may no longer be there in the next decade. Again, close contact with employers in the region, some of whom have a competency-based hierarchy for employment advancement rather than a straightforward job ladder, is important to those developing training programs. Specialized programs are needed for displaced workers whose jobs have been eliminated or made obsolete by technology or outsourcing. job place m e n t.

After receiving training or education, potential workers still must find jobs. Job-finding resources include simple job listings in newspapers and on websites or by the local department of employment security. More complex job placement services involve analyzing the employment potential of the individual and matching him or her to known jobs or employment areas. Other techniques of job placement services include providing individuals seeking employment with support groups in which they share information and experiences; planning hiring halls, which labor unions use to recruit new workers; and placing potential workers in temporary job placements provided by nonprofits. career de v e lopme n t a n d c oac hi n g.

Moving from entry-level jobs to higher-paying employment has become more complex as employers provide less clearly hierarchical job ladders. Both for-profit and nonprofit career development and placement services have become more common and necessary. These services provide workers with an understanding of their potential and the location of more lucrative and advancement-oriented employment, some of which may lie outside of their current employers, their current industry, or their current geographic location. As lifelong education is a prerequisite of advancement, the services often help individuals map out continuing training opportunities and find financial support for them. s upport se rv i c e s.

Sustaining employment while maintaining a family requires a variety of supports, whatever the income level of the worker. Organizations in workforce and community-based development organizations help arrange or

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provide these supports for individuals who do not make enough money to pay for them. Transportation to work, child care for young children, afterschool care for school-age children, health care, and health insurance are critical elements of a support system. Some low-income workers may need help with initial costs for work-appropriate clothing and tools. A common barrier to employment for low-income people is the inability to pass employer-required drug tests, given the prevalence of drug use in distressed communities. Therefore, drug treatment programs are also critical. Preparing the Human Capital Development System

The arrangement of support services for participants in any of the various workforce preparation or training programs raises the issue of coordination. The number and variety of these programs make coordination complicated enough. Adding support services for employee development, and, as described below, a variety of initiatives to create, preserve, and improve jobs, can make workforce development efforts bewilderingly complex. It quickly becomes important to construct and improve the formal or informal workforce development system by integrating all of the elements that deliver the services and programs. Historically, and in many new communities as they grow their system from a simple program, the process has typically been: (1) identify a new need or new population, (2) provide specialized programs today to meet that need or incorporate that population, and (3) integrate that program with others that already exist. As federal support for manpower development and training expanded in the 1960s, service coordination was demonstrated to be one of the benchmarks of successful programs and was soon incorporated in legislation and program requirements. Federal legislation, which drives workforce development, has moved progressively over the past forty-five years toward more coordination and integration. The scope of this coordination moved from integrating all federally supported categorical workforce development programs to first providing a block grant to states that gave flexibility to local planning bodies for creating integrated programs and then to requiring the locally driven, federally supported local manpower system to have more close coordination with employers. Finally, the mandate to coordinate led to a full-blown integrated system that includes employers, local government, those most in contact with targeted populations, and providers of employment and training

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services and support programs for employees. The current formal expression of that mandate is the local Workforce Investment Board (WIB), which is required by the Workforce Investment Act (WIA) of 1998. That law requires each state to have at least one designated local workforce investment area. The U.S. Government Accountability Office (GAO) reported that, as of April 2007, there were 563 local workforce investment areas across the United States. These number of investment areas in each state ranges from California, which has fifty local investment areas, to nine states in which the entire state serves as the local workforce investment area (GAO, 2007). The following sections describing elements of the human capital development system take a true social work perspective by beginning with the elements closest to workers and building out in concentric circles. i ntegratin g se rv i c e s.

The WIA integrated all organizations with a connection to workforce development into one governance structure for planning, implementation, and evaluation. The law also required localities to create one-stop centers physically to co-locate and improve the integration of the sixteen programs mandated by the act. In theory, this would lead to better integration of all services needed by the potential client. However, almost ten years after passage of the act, Congress was still concerned that many stand-alone programs were not affiliated or linked with the one-stop centers (GAO, 2007). Whether co-located in one building or not, the careful work of coordinating services and managing the handoff of workers from one stage of workforce development to another is critical to success. job developme n t.

Providing support services for workers is one part of building human capital. Considerable attention also needs to be paid to the employment side of the equation, often called job development. f i ndi ng plac e m e n ts.

The first step in the job development process is finding placements for trainees and later full-time employees who are coming through the human capital development system. Part of training potential workers is helping them learn job search skills, but job search skills often are not enough. In every good human capital system, workforce development professionals talk

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organi zati ons The sixteen programs required by the WIA by federal administrative agency. U.S. Department of Labor Ι


 
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to community employers to prepare the way for workers with special needs, to identify potential employment opportunities that have not yet been listed in any public forum, and to help reduce barriers, such as screening policies that prevent people with criminal histories from working, for people who have the most need for employment. Job developers are also important sources of feedback for the professionals working to prepare employees for the world of work and to those designing new training programs.

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coordi nat i on .

In many communities, there are not enough jobs to go around and/or the best opportunities for employment for trainees lie in the expanding sections of the economy. A good human capital system closely coordinates with economic development efforts in the local community. Human capital workers can draw great insight from collaborating with CED practitioners to analyze the local and regional economy for workforce needs. This collaboration is mutually beneficial, as so much of the economic development potential of any region lies in its human capital reserves and the community’s ability to grow workers for new kinds of jobs and industries. In addition to coordination at the general planning level, there also can be project-specific coordination. When CED agencies are creating large new commercial developments or managing the expansion or relocation of a large employer, the community’s manpower system can target workforce development efforts. A major new convention hotel, for example, needs a variety of employees who may not yet be present in the local community. During the time it takes to construct the hotel, a manpower system can be recruiting and training a workforce for that specific purpose. targeted j ob c r e at i on .

Taking economic development coordination one step further, some communities have targeted their economic development initiatives to fit the special characteristics of their local workforces as identified by the human capital system. Knowing, for example, that the automobile industry was laying off local skilled machinists suggests that economic development efforts could be shifted to help the local small machine shops make use of this influx of talented workers. CED practitioners could help these machine shops expand by enhancing their marketing, providing capital for new equipment, or networking them to undertake larger projects. Local workforce development with people recovering from substance dependence and returning prisoners suggested the need to one Denver, Colorado, organization for a business that could provide transitional employment, especially a business run by a nonprofit that would not put up screening barriers around substance use and criminal history and would allow employees to build a track record of work that would subsequently help them overcome those barriers with conventional employers. The business turned out to

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be a contract print shop that did large, quick turnaround productions of printed materials for downtown businesses and the convention trade. Such an operation had a variety of easy-entry jobs as well as more sophisticated functions into which employees could grow. Communities of immigrants often bring special skills that would be most easily utilized in similar businesses developed for an immigrant workforce and would enable workers to speak their native languages in addition to English. s ectoral i n t e rv e n t i on .

One technique described later, in chapter 11, is intervening in a sector of the economy in a local region in order to provide resources either to help it expand or prevent contraction. Manpower development organizations have used the same technique of concentrating attention on one particular sector for job development and training. In working with economic development agencies, a human capital system will help identify a large employment sector in the local community that is having trouble getting workers or that could expand if it had a more capable, ready workforce. Working carefully with economic development experts, employers in the industry, and skilled workers in that sector, the manpower system can design specific recruitment and worker preparation activities targeted to the needs of that sector. Sometimes the sector is defined as broadly as “health care” or the “hospitality industry” and as narrowly as “nursing home assistants” or “food preparation assistants.” publi c s erv i c e e m ploy me n t.

One particular opportunity, especially for people with little work experience, has been the creation of additional jobs in the public and nonprofit sectors with wages supported by specialized federal, state, or local programs. New employees help the government agency or nonprofit address unmet needs, maybe even in the same community in which the employees live. The employers are sensitive to the human capital development agenda and provide both worker preparation and the employment itself. Having a real job, in a real setting with real wages, helps the employee build real skills and develop an employable résumé. One of the best examples of full coordination of economic development, job development, and manpower development is a system put together by the Pennsylvania state government. Pennsylvania’s Workforce

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Development Strategy has focused on creating regional, industry-based strategies for specific industry clusters. It created an intermediary organization representing employee unions, workers, training providers, and funders and staffed the intermediary to coordinate programs and enable community-based organizations to recruit and support workers. Coordinating Mechanisms the work for c e i n v e st me n t boa r d .

The WIB provides a mechanism for bringing together all relevant parties to develop the best and most integrated system for each local community across a region. The WIB under present law is established by the federally funded local jurisdiction of government for large regions in the state and by the state government for the balance of the state. The WIB is composed of representatives of employers and economic developers, education and training organizations, support service agencies, and those closest to the targeted populations of the unemployed. The WIB employs its own staff and consultants to develop a data-based analysis of the workforce, employment needs, and potential target groups needing workforce development and employment services. The staff, consultants, and members of the board together identify alternative programs and mechanisms for strategically addressing those needs. Based on its submission of a plan, the WIB receives federal funding to provide support to organizations implementing elements of the plan to continue its planning, coordination, implementation, and evaluation of results. Unfortunately, integration has been hampered by some providers who attempt to protect their self-interest in categorical streams of funding or by political interests that limit the WIB to an individual political jurisdiction rather than a regional labor market. employer a n d pr ov i d e r gr ou ps.

Because there are only a few workforce and support services in every region, it is useful to include or create in a workforce development system trainers and social service agencies for employers. Some of these may be organized by a particular area of interest—for example, child care providers. The more coordination and communication within each element of the local or regional system, the easier the coordination and communication will be on a larger scale. Social workers with skills in community organizing

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and program coordination can be particularly useful in enhancing and enriching the manpower development system at this level. workf orc e pr ov i d e r s.

Special attention of the WIB staff needs to be devoted to continuous oversight and coordination of the various providers of manpower services, from client outreach to advanced training and job placement. Oversight includes demanding that providers use outcome-based planning and delivery strategies, evaluate their results, and recalibrate the system based on those results. Coordination includes providing mechanisms of communication among providers and convening providers to develop collaborative planning and client services. Crucial to program success are the providers’ abilities to pass a particular client from one provider to another as that individual’s need for manpower services changes. adjus ti ng to t he n e w wor kfor c e struc t ure .

Manufacturing jobs used to offer easy entry to the workforce. Manufacturing offered relatively highly paid semiskilled work and long-term careers for individuals with little formal education. Globalization further complicated the world of work, shifting the U.S. economy toward service, knowledge, and technology jobs. This work turns out to be incredibly volatile. Gone is the old job ladder that was the paradigm of 1960s manpower programs. Companies change the configuration of their workforce and engage in massive layoffs and outsourcing of functions with impunity. Workers change jobs frequently and are expected to have several careers in a lifetime. To succeed, workers need to be able to navigate a complicated and shifting set of options for increasing their employability and income. Workers in older manpower development programs needed a better understanding of the pathways to these new careers. Unfortunately for vulnerable populations in distressed communities, that understanding is hard to come by, and there is a considerable mismatch between the populations’ skills and workforce needs. One study in Baltimore, Maryland, for example, showed the following skills gap challenge (Giloth, 2006). The study examined growing segments of employment in construction and health in East Baltimore near a major medical complex. Only 5 percent of the local population had the bachelor’s degree or better needed to earn wages at the level of a registered nurse at $23.70 per hour. Only 15 percent had some postsecondary education, which

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was required for $15.00 to $23.00 per-hour jobs such as first-line supervisors in construction or radiology technicians in the health care field. Another 30 percent could qualify for jobs requiring a high school diploma, such as that of a carpenter at $13.89 per hour or a pharmacy technician at $9.00 to $12.00 per hour. The remaining 50 percent had not completed high school and could only qualify to be laborers in the construction field, which paid at best $11.50 per hour, or food service workers at $8.00 per hour.

a s ample pathway Sample pathway to employment and career advancement in the health care industry:

Level 1: Eighth Grade to High School Diploma or GED Federal poverty level: $7.98 per hour Food service assistant: $9.35 Environmental service assistant: $9.55 Transporter: $10.50

Level 2: High School Diploma or GED to Associate’s Degree Phlebotomist: $11.00 per hour Radiology film reader: $11.50 Pharmacy technician: $11.51 Inventory management clerk: $12.18 Sterile processing technician: $12.68 Surgical technician: $15.21

Level 3: Associate’s Degree to Bachelor’s Degree Median household income: $15.60 per hour Medical lab technician: $18.25 Occupational therapy assistant: $19.60 Physical therapy assistant: $21.03 Respiratory therapist: $22.58 Medical technologist: $22.58 Radiologic technologist: $26.01

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Cities with a growing health care sector have attempted to identify pathways for moving from entry-level to higher-paying jobs in health care for targeted populations. The sample pathway demonstrates the results of one such pathway and provides a framework that might be applied to other industries. The difficulty for workers attempting to move along such pathways suggests the need for long-term career counseling, education, and support services. The data used to document the pathway can also be used to convince employers to invest in education and career advancement for their workforce, to modify employment promotion policies, and to facilitate long-term retention of workers in whom they have made an investment, moving them from entry-level to skilled jobs in ever better-paying positions. Employers need to provide both the resources and the venues for more sophisticated education that replaces what in an earlier era might have been on-the-job training. the nei ghb or hood d e li v e ry pi pe li n e .

If workers, especially those from challenging backgrounds and neighborhoods, require long-term coaching, education, and support services, how better to orchestrate a coordinated, accessible system than to work within the neighborhoods in which they live? CDCs and other community-based organizations working in the neighborhood for some length of time are the logical choices for taking on this challenge. The Annie E. Casey Foundation (AECF) calls the process undertaken by CDCs that have been successful in this work “The Neighborhood Workforce Pipeline” (Padilla, 2008). The pipeline is a set of activities, networks, and services that r
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Figure 8.1 Workforce/neighborhood pipeline example. An illustration of the integration of a neighborhood pipeline system in Boston, Massachusetts, which is integrated with employers in the health sector (Giloth, 2006).

workf orc e i n t e r m e d i a r i e s.

Although changes in the workforce and the needs of workers are complex, the field of manpower development is one of the most extensively studied in evaluations of fields of employment and of community development. There is excellent literature and a plethora of regional and national intermediaries with expertise in the area. For example, in youth development, Brandeis University’s Center for Youth and Communities and Philadelphia’s Public-Private Ventures are prominent. General workforce development is addressed by the Manpower Development Research Corporation (MDRC) and the Urban Institute. Several national foundations are also repositories of information, including the Ford Foundation, AECF, the Open Society Institute, and the Edna McConnell Clark Foundation. Programs for Special Populations

The above descriptions of services and supports are generic; the particular services the system provides must be shaped to each individual client’s needs. The most prevalent groups of clients with common needs for special programs are youth, both in school and out of school; older workers;

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displaced workers; women, especially women returning to the workforce; workers with disabilities; people returning from prison; and immigrants. If the target area of a CED organization includes significant numbers of people in one of these categories, the local CED organization often makes a good sponsor of specialized workforce development programs. Specialized programs range from modifying generic services to fit the particular needs of the group, to delivering services in a culturally or situationally sensitive way, to providing alternative employment opportunities such as sheltered workshops. In Milwaukee, Wisconsin, and Indianapolis, Indiana, for example, CDCs established their own businesses in demolishing houses with threshold-level employment for former prisoners so that they could develop résumés listing job performance and obtain references that would help them matriculate in the private employment world (Local Initiatives Support Corporation, n.d.b). The St. Vincent de Paul Society in Eugene, Oregon, discovered that breaking down equipment and building components for recycling was another profitable line of work for the nonprofit. Typically, the clients would spend a short period of time at the sponsored industry setting, during which he or she would also receive appropriate services like those described earlier in this chapter. In the Tenderloin section of San Francisco, California, the Delancey Street Foundation became famous for its restaurants and other incomegenerating businesses that employed people who had been dependent on substances and people who had experienced homelessness. Casa de Maryland created a hiring hall for local immigrants in construction trades and other day labor that enabled the negotiation of fair wages and the provision of other employment services for its Latino clients. The Greater Southwest Development Corporation helped retain jobs and create low-income businesses for Hispanics in the Chicago area, and it developed low-income housing through its CDC and community organizing efforts (Capraro, 2004). The development of population-specific and culturally sensitive programs is an area to which social workers bring the necessary values and a skill set that is often missing in CED organization staff. Increasing the Value of Human Capital

People from low-income neighborhoods often end up in low-wage employment. Changing the economic value of their labor and gaining benefits packages that provide the support services they need requires efforts

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beyond simply service provision. It may take organizing, such as union organization or union membership drives, or it may take advocacy for public policy change, such as for increasing the minimum wage or extending the Earned Income Tax Credit. A CED organization cannot neglect these important organizing advocacy tools. Again, social workers with a community organizing background bring a particular set of values and skills that are needed for this work. For example, organizing custodial staff who work in different buildings into one union to negotiate with a set of employers, or organizing home health care workers into a collaborative to negotiate with those who pay for their services, helps individual workers transcend their isolation and increases their bargaining power. Nonprofits have succeeded in getting higher wages for individuals through sheltered workshops and community-owned businesses that organize the process of procuring, delivering, providing quality control, and receiving payment for simple tasks that are usually inexpensively remunerated. Summary of Workforce Programs

The federal government’s involvement in workforce intervention has almost done a complete turnaround. From the passage of the Employment Act of 1946, in which Congress stated it wanted to see “free competitive enterprise and the general welfare, conditions under which there will be afforded useful employment opportunities, including self-employment, for those able, willing, and seeking to work, and to promote maximum employment, production, and purchasing power” to the passage of the Personal Responsibility and Work Opportunity Reconciliation Act exactly fifty years later, under which individuals are expected to take responsibility for their own employment regardless of economic conditions, there has been a total paradigm shift in the federal approach to work issues. In the 1960s, the federal government clearly saw that it had some responsibility for helping workers, especially those who became unemployed by no fault of their own, become gainfully employed. The government to a large extent supported those who were unemployed or on welfare. The government was also viewed by most to have the responsibility of funding and setting the parameters for workforce development programs to the extent possible. As described in chapters 4 and 5, beginning with the New Federalism and continuing into the Reagan administration, more and more

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responsibility was shifted to states and cities to deal with all sorts of social and economic problems, including unemployment, underemployment, and welfare. Cuts in federal support coupled with increased state and city control over workforce development programs created many hardships and some opportunities for the individuals affected by these decisions. Helping each individual realize his or her full work, creativity, and earning potential has rarely, if ever, been the goal of any governmental workforce development or welfare program, even when federal support was more abundant. It is one thing to see that someone is gainfully employed or at least able to survive; it is another to help someone self-actualize. Some local CED efforts actually try to do the latter, as will be seen in chapter 13. Even there, however, these efforts are unfortunately few and far between. you t h de ve lo p m e nt and yo u th wo r k

One of the largest problems facing poor communities is youth school dropout rates and subsequent underemployment or unemployment. While many, if not most, youth from middle- and upper-middle-class backgrounds have a variety of work experiences both before and during high school and college, work experiences are vastly different and more limited for poor and working-class youth. Consequently, working with young people ages sixteen to twenty-four is a vital component of human capital development from the perspective of the community builders. AECF has been involved in youth development for more than a decade. Its Jobs Initiative, started in 1995, provides funding and support for community-based initiatives in six cities that help young, low-income workers find work in fields such as construction, health care, manufacturing, and teleservices (AECF, n.d.a). The six cities involved in the Jobs Initiative are Denver, New Orleans, St. Louis, Philadelphia, Seattle, and Milwaukee. In one evaluation study, it was found that almost 10,000 participants were enrolled, about 1,700 employers were involved, and about 50 percent of the participants found jobs with a minimum wage of $7.00 (Fleischer, 2001). It was also found, however, that working in low-wage jobs such as these longterm may have increased the likelihood of depression in the participants. There are other efforts across the country focusing on poor youth that are making a difference. One such program is YouthBuild, which has been doing important work since 1990 in New York City teaching young adults

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ages sixteen to twenty-four the necessary skills in the construction trades so that they can be gainfully employed as adults. In addition, the program focuses on academic and leadership skills, thus rounding out the picture for these youth (Schorr, 1997). This program is now national and called YouthBuild USA. The organization has successfully lobbied for federal funds of $200 million for 200 projects across the country. As Schorr states, “by 1996  .  .  . one hundred YouthBuild programs were operating in thirty-four states… [and] some 2,400 young men and six hundred women were in YouthBuild classrooms earning high school diplomas or GEDs, and on work sites building housing for the homeless” (1997, p. 40). And the story gets even more impressive. Almost a half-billion dollars have been brought into several hundred poor communities, and more than 50,000 youth have been involved in constructing about 14,000 affordable housing units in almost every state in the nation. YouthBuild’s founder and president, Dorothy Stoneman, has been named a recipient of the MacArthur “Genius” Fellowship (YouthBuild, n.d.). The Mayor’s Youth Council in Burlington, Vermont, which was set up by the socialist administration of Mayor Bernard Sanders in the 1980s, is one example of what local government can do to help youth at risk (Soifer, 1991). The Youth Council set up afterschool programs, a battle-of-the-bands program, a new Little League baseball program, an International Peace Workcamp, a citywide Halloween party, a performing arts program, a tree-planting program, a child care center, a youth newspaper, a teen center, an annual Kid’s Day, and several youth-run businesses (Soifer, 1991). Unfortunately, there are still many CDCs and other community development initiatives that do not include youth development work in their mission statements. From a comprehensive community building perspective, this makes little sense. Without educating people, especially youth, and training them in the necessary set of job skills and/or appropriate work experience, little will change over time in disenfranchised communities. While YouthBuild USA is a shining star in an otherwise very cloudy sky, almost all of the federal teenage youth programs of the past no longer exist. In a few places, states and cities have stepped in, but their programs are often tiny. Consequently, it is usually left to nonprofit youth agencies to try to make the difference in young people’s lives.

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t h e r ol e o f c o m m u ni ty -bas e d d e v e lo pe r s

The first wave of CDCs was extensively involved in federally supported employment and training programs, in part as a result of a special setaside of funding for the CDCs. The Bedford Stuyvesant Restoration Corporation, the New Community Corporation, the Watts Labor Community Action Council, and others demonstrated successful large-scale manpower development programs and pioneered the comprehensive workforce development activities described earlier in this chapter. With the shift from federal categorical grants to a locally driven block grant approach to funding and managing workforce development programs, many of these organizations were unable to sustain large-scale manpower programs, and the second wave of CDCs had little opportunity to imitate their earlier successes. As federal funds were dramatically cut from manpower programs beginning in the 1980s, resources were often targeted locally to those most easily placed in jobs and those requiring the least amount of training. That triage approach meant fewer resources for CDCs and other organizations serving the most difficult-to-employ populations, typically those people in the CDCs’ target communities. Some community-based efforts and later waves of CDCs chose to focus on specific programs or limited services that supplemented the remaining manpower development programs. YouthBuild began this way as a small community-based effort in Harlem. Other CDCs and community organizations and faith-based efforts provided child care, transportation, drug treatment, and other support services. Still other CDCs that were active in industrial and economic development, such as WireNet in Cleveland, engaged in job placement as an extension of their work with employers in their targeted communities. Today, the prevailing wisdom is that CDCs should become involved in the regional manpower development system through collaboration with the WIBs and one-stop job centers (Murphy & Cunningham, 2003). They should advocate for attention to their communities and help provide information on the special needs of their residents to the larger workforce development system. They should monitor and evaluate the outcomes being produced for their communities by programs in their WIAs. They should become a bridge between the larger system and their communities. Where there are gaps in outreach to their communities, in workforce development

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programs, or in support services, they might sponsor specific programs and seek funding through the WIB. This concept of the CDC as an arranger of services provided by others for its targeted population first emerged in the late 1980s. Harrison and Weiss (1998) saw the CDC as a hub, with the spokes of the wheel reaching out to a variety of workforce development providers, employers, support organizations, and social service agencies. More recently, as mentioned earlier in this chapter, the AECF has popularized the notion of the neighborhood pipeline to work (Padilla, 2008). CDCs that facilitate these pipelines not only connect neighborhood residents to manpower programs, but they are also an active agent in transcending “business as usual” by joining together service providers, employers, and neighborhood representatives to create new approaches. The special characteristics for CDCs of the pipeline are as follows: r
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For example, a CDC facilitating the neighborhood pipeline in a Louisville, Kentucky, community worked with a hospital on its borders—the flagship hospital of the Norton Healthcare system, an institution that almost never hired neighborhood residents—to develop community employment opportunities. Padilla writes, “Together they developed a package of training and supports that promote job success and retention. Norton gained trained, reliable workers and stronger connections with the community, and residents now enjoy a new source of jobs, income and pride” (2008, p. 7). Figure 8.2 illustrates a neighborhood pipeline that enables residents to reach the ultimate goal of a career that will economically support the dreams of residents’ families.

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Figure 8.2 Baltimore workforce pipeline example. Principles: Dual customer approach, employer engagement, outcomes driven, focus on job quality, and long-term retention and advancement.

Advocate, hub, pipeline, or gap filler, the new vision of the CDC role is for CDCs to insert themselves into existing regional workforce development systems. Few CDCs will have the resources to do more than that, and precious few will have the flexible dollars that are often the make-or-break ingredient of collaborations for innovation. Nonetheless, when there are resources, partnerships, and local leadership committed to the employment of community residents, community-based efforts are setting a remarkable record. Now in three states, America Works, an employment company that specializes in job placement for hard-to-place people, reports a 70 percent success rate at permanent employment through its program of intensive coaching on workforce habits and immediate placement in real jobs with private sector employers. America Works offers the employers a guarantee that the workers will perform or be replaced by America Works (Dickens, 1999).

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Many national models in the workforce development field such as YouthBuild sprang from neighborhood groups. The Center for Employment Training of San Jose, California, has a well-documented record of success in training and employment placement and retention and has been replicated successfully across the country. It began as a neighborhoodbased project led by the local parish priest. In over twenty years, beginning in the early 1970s, it graduated 60,000 trainees, 70 percent of whom had not completed high school (Murphy & Cunningham, 2003). con cl usi o n

Whatever the success of a CDC in its projects in housing, business development, and commercial real estate, the ultimate measure of its efficacy is always whether the residents of the community have a higher level of income and are increasingly part of the mainstream economic system of the region. The essential pathway to that goal includes improved employability, job retention, and career advancement for residents. Whether or not the CDC plays a direct role in workforce development, the organization needs to measure this dimension in the community and advocate for the improvement of systems that play a direct role in developing human capital. Many CDCs will find they are natural partners with the larger workforce development system in providing missing services, acting as a hub of coordination, or building the neighborhood pipeline. The social worker as a community developer brings a special set of insights and skills to the development of human capital and community. Traditional social work services are important supports to those seeking better employment. Techniques of social work administration and coordination of services are almost identical to best practices in successful workforce development systems. Finally, a holistic view of community development provides a framework for integrating workforce development and other human capital improvements into a larger picture of neighborhood revitalization. The emerging picture of a multifaceted, multiparty, complex workforce development system that focuses on delivering services to clients is a holistic picture in itself. For the important mission of the CDC in building human capital, the well-trained social worker is uniquely positioned to be a leader. The development of human capital is an important endeavor in CED, as well as in the overall economic strategies of helping the poor, especially

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women and people of color. The case study that follows this chapter, on New Economics for Women (NEW), clearly illustrates this aspect. NEW, by focusing its efforts on low-income Latinas, at least initially, needed to address the issues most crucial to this population: jobs and job training, quality child care, affordable housing, and the provision of social services. NEW’s efforts, however, were not limited to these areas. For example, in line with the idea of human capital, time and money was spent on leadership training efforts for these women. There was also a financial literacy component to their programs, with the goal of helping the women become economically self-sufficient. The investment in human capital can make all the difference in the lives of people being served by CDCs. Making human capital development a part of a comprehensive revitalization strategy is necessary for the longterm survival and success of a CDC. NEW certainly illustrates this point. new economi cs for wome n (n e w ) Description

Origins Founded in 1985, New Economics for Women (NEW) is a nonprofit organization dedicated to enabling Latina single parents and their families in Los Angeles, California, to achieve economic self-sufficiency (OMG Center for Collaborative Learning, 2003, p. 149). NEW was the first CDC in the United States created and operated by Latinas and focused on meeting the needs of Latina single parents (Enterprise Foundation, 1996). Its “founding mothers” belonged to the Comision Femenil de Los Angeles, the Los Angeles Chapter of the Comision Femenil Mexicana Nacional, a national activist group that organizes Latina women to assume leadership positions in their communities. Each founding mother herself began her life in poverty and grew to become a community or business leader (NEW, 2005). NEW began as an all-volunteer organization, its constituents residents of the impoverished Pico-Union neighborhood in Los Angeles, about two miles west of the city’s downtown area. Information about the organization’s first few years is scanty, and it appears that it took time for NEW to begin work in earnest. By 1988, however, NEW had outlined an economic development strategy for Pico-Union designed to address the needs of Latina single parents, and NEW’s office officially opened in 1990 (NEW, 2005; Enterprise Foundation, 1996). By 2005, when the organization was twenty years old, NEW had expanded its scope to provide housing and services for all low-income Latino families, regardless of single-parent status, as well as Latino senior citizens. NEW now provides multiple family

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enrichment services and operates thirteen affordable housing sites in the greater Los Angeles area as well as two charter schools, a large community center, a health clinic, and a center for economic literacy that offers adult education, computer classes, and financial education (NEW, 2005).

Structure NEW’s Board of Directors consists of thirteen community members and professionals in real estate, law, economic development, social services, and education (NEW, n.d.a). NEW’s board members are successful Latina mothers and are “community leaders who knew firsthand the struggles of growing up poor [and who] shared a powerful, fundamental belief—that working parents are self-motivated and responsible” (NEW, n.d.a, para. 1). Although NEW began as an all-volunteer organization, by 1998, it had a staff of twentyseven, and by 2009, the organization employed sixty-four people (GuideStar, 2009h).

Funding In 2009, NEW had gross receipts of more than $4.2 million and net assets of more than $10 million (GuideStar, 2009h). NEW’s funding comes from a wide range of sources, including scores of small donors. Major donors providing funds of $100,000 or more include the Bank of America Foundation, the City of Los Angeles, Los Angeles County, the Ford Foundation, the U.S. Department of Housing and Urban Development (HUD), and the National Council of La Raza. Other funders include the State of California, the Wachovia Foundation, and Washington Mutual Bank (NEW, n.d.a). In 2008, Bank of America awarded NEW with a $200,000 Neighborhood Builders Grant and sponsored NEW’s executive director and an emerging leader from the organization to participate in a prestigious leadership development program for nonprofit leaders (NEW, n.d.c). Strategy and Programs

Target Community NEW originally focused its community planning and services on meeting the needs of low-income, Latina single parents and their children in Pico-Union, a community of nearly 42,324 residents in 2000 (LA Times, n.d.). Pico-Union is the site of two redevelopment projects initiated in the 1970s by the Community Redevelopment Agency of the City of Los Angeles that continue today (CRA/LA, n.d.a; CRA/LA, n.d.b). More than 85 percent of the residents of Pico-Union are of Latino or Hispanic origin, much higher than the 46 percent for residents of Los Angeles as a whole (LA Times, n.d; Census, 2010). Many are firstgeneration Salvadoran and Mexican immigrants (LA Times, n.d.). Pico-Union is also one of the poorest neighborhoods in Los Angeles with a median household income of $26,424

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compared to a median income of $50,028 in Los Angeles (Census, 2010; LA Times, n.d.). The neighborhood has a very low number of owner-occupied housing units (9.5 percent versus 38.2 percent in Los Angeles). Pico-Union is home to a relatively young population, with a mean age of twenty-seven, versus 34.1 in Los Angeles (Census, 2010; LA Times, n.d). In addition, less than 7 percent of residents twenty-five and older have a four-year degree, compared to 20.2 percent in Los Angeles (Census, 2010; LA Times, n.d). As NEW expanded to include services for senior citizens and all low-income Latino families, it also expanded its services to other parts of the City of Los Angeles and Los Angeles County (OMG Center for Collaborative Learning, 2003). The organization’s thirteen housing sites are scattered across San Pedro, City Terrace, El Sereno, and several San Fernando Valley communities (NEW, n.d.b). Nearly 50 percent of the residents of Los Angeles County are of Hispanic or Latino origin (U.S. Census Bureau, 2011). Fifty-six percent of Los Angeles County residents are rent burdened, paying more than 30 percent of their gross incomes on rent (Flaming, Burns, & Matsunaga, 2008).

Strategy NEW’s mission is to reduce poverty by creating wealth opportunities for women and children, and it uses a “holistic approach to economic development, and a winning comprehensive strategy for addressing poverty from the perspective of women and children” (NEW, n.d.a, para. 2). From its beginning, NEW chose to be comprehensive in its approach to whole family transformation and neighborhood investment, focusing on four primary concerns: affordable housing, quality child care, jobs and job training, and provision of social services (OMG Center for Collaborative Learning, 2003). Because NEW’s founding members believed that providing for the needs of children significantly reduces poverty in any setting, services for children are also a major area of focus (NEW, n.d.d). NEW refers to its strategy as “getting stable, gaining knowledge, growing assets.” Getting stable refers to providing affordable permanent rental housing and transitional housing for families in poverty, teaching basic health education and safety skills, and providing medical care. Gaining knowledge comes next for families that have stabilized. NEW provides educational, personal development, and job skills training. For families ready for the step after that, growing assets, NEW offers affordable home ownership opportunities. NEW zeroed in early on constructing new affordable housing with the intent to provide child care, job training, and other services on site for residents. In 1993, NEW’s strategy was to build Casa Loma, a 110-unit, 55,234-square-foot complex of affordable apartments designed for Latina single-parent families and some senior citizens. Casa Loma officially opened in May 1993 and includes amenities such as twenty-four-hour security, on-site child care, a youth center, job training programs, and a comprehensive family development

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program (Enterprise Foundation, 1996). Casa Loma also includes a community space, financial literacy courses, transportation services, and an on-site K–2 charter school. After the success of Casa Loma, NEW’s development projects expanded to include more affordable housing complexes, schools, and community transformation projects as described below. Internally, NEW has undergone intensive leadership training through a Sustaining Excellence Award (SEA) grant from the Fannie Mae Foundation. In part, the grant was used for “deepening staff management capacity and preparing for an eventual leadership transition” (OMG Center for Collaborative Learning, 2003, p. 151). Furthermore, all the projects incorporated leadership training for NEW’s resident council to help develop in them the spirit of civic engagement on larger community issues (Fannie Mae Foundation, 2003).

Selected Programs and Projects NEW has been a stellar success story in the area of housing development. In 1991, NEW started construction on its first major housing project, the 110-unit Casa Loma project , which was targeted at meeting the housing concerns and the economic growth of lowincome single-parent families (Fannie Mae Foundation, 2003). This project was followed in 1995 with the sixty-unit La Posada project, a renovated hotel for teen mothers and their children, and then in 1996 Villa Mariposa, a 115-unit complex for single mothers and their families (Fannie Mae Foundation, 2003). The overall growth of the organization from 1992 to 1998 did not only result in staff and board development but also brought about the completion of 285 affordable housing units for residents (Fannie Mae Foundation, 2003). All of these projects were either for very poor families or single mothers with children (OMG Center for Collaborative Learning, 2003). Since then, six other housing projects have been completed. NEW manages over 600 units of housing now. But this is just the tip of the iceberg. NEW has begun two charter schools; created two all-purpose, comprehensive community centers; and has a variety of health, economic development, and financial literacy programs. In addition to these projects, the organization runs other programs for the public and new residents (NEW, n.d.d). The projects offered for new residents include Mariposa to improve residents’ education, wealth and assets, and health; the Learning Centers to foster higher academic achievement for resident children; and La Posada, which provides housing for single mothers and their children. NEW’s programs for the public include the Family Development Networks (FDN). The FDNs provide financial and social services such as case management services, referrals to citywide resources, and youth advocacy programs through the Westlake/Pico Union Services and the South San Fernando Valley Services programs. Other efforts include

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Asset Development through the First-Time Homebuyer/Pre-Purchase projects, the Homebuyer Education, Home Preservation/Foreclosure Prevention, Counseling, Individual Development Accounts, and the Smart Consumer programs. Also under public services are public safety and education programs, the NEW Business Growth Center, and the Wellness Center. Major Successes Major successes of NEW include raising family assets by more than $1 million, providing more than $1.6 million in health benefits for hundreds of families, giving almost $2.5 million to small businesses, training more than 2,500 families in financial literacy, and engaging in a myriad of other wealth creation activities. According to the Fannie Mae Foundation (2003), NEW’s participation in the SEA grant program as an awardee brought about the following accomplishments:

1. Physical developments in its central neighborhoods 2. Establishment of projects in other neighborhoods in East Los Angeles, Canoga Park in the San Fernando Valley, and San Pedro 3. Expansion of its policy and advocacy work to state and national arenas 4. Approval for a tax credit in 2001 for the San Pedro 129-unit housing project including multifamily buildings, senior living facilities, and town houses 5. Completion of fifty rental units under two projects: Guadalupe Terrace (thirtyone units for single parents and larger families) and project Tres Palmas (nineteen units) 6. Acquisition of the Prosperity Center

In addition, in the early 2000s, NEW provided support services to about 500 families in Pico-Union. It received grants for building and running charter schools in Canoga Park and Belmont Pico-Union. Although the Belmont School project was delayed and experienced funding constraints, NEW helped launch a nonprofit organization that later took over and completed the school project. Finally, NEW created a housing division that undertakes real estate development endeavors outside the organization’s core neighborhoods, extending its reach far beyond its early boundaries.

c h a p t e r  2 9

Building HighPerformance Organizations

of, and methods for, building the capacities of an effective community economic development (CED) organization. Only an ongoing institutional vehicle for community leadership and project development can accomplish the goals of a longterm CED strategy. To be credible with banks, private sector partners, and foundations, CED organizations need to be stable, well managed, and resourceful. The skills of building high-performance organizations are a prerequisite for the chief executives of CED organizations and for external consultants who work to help build the organizations themselves. This chapter does not attempt to cover the wide range of literature on management in the nonprofit sector, which has grown so dramatically since the mid-1980s. Suffice it to say, there are plenty of programs and training, a growing body of knowledge and literature, and a set of well-documented skills needed for capably managing organizations (Herman, 2005). This chapter does provide some summary of the framework of current literature and the avenues of current practice for those with training in group dynamics, management, organizational development, macro social work practice, and business planning. t h i s c h a p t e r a d d r e s s e s t h e i m p o r ta n c e

t h e i mp o rtanc e o f b u i ld i ng h i g h- pe r fo r m a n c e o r g a n i zati o ns

Four forces of organizational development and performance are of greatest importance to funders, managers, and the general public: professionalism,

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competition, volatility, and accountability. The growth of the nonprofit sector has led to the development of a specific body of knowledge and educational programs, involving both university degrees and freestanding training, to build skills for professional managers in the nonprofit sector. As with the evolution of management in the for-profit sector, the nonprofit sector has moved beyond theories of management that focus on structures and standards of practice (“scientific management”) to more robust methods of management for outcomes and efficacy. These methods include strategic decision making and devolving authority for continuous improvement in the organization (Letts, Ryan, & Grossman, 1999). The nonprofit sector has become increasingly competitive in relation to its dramatic growth. It has doubled since the 1980s and shows no sign of abatement (Salamon, 2006). The exponentially increasing number of organizations is competing for philanthropic resources that grew only linearly and for public resources that have shrunk during the same period. Private philanthropic organizations significantly shrunk their grant making in the early part of the twenty-first century after the economic downturn, as compared to the inflated portfolio values rendered by the hot stock market of the 1990s. Economic downturn also resulted in a cutback in government spending. This has increased the pressure on communities that depend on governmental support for addressing their problems and has simultaneously reduced the resources available to the nonprofit sector from government contracts. The nonprofit sector also competes for the best talent not only with other organizations in the sector but also with the public and for-profit sectors (Rodriguez & Herzog, 2004). These pressures are particularly felt in the field of community development, where capabilities that are highly prized in the private sector, such as real estate development, finance, business management, and property management, are much in demand. With the advent of technological change, globalization, and volatile markets, all sectors of the economy have had to learn to live by the adage “change is the rule; stability is the exception” (Collins, 2001). Coping with change, embracing change, and leading change have become bywords of successful managers in all sectors. Everybody has had to find new ways to do business. “High performance” is a mantra as much in the business sector as in the nonprofit community. One has only to visit the business section of a popular bookstore to find the concept of high performance in such

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titles as Good to Great: Why Some Companies Make the Leap . . . and Others Don’t by Jim Collins (2001) and Leading Change by John P. Kotter (1996). So it’s no surprise to find on the nonprofit side of the aisle such works as High-Performance Nonprofit Organizations: Managing Upstream for Greater Impact by Christine Letts and colleagues (1999) or The Nonprofit Organizational Culture Guide by Paige Hull Teegarden, Denice Rothman Hinden, and Paul Sturm (2011). In the nonprofit sector, the increased emphasis on performance is driven by both funder and public pressure for a greater degree of accountability. The public pressure drive derives from a succession of scandals in major nonprofits, such as CEO compensation problems at the United Way of America and the failure of the Red Cross in the wake of overwhelming donations following the terrorist attacks of September 11, 2001. Funder pressure comes from increasing professionalization in the foundation sector and demands by trustees to know the proven efficacy of initiatives funded by their grants (Olenick & Olenick, 1991). One response from within the nonprofit field has been to focus on achieving standards that are derived from a combination of funder and nonprofit organization input. The systems of review and compliance with the standards amount to “certifying” the quality of the organizations, as is done by the Maryland Association of Nonprofit Organizations (n.d.). These pressures in the nonprofit sector as a whole generally apply to CED and community development organizations as well. In addition, CED and community development organizations require a high level of performance to recruit the investment of private resources. ca paci t y b u i ld i ng

One of the most common phrases for describing the process of building high-performance organizations since the early 1980s has been capacity building. Nonetheless, the phrase is difficult to define. To define capacity building as “a variety of methods for increasing organizational effectiveness and high-performance,” a common definition, only avoids the issue that “the nonprofit sector does not know enough yet about how to achieve higher performance” (Light, 2002, p. 26). This chapter will take a more commonsense approach to capacity building, defining it as a variety of methods for increasing critical capabilities and improving systems

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The hierarchy of terms associated with capacity building in community development (McNeely, 1993).

that have been demonstrated to be the best practices of highly successful organizations. In a field devoted to the empowerment of the community, it is important to distinguish between building organizational capacity and building community capacity (Glickman, 2004). This chapter focuses on building the capacity of the organization in the community in which it undertakes community development, that is, organizational capacity. Other chapters will focus on the means of developing community leadership, community engagement, and resident learning through action. These approaches build

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the capacity of individuals and institutions in a community to set goals that achieve community visions. The hierarchy of terms associated with capacity building in community development (fig. 9.1) shows the relationships among some of the most common methods (McNeely, 1993). The power to fund staff positions that bring critical new capabilities to an organization cannot be underestimated. Direct funding—funding that may be used for general organization operations—is perhaps the most powerful and immediate mechanism for building capacity. Consistent general operating support, especially when driven by an internally generated plan for continuous improvement, provides both stability and expansion capability. Direct funding is a more powerful tool than categorical funding, which funds specific capabilities or projects for a short period of time. National and local intermediaries were created specifically to provide CDCs with the power of consistent operating support. Those intermediaries find it more useful to couple other tools of capacity building with general financial support rather than provide capacity building support disconnected from financing. Although capacity building is an ongoing process of continuous improvement in the organization, there are some discrete and significant interventions that are commonly used to accelerate the building of capacity: planned organizational development, strategic planning, and deliberate human capital investment (Glickman & Servon, 1998). Planned Organizational Development

Organizational development is so widely practiced it is really a field unto itself within the larger field of management. Planned organizational development refers to a discrete series of steps for analyzing the particular needs of and determining critical improvements in the organization. An organization may undergo this process in response to a crisis or significant change in the organization, such as the departure of a top executive, or the organization may be proactive in launching this process as an initiative for building capability for growth or change. Generally, organizational development is led by an external consultant retained for that purpose. The process may have a high degree of organizational

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involvement from the board down to front-line staff, or it may be an exercise of top and middle management. The first step of planned organizational development is an assessment of organizational systems and performance, followed by the identification of issues for improvement. The issues identified might address any of the organizational functions or management processes, from programmatic development and administration, to financial management, to board and fund development, to management structures for delegation and accountability. Typically with a high degree of group involvement, specific improvements are identified and planned to address each of the issues. Resources must be allocated for implementation of these plans or might have to be recruited. Implementation is then undertaken along a specific calendar with clear monitoring points, a process that is often assisted by the same external consultant. Strategic Planning

Strategic planning is a second major capacity-building intervention. In high-performing organizations, strategic planning is employed on a periodic basis to update the vision of the organization for accomplishing its mission over the upcoming three- to five-year period. Leaders of the organization step back from current operations and look at the conditions, opportunities, and threats facing the organization in the near term. This process gives leaders a chance to return to the original mission and reimagine the organization, identifying even radical departures from current approaches. In strategic planning, an organization might retain its mission but change its image, its program or services, its clientele or geography, or its structure, such as by merging with another organization or even going out of business. Strategic planning usually involves the use of an outside consultant or firm to assist and to lead the organization. Figure 9.1 shows the steps involved in a typical strategic planning exercise. A high level of leadership and staff involvement is recommended in strategic planning as a means of getting all critical stakeholders in alignment behind the same strategy. The strategic planning process may identify weaknesses in the organization or call for new capabilities, as may the organizational development process described above.

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Figure 9.1 Strategic planning process. Steps in a typical strategic planning exercise.

Human Capital Investment

Because so much of an organization’s success depends on the capability of its people, human capital investments are a major way of building capacity. Unfortunately, most organizations in the nonprofit sector and community development are fairly small and can neither support nor justify staff dedicated to human resources management. Nonetheless, high-performing organizations in community development find a way to invest in and raise the knowledge, skills, values, and motivation of their staff (Rodriguez & Herzog, 2004). Human capital investments might focus on recruitment; compensation, including both salary and benefits; career development and internal advancement; training and education; and improving personnel practices. Human capital investment in the nonprofit sector is rare, so there are few precedents within the industry. Industries such as community development are well advised to look to other recently emerged industries for best practices. All of these techniques build the organization’s systems and the capability of the people within the organization. The result is to achieve high

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performance that has a positive effect on the community to which the community development organization is devoted. h i g h - p e rf o rm anc e o rg ani z ati o ns

A high-performance nonprofit organization is successful at accomplishing its mission (Brinkenhoff, 2009). It produces the outcomes for its targeted beneficiaries through a series of carefully designed, well-managed programs that use regular evaluation to measure outcomes for continuous quality improvement. It is highly focused on its beneficiaries, taking customer-centered practice to a level well beyond that of the private sector. Its programs are both efficient and effective. Many nonprofits have been successful at the program level while having weak internal management systems. That is a common result of a mix of charismatic leadership and the program skills and missionary zeal of committed and overextended staff. However, program success will be short lived unless a sustainable organization is built. Programmatic capacity was identified as only one of five major community development corporation (CDC) capacities by Glickman and Servon (1998). The other four capacities are resource, organization, networking, and political capacities. Two of the most important capacities, resource and organization, are discussed below. Chapter 13 addresses building social and political capital. Resource Capacity

The key to successful organizations—in both the for-profit and nonprofit sectors—is attracting and retaining talented people, who are nurtured to grow and work at peak performance to meet the needs of the organization and its mission. Human resources at Hewlett-Packard, for example, was at the heart of the highly successful “HP Way.” Hewlett-Packard created a dynamic culture based on strong beliefs about how a company should be run and set specific corporate objectives for areas of interest, growth and profit, customer relationships, and management, including the development of personnel and citizenship (Beer & Rogers, 1995). Underlying the HP Way was a clear set of values reinforced daily through behavior and management processes. The management style was participatory, emphasizing teamwork and individual initiative.

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Letts and colleagues (1999) found similar characteristics in highperformance nonprofit organizations: The most successful organizations were described by employees as “the best place to work.” Another study of successful nonprofits (Hecht & Ramsey, 2002) helped define what characterizes a people-first organization: 1. The organization genuinely cares about people 2. People have flexibility in their work 3. Leaders treat people with trust and respect and honor the intelligence of all who contribute to the organization 4. The workforce is as diverse as its community and its customers 5. Contributions are acknowledged, and compensation is fair

Organizational Capacity

The people working within an organization have to be organized and supported in a consistent way. These methods and structures of organizations are termed “organizational systems.” Some are internal organizational systems: planning and strategy, financial management, human resources, sustaining an organizational culture, performance management, fundraising, program development, operational management, facilities, and technology. Others relate to the external world: communications, policy advocacy and civic leadership, community, and client involvement. Still others relate to the unique nonprofit function of board development. There are a variety of analytical systems explained in the literature of nonprofit management and in which organizational development consultants have expertise. Nevertheless, in the end, mission usually trumps organizational capacity. Most nonprofits might well be characterized as practicing “mission-based management” (Brinkenhoff, 2009). p r ov i de rs o f c apac i ty b u i ld i ng

For many years, the only providers of capacity-building services were local independent consultants. These consultants were often former managers in CED and other community development organizations. At first, word of mouth was the major method of provider and client referrals. As leading national and local funders set aside specific resources for organization

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development, the consulting field became more structured and professionalized, and referral methods became more formalized. Local and National Intermediaries

The early 1980s saw the evolution of local and national intermediaries acting as a major structure for funding and building the capacity of organizations in community development. The federal Neighborhood Reinvestment Corporation (NRC) was the first, and it remains the largest in terms of grant dollars provided for general operating support of its organizations. Initially, the NRC concentrated on one set of organizations, the Neighborhood Housing Services (NHS). Each NHS focused on a particular neighborhood in which to boost homeownership, improve all property conditions, and increase lending for home repair and rehabilitation. Several cities evolved multiple neighborhood NHS programs. In the 1990s, the NRC opened its support to any organization engaged in community development; these organizations could then enter a certification process. Almost from the beginning, the NRC engaged in training in addition to its direct funding of organizations, and it gradually expanded its capacitybuilding efforts to include almost every possible intervention. Two large private national funding intermediaries also grew up in the 1980s, the Local Initiative Support Corporation (LISC) and the Enterprise Foundation. LISC focused its activities on a cadre of local CDCs, creating local affiliates that provided project development and general operating funding, capacity-building funding, and a variety of other supports. The Enterprise Foundation was founded by James Rouse, one of the nation’s most successful real estate developers, to focus on affordable housing. It both provided support to local nonprofit affordable housing developers and engaged in its own direct development activity for affordable housing for the most impoverished. At the same time, organizations such as the Development Training Institute (DTI), which had a national reach, and local programs like those sponsored by the California Community Economic Development Association (n.d.) were founded or expanded to focus specifically on capacity building for community development organizations. Finally, supporters of CDCs in a number of cities created local intermediaries to provide funding and capacity building (McNeely, 2004).

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Colleges and Universities

Another source of capacity-building expertise lies in colleges and universities. Academic institutions have been providing technical assistance to neighborhood organizations for years through service facilities such as community design centers in architecture planning schools. The number of nonprofit management schools in higher education has expanded dramatically in the last two decades of the twentieth century. Some of these programs include community development as a specialization, and some academic programs in community development have increased their offerings in management and organization development. Private Consulting Firms

The private sector eventually discovered that there was capacity-building work to be had in the nonprofit world. Some major national accounting and management consulting firms have created specialized units to focus on nonprofits. Although servicing the nonprofit world generally, some of these firms have designated community development organizations as a specialty, and several major foundations even supported the consulting giant Bain Associates to start a specialized subsidiary to aid nonprofits called Bridgespan. Venture Philanthropy Packages Capacity Building

A unique method of strengthening CED and community development organizations came into play with the advance of venture philanthropy beginning in the 1990s. Venture philanthropy seeks to imitate the methods of venture capitalists in the private sector (Social Venture Partners, n.d.). For example, an organization or investor chooses a CED organization and makes an agreement to provide it with substantial capitalization and longterm support. In return, the investor requires data-based decision making on program activity, provides support for a system that outlines and tracks appropriate metrics, requires specific management and organization development improvements based on a thorough organizational assessment by an outside firm chosen by the venture capitalist/philanthropist, and engages on a regular basis in joint decision making on a specific set of

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agenda items. Distinct from typical philanthropy, venture philanthropists commit to a long-term financial relationship with the organization and provide expansion capital up front based on a business plan. In exchange, however, the venture philanthropist and/or consultants to the venture philanthropist become much more intimately involved in the decision making and management of the organization. Venture philanthropists expect nonprofit organizations to adopt the discipline and tools of the private sector and are willing to pay for the infrastructure to make that happen. ma n ag i ng c o ns u ltants

Using highly knowledgeable and skilled external consultants to build capacity and develop an organization is often the best option for nonprofit organizations. CDCs may require consultants specializing in: r
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Because many organizations in community development are small, however, they typically have little experience with engaging and working with outside consultants. With the increase in intermediary and funder interest in capacity building, the resources for organization development often come from entities outside the organization that pay the consultant directly. Therefore, it is all the more important that the consultant and the client work together to bring discipline to the process (Mayer & Blake, 1981). The skills needed to manage an organization development consultant are a subset of the skills needed to managing consultants generally in CDCs. Because CDCs need to have specialized and highly technical competencies in so many areas, but often only sporadically, they employ

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a wider range and a larger volume of consultants than most nonprofits, just as real estate development businesses use more consultants than do other private businesses. Generally, CDC staff must be skilled in identifying the appropriate time for bringing in a consultant, choosing the right kind of consultant, and managing any issues unique to that particular type of consulting. Defining the Level of Engagement

Once a CDC has identified the need for an organizational development consultant and identified a suitable candidate, the organization should define the level of engagement with the consultant based on its needs. Consultants are not only distinguished by their field of capability but also by their approach to doing the consulting work and the level at which they are skilled in engaging with organizations. Some consultants are hired to do work on behalf of the organization. In other instances, the consultant may show employees of the organization how to do the work, or they may work at building the internal capacity of employees to do the work themselves. The primary levels of engagement and roles consultants play at each level are as follows. the “tempor a ry e mploy e e .”

At this level, the organization has no need or interest in internally acquiring the capability the consultant offers. The consultant does work on behalf of the client, acting, in effect, as temporary staff. For example, an organization could hire an architect to consult on the design of a building or housing project. the “s uperv i sor .”

At this level, the organization also has no interest in internally acquiring the capability of the consultant long term but does wish to reduce costs or accomplish other program goals using existing employees. The consultant coaches or teaches members of the client’s staff to learn the needed skills. For example, an organization may have no long-term need to build expertise in constructing surveys, so it hires a market analyst to construct a survey and show staff how to conduct it.

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the “trai n e r .”

At this level, the organization has the desire and need to acquire internally a capability the consultant possesses. Members of the organization’s staff may shadow the consultant and learn new skills, working alongside the consultant to extend their capability. For example, an organization desires staff to have expertise in using certain project management skills and hires an experienced consultant to work with junior staff to help them acquire the skills. the “proc e ss fac i li tator .”

At this level, the organization has the desire and need to develop capacity broadly across the organization spanning a variety of functions and people in the organization. The consultant builds the internal capacity of the organization through an organized process, typically involving stakeholders at many levels of the organization. For example, an organization may desire to upgrade substantially its use of technology across all programs and operations, and the consultants develop and implement a plan to do so. the “evaluator .”

At this level, the organization requires an objective evaluation of some aspect of the organization. The consultant remains outside of the process because his or her role is to audit, much as a financial auditor does. The evaluation may be highly interactive and provide interim feedback to the program operators, but the consultant maintains distance and neutrality. For example, an organization may require a summative evaluation of a major program and hires a consultant to conduct the evaluation. Define the Work and Work Products

After the organization determines its basic approach to working with a consultant, the next step is to define the actual work and the work products, or deliverables. This step is best undertaken as a dialogue between the consultant and the organization’s point person for managing the consultant, but it may also sometimes involve other people in the organization. Unfortunately, too many consultants in the community development field

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operate without a written scope of services that specifies the work to be completed, especially when a third party is paying for the service. Time spent up front detailing the work, the organization’s expectations for results, and the schedule for work and delivery of work products will save significant time in the long run and will prevent misunderstanding and frustration. If the circumstances surrounding the need for consultation are volatile or the organization is unclear about its expectations, the scope of services should be broken into phases and revisited and redefined periodically over the course of the relationship. A payment schedule should be developed that balances the needs of both the consultant and the organization as well as holds the consultant accountable for production. As work with the consultant proceeds, the organization should specify a method by which the consultant will provide notification of accumulating charges or seek permission for additional tasks before charges accrue. The organization should also schedule periodic evaluations of the relationship and work production separate from the many meetings necessary to do the work. A final word of caution about consulting in community development: A pure process-oriented consultant is more dangerous to CDCs than to many other nonprofits. CDCs are complex businesses melding a nonprofit social program orientation with sophisticated real estate and finance techniques. CDCs cannot afford a consultant who is skilled at facilitating internal conversation but has little knowledge of the financial aspects of operating CDCs. In developing a CDC’s technology capacities, for example, not understanding the need to segregate the financial transactions of each real estate project could be disastrous for the CDC. Even in hiring for what seems to be only management or process-oriented consulting, CDCs need to look for consultants with community development experience. act i n g as an o rg ani z ati o n d e ve lo pm e n t c o n sulta n t

Professionals with backgrounds in group dynamics, management, organization development, macro social work practice, and business planning may be interested in serving in the role of organization development or management consultant. Consulting is an effective way for those with an interest in social development to have an effect on communities and improve the capabilities of indigenous institutions.

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Best practices for organization development consultants who serve community building organizations mirror the best practices for CDCs that manage organization development consultants. Especially in a capacitybuilding context, the best consultants are those who help organizations manage them and, in effect, put themselves out of a job. Consultants must distinguish their role from the organization’s role, carefully outlining the level of capacity building they will do within the organization versus the solo work they will do on the organization’s behalf. Those consultants who are not in capacity-building mode during this process will end up working with the aim of maintaining a long-term relationship with the organization. To do so, they create a dependency in the organization for the services of the consultant by repeating the same scope of mostly solo work. Consultants who are skilled at building capacity may render their work unnecessary with respect to the immediate scope of work but become valuable resources to which developing organizations repeatedly turn. Good consultant practice, again the mirror image of good consultant management practice, also requires the development of a clear scope of services in conjunction with the organization, identification of specific deliverables, and designation of a detailed timetable when possible. This should be followed by defining methods and agreed upon points for evaluating the work, perhaps tying payment to client satisfaction. If the engagement includes capacity-building work, the scope of services should clearly outline the work and identify how the consultant and client together will evaluate the success of the capacity-building work. As obvious as one would think it should be, the scope and all other aspects of the engagement need to be prepared in a written contract; many CDCs and consultants make the mistake of skipping this step. The consultant should ensure that it is clear who will direct the work of the consultant and how the consultant will report to that individual. In the process of negotiating the scope of services, the organization and consultant should make clear who owns the “work product” of the consultant and the degree to which the organization’s approval is necessary for the consultant to use that work product in another context. Further, the consultant should clarify which products and tools to be used have already been created or obtained by the consultant and will not become property of the client. Once a written scope of work is in place, the consultant conducts high-quality work in a timely manner, reporting formally to the client as

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required by the scope and informally more frequently. When working in an area of new growth for the client, it can be challenging for the consultant to stay in the role of an adviser, resisting the temptation to step in and make decisions for the client. The consultant should help frame the options and evaluate them, making recommendations to the client, but also ensure that the client internalizes the evaluation and makes the decisions. Drafting a brief “decision memo” might help put the issues directly in front of the client and model a system that the organization may want to use later with its own staff on other issues. Conversely, it can be difficult for a consultant to confront a client when the organization is not acting responsibly, is avoiding a decision, or appears not to be listening to the consultant’s advice. A good consultant is willing to confront a client in a firm and supportive way, having what the management consultant Susan Scott (2002) calls “fierce conversations.” s p eci a l is s u e s f o r o rg ani z ati o n de v e lo pm e n t in c e d

Many issues for CED organizations are not unlike those of other nonprofit and some for-profit organizations. There are, however, several issues for organizations that arise frequently in CED or are unique to it. Diversity

In spite of its core values and commitment to civic society, the nonprofit sector unfortunately lags behind the private and public sectors in hiring and promoting people of color and women. While the community development field fares slightly better than the nonprofit sector as a whole, the staff profile of the CDC industry is significantly different from what it aspires to be, given that CDCs serve communities with substantially higher proportions of people of color and women than in the country at large (Rodriguez & Herzog, 2004). The failure of CDCs to reflect their clientele within their own personnel undermines their credibility in the community and their ability to understand the dynamics and cultural nuances of the people in the neighborhood. If CDCs continue to reflect the lack of diversity and the racism and sexism in the society at large, they can hardly serve as models or challenge the oppression of racism and sexism of its neighborhood populations.

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Given that the real estate and financial services industries with which CDCs frequently interact remain among the least diverse sectors of the economy, it is important that the staff composition of CDCs reflects that women and people of color are capable of succeeding in those industries and in the community. Insofar as CDCs work with populations that have been systematically excluded from the mainstream, they must demonstrate to the community that “people who look like me” can succeed in their interactions with the mainstream economy. Some CDCs have historically been successful at addressing these issues by hiring and training people from within the community. Diversity, however, is not simply a matter of equal employment opportunity or hiring a workforce that fits the profile of the community or the demands of a particular funder. Embracing diversity means understanding, valuing, and fully utilizing the power of the differences among a community of people to strengthen an organization. It requires all of the skills of community building, from cultural understanding to communication and from conflict management to celebration. Fully utilizing the power of diversity is integrally bound with cultural and gender sensitivity. Cultural and Gender Competence

CDCs must recognize how the cultures of the people in their communities differ from those represented in mainstream economic and political institutions. The orientation of American capitalism, and especially the financial services and real estate industries, are quintessentially Western European and male centric. African American, Hispanic, Asian, and other communities may have orientations that are inherently different and almost incompatible. Bridging those worlds and helping communities understand and succeed in mainstream American capitalism is an important goal of CDCs. To accomplish that goal, CDC staff and board members must bring a high degree of cultural awareness and sensitivity to their work. CDC staff and board members also must be aware that they run the risk of unconsciously incorporating into their work many of the cultural biases of the finance industry, with which they must constantly interact, and may find themselves in cultural conflicts with their own communities. There are many things individuals can do to appreciate, celebrate, and maximize the value of diversity in community. The organization itself, however, must

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promote practices and policies that favor diversity and manage its positive payoff for the organization and community. Organizations should include everyone and recognize that each culture and personality, as well as gender, influences the way individuals will respond to the invitation to participate and the ways that they participate. Organizations that value and are sensitive to difference, whether based on race, ethnicity, culture, class, gender, religious affiliation, ability, or sexual orientation, will: r
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It is far easier to hire someone with sensitivity for the community and the core values of CED and teach the technical skills of development and finance than it is to hire someone with those skills but no community background and work to develop sensitivity and a values framework. Third-Party Payment: Who Is the Client?

One of the most difficult relationship challenges in nonprofit and CDC consulting is the frequency with which consultants are paid for, or even hired by, a third party, particularly a funder of the organization benefiting from the consulting. Often, funders have a genuine and well-founded concern for the capacity of the grantee. In the funder’s view, the organization may be so lacking in capacity that it lacks even the capability to identify, engage, and manage a consultant appropriately. When that happens, the funder may step in and perform that work. When a funder has a capacitybuilding concern for a large number of organizations and makes a grant to a

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capacity-building institution to provide services to those organizations, the situation is still considered a third-party payment. Third-party payment raises at least one ethical dilemma for consultants: Who is the real client? There is no doubt who pays the consultant, but to whom does the consultant owe the superior duty of loyalty—the paying party or the beneficiary? How confidential are conversations between the consultant and the organization? Are conclusions the consultant draws about the organization that derive directly from the consultancy available to the funder directly? Can the consultant disclose to the organization information about the funder’s process or the opinions the funder holds about the organization? Expert consultants make clear to the funder that the consultant will act as if the grantee organization is paying and is the true client, reporting back to the funder only what the organization approves. In such consultancy, smart consultants will bring the funder and grantee into communication at the time when the scope of services is established, obtaining agreement on the scope of information to be reported and the mode of reporting. For example, the agreement may establish that there will be a written report to the funder after the assessment of some aspect of the grantee operation but that the report will be subject to vetting first by the grantee. In that situation, the consultant takes on the responsibility of “fierce conversations” with the grantee that are necessary to reveal weaknesses but also makes a commitment to help the grantee in formulating an appropriate response, perhaps even helping the grantee organization negotiate additional resources from the funder. In a more difficult situation, the funder may distrust the grantee organization or want a consultant to do the dirty work of forcing changes within the organization or even eliminating it from the funder’s portfolio. An ethical consultant will not undertake such work under the guise of consulting with the grantee organization and will instead require that the funder retain the consultant as an operative who is overtly working on behalf of the funder. Skillful consultants help funders understand how they can also undertake “fierce conversations” while allowing the autonomy of the grantee organization, rather than be the keeper of the funders’ secrets while they pretend to work for the grantees. Experienced consultants know that however friendly or open a funder, the power balance is always in favor of

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the one who provides the resources. Experienced funders do not let themselves be fooled by their own language of “partnership” or “collaboration” into thinking that the power balance will ever be equalized. Consultants can ultimately be facilitators of better and more honest communication between funders and grantee organizations. Limits on Transferability of Models and Practices

Each organization is unique. Over time, however, enough organization development and research has occurred to establish a body of principles, models, and best practices for organization development and management. Unfortunately, some of these are inappropriate for CED organizations. First of all, most CED groups are small, with fewer than a dozen staff persons. They are more like small businesses than big corporations. Unfortunately, because small businesses often cannot afford consultants, consulting practices in many content areas have been developed through work with large corporations or public and nonprofit bureaucracies, such as government agencies, large hospitals, and universities. In spite of the similarity of functions, many of the systems developed for large institutions are not immediately applicable to small systems. Moreover, many small nonprofit organizations are community or client based and are open to a large amount of public participation. They are “open systems” compared with “closed systems” in which everyone is an employee and senior employees can control or fire lower-level employees. Failure to recognize these differences has undermined the success of volunteers from the private sector helping in the nonprofit world. Some translation of the systems and training of those working across these boundaries are necessary. Often, local intermediary or broker organizations make the translation and provide the orientation to volunteers and consultants. At the same time, there are some unique features of CED organizations that limit the application of organization development practices that have actually been developed through work in the larger nonprofit sector. CED organizations are part nonprofit, part real estate investors. Their accounting systems may in part look like a fund accounting nonprofit system, but its real estate accounting must be designed for asset management like those of profit portfolios. In most nonprofits, the consultant’s

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initial assessment would not examine the level of detail that would reveal whether the CDC is appropriately segregating costs by project so that “losing” projects are not draining funds from “winning” projects. Consultants with only nonprofit experience and no real estate background might actually mislead a CDC, and those with the right combination of skills are rare. Succession Planning and Transition

A consultant will frequently be brought in to help with the transition when a key staff member leaves an organization. Indeed, sometimes the consultant realizes in the middle of an engagement that someone needs to move along. Fortunately, within the nonprofit sector, there is a move toward incorporating decades of experience in succession planning and transition from the for-profit sector. All organizations should have plans in place for emergency succession; that is, for each key position, clear assignments for others to step in should be in place should a key staff person become unavailable. Long-term succession planning is a thorough method of addressing a permanent change. The emergency plan can often serve as a template or provide confidence during the process of drafting a permanent plan. Transition is a separate process involving helping the organization retain the ability to manage itself during the time that both the new appointee and the organization are learning about each other. Succession planning and transition are most delicate at the top levels of management. Succession and transition present an opportunity, albeit risky, to discover new dimensions of the organization and to ensure that it thrives at a higher level (Adams, 2004). Human Capital Development in Emerging Industries

Because the nonprofit sector is, by definition, responding to gaps in society, it is extremely creative and volatile. New fields of endeavor, new forms of organization, and even whole new industries emerge regularly. Like all new industries, these advances are often driven by charismatic entrepreneurs with a vision for the product or service and little time or patience

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for management of an organization, including human capital development. Consultants working in these areas are not only building the capacity of people but also helping fashion and install new systems to recognize the importance of building the talent of people doing new work. Sources of Support for Consultants and Capacity Building

Nonprofit leaders and funders are increasingly aware of the important capacity-building infrastructure in the United States and the need to use and support it (Nonprofit Quarterly, 2004). Specialized centers of capacity building, whether field specific or devoted in general to the nonprofit sector, have become more common. Direct funding of capacity building has grown. According to the Foundation Center, grants for capacity building increased by $100 million from 1989 to 1998 (Light, 2002). Independent consultants and some of these centers have formed networks such as the Alliance for Nonprofit Management for the sharing of resources and advancement of capacity-building work. Dozens of universities now offer undergraduate and graduate degrees in nonprofit management, and there are also a host of professional development certification programs. con cl usi o n

Like other components of the nonprofit sector, CED and other community development organizations continue to put an emphasis on building high-performance organizations through investments in the human capital of organizations and organizational systems. Usually it is management and organizational crises that are more disruptive or fatal to organizations than real estate or programmatic problems. Management consulting and organization development are two areas of work that most directly call on skills developed by many macro social workers. The next series of tools described in this section of the book, however, derive more from the field of business. These skills are often the most challenging technical areas of CED for social workers. The case study that follows this chapter discusses the East Bay Asian Local Development Corporation, which is well noted for its high level of organizational performance and management.

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eas t bay as i an loc a l d e v e lopme n t c or por at i o n Description

Origins The East Bay Asian Local Development Corporation (EBALDC) was founded in 1975 by a group of Asian American students from the University of California, Berkeley, and neighborhood leaders in Oakland’s Chinatown. Initially, the group planned to convert a historic vacant warehouse—a symbol of a time when Oakland was a vibrant business center—into a community convalescent home. The organization soon instead decided to convert the warehouse into a comprehensive Asian Resource Center that would house community agencies, medical services, an art gallery, and retail businesses (Jung Lee, 2004; EBALDC, n.d.e). The first eight years of EBALDC were dedicated to creating the Asian Resource Center, but later its focus shifted to meeting other needs of the Chinatown community. Chief among those needs was providing affordable housing for the immigrants who had moved to Oakland in increasing numbers since the passage of the Immigration and Nationality Act of 1965. This legislation changed immigration policies such that more new immigrants hailed from Asia and Central and South America than from Europe, changing the ethnic profile of the United States. As a result of the law, immigration doubled between 1965 and 1970 and doubled again between 1970 and 1990 (Frum, 2000). As new immigrants joined the Chinese workers who had lived in Oakland since the Civil War and the African American families who had moved there after World War II, white families left Oakland to live in the suburbs. In light of the 25 percent loss in housing stock in Oakland in the 1970s because of demolition and conversion to commercial properties, EBALDC leadership and staff determined that developing affordable housing was the area in which they could be of most help to the changing community (Frum, 2000). Over the last twenty-five years, EBALDC has developed more than 1,400 units of affordable housing as well as 250,000 square feet of retail and office space in Oakland and nearby Emeryville. Services have moved beyond affordable housing to home ownership programs for low-income families, neighborhood economic development programs, and advocacy programs (EBALDC, n.d.e).

Structure EBALDC’s board of directors consists of sixteen board members (EBALDC, n.d.c). EBALDC’s staff has grown from six at its founding to more than eighty (EBALDC, n.d.k). The board and staff members were originally all Asian Americans but are now as diverse as the populations EBALDC serves, with members who are African American, Caucasian, Eastern European, and Middle Eastern, Latino, and Asian (Jung Lee, 2004).

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Funding The City of Oakland provided EBALDC with early funding—the funding to build the Asian Resource Center, as well as $2.3 million to acquire a vacant parking lot in Chinatown for housing and commercial development, EBALDC’s first project after completing the center (Jung Lee, 2004). During later development projects, EBALDC formed partnerships and joint ventures with other local nonprofits. These organizations then split the development fees earned on the projects based on the amount of work each organization had completed (Jung Lee, 2004). More than 75 percent of EBALDC’s funding now comes from earned income. The remaining funds come from grants from national and local banks and foundations, the City of Oakland’s Redevelopment Agency (HOME program), and individual donations (EBALDC, n.d.f). At the close of the fiscal year ending June 30, 2009, EBALDC had total revenues of $8,667,561, total expenditures of $9,344,712, net revenues of −$677,151, and net assets of approximately $26,487,752. In the previous fiscal year, EBALDC had net revenues of $1,999,438 and net assets of $27,157,614. The dramatic change in net revenues resulted from sharp decreases in contributions and grants as well as earned income that coincided with the economic recession at the end of the decade (GuideStar, 2009d). Strategy and Programs

Target Community In its early years, EBALDC served only Asian Americans living in Chinatown. Today it serves the needs of all citizens located in East Oakland and West Oakland in both Contra Costa and Alameda counties in addition to those in Chinatown. In Chinatown, the majority of the clients remain Asian. In West Oakland, the majority of the clients are African American, and in East Oakland, clients have a variety of racial and ethnic backgrounds (Jung Lee, 2004). As of 2009, the total population served by EBALDC was 45 percent African American, 40 percent Asian and Pacific Islander, 8 percent Latino, with Caucasian, Native American, and other ethnicities making up the remainder (EBALDC, n.d.d). Approximately 60 percent of EBALDC’s participants, residents, and homebuyers are extremely low income, 25 percent are very low income, and 10 percent are low income (EBALDC, n.d.d). Oakland continues to serve as a port of entry for immigrants and refugees internationally, and the target population’s demographics are usually in flux (Jung Lee, 2004).

Strategy EBALDC is most remarkable for its willingness to be responsive to the changing composition of its community and its residents’ needs while maintaining its relatively narrow mission to provide housing and housing-related services, even as it needed to expand

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throughout Oakland to remain successful. Despite that the City of Oakland funded EBALDC’s initial projects, EBALDC’s board of directors recognized that they could not depend on the city to continue to fund future projects. Vacant land in Chinatown was very expensive, at $60 per square foot, so EBALDC decided to buy land in areas where immigrants were moving and where land was cheaper: West Oakland and East Oakland (Jung Lee, 2004). EBALDC knew that the local communities of West Oakland and East Oakland would view EBALDC skeptically as an outside entity and may not provide their support. EBALDC’s strategy was to develop partnerships with local community-based organizations in each area and create venture partnerships. EBALDC needed to be a bridge between the new Asian immigrants they were introducing and the older African American and Latino communities (Jung Lee, 2004). As a result, EBALDC changed the ethnic makeup of its board and executive management team and worked to be inclusive across communities. EBALDC also strategically created a formal partnership with a nonprofit development company called Jubilee West in West Oakland. Both organizations split up responsibilities and formed a joint board of directors to oversee all development (Jung Lee, 2004). The move improved solidarity and built trust in EBALDC across the communities. A significant portion of EBALDC’s work has been accomplished in partnership with local schools, nonprofits, for-profit organizations, churches, and local, state, and federal government (EBALDC, n.d.d).

Selected Programs and Projects EBALDC manages housing and commercial properties and constructs and rehabilitates buildings. EBALDC’s Property Management Department is responsible for leasing, managing, and maintaining most EBALDC properties and manages more than 900 units of affordable housing and more than 250,000 square feet of commercial nonprofit space (EBALDC, n.d.i). Residential properties include the Seven Directions Apartments, a thirty-six-unit building developed in collaboration with the Native American Health Center in Oakland; Marcus Garvey Commons, a development with twenty-one family townhomes; and Jack London Gateway Senior Housing, which provides affordable housing for extremely lowincome and very low-income senior citizens. Commercial properties managed by EBALDC include the 200,000-square-foot Swan’s Marketplace, which includes a fresh food market, child care space, restaurants, retail shops, commercial office space, market-rate condominiums, and affordable rental apartments; and San Antonio Commercial Revitalization, Inc., with street-level retail and office space topped by residential apartments. EBALDC’s Real Estate Development Department constructs and rehabs buildings in the community to create affordable housing for families and seniors and community

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and commercial facilities for nonprofits and businesses that serve the neighborhood. It has developed or partnered to develop more than 1,400 affordable rental apartments and townhouses (EBALDC, n.d.j). In addition to these, EBALDC has developed more than 100 single-family homes for low- and moderate-income families through Home Place Initiatives, an independent nonprofit corporation established by EBALDC to increase homeownership in the community. The department also provides asset management to more than 250,000 square feet of retail office space. In addition to providing affordable housing, EBALDC also provides financial and housing-related services. Its Family Economic Success (FES) program, created in 1999, provides financial literacy training to youth and adults as well as financial counseling and free income tax preparation (EBALDC, n.d.h). In addition, the FES program operates an Individual Development Accounts initiative, which helps participants save money and set goals for financial education, small business development, or the purchase of a home. The program contributes two dollars for every one dollar participants save. Participants have saved more than $1 million, and more than 10 percent of them have used their savings to buy their first homes (EBALDC, n.d.g). EBALDC’s Resident Services program provides child care, afterschool programs, computer training, English classes, health care, and counseling services at EBALDC’s housing properties (EBALDC, n.d.h). Finally, in an effort to continue to bridge the cultural differences in the communities served by EBALDC throughout Contra Costa and Alameda counties, EBALDC created the Asian Resource Gallery in 1985 (EBALDC, n.d.a). The gallery features music, art, photography, and historical and political exhibits that are relevant to grassroots communities and urban living. Major Successes Since 1990, EBALDC has won several dozen awards for its housing development projects, including the prestigious Fannie Mae Maxwell Award of Excellence and MetLife’s Excellence in Property and Asset Management Award (EBALDC, n.d.b). EBALDC annually houses more than 2,500 adults and children and provides financial and housing-related services to more over 1,000 people. Roughly 25 percent of EBALDC’s property management staff are former tenants of EBALDC properties or participants in their financial literacy programs. Many staff members have made careers at EBALDC, and several have been promoted to administrative positions within the organization (Jung Lee, 2004). With more than 75 percent of its annual revenues coming from income earned from its residential and commercial properties, EBALDC has built a sustainable model for creating affordable housing and building resident wealth in a diverse and challenging community.

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Real Estate: Developing Physical Capital

process of identifying, planning, financing, and building residential and commercial real estate projects. For almost all community-based development organizations, real estate development is an important tool. The genius of the community development corporation (CDC) approach to neighborhood revitalization lies in its ability to generate concrete physical change in the community, creating residential and commercial assets through a community-driven process. r e a l e s tat e d e v e lo p m e n t i s t h e

t h e r e a l e s tate d e ve lo p m e nt p r o c e ss

Real estate development involves the management of a complex process (Alenick, 1990). The process begins with identifying a potential project, then testing its feasibility, planning and designing the project, getting public approvals, negotiating financing, managing construction, and renting or selling the project for a profit. Real estate development in the context of community economic development (CED) is similar to conventional real estate, except that there are additional and more difficult barriers, a larger number of actors, and more vulnerable projects. All of these factors increase the time required of the housing developer as well as the duration and cost of project development. For example, adding additional participants increases the number of business interactions exponentially rather than arithmetically. These increases are inherent to project development in distressed communities; if it were easy and profitable, the private sector would already be doing it.

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Real estate development is a mystery to most Americans, even to middle-class professionals with investment experience (Mayer, 1978). For most people, a construction crew simply shows up one day and begins digging a hole or putting up a house. To members of distressed communities who have often been left out of mainstream real estate development and have seen only the process of disinvestment and deterioration, real estate development is often overwhelming and confusing. It is important that community leadership understands the real estate development process even if professional staff or consultants are hired to do the detail work. For a community-based development organization, the board of that organization and its senior staff must still direct the process and make appropriate decisions at critical stages. Without an understanding of the real estate process, CED organizations wind up yielding full control to real estate professionals, or they enter the decision-making process too late to affect the issues that are of concern. Even when the project is in the hands of a private developer, the community still needs to understand the process to negotiate community benefits effectively and to intervene at the appropriate stages to ensure that community goals are being met (Murphy & Cunningham, 2003). The real estate development process chart shown in figure 10.1 simplifies the process by tracking four major elements (illustrated by the horizontal lines) through five stages of development (illustrated by the vertical divisions). The four elements are market, site, finance, and management, both of the development process and development team. These four elements do not operate like a four-ring circus, with independent acts going on in separate forums; rather, each element influences the other three, and a change in one factor—whether progress or setback, clarification or challenge—will set off a domino effect in the others. It is important to note that this chart oversimplifies the real estate development process in several significant ways. First, it is directly linear from left to right, whereas most real estate development projects encounter challenges and changes that require the developers to go back and reformulate the work of an earlier stage before proceeding. Second, each of the four elements has a variety of subelements. If those were fully revealed by the chart at the outset, the chart would prove overwhelming to novices in real estate and to community leaders. For example, within the element of site, there could be separate lines for the work of the architect

Figure 10.1 Real estate development process for community development. The four elements of the real estate development process—market, site, finance, and management (illustrated by the horizontal lines)—across five stages of development (illustrated by the vertical divisions).

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and construction contractor, site improvement activity such as remediation of brownfields, site acquisition, zoning and planning approvals, and management of the building produced. If one adds in the complexities of developing already built sites, such as street and traffic reconfiguration and historic preservation, the process becomes even more complex. Third, in order to achieve visual clarity the chart oversimplifies the real estate development process by not showing the complex interaction of activities among the lines of work. Although the chart does not show the recycling of activities to account for overcoming barriers and reformulating work of earlier stages, the sequence of activities in the chart is accurate and valid. Real estate development is a process in which each step builds on the previous one (Alenick, 1990) and on the accomplishment of work on other horizontal lines. Elements that are aligned on the chart must be completed simultaneously. It is at least costly, if not dysfunctional, to skip steps or to allow activity on one horizontal line to move more rapidly than work on the others. For example, allowing architects to design a project fully before a detailed market analysis is performed may result in expensive plans that must be discarded when it is discovered that they are inappropriate for the targeted occupants. Finally, as shown in figure 10.2, it is important to note that there are a series of decisions at the end of each stage of real estate development but that the scope of these decisions becomes increasingly narrow as the process moves along. Early on, it is easy to walk away from a project or make radical changes to it. Later, there are so many actors who have made so many commitments to the project as negotiated that the project literally has a life of its own, and any single actor is extremely constrained. Real estate development is inherently a multiparty negotiation, with each party giving up some of its pure desires to accommodate the agenda of all the necessary partners. These two concepts, that real estate is a negotiation and that a project is difficult to change late in the game, pose particular challenges for community leaders. A negotiated outcome does not always comport with the concept of community control. For a community with little real estate development experience, it may only become apparent close to construction how the project will address community desires for use, design, or affordability. By that time, financing, construction bids, and government

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Figure 10.2 Five steps in the development process. The series of decision points at the end of each stage of the real estate development process.

regulatory approval have already locked in the features of the project. A facilitated process that puts a premium on empowerment of the community must invest heavily at the early stages of development in making come alive as many alternatives as possible so that the community can provide clear direction at the outset. Community education on the development process can also enhance the community’s participation and reduce the potential for conflict at a point too late to make adjustments to the project.

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Step One: Forming the Concept

Textbooks that portray the conventional real estate development process begin the process with feasibility analysis (Arnold, 2008). Those texts assume that a developer already has five highly interactive components of the project in place: a specific site with a specific use for a specific market that will be built by a specific team with a clear financial plan. For example, a developer wants to build a subdivision on a 200-acre parcel of land at the intersection of Route 25 and Route 380, building 150 units of singlefamily residences for upper-middle-class families moving up the real estate chain from smaller houses; fifty townhouses for young married couples and single people without children; and a small commercial plaza with a convenience store, dry cleaner, ATM, and fast-food outlet. The developer brings his or her own team, including the in-house project design and management group; an architectural firm that has worked with the developer on other projects; a homebuilder with a good reputation for building subdivisions; and a commercial contractor for the shopping plaza (Mayer, 1978). The developer brings in the bank that has financed four of his or her previous projects along with insurance, bonding, and title attorneys. The developer has his or her own equity or has a few silent partners who are investors in the project. The financial plan includes the total cost of the project, the profit he or she expects to make as the developer, the fees and profits of all of the partners, and the return in rent streams and long-term capital appreciation. The developer’s project concept is not a pipedream. In fact, putting the specific dimensions of the project in place has served as a rough feasibility analysis. By contrast, a distressed community does not typically have all of these existing partners and resources in place when community leaders identify a project. Worse, the community may not be aware that its project is more a dream than a real estate deal. For example, the community may begin with a neighborhood plan, the map of which designates a quadrant of the community for new housing. That designation is not specific as to which portion of the quadrant will serve as the site for the first project or whether the whole quadrant will be completed at once. The plan may not specify the type of housing, much less the specific target market. Yet community leaders often believe they have a project plan even when all they can define about the plan is “affordable housing in place of those six

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boarded-up houses.” That vision is a good start, but it is only the beginning of the process. Alternatively, a community may begin with an intense commitment to address a dire need such as homelessness, affordability of housing for large families, or housing for senior citizens. The idea the community has may be related to a particular site, such as a redeveloping a vacant house currently used by drug dealers or taking the opportunity to use a vacant parcel of land to improve the community in a way they have not yet determined. However, even having a high degree of clarity on needs does not mean that a particular site is appropriate or takes into consideration the financial characteristics of the market. The work of facilitating community and professional activity at the stage of forming the development concept (see figure 10.3) is to drill down on each of the five components of a project idea to achieve specificity and to put rough numbers to the concept. The first step in community education is to help leaders understand that the description they have of the project is valuable as a vision or dream that sets the direction. They should use it as a starting point. The community has to undertake additional steps in the process just to get to the same starting point as the developers. In fact, the process of getting to the starting line can take as long as the combined subsequent stages of development. By thoroughly specifying the elements and forming the development concept, time and frustration can be saved later in the process. The main tasks during the forming of the development concept (fig. 10.3) are devoted to identifying and testing the dimensions and feasibility of each of the five components of the proposed project (Alenick, 1990). For the market, communities identify alternatives and users, whether tenants or owners, and work to narrow the list to those most likely to be served by the project. For the site, communities evaluate the architectural and engineering challenges, the legal and government regulatory issues, and the present ownership and acquisition options. They then estimate the construction costs by, for example, securing comparable dollar-per-square-foot estimates from local databases or friendly contractors. The final construction cost must be established with the actual builder when the use of the site and market are more focused. In conjunction with determining the market, communities must also narrow the use for the intended site with specificity. Experienced developers find inexpensive ways to accomplish the evaluation of the site without hiring architects, engineers, or lawyers. For example,

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Figure 10.3 Forming the development concept. The process for forming the development concept for developers and communities.

they may use Department of Public Works information on the grade of roads adjacent to the site to determine any elevation issues without paying for a survey. Searching property records at the local Office of Deeds or Tax Office can be performed in order to determine who owns the site, rather than paying for title work to be performed at this stage. Some states have property ownership and assessed value of properties available online. Once there is a rough cost estimate, prospective funding sources and a financing structure need to be determined based on experience. A rough estimate often reveals a gap in the financing for a community project, leading to the identification and evaluation of alternative subsidy sources.

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Often, the local public agency charged with community development or a bank that regularly works with the community-based development organizations can provide an initial framework for financing. An important funding issue for most communities is identifying a source of the predevelopment funds that will be necessary to pay for the next stage of work, the feasibility analysis, and further planning of the project. These are costs that conventional real estate developers typically pay out of their own pockets. Project management begins next. As the specific use of the site and financial constraints emerge, the community must evaluate how this project fits its mission and service goals. There are often community and political issues involved in the approval process for zoning and acquiring public funds necessary for the project. At this point, the community group needs to identify what role it will play in this process. Some of the possibilities are developer, community planning entity overseeing a private developer, joint venture partner with a private developer, or funding source for a project that will be developed and owned by someone else. A smart organization evaluates its appropriate role in each project and is not tied to any permanent role. The constraints and opportunities for each project, as well as the current capabilities and resources of the organization, weigh heavily on the choice of role. Depending on the role, the organization must then identify a project team. Even a private developer needs an architect, lawyer, and real estate broker, and the project may also require additional professional expertise (Alenick, 1990). Management and finance converge as the organization—given the role and the designation of various team members—identifies the full project development cost. The outcome of the process of forming the development concept is that the organization now has the five critical components needed to proceed, as mentioned above: a specific site with a specific use for a specific market that will be built by a specific team with a clear financial plan. At this point, the board of the community-based development organization can decide whether to go forward, drop the project, or send it back for modification. If the organization goes forward, it must commit resources for the estimated development costs and time. Because many projects end up not being feasible after analysis and others become delayed at some point, it is useful for nonprofit developers to emulate their for-profit counterparts and regularly identify and evaluate a large number of potential projects. They need criteria, a good process, and

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the courage to reject a significant percentage of projects at this early stage. The development pipeline at this stage is really like a funnel. Experienced conventional developers and community-based development organizations generally keep a number of alternatives on the back burner as the conditions determining feasibility change over time. Perhaps half of the potential projects are rejected at this stage. Half of those that survive this stage will fail or go into a holding pattern during a feasibility study, and half of those will encounter some major difficulty, causing significant delay during the development process. Therefore, a good rule of thumb for an organization that desires to have one project under development at all times is to start with eight rough ideas at the initial stage of forming the developmental concept. Step Two: Feasibility Study

The feasibility study stage involves the analysis and testing of all the assumptions that went into the specifications of market, site, budget development, operational financing, financial requirements with the chosen team, and assigned roles (Miles, Berens, Weiss, & Urban Land Institute Staff, 2000). Perhaps the most critical is beginning work on the site. The organization doing the development must obtain the development rights to the property, which is not necessarily an outright purchase. The less money expended at this stage, the better. An early investigation into the legal side of the site, title issues, legal issues, and zoning comes early in the process (Alenick, 1990). Quickly behind that are the physical assessments of the site, the environmental and engineering assessments, and preliminary design. Usually the organization already has formed an architectural program and a footprint of the building(s) as part of its development concept. During the feasibility study, the architects refine their schematics and prepare elevations but nothing more in order to avoid incurring costs. The market is now subjected to a detailed market analysis using professional techniques. The developer must design a marketing strategy based on data in the analysis. The lion’s share of the work comes in the financial details. The developer must prepare and test all cost assumptions (Arnold, 2008). All of the costs of development up to the time the project is turned over to its final tenants or owners fit into a development or construction budget called a pro forma. Similar to the development pro forma is the operating pro forma,

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a multiyear budget for the operation, management, and eventual sale of a rental project. If ownership will change immediately after construction, such as for a turnkey project that is quickly turned over to a buyer in readyto-use condition, the operating pro forma is replaced by a budget for carrying the project (e.g., costs of utilities or providing building security) before the change (Arnold, 2008). Should the project be built and sold in stages, the carrying costs of each part must be staged. The development and operating pro formas drive all of the considerations of financing and establish the parameters for design and for the market that can be served by the project. The development and operating pro formas dictate a financial structure that can be tested with potential financial sources for the project (Dorsey & Rockwell, 2006). How much of the financial structure will be debt and how much equity? What debt-to-value ratios will a lender require? What reserves will there be in the operating pro forma? Who will serve as the sources of the equity portion, and what return on their investment will they want? To what degree is the equity at risk? What amount of deviation for the planned payout or profit can the equity sources tolerate? How do the answers to these questions play back into the development and operating pro formas? Feasibility is not tested until at least some of the financial sources have been contacted, negotiations opened, and conditional commitments are obtained. On the project management side, the developer lays out a full and detailed plan for the development of the project and locks in the development team through contractual agreements. At the conclusion of the feasibility study (see figure 10.2), there is another opportunity to drop the project, go forward, or send it back for modification. In fact, the project is constantly being modified as issues of market, site, finance, or management rise to the surface. Thus, the project at the end of the feasibility study may only bear a slight resemblance to the concept that entered the feasibility period (Miles et al., 2000). It is crucial for community participation and acceptance of a project that community leaders are well informed and that they have accurate information about the project during the feasibility study period; the major parameters will be locked in after this stage. As the project evolves, important project issues, such as appearance or features in the design or the target market, may be altered. Frequently, community opposition or disappointment arises at a later stage because residents are surprised at the new

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dimensions of the project that emerged at the feasibility stage or in the next stage of making the deal with financing sources. Step Three: Making the Deal

Assuming the project survives the feasibility study, the developer, whether a community-based developer or a private party, now has a feasible project with which to move forward. However, there is a major stage before starting construction, making the deal, that involves arranging all of the financial commitments and locking in all of the terms for the construction of the project. On the site, the developer moves forward to secure all necessary government regulatory action, such as requesting zoning changes for planned unit development, subdivision approval, or design review approval. Some expenditure may be necessary to acquire further control over the site. Detailed architectural and engineering drawings or a rehabilitation scope of work are necessary to create construction specifications and lock in a contractor’s bid price. The financing is constantly in play as construction estimates cause refinement of the development budget and the operating pro forma is made “bulletproof.” Negotiations with debt and equity sources create additional restraints and requirements to be incorporated into both pro formas. The developer submits the proper applications to banks, public agencies, foundations, state financing authorities, and others necessary to secure funds for acquisition, construction, and permanent financing (Dorsey & Rockwell, 2006). As a developer manages the project planning through this stage, the process truly takes on a life of its own. A revolving set of negotiations occurs among the architect, builder, lender, investor, and marketing team. For the market, the developer must design a marketing and property management plan for a rental project or a market and sales plan for a project being sold. Preleasing or preselling—getting a tenant or buyer to sign up before construction—often sweetens the financing deal at this stage. The management plans for sales or rentals need to be developed in detail to lock in management and sales costs. Finally, when development resources are released from funders, the developer acquires the site, bids in contracts for construction, and closes on financing with all of the critical partners. The outcome of this stage is “the deal.” All elements of the project have been defined. Letters of commitment, contracts, and loan documents bind

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all the parties to specific elements of the deal. While it is possible to drop the project at or after this point, it is very difficult for the developer to back out and retain any credibility for future development. Moreover, institutions that have made commitments of time and other resources at this stage of deal making now have an investment they want to recover. No one wants to walk away. At this stage, the board of the nonprofit community-based development organization must pass a variety of resolutions related to financing, construction, property purchase, and service contracts for everything from marketing to management. There is less and less room for wide-open community participation. The board must be able to delegate considerable authority to the staff and/or officers of the board because decisions must often be made quickly to avoid costly delays. Moreover, the other partners in the real estate process, from the builder to the bank, are accustomed to individuals being authorized to make decisions on behalf of partner organizations, so the organization must be represented by one or two people at negotiating sessions. Step Four: Project Construction

The construction and construction management stage is easy to describe but excruciatingly difficult to execute. Witness just the number of monitors involved: The architect monitors the builder for compliance with design; government inspectors monitor compliance with building codes, water and sewer hookup requirements, utilities, and environmental compliance; and utility companies have their own inspectors visiting the site. The bank has an inspector who reviews the project prior to releasing the scheduled part of the project funds, known as “draws,” for partial completion of the project. The developer is watching everyone, and everyone is watching the builder. The builder has its own set of constraints and is frequently uncovering issues that trigger requests for “change orders” that have financial implications for the project. When the change orders exceed the assumptions of the development budget, there must be another round of negotiations among all of the parties similar to that which occurred during the deal-making stage. A good developer creates incentives for the builder to meet the cost and time goals, but it also carefully watches everything the builder does, not letting the builder cut corners or create too many change orders.

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Now is the time to market the project aggressively through advertising and by hiring operating management, a sales company, or a real estate agent to sell it to prospective tenants or buyers. A good project requires tenants to sign leases or owners to sign sales contracts before construction is halfway completed. Those who commit early often get better prices or incentives than those who commit later. If there are not many changes needed during construction, the financing progresses to a process of lender inspection and release of draws and equity pay-in by investors. If changes because of escalation of costs, delay, or unforeseen expenses exceed margins built into the financing, the developer has to give up profit, renegotiate financing, or increase the equity put into the project. Finally, developers must manage all of the contractors involved in the construction. Developers who do not have experience with the type or scale of project often hire construction managers to help in this supervision or contract that service from their architectural firm. The developer also manages the marketing effort and maintains relationships with financial sources. Construction often unleashes another round of issues that affect the community and that the developer must address, from dust to traffic congestion to ensuring that the builder actually hires community residents as promised. From turning a shovel at the beginning of construction to ribbon cutting at the end, the developer is in a state of perpetual motion. Nothing goes as planned; a million field decisions have to be made without much deliberation to complete the project on time and on or under budget. Step Five: Sales or Asset Management and Operations

At this stage, there is a marked difference between home ownership projects, which are sold off, and residential rental or commercial rental properties, which require ongoing management. A major question with rental projects for community-based developers is whether to manage their own projects. Day-to-day attention to detail and inevitable conflicts with tenants are issues that strongly support the hiring of a professional property management company. A community organization should carefully ascertain the minimum number of properties that conventional property managers need in order

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to mount a full-time staff and still make money. Below that number, it is hard to argue for a nonprofit to do its own property management. Conflict is greatest for the community developer and its business considerations when tenants do not pay their rent and must be disciplined or evicted. It is much easier to be an arbiter between residents and the management company than to have to make these tough decisions. With the completion of the site, there is also a shift in financing from construction financing to permanent financing. At the closing of a homeownership project, the homebuilder transfers the title to the family buying a home. The homebuilder receives funds from the family’s mortgage lender, who pays the developer, who then pays off the construction loan. The family then has a long-term mortgage. There is a parallel shift of responsibility for rental projects. In a rental project, the community-based developer’s management responsibility becomes managing the rental property, paying the mortgage, and reporting to investors, functions for which the organization needs sophisticated financial management and tax-reporting expertise. Usually, the developer has a plan for maintaining and selling the project at some point down the road, as dictated by financing at the outset and tax considerations or profit goals that depend on monitoring the market for property appreciation. Managing the property’s investment aspects as part of a portfolio of projects is called asset management. This is in contrast to property management and the maintenance of the facility, which requires a unique set of other skills. Of course, if the project is a homeowner project, this final stage is different. The developer markets to buyers, perhaps helping the buyers find financing; counsels the buyers for homeownership; and closes sales on time. fi n a n ci n g af f o rdab le h o u s i ng The Basics

One cannot be an effective advocate of affordable housing or a facilitator of a community development process without understanding financing and being able to do some of the basic calculations needed to establish a project’s affordability. The various methods of increasing a project’s affordability generally add some kind of subsidy to some aspect of the project during the basic affordability calculations. Anyone seriously interested in these

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advocacy and facilitation roles should master the operation of a calculator with financial functions or a computer spreadsheet program with the same calculation functions. Introduction: The Simple Transaction

To establish a working vocabulary for real estate finance, look at the simplest form of real estate development and homeownership: A homebuilder buys farmland for development. He plans a subdivision and shepherds that plan through governmental approvals. He borrows construction financing from a local bank, paying only interest until each of the houses is sold. He prepares the land, puts in infrastructure (roads, water and sewer, utilities), and builds houses. To pay his bills during construction, he draws down a portion of the construction loan from the bank. The bank inspects the property to make sure the work for which it is lending money to complete is actually done. When each house is sold, the homebuilder repays an agreed upon portion of the principal he borrowed from the bank. A homebuyer buys the house from the developer, giving a mortgage on the house to a bank, which provides 90 percent of the funds she needs for the purchase price based on an appraisal of the house value. The remaining 10 percent, the down payment, and the buyer’s share of closing costs and transfer taxes are the equity a homebuyer must put into the house; the rest is debt. If the appraisal shows a value lower than the purchase price, the buyer may have to come up with more of the equity. A conventional mortgage is a fixed-interest loan for a long period of time, usually thirty years, during which the borrower pays back principal and interest in even monthly payments. The required monthly mortgage payment also includes an amount that goes into an escrow account from which the lender pays property taxes and property insurance. The mortgage gives the lender the right to foreclose on the loan and take the house if the buyer fails to make payment. Typically, banks sell the mortgages they hold to Fannie Mae or Freddie Mac, governmental institutions that comprise part of the secondary market for mortgage financing. In turn, these institutions bundle a large number of mortgages into a private security— an investment contract in which profit is gained without effort on the part of the investor—that is then sold to private investors on Wall Street. At each point the mortgage is resold, the seller has to discount the price

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(take less money than the face value of the mortgage) because the buyer of the mortgage is now assuming the risk. Mortgage insurance can be purchased by the homebuyer and included in the amount of the mortgage. That insurance reduces the risk to the mortgage holder by guaranteeing payment from the homebuyer. This simple home-buying transaction can be made more complicated at each step. Since the 1990s, homebuyers have increasingly turned to mortgage brokers rather than to banks to find money to buy their homes. In a hot real estate market with low interest rates and a variety of lenders competing for business, homebuyers often believe that they can get a better deal by turning to a broker who shops around for the best mortgage product for the buyer. Often, however, they are paying hidden fees to the broker. Nonetheless, mortgage brokers increased their share of home lending from approximately 10 percent to 65 percent of the market by 2003 (Schneider, 2003). The types of loans employed can also be manipulated. As opposed to fixed-rate mortgages, adjustable-rate mortgages have a variable interest rate that starts lower than fixed-rate mortgages and therefore has lower monthly payments. However, the rate may go up based on an economic indicator such as the prime lending rate of banks. Loans with low or no down payments help those who have little cash for the initial equity to purchase a home. Adjustable-rate mortgages and 100 percent financing mortgages (i.e., mortgages with no down payment) are now so common, many would not consider them exotic at all compared with more unconventional loans such as accelerated payment mortgages. Accelerated payment mortgages have lower monthly payments in the early years of the loan and higher payments later on when the borrower is expected to have reached a higher income level. There are also loans that provide 100 to 120 percent of the appraised value of the house; these cover all of the buyer’s down payment and closing costs because the lender expects rapid appreciation of the house (Friedman & Harris, 2007). Subprime lending is a different category of unconventional loans. Borrowers without good credit are often turned down for conventional mortgages. They are forced to turn to the subprime market, which usually offers mortgages with higher interest rates. Sometimes subprime loans are simply another category of loans provided by major financial institutions, but often they are provided only by unconventional financial sources with less

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regulation and protection for the borrower. Typically, subprime loans do not require an escrow or mortgage insurance. Low-income buyers and minorities have been disproportionately represented in the subprime business (Taylor, Silver, & Berenbaum, 2004). The foreclosure crisis that began in 2006 was the result of the combination of mortgage broker domination and subprime lending. As mortgage brokers and unregulated mortgage lenders replaced federally regulated banks as the primary mortgage lenders, the old system of checks and balances broke down. To boost business, brokers offered exotic mortgages to many borrowers. Exotic mortgages manipulate the conventional mortgage arrangement by extending a higher loan to a borrower who otherwise would not be able to afford it. A rapidly rising real estate market was supposed to protect both the borrower (who could always refinance or sell the home to pay off the mortgage if payments later got too high) and lenders (who would have more valuable property to auction if they had to foreclose later). Those who would never qualify for conventional mortgages were offered subprime loans with the same exotic features, and the mortgage market grew. All of these kinds of mortgages were bundled into mortgage-backed securities and sold on Wall Street. Risks were ignored. Mortgage brokers did not need to pay attention to the long-term viability of the financing— they got their fees up front. Mortgage lenders did not have to care about long-term viability either—they were selling the bundles off to Wall Street investors. The investors relied on rating services to determine the risk of the mortgage bundles and other securities derived from them correctly, and they were overly optimistic. In the end, people who had borrowed over their capabilities to pay got behind on their mortgage payments, and foreclosures skyrocketed. This crisis hurt not only families who had to leave their homes and lose their credit ratings but also moderate-income neighborhoods, in which a devastating percentage of homes had been foreclosed on and abandoned (Marsh & Vikas, 2007; Morgensen, 2007; Norris, 2007). When a homebuyer purchases an existing rather than new house, the financial transaction is the same, minus the homebuilder. The money borrowed from the mortgage lender goes to the seller. If the house needs extensive renovation, as is true in many community development situations, the mortgage lender may make a loan for purchase and rehabilitation,

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dispensing one amount at the closing for the purchase and scheduling payments for the second part in increments against work on the house done during renovation. When the renovation is complete and inspected, the total amount borrowed becomes one long-term mortgage. Rolling everything into one long-term mortgage has been an important innovation for borrowers as construction loans are otherwise traditionally short-term loans at higher interest rates. The Heart of the Problem: The Financing Gap

The basic calculation of housing affordability relates family income to the cost of housing. Based on family economics research, the generally agreed upon “reasonable level” for family housing costs has been 30 percent of monthly income. This figure has been incorporated in federal legislation for subsidized housing. One can quickly calculate 30 percent of monthly family income to learn the amount of money with which the family can go shopping for unsubsidized housing. Unfortunately, the poor and working poor who are not in subsidized housing generally pay a higher percentage, sometimes paying more than 50 percent of their income for housing, jeopardizing their ability to meet their other basic needs, including food. This reality reveals two different places in which there is a gap in financing. The first affordability problem comes when the available housing or the housing the family needs costs more than 30 percent of income. The second affordability problem in a community development context comes when housing is being built or rehabilitated by a CDC or private builder. The community wants to produce a house of adequate size and quality for a targeted family. The family cannot afford the price the builder or developer would have to charge for rental or purchase to cover the cost of developing it. In both affordability problems, there will be a gap between what the family can afford and what the housing costs. The process of analyzing affordability can be performed at either end of the calculation, from increasing the target resident’s income to reducing the cost of the project for the CDC or developer. Supplements to the payments of the family or other residents are termed demand-side policies, and solutions to reducing the cost housing are referred to as supply-side policies. In either case, the first step is to calculate the gap, and the second step is to identify the methods for filling it.

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Understanding Demand-Side Versus Supply-Side Policies: Helping Residents Pay

The largest federal housing subsidy programs today supplement the tenants’ payment, which is at 30 percent of family income, by covering the public housing authority’s gap when the family lives in public housing or by paying private landlords the difference when the family lives in Section 8 rental housing (Winnick, 1995). These demand-side scenarios assume that the price of the housing is fixed. If an organization starts with a unit in a project to be built, it would be possible to estimate the unit’s cost and to find buyers who could afford the price that would be required to lease or purchase the property. Alternatively, the organization could begin with a particular end user in mind and determine how much he or she could afford and then drive the development process to fit the building within the buyer’s parameters. Community-based developers could do the same kind of subsidizing for homeowners or altering of development plans, but they have not, choosing instead to lower the buyer’s cost of borrowing by working to modify aspects of the mortgage. The temptation, however, is to think that the answer lies in building the unit for less. As any experienced developer knows, “it costs what it costs” to build the housing, no matter how socially motivated the developer. There have been many attempts to use creative designs to make a cheaper house (i.e., a smaller house) more livable or make breakthroughs in reducing costs, including the use of volunteer labor (e.g., Habitat for Humanity) and factory-built housing, but production costs still generally exceed the ability of the occupants targeted by the community to pay for them. Supply-side solutions to this problem have typically involved some form of subsidy in development, such as reducing the cost of the financing or land. Another supply-side solution has been a simple write down of the cost through a direct grant to the developer or, in the case of homeownership, to the buyer. Understanding the Cost of Money and Financing

The cost of housing lies not only in the construction cost; financing— getting a loan, negotiating it at the best interest rate, and scheduling paying

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it back—is also a major factor and cost in producing housing. If communitybased developers can only reduce the construction and development cost marginally, and if they do not want to give funds directly to the homeowner every month to help pay the mortgage or give rent supplements to any more tenants than the Section 8 program does, the developers have to find ways to reduce the financing cost to the residents. Homeownership offers the simplest example for understanding the mechanisms and mathematics of this issue. First, some basic understanding of the lending process and terminology is necessary. As mentioned above, a mortgage lender will typically cover 90 percent of the appraised value of the home. This 90 percent is called debt; the 10 percent provided by the owner (i.e., the down payment) is called equity. The mortgage company that provides the funding is financing the debt. For the lender to issue the mortgage, the family’s income must support the monthly cost of the mortgage principal and interest, taxes, and insurance (PITI). The determination of affordability is based on lender-generated ratios of the amount of family income the lender considers available to pay for principal and interest, normally 25 percent of the family’s gross income, with the assumption that another portion of the family’s income will cover other costs such as utilities, home maintenance, and repairs. The purchase price covered by the owner’s equity and lender financing must include all of the developer’s costs, from acquisition to construction, including profit and fees. A simple financial calculator or mortgage table can be used to calculate the amount of borrowing that a family can support or the size of the income a house of a certain cost will require a family to have. The mortgage table shown in table 10.1 allows one to choose an interest rate from the first column and the term, the length over which the mortgage will be paid back, from the top row. In the resulting cell is the number of dollars per month the borrower would pay per $1,000 for a loan under those conditions. For example, if one borrowed $1,000 for 30 years (i.e., a 30-year term) at 4% interest, the monthly cost for simply having the loan would be $4.76. If one wanted a loan for $100,000, the $4.76 would be multiplied by 100, for a total of $476. Increase the interest to 5%, and the cost goes up to $5.35 per $1,000, or $535 for $100,000. If one borrowed the same $1,000 at 4% but wanted to pay it back faster, the cost would go up.

table 10.1

Equal monthly payment to amortize a loan of $1000

term (interest r at e % )

10

15

20

25

30

4

10.12

7.40

6.06

5.28

4.77

4⅛

10.18

7.46

6.13

5.35

4.85

4¼

10.24

7.52

6.19

5.42

4.92

4⅜

10.30

7.59

6.19

5.42

4.92

4½

10.36

7.65

6.33

5.56

5.07

4⅝

10.42

7.71

6.39

5.63

5.14

4¾

10.48

7.78

6.46

5.70

5.22

4⅞

10.55

7.84

6.53

5.77

5.29

5

10.61

7.91

6.60

5.85

5.37

5⅛

10.61

7.91

6.60

5.85

5.37

5¼

10.73

8.04

6.74

6.00

5.53

5⅜

10.80

8.11

6.81

6.07

5.60

5½

10.86

8.18

6.88

6.15

5.68

5⅝

10.92

8.24

6.95

6.22

5.75

5¾

10.98

8.31

7.03

6.30

5.84

5⅞

11.04

8.38

7.10

6.37

5.92

6

11.11

8.44

7.17

6.45

6.00

6⅛

11.17

8.51

7.24

6.52

6.08

6¼

11.23

8.58

7.31

6.60

6.16

6⅜

11.30

8.65

7.39

6.68

6.24

6½

11.36

8.72

7.46

6.76

6.33

6⅝

11.42

8.78

7.53

6.84

6.41

6¾

11.49

8.85

7.61

6.91

6.49

6⅞

11.55

8.92

7.68

6.99

6.57

7

11.62

8.99

7.76

7.07

6.66

7⅛

11.68

9.06

7.83

7.15

6.74

7¼

11.75

9.13

7.91

7.23

6.83

7⅜

11.81

9.20

7.98

7.31

6.91

r e a l e s tat e : d e v e l o p i n g p h y s i c a l c a p i ta l

337

For example, $1,000 at 4% interest for a 15-year term results in a monthly cost of $7.88, or $788 for a $100,000 loan. It is easy to see why the American invention of the long-term, self-amortizing, low down payment, lowinterest rate mortgage was so instrumental in making the United States a land of homeowners; simply compare the monthly repayment amounts between ten-year and thirty-year terms with interest rates of 4.5 percent and 9 percent. A financial calculator, whether handheld or computer based, allows complete flexibility in entering all financial data and solving quickly for any one of the variables in this equation, including the amount of the loan, the interest rate, the length of the term, and the monthly payment. Some mortgage companies, state housing agencies, and the U.S. Department of Housing and Urban Development (HUD) provide mortgage calculators on their websites. This mathematical information can be figured using various financing scenarios: Reduce the interest rate and see how much more costly a house the borrower can afford at the same monthly payment and term. Reduce the size of the loan and see how much lower the monthly payment is and how much less family income is required. These basic formulas reveal the most common mechanisms for making mortgages more affordable: (1) reduce the interest rate, (2) increase the length of the term, or (3) subsidize the down payment. In the first two scenarios, someone (usually a governmental entity) must subsidize the loss to the lender or regulate the lender’s practices to force the lender to offer lower interest or a longer term (and make less money, of course). In the third scenario, someone provides funds that the buyer does not have; for many, this someone is a family member, and for some, it is the government. Calculations: The Borrowing Potential of the Family

How much can a given family afford, and what price of house can they buy? As shown in row 1 of table 10.2, at 25% of household monthly income, a family with an annual income of $40,000 can afford a monthly payment of $833: $40,000 (annual income) ÷ 12 (months) × 25% = $833. A $40,000 annual income will support a loan of approximately $104,643 at 6% interest for a 20-year term. That loan will enable the family to buy an $116,270 house if the family is able to put down a 10% ($11,627) down payment.

5

4

3

2

40,000

1

833

833 6%

3%

6%

m o rt g ag e i n t e r e s t r at e

833

50,000

1,042

Increase the income from row 3

40,000 6%

3%

Combine lower interest from row 2 and longer term from row 3

40,000

Increase term on row 1

40,000

833

a f f o r da b l e m o n t h ly pay m e n t

Decrease interest rate on row 1

t ota l fa m i ly income

Housing affordability scenario calculations

row #

ta ble 10 .2

30

30

30

20

20

m o rt g ag e term in years

173,797

197,579

138,937

150,199

104,643

amount of a f f o r da b l e loa n

193,108

219,532

154,374

166,888

116,270

a f f o r da b l e house price

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Calculations: Starting with Family Income, Find an Affordable House Price s cenari o 1: r e d u c e t he i n t e r e st, e x t e n d t h e t e rm .

Can the same family afford a higher-priced home if they need more space or want an attractive home in a market that is decent, safe, and in a good neighborhood? Row 2 of table 10.2 illustrates the effects of lowering the interest rate on the mortgage. Some state or local government programs can lend at lower rates than can banks because they obtain money for lending more cheaply by selling tax-exempt bonds. With the lower interest rate, the family of row 1 can increase what they are able to pay by slightly more than $50,000 but still have the same monthly payment. Row 3 illustrates the effects of extending the payment over a longer term, from twenty years to thirty years, which is the most common conventional term today. By keeping all other variables as they were in row 1 except the length of the term, the family can now afford a home of almost $40,000 more and still have the same monthly payment. As shown in row 4, when the lower interest rate (3% versus 6%) is combined with the longer term (thirty years versus twenty years), the same family with a $40,000 annual income can now afford a house costing an additional $103,252 ($219,532 versus $116,270) and still have the same monthly payment. s cenari o 2 : i n c r e a se t he fa m i ly i n c o m e .

Of course, it would also be desirable for the family to have more income. Row 5 of table 10.2 illustrates the level of borrowing and house price that a $10,000 increase in annual income would have on the situation represented in row 3—an almost $50,000 increase in the price of the house. Notice, however, that lowering the interest rate from 6% to 3% with the same thirty-year term achieved an even better outcome than increasing the family’s annual income by $10,000—hence the focus on the mortgage rather than on the income of the buyer (Welfeld, 1998). s cenari o 3: offe r pr ogr a ms.

Community-based affordable housing programs for home ownership address (1) reducing the monthly payment by subsidizing the interest rate, as shown in row 2 of table 10.2; or (2) extending the length of the term, as shown in row 3. Lower interest rates might result from a government or

34 0

tools of development

nonprofit organization obtaining the money to lend through tax-exempt bonds that carry a lower cost compared with the sources available to banks or private mortgage companies (Aaron, 1972). A program could also directly subsidize the interest payment each month. A final method is to break the mortgage loan into two parts, a conventional source at market rates and a second component, or “second mortgage,” from the government, a nonprofit, or a special bank program at much lower rates. This results in a lower interest rate on the total amount borrowed, called a “blended rate.” Finally, one could reduce the debt by increasing the down payment and borrowing less money. More affluent buyers can bring more money to the table through savings and the contribution of parents or other family members, a common source of funds for down payments. However, the family illustrated in table 10.2 has low income and has little cash saved. For many moderate-income buyers, the amount of cash they have to bring to the table for the down payment and closing costs (3 to 4 percent in many states) is another affordability hurdle. There are special public and private affordable housing lending programs in which borrowers can obtain a loan for the full cost of the house (i.e., no down payment loan). In this case, as shown in row 5 of table 10.2, the cost of the house to the family would then be the same as the amount they can borrow. s cenari o 4: t he su pply si d e — r e d u c e t h e c o s t o f t h e h o us e .

Some programs make a grant to reduce, or write down, the purchase price of a house either to encourage homeowners of a targeted group to buy (e.g., Missouri’s program for first-time homebuyers; Missouri Housing Development Commission, n.d.) or to reach some other community revitalization goal (Aaron, 1972). For example, to promote neighborhood stability, many cities such as Philadelphia provide grants—technically nointerest loans, a percentage of which is written off each year or all of which is written off if the house is sold early—to buyers who will live in the house for five to fifteen years (Philadelphia Office of Housing and Community Development, n.d.). Table 10.3 provides several examples that reduce the monthly payment in different ways and shows the subsequent effect on affordability. Row 1 shows that, with the addition of a write-down, the $154,374 house depicted in row 3 of table 10.2 is now affordable for a family with approximately $5,000 less in income. Of course, the less expensive the house, the

3

2

1

0

154,374

row #

6%

25,000

116,437

6%

0

67,500

6%

75,000

25,000

45,000

6%

Add a write-down to row 2, which then requires an even lower family income

75,000

Next, start with a less expensive house, which requires a lower family income

154,374

Start with the house illustrated in row 3 of table 10.2 and add a write-down

138,937

m o rt g ag e i n t e r e s t r at e

write down amount

house price

loa n a m o u n t at 9 0 %

The impact of write-downs on housing affordability

ta ble 10 .3

30

30

270

405

698

833

30 30

m o n t h ly pay m e n t required

m o r t g ag e term

12,950

19,440

35,509

40,000

fa m i ly income required

tools of development

34 2

lower the income a family needs to afford it, as shown in row 2 of table 10.3. Combinations of techniques, such as combining less expensive housing with a write-down, as shown in row 3 of table 10.3, can help very lowincome families afford a home. One other way to reduce the cost of the house is to subsidize the developer, which can be accomplished by reducing the cost of city-owned land, making a grant to the developer, or lending the developer construction financing at interest rates lower than banks provide. s cenari o 5 : a d d r e ss ot he r a ffor da b i l i t y i s s ue s .

Credit issues. Families who lack the resources for adequate down payments may also have marginal credit histories. Borrowers with poor credit history may be forced into subprime lending at higher interest rates. Obviously, a significant increase in interest rates increases the amount of income required to borrow the same amount of money, which therefore forces borrowers to look for lower-priced houses. Often, the house that a family can then afford to buy is too small. Unfortunately, while some major financial institutions offer subprime lending, much of the subprime industry is run by institutions with more exploitive practices. Appraisals. In addition to the ratio of family income to the cost of the house, the appraisal of the home’s value also influences the ability of moderate-income families to become homeowners. The lender is concerned about recovering the balance of the loan if the borrower defaults. If this happens, the lender has to foreclose on the house in order to resell the house and recoup the loan. Therefore, the ratio of the loan to the value of the property as established by an appraisal influences the lender’s decision. A loan may be held up by a lender when an appraisal suggests that the building will not yield enough value after foreclosure. Moderate-income buyers often seek properties in marginal neighborhoods where prices are lower. However, in many situations, the asking prices for homes are actually above their appraised values. h o me owne rs h i p p ro g ram s Home Ownership Counseling Services

The simplest form of affordable home ownership programs is housing counseling, which is the process of providing advice to families interested in buying a home; HUD provides a list of HUD-approved counseling

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34 3

agencies on its website. Housing counseling agencies may work with individual buyers who have located a property to help them understand the home ownership financing process and/or help them with family budgeting and rehabilitating their credit ratings. This process may be enhanced by a relationship between a housing counseling agency and a financial institution or public program. The financial institution may provide accelerated processing to graduates of the housing counseling program or concessionary financing such as a lower down payment or lower interest rate. The housing counseling agency may also have a relationship with public programs providing financing or down payment assistance for first-time homebuyers or other targeted groups. Some housing counseling agencies also offer a formal home ownership training program. They provide a certificate upon completion of the program, which is a prerequisite for qualifying for specialized lending programs. Sometimes the housing counseling agency operates in a specific geographic designation and helps families buy homes in a particular neighborhood. Where rehabilitation of existing properties is prevalent, the housing counseling agency may have the capability of coaching the property owner through contracting, financing, and construction management. Counselors have formed the National Association of Housing Counselors and Agencies, whose website and materials provide in-depth information on the counseling process. The Neighborhood Housing Service

When a lender has concerns about the ratio of the value of the property relative to the mortgage requirement for the purchase price of the home, the homeownership strategy has to focus on the community as a whole as well as on individual buyers. The Neighborhood Housing Service (NHS) is a national program that began in the 1970s specifically to enhance property values in marginal communities through a three-part program: 1. Housing code enforcement and other mechanisms of raising every property in the neighborhood to a minimum standard, thereby enhancing the value of all individual properties and addressing the appraisal gap 2. Home improvement loans and purchase/rehabilitation financing to encourage owners and potential owners to bring properties up to standards and to make them more marketable

tools of development

34 4

3. Community organizing to enhance the social cohesion of the neighborhood, to keep the neighborhood clean, and to facilitate public improvements to the public infrastructure and public space

The NHS organizes a team of lenders to provide necessary financing and to make grants for the operation of the program in a particular neighborhood. Public funding sources often contribute to a revolving loan fund for those families who are not able to be serviced by banks. NHS also utilizes an aggressive marketing program to reach the niche of potential buyers for a particular neighborhood in the regional marketplace. To encourage a higher degree of homeownership, state and local government agencies offer a variety of down payment and homeowner assistance programs (HUD, n.d.). Some may provide an outright grant to aid in the down payment, and other programs may provide a no-interest loan for a portion of the home’s purchase price. The principal is then written off each year over a designated period of time, during which the owner must remain in the home, typically five years. State housing finance agencies use the public bond market to secure low rates that enable them to offer mortgage interest rates that are lower than conventional financing. Major employers, foundations, religious institutions, and nonprofit organizations in the targeted area may also provide grants or concessionary financing. Major institutions like hospitals or universities, for example, now participate in “live near your work” programs such as the one at the Johns Hopkins University (n.d.). Some local governments provide similar support for their employees. As a result of the Community Reinvestment Act (CRA), financial institutions may provide concessionary or more accessible financing for targeted areas or targeted populations, such as minority borrowers. r e n ta l pro p e rty The Basics

Rental property financing is not much different from home ownership financing if one equates the landlord to the homebuyer in a borrowing situation. The owner must make loan payments on the group of rental units in the development just as an individual owner must make loan payments for a single-family home. In addition to the development budget

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34 5

for building the project, which is again referred to as the development pro forma (see table 10.4), the rental property developer needs to project an operating pro forma (see table 10.5) that covers the length of the intended mortgage. In simplified terms, the key items in the operating pro forma are as follows. These calculations are critical in the financing of rental property: 1. The amount the group of tenants has to pay is the gross income of the project. 2. Normally, in projections, a vacancy factor based on history in the area or similar projects is applied to the total that would be available if all units were occupied all the time. This leaves the effective gross income. 3. From that, management must deduct operating expenses. Operating expenses include all management personnel and associated costs, all supplies, trash removal services, maintenance and repair, utilities, property taxes and fees, security, insurance, the costs of renting and administration, and other costs. 4. After these cash expenses are deducted, the amount left is called net operating income (NOI). After that, there are two kinds of calculations, one for cash and the other for taxes: a. For the cash calculation, the borrower must pay debt service out of NOI funds and also set aside replacement or other reserve funding. The amount left is then called net cash flow. That cash may be held as retained earnings or distributed to owners as profit or return of equity. b. For the tax calculation, additional expenses for depreciation (and some amortization) based on a schedule set by the Internal Revenue Service need to be subtracted from the NOI. The IRS also allows a deduction for the interest on debt as an expense; a deduction may not be taken for the principal. The amount left after the subtraction is taxable income (or loss). The corporate owner must pay any taxes due on this amount, assuming that the property is owned by a corporation that must pay an income tax. When an individual owns the property, this taxable income or loss passes through to the owner’s personal income tax. When the property is owned by a group of partners, the income or loss passes through to each of their own income tax reports in a percentage split determined by their legal agreement. What is left after paying income tax is after-tax profit.

table 10.4

A sample development pro forma

Units

50

Total square footage

48,669

 

Sources of funds FHLB AHP mortgage (30 yrs., 5.5%)

Per unit $800,000

$16,000

Local HOME funds (20 yrs., 3%)

419,083

8,382

State housing trust fund loan (30 yrs., 3%)

300,000

6,000

1,338,056

26,761

$2,857,139

$57,143

 

Per unit

Equity from LIHTC Total sources of funds Applications of funding Land acquisition Site improvements

$130,000

$2,600

170,000

3,400

1,569,771

31,395

General requirements

129,182

2,584

Contractor profit

149,553

2,991

25,455

509

149,091

2,982

Construction

Construction contingency Permit/fees Architect fee—Design

34,545

691

Architect fee—Supervision

27,273

545

Survey

8,500

170

Construction insurance

5,455

109

28,600

572

Construction interest (6.5% for 9 mos. on $800k 55% average balance) Construction loan origination fee

4,000

80

Real estate taxes

2,000

40

29,000

580

Property appraisal (feasibility)

6,000

120

Market study

2,000

40

Environmental report

1,000

20

Tax credit fees

18,000

360

Rent-up expenses

20,000

400

Legal and organizational

25,000

500

Permanent loan origination fee

Tax opinion Developer’s fees Cost certification Operating reserve capitalization Total uses of funds Source: Guggenheim, 2003.

4,500

90

211,640

4,233

6,500

130

100,074

2,001

$2,857,139

$57,143

Income

 

(16,500)

Maintenance and repair—Expenses

Total expenses

($145,103)

0

(17,500)

Maintenance and repair—Payroll

Payment to operating reserve

(6,050) (24,970)

Operating expenses

Taxes

(31,500)

Administrative expenses

Insurance

(18,087) (14,200)

Administration—Payroll

(16,296)

 

Management fee (7% of EGI)

Expenses (increase 4%/year)

$232,807

12,253

Effective gross income

245,060

Less vacancy/collection (05%)

3,500

Total

Other income (laundry, parking)

  $241,560

year 1

A sample operating pro forma

Gross rental income (increase 3%/year)

ta ble 10 .5

 

($158,041)

(8,296)

(17,160)

(18,200)

(25,969)

(6,292)

(32,760)

(14,768)

(18,810)

(16,785)

 

$239,791

12,621

252,412

3,605

$248,807

year 2

 

($165,819)

(9,212)

(17,846)

(18,928)

(27,008)

(6,544)

(34,070)

(15,358)

(19,563)

(17,289)

 

$246,985

12,999

259,984

3,713

$256,271

year 3

 

($172,796)

(10,098)

(18,560)

(19,685)

(28,088)

(6,805)

(35,433)

(15,973)

(20,345)

(17,808)

 

$254,394

13,389

267,784

3,825

$263,950

year 4

 

($179,978)

(10,950)

(19,303)

(20,473)

(29,211)

(7,078)

(36,851)

(16,612)

(21,159)

(18,342)

 

$262,026

13,791

275,817

3,939

$271,878

year 5

 

(continued )

($187,371)

(11,765)

(20,075)

(21,291)

(30,380)

(7,351)

(38,325)

(17,276)

(22,006)

(18,892)

 

$269,887

14,205

284,092

4,057

$280,034

year 6

$87,704   (55,044) (15,306) 0   (10,000) $7,353.00 1.25   $87,704 (44,000) (9,000) (4,191) (94,929) (8,467) ($72,883) (729) (72,154) 25,254 213,659 $238,913

Net operating income Debt service First mortgage payment Second mortgage payment HOME loan payment Reserves Replacement reserve Net cash flow Debt service coverage ratio (DCR) Tax benefit from operations Net operating income Less interest first mortgage Less interest second mortgage Less interest HOME loan Less depreciation schedule Less amortization schedule Taxable income (loss) General partner share (1%) Limited partner share (99%) Tax savings (35%) Tax credit—LP share (99%) Total tax benefit

Source: Guggenheim, 2003.

year 1

(Continued )

 

ta ble 10 .5

$80,750   (55,044) (15,306) 0   (10,400) 0     $80,750 (43,393) (8,811) (4,233) (94,929) (8,467) ($79,083) (791) (78,292) 27,402 213,659 $241,061

year 2

$81,156   (55,044) (15,306) 0   (10,816) 0     $81,156 (42,752) (8,616) (4,275) (94,929) (8,467) ($77,873) (779) (77,094) 26,983 213,659 $240,642

year 3

$81,599   (55,044) (15,306) 0   (11,249) 0     $81,599 (42,076) (8,415) (4,381) (94,929) (8,467) ($76,606) (766) (75,840) 26,544 213,659 $240,203

year 4

$82,048   (55,044) (15,306) 0   (11,699) 0     $82,048 (41,362) (8,209) (4,361) (94,929) (8,467) ($75,279) (753) (74,526) 26,084 213,659 $239,743

year 5

$82,517   (55,044) (15,306) 0   (12,167) 0     $82,517 (40,610) (7,996) (4,405) (94,929) (1,167) ($66,590) (666) (65,924) 23,073 213,659 $236,732

year 6

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34 9

Financing Multifamily Rental Properties

To understand how CED practitioners finance affordable rental housing, one must understand the conventional financing process for rental housing. Typically, lenders provide a mortgage of 80 percent of the appraised value of the property. Without going into detail, in income-generating properties such as multifamily residential properties, the property might be appraised by one or a combination of three methods: (1) the cost of building or replacing the property, (2) the value of comparable properties recently sold, or (3) the value to an investor of the income resulting from the project over a period of years. Lenders of permanent financing for multifamily residential properties include not only banks but also institutional lenders such as insurance companies and pension funds. These mortgages can be sold on the secondary market just as homeowner mortgages, and some of the same vehicles may be used to do so (e.g., Fannie Mae, specialized agents for rental property such as Ginnie Mae; Arnold, 2008). However, because the permanent lender covers only as much as 80 percent and because big projects are expensive, developers need to find equity investors who will provide the rest of the funds in exchange for a share in the profits from a project, a return on their investment. Investors typically look for three types of return: cash, tax benefits, and future appreciation. The latter comes years later when the property is sold or refinanced based on appreciated value. The investor expects cash and tax benefits to come annually. Tax benefits are the least obvious type of return to those unfamiliar with real estate investing. As mentioned above, depreciation is deducted from NOI before calculating taxable income. Because depreciation is not a cash expense, the property might have a tax loss while actually having positive net cash flow to distribute to investors. Those taxable losses are in turn valuable to an affluent investor who has other taxable income from other sources because they offset or shelter that income, which would otherwise be taxed. For example, a physician who has $300,000 of taxable income from wages on investments before a real estate investment would pay taxes of perhaps a 25 percent marginal rate, or $75,000. With an investment in real estate that generates a $100,000 loss, that same doctor, depending on other tax rules, might owe only $50,000, or 25 percent of $200,000. That tax savings, year after year, is valuable.

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The return picture, however, is not complete yet. In addition to the cash share of the net cash flow that comes without any taxes (because the property has a taxable loss) and the value of the tax shelter, there is also a return to be had in the future, as good properties do not actually lose value (as the depreciation calculation might suggest) but rather increase in value. When the property is later sold at a profit, investors see another return. A side tax benefit is that that return will be taxed at capital gain tax rates that are usually lower than the tax rates on income from wages and businesses. Because of these attractive returns, there are affluent individuals and companies willing to invest in multifamily real estate projects. In addition, Real Estate Investment Trusts (REITs) bring together groups of such investors to pool their capital. REITs, some of which are publicly traded and regulated, may invest equity, lend funds (mortgages), or undertake a combination of both. Pension funds and other institutional investors have also undertaken both equity and debt combinations. Rental Property Affordability in CED

The variety of programs that provide rental housing at affordable prices for low-income families and other special populations are broad and complex. It is best to review the programs according to the general niches that they fill. The Internet is the best tool for up-to-date searching for programs at the national or state levels. There are three problems with the conventional rental processes faced by CED practitioners who are developing affordable rental housing: (1) affordable rents produce insufficient income, (2) lenders often will not lend the conventional portion of the project (80 percent) because of appraisal issues, and (3) conventional investors are not attracted to the project. The rents that can be generated from low-income tenants at 25 to 30 percent of family income will not cover the cost of management or maintenance of the project plus its debt service (the interest and principal on the mortgage). Positive development that improves a challenged community often costs more than the appraisal ratio acceptable to the lender (e.g., the project costs more than comparable rental projects). The investor fears the property will not pay any annual returns and will not appreciate in the future.

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Affordable rental ownership programs address each of these issues by subsidizing some portion of the management expenses and/or subsidizing the tenants to cover the difference between fair market rents and 30 percent of the tenants’ income; providing capital subsidies to reduce the amount of development costs that must be financed, which reduces the cost of borrowing; and providing additional tax incentives to investors. The rental process can only be subsidized in a limited number of places: development cost, the cost of financing, and operating cost. The development cost could be subsidized if the public authority provided the land at little or no cost or put in the infrastructure that would normally be a cost to the developer. The amount to be financed might also be reduced through a public authority or a philanthropic or religious source making a general grant to reduce the amount of the development cost that has to be financed. A philanthropic or public source can also write down the annual interest rate of a conventional loan. Financing, particularly from a public source, can be created that offers a longer term to the mortgage or a lower interest rate, just as was illustrated for an individual owner earlier in this chapter. Through bond financing or advances from the Federal Home Loan Bank, lending institutions may have a lower cost of obtaining money to lend. The Low-Income Housing Tax Credit and other similar tax mechanisms provide an enhanced return for equity investors so that a larger portion of the financing cost is covered by equity (Guggenheim, 2003). This results in less debt. Table 10.4 shows the sources of financing for a hypothetical project and the items to which those funds are applied during development. Through a complex calculation, the Low-Income Housing Tax Credit investor gets a return through a combination of income tax credit, a share in the eventual sale of the project, and cash flow. Normally, tax losses are a deduction, the worth of which depends on the investors’ tax rate. The tax credit here is a dollar-for-dollar reduction of the tax. For example, a tax loss of $50,000 to an investor who pays a 20 percent tax rate is worth $10,000 in reduced taxes; a tax credit of $50,000 to the same investor reduces his or her taxes by $50,000. Another tax technique used involves allowing lowincome rental projects to claim a higher depreciation than normal, or accelerated depreciation, on the developer’s taxes or the taxes of its investors. This reduces the taxable income and taxes due or increases the taxable loss, providing the investor with more tax shelter.

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Rental income for the project can be enhanced beyond what the tenants can afford to pay by either supplementing the payment of each tenant or making an annual contribution (as is done with public housing) toward the rent rolls. Typically, the government is a source of this subsidy. There also are a few mechanisms for reducing the annual operating costs of the project, such as grants. Grants can be used to pay for services or special operations, such as assisting tenants who have special needs. Tax abatement or tax increment financing can reduce the annual tax payment on the project (Lang, Hughes, & Danielsen, 2000). The local taxing authority has these mechanisms to offer and may be interested in development projects because they will eventually contribute to the tax base of the jurisdiction. In tax increment financing, the project is granted an initial abatement, which may be a full or partial abatement. The tax only starts to be due at a later date. While all public subsidies to real estate developments are sometimes controversial because the developer makes a profit that may seem unwarranted to some, tax increment financing is criticized in particular because the public authority gives up for a period of time what is often the very policy justification for public subsidy, namely, increasing the tax base and income to the local authority. Sometimes, costs can be reduced through organizing the residents to do some of the maintenance work themselves. Some housing co-ops, for example, are self-managed. The methods of subsiding low- and moderate-income rental housing are far more complex than can be summarized here. A CED practitioner who expects to undertake such development should enroll in one of the specialized courses offered by CED intermediaries and other training providers and retain specialized consulting for initial projects. commer c i al and i nd u s tri al re al e stat e

Housing is not the only physical development agenda for CED practitioners. As will be more elaborately explained in chapter 11, a vital community needs thriving retail stores; personal and professional businesses providing everything from medical care and legal counsel to child care and car repair; recreation, entertainment, and arts venues; and places of work in the service and manufacturing industries. Some of these businesses need appropriate commercial space for which they pay rent; others, both

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Affordable development versus conventional profits

building

Cost

conventional breakeven

conventional high profit

a f f o r da b l e scenario

$280,000

$280,000

$280,000

Appraised value

$280,000

$350,000

$210,000

Sales price

$280,000

$350,000

$210,000

Loan at 80% appraised value

$224,000

$280,000

$168,000

GAP

$56,000

$70,000

$42,000

0

$+70,000

$−70,000

Developer’s extra profit

nonprofits and private companies offering services at affordable rates for moderate-income families, may be more appropriately located in a community facility. A successful community-based development organization that undertakes comprehensive community renewal needs to be able to create or ensure the success of both of these types of nonresidential real estate. Even CDCs mostly focused on housing will usually come to be involved in mixed-use facilities where the commercial- or community-use portion of the project needs to be addressed as if it were a free-standing profitable commercial real estate or community facility project. The Basics of Commercial Real Estate

The development and financing of homeownership property was used as an example above to explain rental real estate financing. The developer of rental property in that example needed to plan, manage, and justify to lenders and investors (1) the reliability of the tenant market, whose rent payments will pay the operating expenses, debt service, and return to the investors; and (2) all of the aspects of operation, from rent to repair and replacement, that constitute the operating expenses to be deducted from the tenant rent payments before the lender or investors get paid. Commercial real estate is not unlike residential rental real estate, but it has one more step. This time, there are more unknown factors about the tenants (i.e., businesses and other organizations), so the developer needs to understand more about the viability of the tenant businesses and the factors that affect their ability to meet the lease payments.

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If the tenant is a single business (e.g., a doctor’s office), the landlord/ developer only needs to know that the business is viable based on its history and the success of comparable businesses in the area. The landlord will want a security deposit to offset loss if that tenant moves out or the business fails and the landlord has a vacancy until the space can be rented again. If the real estate is specialized or if there is not much demand in the area for the type of commercial use the business requires, the landlord may have the tenant sign a guarantee for the lease payments. Then the landlord needs to assess whether the owner or owners have the net worth to support the guarantees. If the tenant business is a startup (e.g., a new child care operator), then the landlord needs to know more about the tenant’s business plan and the market analysis that supports the child care center, as well as the guarantees and net worth of the business owners. As in the case of residential rental property, operating expense management is crucial. Because business leases are usually for a longer term than residential leases and because so much is affected by the tenant’s business operation, the landlord tries to control operations or pass the risk of higher expenses on to the tenants. If leasing to a shopping center, for example, the landlord may require certain operating hours, garbage disposal, and security of the shopping center. Passing on the risk may also be done by requiring the tenants by lease to pay for increases in certain expenses or to be entirely responsible for certain expenses. In a net lease, for example, the tenant is responsible for paying taxes, utilities, and insurance; the landlord continues to be responsible for maintenance. In a triple net lease, the tenant also takes on responsibility for all maintenance and repair. If there are many tenants, the scenario is compounded, but each leaseholder follows the same patterns as above. The operation of the building(s) is more complex, however, because tenants share common space, from hallways to parking lots. For an office building or a shopping center, the landlord usually retains responsibility for that space and must either have appropriate commercial property management capability or hire it. The tenants pay an assessment for that space and those services based on their utilization, which may be calculated based on the square footage they occupy, the traffic they generate, or the gross receipts they take in. The basis for the assessment is negotiated in the lease. If the tenants are unknown, as in the case of a new shopping center, then the developer bears the burden of planning for a sustainable mix of

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tenants who, collectively, can pay the rent needed to operate the property, pay all taxes and the debt service, make money for investors, and ultimately make money for themselves. It is useful to delve into shopping center development as a particular example, as expanding or bringing retail into a depressed market is often a high priority. Even if a shopping center project is not feasible in a given community, it is useful for CED practitioners helping existing businesses in a neighborhood commercial area to understand tenant mix and tenant management techniques in a shopping center, as neighborhood merchants are often competing with shopping centers or malls outside the community for customers in the community. The shopping center has grown since the 1950s into the dominant form of American retail, and shopping center development has been tracked since then by the Urban Land Institute (ULI). The ULI’s Shopping Center Development Handbook (Beyard & O’Mara, 1999) notes that what characterizes the shopping center is a mix of retail businesses operating in a property with a common architectural design. Because the success of the shopping center so depends on the success of those retailers, the real estate development process outlined earlier in the chapter (see figure 10.1) follows a different sequence. Otherwise, that generic development process works for both retail and residential. Of the five key elements needed for a true real estate project concept to study preliminary feasibility—site, use, market, financing, and team—finding the right retailers of the right size takes center stage, and the market analysis in turn comes earlier and drives the selection of the retailer. In fact, any financing commitment that a developer might want at the feasibility stage will require not only identification of the retailers but also some commitment from the retailers, backed up by the market analysis that shows that the retail tenants will be successful in the property. The market analysis of community customers at this stage even determines the size and type of shopping center. Finding How Much New Retail Business the Community Can Support

The two major trade groups of developers, the ULI (Beyard & O’Mara, 1999) and the Institute of Real Estate Management (Muhlebach & Alexander, 2005), divide shopping centers into four types in descending order of size and variety of tenants: regional and superregional, community,

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neighborhood, and convenience. Table 10.8 shows each of these, along with its typical square footage, required population, and radius of the geographic market it typically serves. Table 10.7 shows the typical tenants in each type of center. They also each identify specialized variations of the basic shopping center: specialty centers, outlet centers, power centers (i.e., big-box retail stores), lifestyle centers, off-price centers, fashion centers, festival marketplaces, and others. Types of shopping goods include: r
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shopping center or store to attract shoppers passing on the way to soughtafter items or while checking out (Beyard & O’Mara, 1999; Schmitz & Scully, 2006)

Retail and supermarket chains, investors, and lenders use the guidelines illustrated in tables 10.7 and 10.8 or ones very similar. CDCs and other developers will be constrained by them, no matter how much the community might aspire to something different or bigger. One of the greatest tensions in neighborhood retail development derives from residents’ desire for a full-scale supermarket when the population of the community is only a fraction of that supermarket operators require in order even to consider a location. The method of determining customer expenditures available to sustain any of these types of retail projects is described here at length to help social workers, community planners, and the community leaders they coach make the difficult journey from neighborhood dream to financial feasibility. Even well-meaning funders who supplied charitable capital for the project but felt they could bypass conventional analysis by subsidizing the construction of shopping centers that did not meet these guidelines have found that the shopping centers failed when the customer expenditure fell below the necessary level.

Supermarket

Supermarket, drugstore/ pharmacy, discount department store, mixed apparel (women’s/men’s/ children’s)

One or two full-line department stores

Three or more full-line department stores

Neighborhood

Community

Regional

Superregional

leading tenant (basis for c l a s s i f i c at i o n )

Characteristics of shopping centers

type of center

ta ble 10 .7

1,000,000

600,000

180,000

60,000

typical gross leasable area (square feet)

600,000–2,000,000

300,000–900,000

100,000–400,000

30,000–100,000

general range in gla (square feet)

15–100 or more

10–60

10–39

3–10

usual minimum site a r e a ( ac r e s )

300,000 or more

150,000 or more

40,000–150,000

3,000–40,000

a p p r o x i m at e m i n i m u m p o p u l at i o n support required

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table 10.8

General guidelines for a primary trade area

type of center

m i n i m u m p o p u l at i o n s u p p o rt r e q u i r e d

radius

driving time

300,000 or more

12 miles

30 minutes

Regional

150,000 or more

8 miles

20 minutes

Community

40,000–150,000

3–5 miles

10–20 minutes

3,000–40,000

1.5 miles

5–10 minutes

Superregional

Neighborhood

Note: This table provides only general guidelines, which must be modified according to the characteristics of the specific shopping center being considered.

Behind the data shown in these figures is a more complex analysis that developers and CED practitioners need to understand even though more technically specialized professionals may actually do the analysis. Developers who are looking to attract a particular kind of store and potential tenants evaluating the location all want to know how much expenditure is not currently captured by and is available in the community market. In the case of a supermarket, for example, an analysis should be conducted of how much of the community’s expenditures on groceries is currently uncaptured. The simplified explanation of that analysis can be broken into three steps. s tep 1.

Based on history, the size and type of store determines the size of the trade area, that is, the radius from within which people will typically patronize that store. Those living outside of that radius typically go to some other store. Data on these factors are available in a variety of databases, both public and proprietary, as illustrated in table 10.9. s tep 2 .

The second step is to determine the consumer expenditures for the goods offered by this type of store in the particular target area established in step 1. Available from the U.S. Department of Labor and proprietary sources are a series of family budgets that show, for different levels of income, the average family or head-of-household expenditure for all expenses, and in this

Drugstore/pharmacy Dollar store/novelties Variety store Office supplies Mixed apparel Sporting goods Restaurant

Hair salon

Nail salon

Dry cleaners

Fast-food service

Medical and dental office

Finance, insurance, real estate services

Office supplies

Books

Pet shop

Bath/shop linens

Sporting goods

Home improvements

Furniture store

Mixed apparel

Discount department store

Drugstore/pharmacy

Supermarket

community

Cineplex

Large-format specialty store

Restaurant row

Food court

Fashion department store

Traditional department store

regional/ superregional

Source: ULI—the Urban Land Institute and International Council of Shopping Centers, Dollars & Cents of Shopping Centers/The Score 2006 (Washington, D.C.: Author, 2006).

Supermarket

Minimart

Restaurant

neighborhood

Typical shopping center anchors

convenience

ta ble 10 .9

2.5 .6 .3 1.3 1.9

Children under 18

Persons 65 and older

Earners

Vehicles

49.7

$63,685

n.a.

Persons

Average number in consumer unit:

Age of reference person

Income before taxes

Consumer unit characteristics:

Lower limit

122,287

all consumer units

1.0

.5

.4

.4

1.7

51.8

$9,805

n.a.

24,435

lo w e s t 20 percent

1.5

.9

.5

.5

2.2

51.7

$27,117

$18,559

24,429

second 20 percent

1.9

1.3

.4

.7

2.6

48.9

$46,190

$35,645

24,473

third 20 percent

Quintiles of income before taxes: Average annual expenditures and characteristics

Number of consumer units (in thousands)

item

ta ble 10 .1 0

2.3

1.7

.3

.7

2.8

48.0

$74,019

$58,272

24,520

fourth 20 percent

2.8

2.0

.2

.8

3.2

48.2

$161,292

$93,837

24,430

highest 20 percent

$49,705 6,458 531 832 407 715 1,353 2,620 456

Food at home

Cereals and bakery products

Meats, poultry, fish, and eggs

Dairy products

Fruits and vegetables

Other food at home

Food away from home

Alcoholic beverages

65

Food

Average annual expenditures:

Percent homeowner

170

1,099

871

448

253

532

344

3,547

$22,001

39

265

1,608

1,038

566

317

703

428

4,659

$32,092

53

324

2,125

1,257

633

380

745

480

5,620

$42,403

65

528

3,103

1,582

791

458

929

603

7,466

$57,460

79

(continued )

994

5,163

2,015

1,136

626

1,252

798

10,991

$94,551

88

3,727 1,122 615 1,514

Utilities, fuels, and public services

Household operations

Housekeeping supplies

Household furnishings and equipment

2,669 2,655 2,454 516

Vehicle purchases (net outlay)

Gasoline and motor oil

Other vehicle expenses

Public and other transportation

8,293

648

Other lodging

Transportation

3,029

Rented dwellings

1,740

6,148

Owned dwellings

Apparel and services

9,825

Shelter

all consumer units

16,803

(Continued )

Housing

item

ta ble 10 .1 0

182

1,020

1,227

827

3,256

850

553

344

430

2,284

197

3,324

1,638

5,159

8,771

lo w e s t 20 percent

204

1,599

1,981

1,358

5,142

1,140

936

440

718

3,072

255

3,758

2,957

6,969

12,136

second 20 percent

367

2,322

2,694

2,208

7,592

1,453

1,275

542

829

3,687

356

3,436

4,819

8,611

14,944

third 20 percent

475

3,043

3,295

3,392

10,205

1,988

1,828

694

1,223

4,280

594

2,585

7,635

10,815

18,840

fourth 20 percent

1,352

4,281

4,073

5,557

15,264

3,266

2,976

1,052

2,411

5,309

1,839

2,046

13,688

17,572

29,321

highest 20 percent

1,051 351 775 1,721 5,424

Education

Tobacco products and smoking supplies

Miscellaneous

Cash contribution

Personal insurance and pensions

n.a.: Not applicable. Source: U.S. Bureau of Labor Statistics (2013).

5,106

115

Reading

Pensions and social security

634

Personal care products and services

317

2,572

Entertainment

Life and other personal insurance

3,313

Health care

341

81

422

687

385

316

807

50

270

981

1,489

1,474

218

1,693

931

579

359

474

72

408

1,622

2,611

3,288

217

3,505

1,311

593

409

562

101

549

2,121

3,319

6,078

353

6,431

1,910

883

403

827

135

742

3,107

3,994

14,351

717

15,068

3,766

1,434

266

2,585

219

1,202

5,027

5,149

tools of development

3 64

case, groceries (see table 10.10). Databases distinguish different geographic regions as well. To use this information, analysts need to know the population of the trade area. To test for a type of store, the analyst draws the appropriate radius and, using census data or other population projections, calculates the number of households by category of income in the trade area. A community supermarket that draws customers from a radius of 3.5 miles can then determine whether the 150,000 people it needs to make a profit live within the radius. More precisely, the analyst can calculate the number of households at each level, the amount of grocery expenditures by each group, and then the total expenditure for this retail use for all households in the area. s tep 3 .

The next task is finding out how much of that expenditure is already being spent in the trade area in existing stores and therefore how much is left (uncaptured) for the new store. The analyst must count the existing number of competitive stores and estimate their square footage using property records such as tax assessment records. Again, using databases of industry averages, the analyst can project how much of the available grocery expenditure is already being taken. First, the analyst multiplies the square footage of each store by the average income for that type of store. Then the analyst adds all of this income and subtracts it from the total expenditure available in the trade area. This calculation results in the uncaptured potential of the trade area. Of course, a new store will not capture all of the uncaptured potential, so the developer or store operator has to make some reasonable projection of the capture rate. Then, the analyst applies that projection to the dollars available and then returns to the industry averages of income per square foot in order to determine what square footage can be supported by the reasonable capture of the uncaptured potential of the trade area. This calculation answers the question: Is the project feasible? Community developers could skip step 1 and use the community addressed by the CDC to establish a potential trade area and then follow steps 2 and 3 to discover the amount of square footage of store that could be supported by the uncaptured potential. In this case, the question to be answered is whether the community developer will able to use that analysis to recruit a new chain grocer.

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Tenant Mix

If the shopping center to be developed can support more than one store, what is the best tenant mix for this trade area and its uncaptured potential? If the shopping center is not new but rather a revitalization of an older shopping center or neighborhood commercial district, what is the most competitive mix to create through a combination of supportive existing businesses and recruiting new stores? The appropriate tenant mix is found through a combination of an analysis of uncaptured potential for a multiplicity of uses, called a market area analysis, and the retailing combinations and the retailing practices typical in shopping centers. The market analysis will combine the uncaptured potential derived via steps 1 through 3 above for other retailers (e.g., shoes, clothing, children’s toys), entertainment, and services (e.g., automotive repair). However, the developer also needs to know the retailing practices of these different types of uses. Some stores want to be in the middle of a mall or shopping center; others want to be on the periphery. The most obvious example of the latter is a car repair and parts store. It needs to be located where its customers have easy drive-up access without interfering with work being completed on other customers’ cars. On the other hand, women’s clothing and shoe stores want to be with other clothing and shoe stores because they know their customers want to do comparison shopping. It is no advantage to be the only seller of women’s shoes in a shopping center; very few customers will come. In fact, mall developers have studied consumer practices so carefully that they can determine how far a shopper will walk before she (women and teens dominate the shopping market) decides to drive and be potentially lost to the shopping center. So, for a long time, malls were composed of two department stores almost exactly the same distance from each other in every mall with stores arranged in between. These stores would profit from the flow of shoppers who would walk that distance—and no more—to compare the two department stores’ products and prices. As larger regions were served by the mall, a second floor for foot traffic was added. Even larger regional trade areas led to bigger malls, which are more efficient for developers, with multiple anchor department stores, and again the four or five department stores would each be a well-studied distance from the others. To sustain the hungry walker, the food court was invented at the intersection.

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Regional malls are not usually projects of CED organizations, but they are competition to local businesses and provide a good model of the careful analysis and discipline that CED neighborhood shopping area revitalizers would do well to emulate. If a CDC is big enough to take on the development of a major community shopping center or mall, it is probably well staffed enough to have specialists or consultants who will be engaged in more sophisticated tasks than can be described here. Smaller CDCs and community developers interested in revitalizing retail areas should retain consultants with retail leasing experience in shopping centers and malls in their region. The consultants will know the site selection criteria of national and major regional chain stores. They will also know the marketing habits that determine where a particular store will want to be located relative to its competition or to complementary retail uses (e.g., shoe stores with clothing stores). Shopping center development (Beyard & O’Mara, 1999; Schmitz & Scully, 2006), leasing (Arnold, 2008), and management (Muhlebach & Alexander, 2005) texts can also be very useful for guiding analysis. A typical exercise presented would be to conduct a market area analysis and identify the square footage needs of typical stores providing the goods where there is uncaptured potential and then identify what stores could be attracted to the community. Tenants’ Impact on Rents and Financing

Lender and investor confidence in the ability of tenants to succeed and pay their rent is so important that it has led to another categorization of tenants and affects the tenants’ leverage in negotiating favorable leasing terms. Anchor tenants are those who occupy the most space and are expected to draw the most customers (e.g., a department store in a mall or a supermarket in a community shopping center). They sign long-term leases that the lender counts on to last, and they therefore are able to negotiate lower lease payments per square foot than smaller stores. Credit tenants are those with a strong record of success and whose balance sheets and profit-and-loss statements assure the lender of more security. These may be national credit-rated tenants or strong regional chains. Franchises of national companies may qualify depending on the guarantees the national company gives the franchisee or shopping center owner. Credit tenants may occupy small or large spaces depending on the store, but

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their national or regional reputation and advertising so help draw customers that they are able to negotiate lower rents. Credit tenants sign relatively long-term leases. A lender may require that some percentage of the property’s mortgage payment amount be covered by rent from credit tenants. Nonanchor tenants are those from which shopping centers get its highest rents. They fill in the spaces between or next to anchor tenants. The developer wants them to sign shorter-term leases so that rents can be raised more frequently than those of anchor tenants or credit tenants. Leasing, Services, and Amenities

It is useful for CED practitioners to understand the leasing of shopping centers even if they never develop one, as they provide a template for retail leases of spaces of any size and give neighborhood retail developers a sense of possibilities beyond the traditional triple net lease of a single store in the neighborhood. For example, CED commercial space developers who know that chain stores are accustomed to leases that specify much of their operations are able to include as lease provisions behaviors that otherwise would have been cast aside as “social goals” (e.g., hiring and training neighborhood residents, selling and displaying fresh produce) that could not realistically be achieved through retail development. Leases for shopping centers are very complex. In addition to specifying the rent, they require additional payments for services provided by the shopping center management, including parking and common space cleaning, maintenance, and security; insurance and taxes; common advertising and promotions; and an ever-expanding variety of amenities designed to attract customers to a shopping-cum-entertainment experience that lengthens their stay and exposure to tenants’ selling. The lease also regulates additional tenant behavior, such as the condition of their stores and displays, and may limit where other locations of the tenant’s store can set up shop. It may also require tenants to keep a level of offering of goods based on the level at which the shopping center manager selected them to become tenants. Leases also provide a bewildering range of methods for increasing rent beyond the usual pass-through of increases in operating expenses, utilities, insurance, and taxes. A percentage lease bases rent payments on the sales volume of the tenant and is very common in shopping centers. The tenant may pay both a base rent based on square footage it occupies (flat rent) with an additional payment based on sales volume. Percentage leases are

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so common that there are databases, such as those listed in table 10.10, that show the expected percentages by store type. To attract tenants to an undeveloped or an inner-city location, a shopping center might offer anchor or credit tenants a low base rent with additional rent if the tenants’ sales volume exceeds some minimum figure required by the tenant to break even. In addition, there are leases that step up or step down rents depending on the occurrence of specific events or achievement of certain financial milestones by the shopping center. The trigger for a step up in rent might be the simple passage of time. The trigger for a step down in rent might be the shopping center owner negotiating for better terms in refinancing based on the success of the shopping center and its tenants. Permanent Financing

As described above, the underwriting for permanent financing in large measure depends on the tenants and the leases the borrower has in hand. It obviously includes an appraisal of the value of the property. Lenders have specific ratios for each type of commercial real estate just as they do for individual housing projects. Because there are so many of these ratios and they are constantly in flux, CED practitioners need to ask each financing source its criteria for evaluating each type of commercial real estate development. Sources of permanent financing include banks, institutional lenders such as pension funds, REITs, and specialized shopping center lenders. Some sources of financing may take an equity position, expecting to profit from the risk they take. Depending on the location (e.g., a target area such as an Empowerment Zone) or the owners (e.g., small businesses, minorityowned stores), government lending sources of financing may provide other support. The Small Business Administration (SBA), for example, supports specialized lenders with its 502 program, which makes loans enabling operating businesses to buy their facilities. In addition to the usual long-term mortgage, commercial real estate allows some variations not found in residential real estate financing. There are pieces of equipment and fixtures needed by every business; these could be separately financed. The tenant might bear responsibility for arranging the financing, and some franchisors will provide that investment. When there are separate buildings, such as a fast-food franchise with a drive-thru on the corner of a shopping center, that part of the real estate deal might be financed separately from the rest of the center.

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A tenant might want to own the property eventually, so a lease-purchase arrangement would be appropriate, and that would trigger different financing and tax considerations. Special CED Issues in Commercial Real Estate

Some of the challenges that face CDCs in developing commercial real estate are the same as those in developing residential real estate: The location or lack of comparable properties in the target neighborhood causes the appraisal to be too low to support the full borrowing needed, lenders are wary of the location in general, and the CDC may find it difficult to attract anchor and credit tenants to the market. CDCs might undertake their own market analyses to overcome these hesitations or conduct consumer surveys in the neighborhood to bolster evidence of demand or prove that local dollars are going elsewhere to shop. The kind of analyses done by groups such as Social Compact, a nonprofit organization breaking down barriers to investment in inner-city neighborhoods, may reveal even more spending power in the community than previously thought, and these types of discoveries have enabled inner-city developers to attract national chains and lenders. It is too easy to overlook the effects of density in the inner city compared with a conventional shopping radius and longer drive time or the expenditures for basic goods even among low-income families. For many years, inner-city locations were considered out of bounds for commercial development, as national supermarket chains and other businesses left those areas. In the 1990s, that began to change as sprawling suburban developments had so spread out the customer population that the trade area models used by chain stores no longer worked. Better economic analysis of the inner city showed plenty of uncaptured expenditures, should vendors decide to adopt practices appropriate to it. First, a national chain of pharmacies with convenience goods came to the inner cities, and it was later followed by national supermarket chains. Financing for other commercial development remains a challenge. Even if a CED organization has the same equity as a private developer, a financing gap often remains because the permanent financing lender will not provide more than the usual portion of the project cost. Some philanthropic sources that are willing to provide a portion of the financing to close the gap in residential development may not similarly see commercial lending as charity

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because it will help for-profit businesses flourish. CDCs have been more successful working with government agencies oriented to economic development, but cutbacks during the Ronald Reagan and the George W. Bush administrations reduced even the paltry levels of those funds. Some have found creative methods of accessing SBA and state financing. Often the social or community planning goals of CED organizations are in conflict with conventional commercial real estate development. A common and already mentioned conflict is the desire of a small community to have a bigger store than its population will support. That desire can be achieved only by amalgamating with other neighborhoods or by being willing to support development of a location outside of the immediate area that serves the neighborhood. In addition, the community wants to see neighborhood residents take jobs in the stores, a high quality of goods and services, and culturally sensitive practices and product mixes. Not all retailers can accommodate those goals. When a CED organization also has goals of supporting indigenous businesses and local woman- and minority-owned businesses, there is a double challenge: making a difficult real estate project work while helping new or expanding businesses without a track record succeed. CED organizations would do well to take a measure of their capability to support multiple goals. The business development methods and capabilities covered in chapter 11 apply here. Finally, there is the importance of building the capability of the CDC itself for commercial development. Commercial real estate is like residential real estate only by analogy. In practice, there is a different set of actors from those involved in residential development at every level of the project. A CDC with a strong residential development track record is certainly better off than one without it, but specialized talents and new relationships are required. Many CDCs have found that joint venturing with a private developer is an effective transition step. Developing partnerships has also been a successful method of addressing financing needs. Community Facilities

One way around some of the commercial real estate development barriers in CED is the development and financing of community facilities. Community facilities most narrowly defined are those buildings and real estate projects

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that house the services that public departments provide in most built communities: recreation, health, social services, senior citizen centers, and others. These are usually constructed and financed by local government. However, in suburban development, subdivision builders are now also required to create such amenities as a community center or swimming pool and finance them privately. Now there is a large market for financing private and nonprofit community facilities. CED organizations can expand that definition to include facilities for tenants that might be considered completely private in a more affluent setting: child care providers, private medical offices, classrooms for English language classes for speakers of other languages, and others. The development of a building for these services is not unlike the development of other commercial space, except for specialized recreational facilities such as swimming pools and gyms. The financing sources and partners, however, are different. Some of the national CED intermediaries, such as the Local Initiatives Support Coalition, have facility financing programs, as does the National Coop Bank and many Community Development Financial Institutions. The U.S. Department of Agriculture has a program for community facility development in rural areas. Some state and local governments also have programs. Even conventional lenders have specialized products for community facilities. CDCs, therefore, might package what otherwise would be an unfeasible office building as a community facility. As a public-oriented set of users in a building owned by a nonprofit, the project might attract grant funding from philanthropic or government sources for part of its cost. The CDC could then borrow the balance from the specialized community facility lenders to make the project feasible and to keep the rents low enough for tenants to ensure they can make their services affordable or free to low- and moderate-income residents. Building at Scale

It is not enough to revitalize a neighborhood by simply building a few homes or an apartment complex. The successful community development organization must take development to some scale in order to have an effect in the neighborhood. There are three ways to think about scale: (1) increasing the number of projects, (2) creating a large-scale development, and (3) building an organization that is a significant volume producer.

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i ncreas i n g t he n u m be r of pr oj e c ts.

The easiest and most common form of increasing scale is for a CED organization that has successfully produced its first projects to regularly produce a number of projects within a larger plan for changing the neighborhood. These projects may include a significant number of rehabs, new housing, or a series of rental apartments. The successful organization has a pipeline of projects—that is, a series of projects in various stages of development—from ones that are finished and for sale or rental, to those that are under construction, to those in a predevelopment phase, to those that are merely conceptual but under negotiation. What determines adequate volume depends on two criteria: Is the production enough for the organization to have a sustainable business model? Is the momentum and cumulative volume enough to have the desired effect on neighborhood conditions and marketability? creati ng a la r ge - sc a le d e v e lopm e nt.

The second notion of scale involves creating a single project of scale. Because CED organizations are so dependent on government support to undertake their housing agendas and because most government programs fund only one project at a time, few of these organizations have ever had the opportunity or achieved the capability of creating a whole subdivision, for example. With the advent of the government housing program Hope VI, many cities tore down public housing complexes and created subdivision-sized developments. A few of these projects were carried out by CDCs alone, but more were carried out by CDCs in partnership with private developers, by socially minded private developers, and by for-profit developers operating within the bounds of a socially oriented plan developed with participation of the public. Some of these large-scale, dense mixed-use developments have been built around a community center, and some, such as Purpose-Built Communities of Atlanta, have placed a public school at the center of the development and made improving public education a theme for the whole community. More recently, transit-oriented development has become more prevalent, that is, creating dense residential and mixed-use communities around transit nodes such as subway stops and train stations. bui ldi ng o r ga n i z at i on a l c a pa bi li t y.

Supporting the organizational and financial development of large-scale production organizations can increase the scale of affordable housing. Mercy

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Housing, Inc., for example, operates in forty-one states, serving 139,000 people in 41,000 units of affordable rental housing. It is the national network with which Intercommunity Mercy Housing, discussed in the case study that follows this chapter, partnered in order to expand its capabilities. Bridge, a developer in the San Francisco Bay Area, was created as a large-scale organization to serve all of the communities of the region. It was capitalized by banks and state government, hired the former state housing director as its CEO, and reached annual production of more than 1,000 units. con cl usi o n

Understanding real estate development basics, including lending, financing, planning, home ownership, and rental property management and ownership, is vital to CED practitioners. While the aesthetics of transforming a community are critical, without sound business knowledge, creating effective CED is no more than a wishful dream. Empowering lowand moderate-income populations to thrive in their communities requires vision combined with established business practices as outlined in this chapter. For CED practitioners, the integration of the desire to improve disadvantaged populations’ communities must be coupled with real estate development knowledge in order to achieve a successful result. This chapter has only scratched the surface of the real estate knowledge and skills needed by CED practitioners and even those supervising CED practitioners. Social workers and others who wish to specialize in this field need to enroll in technically oriented real estate development programs to develop their knowledge and skills. In addition to training programs and continuing education opportunities available from local institutions of higher education and trade groups including realtors and developers (e.g., ULI), state associations in CED or nonprofit housing and some of the CED intermediaries regularly offer training (e.g., the Housing and Community Development Network of New Jersey, the California Community Economic Development Association, the NeighborWorks Training Institutes, the National Development Council). Intercommunity Mercy Housing, discussed in the case study that follows this chapter, illustrates a third-wave CED organization that is singularly focused on nonprofit housing. As mentioned above, it is affiliated with Mercy Housing, Inc., a national organization that, directly and through its affiliates, has approached a significant scale of development. These national

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organizations, as well as other nonprofit housing organizations with a strong track record, also provide development expertise available to other CED organizations without those technical capabilities through partnering and joint venture arrangements. Intercommunity Mercy Housing has been quite successful in producing a large number of affordable housing units and utilizing the benefits of its affiliation with Mercy Housing, Inc. intercommuni t y me r c y hou si n g (i m h) Description

Origins In 1991, five Catholic and interfaith women’s religious communities collaborated to found Intercommunity Mercy Housing (IMH) in Seattle, Washington. The original intent of IMH was to provide housing and services to those in the area who lacked the socioeconomic power to access quality, affordable, and safe housing, namely families and seniors who are experiencing homelessness, have developmental disabilities, and/or have low incomes (Mercy Housing, 2010). The founding communities had a combined 150-year history of providing services to people who are poor, and forming IMH enabled the groups to collaborate, share resources, and augment their services. By 1992, IMH chose to expand its services and partnered with a national nonprofit organization, Mercy Housing, Inc., founded in 1981 by the Sisters of Mercy of Omaha, Nebraska (Mercy Housing, 2010). After acquiring and renovating properties to address the need for affordable housing in Omaha, Mercy Housing, Inc., had expanded throughout the late 1980s and 1990s into a national organization sponsored by Catholic Sisters across the country to develop affordable housing for poor families as well as people who are homeless or elderly and people with HIV/AIDS and developmental disabilities. Now headquartered in Denver, Colorado, Mercy Housing, Inc., has satellite offices and strategic initiatives in forty-one states and has developed more than 19,000 homes (Mercy Housing, 2007, December 11). IMH remains based in Seattle and dedicated to serving communities in Washington State while also serving as one of the national organization’s five regional offices across the country. In addition to financing more than 37,000 affordable homes and developing an additional 8,000 homes, IMH now also provides social services such as afterschool and summer programs for children, adult basic education classes, health classes and screenings, and job training (Mercy Housing, 2010).

Structure IMH is governed by a twelve-person board of directors; seven are drawn from Seattlebased community organizations such as banks and hospitals, and five are sisters from

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each of the five founding women’s religious communities (Mercy Housing, n.d.c). The organization has fifteen employees as well as dozens of volunteers (MetLife Foundation & Enterprise Community Partners, Inc., 2007; GuideStar, 2009e).

Funding IMH has an annual operating budget of approximately $2 million and has assets totaling more than $4 million (GuideStar, 2009e). IMH’s five founding women’s religious communities all continue to fund IMH operations and projects, and IMH holds annual fundraisers to raise money from local businesses and individuals to support its work (Mercy Housing, n.d.b; Mercy Housing, 2007, Fall/Winter-a). IMH has also received substantial grants and sponsorship monies from local and national charitable foundations, banks, and local government entities, including the Washington Families Fund, Bank of America, Washington Mutual Bank, Home Street Bank, the Paul G. Allen Family Foundation, the Washington State Housing Trust Fund, Homestead Capital, the Seattle Office of Housing, the Franciscan Health System, Providence Everett Medical Center, and Providence Health & Services to renovate and construct properties throughout Washington (Mercy Housing, 2007, Fall/Winter-b; Mercy Housing, 2007, Fall/ Winter-c). IMH has successfully and repeatedly partnered with the Bill & Melinda Gates Foundation’s Sound Families Initiative, which funds housing and support services for families experiencing homelessness in the Puget Sound region, to secure funding for development projects that fit the missions of both IMH and Sound Families (Sound Families Initiative, 2003). The Sound Families Initiative has provided IMH with multiple grants totaling approximately $2 million (Puget Sound Business Journal, 2003). Strategy and Programs

Target Community IMH has developed properties and tailored services to meet residents’ needs in communities in sixteen counties in Washington State, from Puget Sound in western Washington to Spokane in the eastern-most part of the state (Mercy Housing, 2010). Many IMH-targeted communities have high numbers of recent immigrants, and residents frequently speak English as a second, third, or fourth language (IMH, 2006). In part because it has received ongoing funding from the Sound Families Initiative, which is dedicated to developing housing for homeless families specifically in King, Pierce, and Snohomish counties, many IMH projects have focused on low-income families transitioning out of homelessness in these Puget Sound communities. Housing prices have risen dramatically in the Puget Sound region, and King, Pierce, and Snohomish counties are now among the most expensive housing markets in Washington (Mercy Housing, 2010).

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Strategy IMH decided early to provide on-site services at each of its properties to meet the needs of the individual resident communities as well as to reserve some properties for special populations. Although IMH is part of the national Mercy Housing, Inc., it manages its assets at the regional level and uses asset management software that enables the organization to stay closely linked to its affiliate property manager, Mercy Services Corporation (MetLife Foundation & Enterprise Community Partners, Inc., 2007), IMH has successfully established ongoing partnerships with funders, most importantly the Sound Families Initiative. To ensure the provision of quality services to its client around the United States, IMH conducts research aimed at gathering and analyzing resident and services data through a program called the Mercy Measurement Initiative. A team of highly competent researchers collects data through storytelling that captures the fidelity and credibility of investment projects; analyzes these data; and disseminates findings, implications, and conclusions to the clients, the community, investors, and philanthropists (Mercy Housing, 2010).

Selected Programs and Projects Housing with on-site services. One of IMH’s first projects, the Family Tree Apartments, was undertaken in partnership with the Sound Families Initiative. Completed in 1994, the property houses more than 330 low-income residents in Snohomish County in 151 affordable one-, two-, and three-bedroom apartments (Mercy Housing, 2008, Spring-a). Residents have access to an on-site community center, a child care facility, playgrounds, a basketball court, and a computer lab, in addition to services that include parenting classes, financial literacy classes, and job skills training. In exchange for support and funding from the Sound Families Initiative, IMH reserves fifteen Family Tree apartments for families transitioning from homelessness to rental housing. These families also receive individualized case management and other services in partnership with the local YWCA (Mercy Housing, 2008, Spring-a). Since completing the Family Tree Apartments, IMH has undertaken several housing projects with on-site services for residents and the surrounding community. With more than $1 million from the Sound Families Initiative, IMH purchased the Catalina Apartments in Tacoma, Washington, to stop the conversion of the property—contaminated with toxic mold and asbestos—from Section 8 housing to expensive condominiums. IMH secured additional financing to pay for the temporary relocation of residents, most of whom were poor immigrants from Southeast Asia. After massive renovations and the creation of a new playground, laundry rooms, and gardening areas, nearly all of the residents returned. Another IMH-renovated apartment complex hosts back-to-school nights with translators to

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help register students and tell parents about school requirements; school enrollment went from 50 percent to 100 percent among children living in the complex (IMH, 2006). The development features a community center, child care, and case management services. Several other properties feature on-site programs such volunteering opportunities, financial education, afterschool and summer programs for children, and a summer lunch program. Other IMH rental properties earmark apartments for underserved populations. The Evergreen Vista II project provides fifty apartments for very low- and low-income residents, ten of which are reserved for families experiencing homelessness, ten for families with a family member who has a mental illness, and ten for large families (Mercy Housing, 2007, December 11). Residents are provided with stabilizing case management and supportive services. Lincoln Way II, a self-contained community constructed to look like market-rate housing, features fifty affordable one-, two-, and three-bedroom apartments, fifteen of which are reserved for families experiencing homelessness (Mercy Housing, 2007, Fall/Winter-c). As many Lincoln Way II residents are immigrants from Russia and the Ukraine, IMH hired a bilingual assistant property manager who collaborates with the resident services coordinator to make services accessible and effective for all residents (MetLife Foundation & Enterprise Community Partners, Inc., 2007). Constructed with a grant from the U.S. Department of Housing and Urban Development, the New Tacoma project features seventy-three apartment homes earmarked for elderly residents (Mercy Housing, 2007, Fall/Winter-a). Apartments include grab bars, roll-in showers, wide corridors, a twenty-four-hour security system, and other features that promote independent living. In addition, the project offers field trips, gardening and volunteer opportunities, wellness classes, animal therapy, and tax preparation assistance. Healthy Families Initiative. Funded by the Boston Herald, the United Way, a local hospital, an insurance company, and other organizations, IMH’s Healthy Families Initiative has worked since 2002 to improve the health of Hispanic women, who are often at higher risk for diabetes, obesity, and hypertension (Mercy Housing, n.d.a). The initiative was piloted at IMH’s Sterling Meadows property, which has fifty homes for Hispanic low-income farm worker families. IMH offered a series of health fairs and health education workshops in Spanish focused on health topics such as prenatal care, exercise, and nutrition. Later IMH expanded the program and now offers workshops in English and Spanish at its Appian Way property, where half of the residents are Hispanic. The workshops are open to people in the surrounding community as well as to adolescents and adults who live at Appian Way. IMH now also partners with local community organizations to hold annual health fairs on their housing properties and provide information on substance abuse prevention, women’s health, food stamps, and car seats as well as health and wellness checks and breast and cervical cancer exams.

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Major Successes Since its founding, IMH has developed and currently owns forty-three properties with a total of 1,727 rental units throughout Washington and now provides housing to just under 3,700 people (Mercy Housing, n.d.b; MetLife Foundation & Enterprise Community Partners, Inc., 2007). According to organization reports, since 2006, 70 percent of residents of IMH properties have maintained stable housing for at least twelve months after long histories of housing instability. Reports also indicate that more than 70 percent of residents have improved their ability to access community resources, including assistance in meeting basic needs, financial literacy programs, job training, and youth programs (GuideStar, 2009e). In 2006, IMH representatives successfully partnered with other community organizations to lobby the Washington State legislature to support bills and increased funding for affordable housing initiatives, leading to a $70 million increase in the Washington State Housing Trust Fund and other housing development measures, $6 million for the Washington Families Fund, $1.5 million for home ownership counseling, $2.5 million for a program that provides homeless families with children with rental assistance and case management, and the passing of the Fair Zoning Bill, which prohibits discrimination against affordable housing developments (Mercy Housing, 2008, Spring-b). In 2007, IMH won two prestigious awards: the fourth annual Bank of America Neighborhood Excellence Initiative (NEI) awards in Seattle (Bank of America, 2007) and first place in the MetLife Foundation Awards for Excellence in Affordable Housing (MetLife Foundation & Enterprise Community Partners, Inc., 2007). The NEI awards recognize local nonprofit organizations for making a difference in the Puget Sound communities. IMH received the MetLife Foundation Award in the Property and Asset Management category for their development of Lincoln Way II. Lincoln Way II is considered a “model of excellence” in developing, maintaining, and operating affordable housing (MetLife Foundation & Enterprise Community Partners, Inc., 2007). Since 2011, IMH has been renamed Mercy Housing Northwest, reflective of its role as a larger regional office of Mercy Housing, Inc., and it coordinates closely with another Mercy Housing office in Idaho. New initiatives since this transition include a focus on green, environmentally friendly housing that reduces energy costs and improves indoor air quality for residents and an expanded focus on rural housing development.

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Financial Capital BUSINESS DEVELOPMENT AND FINANCIAL INFRASTRUCTURE

dominant activity of CED organizations, more than 40 percent of CED organizations also engage in some form of building financial capital. Financial capital ventures include assisting small businesses, revitalizing neighborhood commercial areas, and bringing in or creating banking and credit facilities. Developing housing alone will never be enough to achieve a sustainable residential community. There need to be amenities no matter what the income of the community: stores, professional and personal services, entertainment, and other commercial venues. There is also in many communities the opportunity for commercial and industrial space for businesses that add value to the community by exporting or selling products from the area to people outside the community. In addition to the goods and services these enterprises supply, the creation or expansion of businesses creates jobs for residents and wealth for the business owners. In other words, these initiatives build financial capital. The financial institutions that help preserve and grow that financial capital and enable it to move smoothly through the economy make up the financial infrastructure a community needs for the effective use and investment of capital. Unfortunately, many neighborhoods targeted by CED organizations have been abandoned by conventional investment and top-flight businesses. This chapter examines how CED organizations can reverse that cycle of disinvestment by building businesses, financial institutions, and community wealth. This chapter treats both major aspects of building financial capital: economic development and financial infrastructure. Economic development,

though housing has been the

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usually the province of the public sector, provides the mechanisms for choosing the targets for which the tools of business development and commercial and industrial real estate can be used. As chapter 4 explained, the first thinking about economic development came from rural areas where infrastructure needed for manufacturing had to be installed. After that, economic development generally involved big projects designed to attract job-intensive businesses to locate in the depressed area. Tax breaks and direct investment in plants and equipment were the major tools for building financial capital. Later, economic developers learned that most new job development came through the growth of businesses already in place, not only large businesses but also small ones. Economic development agencies turned to the “homegrown economy” to figure out what existing and new businesses needed to grow. Sometimes, the old tools of tax breaks and subsidies for facilities and equipment proved important, but often new tools were needed to help organize, promote, and create synergy among existing businesses. Economic development expanded its focus from the individual firms to sectors of the economy dominant in the area and later to the support of clusters of companies that fed off one another. Although analyzing the regional and local economic climate typically helps set the framework for the use of business development tools, these tools are usually unfamiliar to social workers engaging in CED practice. This chapter, therefore, starts with an explanation of the tools of business development and then provides the context for local and regional economic climate analysis. Finally, this chapter turns to the financial infrastructure of the community and how CED practitioners have encouraged existing banks and financial institutions to expand services and investments as well as how the CED field has spawned a legion of new communitybased financial institutions. t h e p u r po s e s o f f i nanc i al c ap i ta l de v e lo pm e n t

The long-range purpose of CED work is the biggest determinant in the selection and deployment of business development tools. There are two different but complimentary purposes that dominate: (1) plugging a gap in the community and (2) creating wealth. The first is obvious to most everyone motivated by reversing the deterioration of the neighborhood. The second is more difficult to envision and often presents a conundrum

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for social workers more oriented to social benefits than to wealth building. The rationale for addressing wealth creation requires some explanation. The early emphasis of the War on Poverty in the 1960s focused on income differences. With the exception of a short-lived and ill-fated Federal Housing Authority Section 235 homeownership program, President Lyndon Johnson’s Great Society programs were intended to provide access to higher-paying jobs, develop skills and provide education that would lead to higher-paying jobs, and create businesses that would provide jobs and income. By the 1990s, the income gap between whites and African Americans narrowed, but it was apparent that the gap between the wealth of whites and blacks was not shrinking but growing. Unfortunately, wealth, not income, is far more influential with regard to a family’s ability to weather temporary economic misfortune, provide for retirement, and transfer economic gains to the next generation. Oliver and Shapiro (1995) and others have documented that more than any other factor, racial discrimination contributes to disparities in wealth. Higher rates of homeownership among whites account for the vast majority of the difference, with pension portfolios running a distant second. When African Americans have owned homes, those homes did not appreciate at the same rates as homes in predominantly white communities. Meanwhile, community groups have also documented discrimination in homeownership based on location. When race and location discrimination are combined, the result is devastating. African Americans in general—and African American communities in particular—are outside of the economic mainstream and on the backside of the investment-disinvestment curve. Wealth is also often required to establish the mechanisms that retain income benefits, whether for families or communities. Economic analysis has demonstrated that it costs poor families more to cover basic necessities (Annie E. Casey Foundation, 2004). Families need to retain more wealth, not just earn more money, if they are to escape poverty. So too, the community must build its wealth to become part of the mainstream economy. The community income flows illustrated in chapter 1 describe how the economic benefits of earnings and expenditures can leave the community, while spending retained internally has a multiplying beneficial effect on the community. To provide wages and services within the community, there have to be businesses in the community that employ its population. To retain expenditures within the community, there have to be providers

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of goods and services within the community that are owned by people in the community who will spend its profits in the community. Ownership of such businesses requires wealth at the start, as startup capital usually comes from family and friends, as well as the continued building of wealth as the businesses succeed and expand. fi v e a p p r oac h e s to b u i ld i ng we a lt h

While approaches to building wealth are easy to describe, acting to change the dynamics of a community with net outflow of cash and little internal wealth is difficult. There are five approaches to addressing the goal of building wealth that recycles into the community: (1) using community development corporations (CDCs), (2) supporting minority business development, (3) growing and attracting businesses to locate in the community, (4) building the financial infrastructure of the community, and (5) directly building individual and family wealth. The five approaches are described briefly below and then more elaborately. Using CDCs

The CDC approach to building wealth is an institutional rather than an individual pathway. On behalf of the community, the CDC owns economic ventures that have long-term economic value in the community (e.g., a manufacturing plant, a supermarket). Profits are plowed back into businesses and other ventures within the community. Supporting Minority Business Development

The minority business development approach is an individual pathway, as opposed to the collective wealth approach taken by CDCs. Discrimination against minority entrepreneurs, although substantially reduced since the days of segregation, is still significant and well documented (Wallace, 1993). A specialized focus on the needs of minority and women businesses has yielded impressive results in building wealth. The U.S. Department of Commerce mounts research on a number of programs through its Minority Business Development Agency, as do most state and local governments and a variety of nonprofits and university-based centers. The federal Minority

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Business Development Agency, based on the latest data available from the U.S. Census (2010), reported that from 2002 to 2007, minority-owned firms (5.8 million firms in 2007 with gross receipts of $1 trillion) grew faster than non-minority-owned firms in gross receipts, employment, and number of firms, showing themselves to be “an engine of job creation with paid employment growing by 24% from 4.7 million to 5.8 million compared to a decrease in employment of 1.1% for nonminority firms” (U.S. Department of Commerce, Minority Business Development Agency, 2011, p. 1). Today, the development of minority and immigrant businesses is considered a major force in those cities that have the strongest local economies (Butler & Kozmetsky, 2004). In addition, minority business development also creates a multiplier effect: Supporting African Americans to build successful businesses creates individual wealth that can be plowed back into the business and into the minority community, and minority firms are more likely than others to hire minority employees from the community. Certainly those effects were obvious in the early days of the civil rights movement, when minority business owners, however successful, were segregated into minority areas with less-well-off customers. Typically, programs to promote minority business development include encouraging entrepreneurship, researching and publicizing the minority business sector, coaching and providing technical assistance to business owners, arranging or providing investment and financing for business startups, and expanding and advocating for special consideration of minority firms in public and private procurement, which is sometimes called making a set-aside (Blakely & Bradshaw, 2002). Of course, many of the same resources for technical assistance and financing are equally available to the larger small business community. Both the CDC and minority business development approaches to building wealth have deficits. It is difficult for CDCs to succeed in business ventures. It is somewhat easier to help individual entrepreneurs succeed, but they do not always continue to live in the community or keep the proceeds in the community upon success. As society has opened up since the civil rights movement, successful middle-class minority business owners, and even their businesses, often could and did move to more affluent communities, like their white counterparts. Attention has then turned to the third wealth-building approach.

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Helping Local Businesses Grow

Reinvestment in the community is aided by expanding businesses in the community and by bringing in new businesses and helping them grow, no matter who owns them. This business location and growth approach uses and modifies the same tools used for minority business development but emphasizes targeted places rather than types of owners. Analyzing the local concentration of businesses (e.g., a concentration of small machine shops) enables a sectoral intervention that helps them all. Analyzing the clusters of companies that interact in the regional economy in order to grow it enables a better focus on high-payoff investments in business development, such as those in the computer and biomedical technology and entertainment industries. When education and health institutions are the big growth industries in an area, a partnership with a university or a hospital may be part of the picture (Perry & Wiewel, 2005). Developing Financial Infrastructure

There is no sustainable wealth and use of wealth without a developed financial infrastructure in a community, which includes banks and other financial institutions such as credit unions. As is well documented by the Federal Reserve and researchers, distressed neighborhoods and minority communities even decades after the passage of the Community Reinvestment Act (CRA) tend to have fewer financial institution outlets and less access to financial products (Birkenmaier & Tyuse, 2005). The CRA inspired an increase in investment in distressed communities but not always an expansion of financial services. Payday lenders and other predatory financial vendors still undermine the economic health of low-income communities and families (Graves, 2003). Approaches to remedying these deficits in a community’s financial infrastructure have taken the form of advocacy with mainstream financial institutions to increase their services and the formation of alternative institutions, most recently through the Community Development Financial Institutions (CDFI) Program. Building the Wealth of Individuals and Families

This approach is completely different from previous approaches and is neither institution nor business oriented. Like the approach of third-wave

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CDCs, this approach places less emphasis on place and neighborhood revitalization; it is instead focused on helping individuals get out of poverty (e.g., by growing income-generating activities and savings accounts) and on putting their families on the path to prosperity. This approach may be more familiar to social workers. In fact, Individual Development Accounts (IDAs), which encourage saving activity by matching individual contributions, were developed through the research, program development, and advocacy of Dr. Michael Sherraden at Washington University’s Brown School of Social Work (Sherraden, 1991). cdc ow n e rs h i p o f b u s i ne s s e s

The developers of first-wave CDCs imagined that the CDCs would act like venture capitalists to stem out-migration and the collapse of laborintensive manufacturing businesses in the community (Sviridoff, 2004). They planned that CDCs would acquire established businesses and infuse capital and expertise to renew, modernize, and expand the businesses. They also thought CDCs could replace the ailing retail and service sector by bringing in and owning first-class retail establishments. There were some notable early successes with this approach. A CDC in New York City’s Harlem purchased and expanded a declining wire production plant. A CDC in Virginia started a cabinet manufacturing plant to serve its own housing production and private homebuilders throughout a multistate region. In Brooklyn, New York, a CDC renovated a vacant bottling plant into a major commercial center with a first-class chain supermarket, a new (and the only) bank branch in the community, and locally owned stores (Ellis, Brown, & Strandt, 1981). However, many CDC business ownership ventures also failed. One reason that CDCs failed was that they were ill suited to be entrepreneurs. Entrepreneurs with expertise for businesses often want to be owners themselves rather than just employees of a CDC. Managing day-to-day business operations was also very different from the primary activities of CDCs. Business operations require constant attention to minor details, particularly for businesses with a small profit margin, such as supermarkets and cabinet factories. Another reason CDCs failed in venture ownership is that they often acquired businesses solely because they were located in the community. They employed community residents without recognizing that these businesses were available because they were already weak or were in dying

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industries; for example, the Harlem wire plant eventually closed. Most CDC leaders had little business background and were more oriented to community benefit than to the “bottom line” of running a business venture (Lemann, 1994). CDCs are traditionally more gifted at community participation, identifying and opening up new projects, imagining new alternatives, and recruiting partners based on vision and social commitment. CDCs and those who supported them took a hard look at their experience with failing ventures and shifted their approach. This analysis led to a change in the CDC role from owning businesses to helping existing community businesses grow, helping entrepreneurs start new businesses, recruiting and supporting outside businesses to locate or open a branch in the community, and finding new buyers for old businesses that were viable. The original CDCs that persisted in the business ownership approach and succeeded, such as the East Los Angeles Community Union (TELACU), did so by acquiring new expertise within their staff and board; conducting a more hard-nosed analysis; and acquiring strong ventures, even if not located in the community at the time of acquisition (Pratt Center for Community Development, n.d.c). Other CDCs began providing technical assistance, financing, and business development methods widely used by minority business and economic development organizations. In addition, many CDCs found that their expertise in real estate development, a capability more suited to the structure and orientation of CDCs, was another avenue for assisting local businesses without attempting to run businesses themselves. The CDC was a better developer of a supermarket building to be leased to a successful entrepreneur or chain than it was an operator of a supermarket. Independent of the work of CDCs, there has been a rising interest in practice in social enterprises within the nonprofit sector, that is, nonprofit organizations creating income-generating lines of business and even spinoff corporations. Some nonprofits including CDCs have shown that they can successfully operate lines of work that at least partially support themselves through fee income or other sales. Delancey Street Foundation, a rehab and training facility for people in recovery who are experiencing homelessness and people who were formerly incarcerated, now operates twenty for-profit businesses, from a restaurant (its original business) to a moving company. The term “social entrepreneurship” has now been broadened to include for-profit businesses, sometimes called social ventures, that include

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a social benefit within their bottom line. The practice of creating incomegenerating activities to support social endeavors, whether as a division of an existing nonprofit or as a separate socially oriented business, is rapidly expanding outside of the community economic development field. Several states have created a new form of corporation that allows these entities to be free of the requirement that every corporation maximize its profit for shareholders. These corporations are focused on social as well as economic value and are willing to take a high level of risk to capture opportunities and promote employee innovation (Peredo & McLean, 2006). Even social enterprises, however, need the same business development assistance as their truly for-profit peers. n i n e too ls o f b u s i ne s s d e ve lo p me n t

Today, the following business development tools are widely used as a part of community development strategies by CDCs, those engaged in minority business development, and those generally helping small businesses and business expansions as part of an economic development strategy: 1. 2. 3. 4. 5. 6. 7.

“Homegrown” economy and business attraction Technical assistance (analysis, coaching, access to financing) Financing (debt, equity, microenterprise) Franchises The real estate side of business Incubators Organizing businesses for better collective practice (neighborhood commercial revitalization, sectoral intervention, competitive advantage) 8. Special advantages (set-asides, special purchasing, competitive priority) 9. Community equity (benefits in exchange for assistance)

These nine tools are explained more fully below. “Homegrown” Economy and Business Attraction

The most obvious way to build up a local economy is to expand the businesses already located in the community that employ local residents and provide goods and services purchased by the residents. Helping the

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businesses improve attracts customers from outside the community, thereby netting an economic inflow to the community economy. Typically, such business development includes technical assistance and arranging or providing some financial support. With experience, economic developers realized that sometimes similar businesses were having common problems and that the businesses could be better served when the problems were addressed for the whole group. Such sectoral interventions are described in more detail later in this chapter, along with cluster analysis (Porter, 2003). Another theory of business expansion is to attract businesses from outside the community into the community. Business attraction methods have been a mainstay of state and local economic development departments for some time. However, as early as the mid-1980s, researchers such as David Birch (1987) demonstrated that the relocation of large industries was not the job generator that economic development departments suspected. Rather, half of all the job creation came from expansion of large businesses already in place, and half of the remainder came from the creation or expansion of small businesses with fewer than fifty employees. Only 25 percent of new jobs came from business relocation. However, business attraction can yield other benefits in neighborhood revitalization. For example, a neighborhood commercial strip that once held local family-owned clothing stores might be a prime location for attracting clothing and shoe retail chains, whether or not they are large job generators. A community that wants and can support a 60,000-square-foot new supermarket is unlikely to create one itself. It needs to attract a chain. Technical Assistance

The least expensive method of business development is providing business advice and services to existing businesses. Helping business owners understand growth potential, diagnosing and helping them overcome business weaknesses or improve practice, improving management and financial systems, and helping them recruit and train their workforce can have big payoffs for the community. On the other hand, this business development method requires a high level of expertise in general business management and the particulars of specific industries. Few small neighborhood-based organizations have this capability, but they might join forces with citywide

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or regional business assistance organizations. Getting business owners interested and motivated to meet with CDCs is half the battle. The federal Small Business Administration (SBA), city and state economic development organizations, SCORE (an organization of retired business advisors sponsored by the SBA), and business departments of local universities can be used to support local CDCs that have successfully engaged local business owners. Just as housing development is driven by the development plan and the numbers in the development pro forma, as discussed in chapter 10, the creation or expansion of a business is driven by the business plan and the multiyear cash flow projection. Business development experts have long held that the process of creating a business plan is the best method to engage entrepreneur, manager, and owners. The plan must detail every aspect of the business; clarify the entrepreneur’s assumptions about sales, the cost of production, management, and facilities; and justify the details of financing. Like the real estate feasibility testing process, every element of the business plan is then subjected to scrutiny, and the entrepreneur must use data to back up the assumptions and projections (DeThomas & Derammelaere, 2008). There was a time that technical expertise was required even to find the “magic outline” for a business plan. Today, a quick search on the Internet turns up hundreds of examples. Software is also available to help with business plan preparation. Accountants and other experts may even be hired to prepare the plan. Nonetheless, there is no substitute for business owners actually creating the plan, as it enables them to understand the interactions of all elements within their companies and to improve their own business judgment on key variables. Planning and deciding on scenarios may be more important than writing the plan itself because it prepares managers to guide a living business organism in a dynamic marketplace. Social workers and other new CED practitioners who are not familiar with the language of and concepts contained in a business plan would do well to explore the many tools and examples in business planning books and on the Internet and even to take a simple computer-based accounting basics course. An outline for a typical business plan is shown in the list below. See PlanWare (www.planware.org/gcontents.htm), the Global Development Research Center (www.gdrc.org/icm/micro/business-plan.html), or the SBA website (www.sba.gov) for step-by-step guides to business plan development. Searching for a sample business plan on the SBA website will also yield examples of complete business plans.

outli ne of a ty pi c a l b u si n e ss pla n I.

Background and Purpose

II. Market Analysis A. Overall Industry or Market B. Specific Market Segment C. Competition D. Sales Forecasts III. Product or Service A. Product or Service Concept B. Production Requirements and Process C. Proprietary Features and Protections D. Facility and Equipment Requirement IV. Marketing Information and Plan V. Financial Data A. Historical Financial Statements B. Current Financial Position 1. Current Profit and Loss Statement 2. Accounts Payable 3. Accounts Receivable 4. Balance Sheet C. Financial Projections 1. Projected Profit and Loss Statement 2. Cash Flow Projections 3. Asset Acquisition Schedule 4. Breakeven Statement D. Financial Ratios VI. Organization Structure and Management A. Key Personnel B. Other Personnel C. Directors and Advisors D. Professional Advisors E. Key Future Personnel F. Forecasted Labor Force

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VII. Ownership A. Business Structure B. Current Capitalization C. Forecasted Capitalization D. Investors’ Return and Exit Strategy E. Royalty or Licensing Arrangements VIII. Risk Factors

Technical assistance may also be very specific, such as advising on marketing or product development. Sometimes, providing technical assistance goes beyond giving advice and involves rendering a service related to a key business function, as small businesses typically cannot internally incorporate all functions within a venture. For example, they often outsource their accounting or supervision of their bookkeepers. Advertising, product engineering or service design, quality control, clerical services, and government contracting services are sometimes provided as technical assistance for business development. Finally, one important service of public or nonprofit technical assistance is the provision of advice on, and access to, sources of financing. An organization offering technical assistance cultivates relationships and credibility with a variety of financing sources, which then come to trust the endorsement of the organization in referring clients. The potential borrower, in turn, can learn a lot about the financing source from the TA provider. Franchises

Franchises are one way of starting a business with an already successful model. The previous locations give the franchising company a standard set of business practices, from location selection, to production methods for goods sold, to accounting methods. The franchise is a “business in a box”; it just needs to be opened in the right place and the manual followed. In addition, the franchising company often has specialized financing to provide the franchisee that can pay the franchising fee. CDCs have bought franchises,

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financed others to buy franchises, and encouraged new franchises to locate in their community. Franchising got special attention as a mode of minority business development, and some national companies such as McDonald’s have launched specific minority-oriented franchising campaigns. The advent of social entrepreneurs such as Ben and Jerry’s, which franchise the social service organizations that want to employ their clientele as trainees in the establishments, has been particularly appealing to third-wave CDCs and youth and disability serving agencies. Financing: Debt, Equity, and Microenterprise

Like real estate financing, business financing is composed of debt and equity. However, there is considerably more equity required in business financing, as there are fewer assets available to be recovered in the event of foreclosure. The varieties of business financing are more numerous and complicated than those of real estate financing, and many of them are industry specific. Car dealers’ financial relationships with car manufacturers are different from grocers’ financial relationships with food wholesalers. Franchisers and their franchises have their own unique financing methods. Of course, to the extent that there is real estate involved, part of the financing will involve a mortgage, and equipment financing is similarly secured. The hardest part of financing, however, is finding the “working capital” in a business that needs to support production costs and all other costs until the end customer pays for the goods or services he or she is purchasing. The numbers for financing come from the business plan. In addition to the standard accounting terminology in the typical plan outline shown earlier in the chapter, another term deserves explanation: breakeven analysis. No business starts off or expands in a manner that is immediately self-supporting. They must set production at a level in advance of sales and grow the sales to reach a higher level of production. They need capital early to begin production. At some point, they can utilize their production capacity to meet higher sales, but they then need another round of capitalization to expand capacity for these additional sales. The point in the future at which the business is taking in enough cash to pay for all production, operating, sales, and management costs and can pay principal and interest on its loans is called the breakeven point. A multiyear

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cash flow projection of all income and expenses is necessary to calculate the breakeven point. To get to that point, businesses must have cash from investors (equity) or loans (debt) to cover their costs before they hit the breakeven point. The amount needed and timing of payments is referred to as the capitalization plan. Commitments are made at the outset, and infusions of money are typically tied to meeting milestones and carefully monitoring the breakeven cash flow projection. Historically, financial support in an economic or community development context has come in the form of government business loans or bank loans guaranteed by the government. In addition, the financial support provided is usually on concessionary terms for those with a lower threshold of creditworthiness. The SBA 504 program operates through local Certified Development Companies and provides high loan-to-value financing to business owners to purchase, build, or renovate commercial real estate or equipment. They offer long-term, fixed-rate, subordinated loans or mortgages. Pressure on conventional financial institutions to engage in community reinvestment has opened an additional source of small business lending for business expansion in revitalizing communities through banks (Batko & Shister, 1980). The SBA 7(a) program enables participating banks to extend loans guaranteed by the SBA to qualifying businesses. Occasionally, CDCs have created business development loan pools. Existing successful businesses looking for expansion are able to make good use of such lending (Urban Habitat & PolicyLink, 2000). Unfortunately, many small new businesses are already at their maximum debt limits. What they really need is increased funding in the form of equity (Barajas, 2003). Once again, a community without wealth, by definition, does not have the resources it needs to invest in order to gain more wealth. Most owners of startup businesses, for example, borrow from family and friends to finance early costs; owners in poor communities typically cannot draw upon these resources. The SBA does have a program for licensed Small Business Investment Companies (SBICs) that can take an equity position in the firms in which they invest. The SBA (n.d.) reports that most SBICs are owned by relatively small groups of local investors. They are typically venture capitalists with at least $5 million and management expertise. They are licensed through the SBA to receive up to three times the amount of capital that they privately put in by selling SBA-guaranteed debentures

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(unsecured loans back up by general credit rather than specific assets) to other investors. A few CDCs have set up and raised funding for an SBIC or a Certified Development Company. There have been several versions of minorityoriented SBICs, including separately licensed Minority Enterprise Small Business Investment Companies (MESBICs) that receive greater matching funds than SBICs. However, the lack of easy equity remains a real barrier to business development in low- and moderate-income communities. One method of addressing the inability of new businesses to attract sufficient equity and credit has been microenterprise development. This technique, pioneered in developing countries, assists individual entrepreneurs with a business idea to start very small (micro) businesses and grow the businesses over time. The good news is that, typically, very small ventures need only small loans. The bad news is that most banks prefer not to make tiny business loans. Therefore, advocates of microenterprise have created new pools of loan funds. In the purest form of microenterprise, borrowers are formed into peer support groups. These groups have a role in deciding to whom the loan pool makes a loan, lending to one another in turn. The group provides encouragement, advice, and a certain amount of peer pressure for loan repayment (Sherraden, Sanders, & Sherraden, 2004). Initially, the sources of microenterprise funds were foundations and religious institutions. In the late 1990s, the United States began a federal microenterprise program, and funds multiplied rapidly (Rodriguez-Garcia, Macinko, & Waters, 2001). There have also been special provisions to allow individuals to use welfare payments or unemployment benefits in a lump sum to start micro businesses. Today, the funds have their own trade organization and methods of building the capacity of new funds. The track record of successful microenterprises has been impressive, and some of the early evaluations suggest an unintended but positive byproduct: Even when the individual entrepreneur does not succeed in growing the business to a sufficient scale to support the entrepreneur and other employees, the entrepreneur becomes significantly more employable. “Graduates” of microenterprises typically win better jobs (e.g., as store managers) in other companies at higher incomes than comparison groups (Armendariz & Morduch, 2007). Some government programs seek to improve businesses’ financial conditions by lowering their tax burden, either by increasing deductions or providing tax credits for various investments. Obviously, the business has to

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be successful enough to be paying taxes in order to utilize a tax credit, and many young or expanding businesses are not. The same is true of government approaches that provide income tax credits for expanding businesses in a targeted zone (e.g., “Empowerment Zones”). The Real Estate Side of Business

Beyond financing for the real estate component of businesses, CDCs and their counterparts have discovered a formidable role in business development through real estate ventures. If a business already has a suitable facility, helping it with financing may well be the answer. However, many distressed communities are replete with deteriorated industrial and retail facilities that are not suitable for modern use. Nor are they attractive to conventional real estate investors for rehabilitation. CDCs have acquired and recycled industrial sites through expertise and access to government industrial development bond funds and grants that provide the ability to take more risks. They mimic the techniques of and utilize the same funding sources as small town and state economic development agencies that build industrial parks on rural sites. Sometimes these facilities are built “on spec,” and the CDC has to go looking for tenants after the build. With its relationships to government economic development departments, workforce training agencies, and community reinvestment–oriented banks, the CDC may be able to offer a prospective tenant connections as well as space. CDCs have developed specialized industrial space based on careful analysis of the growth areas in the regional economy and businesses most likely to employ community residents. Some of the industrial developments of CDCs with assets in excess of $400 million, such as TELACU in Los Angeles, are substantial. CDCs have also become the developer of last resort for commercial districts in their communities. Where once there was a thriving Main Street that provided goods, services, and entertainment to a nearby walking population, there is often now block after block of partially occupied retail space. Retailers are competing for mobile populations—and losing—with malls that have a common landlord who can dictate the tenant mix, marketing, and business practices. Some CDCs and their counterparts have acquired retail property to change the retail mix (Temali & Amherst H. Wilder Foundation, 2002).

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Incubators

Helping small businesses grow often requires more than technical assistance and financing. Startups need cheap space. They cannot afford much overhead. They do not have time to find suppliers or outlets that will enable them to realize efficiencies or grow. Business incubators are a technique of providing cheap space for several businesses at once in one place, along with a bundle of services and supports (Blakely & Bradshaw, 2002). The sponsor of the incubator creates a facility that can house many businesses and offers space very inexpensively. The sponsor provides clerical services, business services, and office equipment on a collective basis that the businesses might not be able to afford individually, such as computers, copiers, a receptionist, and accounting services. The sponsor may also provide technical assistance on-site as well as arranging suppliers and opening new markets. Incubators have proven to be more successful when combined with a sectoral approach, clustering similar or complementary businesses from the same industry sector to create synergy. For example, a group of metalworking businesses might collectively utilize sophisticated cutting, welding, and lifting equipment that none could afford alone; they might also bid together on a construction contract that exceeds the scale or capability of any one of them. One incubator, for example, hired a retired U.S. Army general to teach its tenants how to bid on military procurement and to represent them in bidding. Organizing Businesses for Better Collective Practice s ectoral i n t e rv e n t i on .

Recognizing that many businesses in communities with CDCs were part of dying industries or did not have the capital to modernize to industry standards led to a sectoral approach in economic development (Porter, 1998). Economic developers use standard industrial code (SIC) information to find and study what businesses categories are present in the community. They look for industry-wide factors that are retarding growth and opportunities to increase it. The community would then see whether an intervention was possible in the industry group as a whole to help it grow. After identifying why a significant group of employers

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in the community was failing to expand, economic developers could extend expertise and investment to highly targeted solutions such as new technologies. One community in Chicago, for example, discovered that it had a significant number of small electroplating businesses that were about to close because of impending government requirements for controlled disposal of the liquids used in the business processes. The technology existed to handle the liquid waste and had been proven in large businesses, but no small business could afford it. The economic development organization brought the local businesses together and enabled them collectively to purchase the equipment necessary to collect and dispose of all of their fluids, and the businesses soon flourished and expanded. Sometimes the barriers are less technical. One community had a high concentration of machine screw manufacturers that had all been founded around the same period of time by Jewish immigrants from Eastern Europe who were now in their eighties. They had successfully raised their children to become professionals, often away from the city. Few family members were interested in taking over the businesses as their owners sought to retire. They closed their businesses, and their customers bought products from foreign manufacturers, resulting in a great job loss to the community. Few of the owners saw anyone in their largely African American workforce as likely successors. Even fewer of the African American workers could hope to finance the purchase of the businesses. A CDC stepped in to cultivate the interest of the present owners in facilitating succession, help identify managerial talent and potential owners among the workforce, and provide long-term business technical assistance and financing to the new owners. competi tiv e a dva n tage .

A later modification of the use of sectoral analysis was led by one of the world experts in business, Harvard University’s Michael Porter (1995), who worked to discover what competitive advantage could be offered by the geography and business makeup of inner-city communities. Later, Porter (2003) and others showed that it was the regional economy that was the scale of organization best suited for competing in the world economy and that it was clusters of interacting businesses, not just all similar SIC

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businesses, that made the difference in terms of competitive advantage (Porter, 1998). As mentioned earlier in this text, CED practitioners should utilize the regional analysis of regional and state economic development agencies to discover the true growth areas for business development and to project the niche of the target community within the region. A sophisticated understanding of competitive advantage enabled communities to be more decisive in their investments in business expansion. For example, one Boston community was particularly attractive as a location for creating large, expensive display materials for conventions and putting them into place at the event; it was closer to the convention center than its suburban competitors who had to move fragile displays long distances. Some businesses in the community were already successful in that niche. The community was able to deploy resources to expand those businesses and start others. The unskilled but flexible workforce of the community was another asset because its members could easily be trained in the kind of carpentry, construction, and painting skills needed to create most displays, and they commanded a lower hourly rate than the suburban workers. In 1994, Porter founded an organization, the Initiative for a Competitive Inner City (ICIC), which has had some success in replicating this approach in cities across the country. nei ghborhood c om m e r c i a l r e v i ta li z at i o n.

Neighborhood commercial revitalization represents a very important approach to organizing businesses and real estate development for better practice. As previously indicated, many neighborhood commercial districts can no longer support all of the retail real estate on its streets. Moreover, merchants are competing individually with the collective power of stores organized in malls and disciplined by a common owner. Too often, the first approach of cities to revitalizing these commercial districts is beautification: They take down the neon signs, replace the sidewalk cement with brick, and install nineteenth-century gaslights. Ask any merchant what they need, and they will tell you more parking, as they and their employees are parked at the meters in front of the store. Ask any elderly community resident what they want, and they will describe a thriving retail strip of 1950, anchored by junior department stores that no longer exist. How does a CDC decide the best course?

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The best practices in neighborhood commercial revitalization take a more comprehensive approach (Temali & Amherst H. Wilder Foundation, 2002): r
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This comprehensive approach to commercial revitalization was pioneered in cities with the help of the U.S. Economic Development Administration (EDA) in the 1970s. The National Trust for Historic Preservation later used it in rural areas for historic preservation of the central commercial areas of small towns under a program called Main Street. The trust used it again in urban areas in the 1990s. The Main Street program utilizes a fourpoint approach to commercial revitalization: (1) organization for consensus and cooperation, (2) collective promotion, (3) design for the physical shape and a safe and inviting environment, and (4) economic restructuring to achieve the right business mix and improved business buildings and finances (National Trust for Historic Preservation, n.d.). The trust provides information and technical assistance through their website, including conferences and on-site coaching. s peci al adva n tage s.

In an effort to encourage minority business development, federal, state, and local governments provide special advantages to woman- and minority-owned businesses. These programs require a percentage of purchases and contracting to go to these businesses. The programs award extra points in competitive bidding for woman- and minority-owned businesses

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or those who employ them as subcontractors. These techniques have been very successful and can be applied to other categories of businesses, such as those located in a particular distressed area. Federal and state Empowerment Zones have provided some priority to businesses that are located in the zone. Some communities have achieved expanded business opportunities by using promotions. The Whittier neighborhood in Eugene, Oregon, catalogued the businesses in its community and started a “Buy Whittier” campaign. The campaign was so successful that the city hired Whittier’s CDC to start a “Buy Eugene” campaign. That was so successful that the campaign was expanded to a “Buy Oregon” campaign. Private businesses and institutions including schools and universities can help business development in a local community by deliberately buying goods and services from local providers. communi t y e q u i t y.

When businesses get special concessions or financial support from government agencies, community groups have been pressuring the agencies to secure “community benefit agreements” that define the expected employment of community residents, contracting requirements, and other business practices that foster community development (PolicyLink, 2005). These agreements typically provide for certain facilities and job openings to first be awarded to those from the community. However, helping develop or expand community-owned businesses as contractors to provide goods and services during construction and operation are also common and have the potential to have more widespread effects. For example, the developer of one “festival marketplace” went so far as to arrange for successful small business owners (not typically minority owned) to become mentors and junior partners with first-time minority business owners in the facility. The financing arrangement provided that the minority business owner could buy out the junior partner if the business was successful. fi n a n ci a l i ns ti tu ti o ns and le ndin g

Imagine an economy without banking. There would be no currency, or if there were, there would be no safe place to put it. Each person would only have the economic power of his or her own hoard and would not be able to

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propel him- or herself to a level of economic activity beyond that which he or she could currently pay for. Most people would barter, and every financial transaction would become a haggling process because there would be no standard for assessing anyone’s financial worth. All knowledge of financial matters would be secret. In fact, many distressed American neighborhoods operate in almost such a way. Communities out of the mainstream are often there as a result of disinvestment, the departure of conventional financial institutions, and the lack of access to major providers and financing in the region. Communities have responded by bringing pressure on regulated institutions to return and reinvest (Naparstek & Cincotta, 1976) and by creating nonconventional institutions that are more responsive to the community (Wolff & Ratcliffe, 2008). Responding to CRA requirements, banks in some cases have stepped up aggressively to open branches and ATMs and to make overtures to community businesses. Most commonly, the successful banks have established specialized products and staff to undertake community development lending. Some have kept those investment portfolios as part of their larger commercial portfolios; others have separated out the community development unit. A few banks have formed their own subsidiary CDCs to become directly involved in developing commercial real estate and investing in business development. Through their CDCs, they can take equity positions or be the developers themselves—roles that would otherwise be prohibited by their regulatory framework. Some insurance companies and other institutional investors have targeted funds for community development projects. Where banks have been unresponsive, communities have started their own financial institutions. The credit union is the longest-running example of a group of people pooling their financial resources to provide their own banking services. Originally, credit unions were a community self-help effort. Unlike most banks, they are cooperatives, owned by their depositors with governance determined by a “one person one vote” rule rather than the size of one’s deposit. Credit unions are now so numerous and conventional that they are regulated like banks by a federal agency and are secured by Federal Deposit Insurance. Federal regulations require that credit union members be drawn from a fairly clearly defined “affinity group,” such as all the residents of a particular geographic area or the teachers of a particular school system (National Credit Union Administration, 2003). Now, credit

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unions may also apply to be community development credit unions so that they can make mortgages and business loans. Some banks have been more oriented toward community reinvestment than others. Among the leaders, and antedating the CRA, is South Shore Bank in Chicago. South Shore was a privately owned bank with a community mission both as a depository bank and as an investor in its neighborhood. It demonstrated what one of its founders, Ron Grzywinski, saw as the unique role of the bank: to be a known institution that outsiders would invest in to help the community, a knowing institution with its finger on the financial pulse of its community and depositors, and a knowledge institution to provide expertise to borrowers and to create unique financial product to meet the special needs of the community. South Shore, for example, pioneered and promoted lending for the purchase and rehabbing of deteriorated “six flats” (three-story buildings with two units on each level) where the owner would live in one of the units, as had been the case when they were built generations earlier. Often, South Shore’s borrowers were African Americans or immigrants to whom no one else would lend. Hundreds of loans and hundreds of buildings later, the bank had transformed the housing stock. In addition to South Shore Bank and business lending by CDCs, a number of new “community loan funds” formed in the 1970s pursued community-oriented lending, drawing on the resources of religious institutions and individuals. Other loan funds drew on federal resources from HUD or the U.S. Department of Agriculture. The success of the South Shore Bank in Chicago and the track record of some other community loan funds finally led to substantial federal recognition. Banks such as South Shore, community development credit unions, and community loan funds, and even minority-owned banks, were lumped under a new term, “community development financial institutions” (CDFIs) and were promoted by President Bill Clinton. He helped create the CDFI Fund in 1994, a government agency that provides funding to individual CDFIs and their partners through a competitive application process. In addition, CRA regulations were amended in 1995 so that loans and investments in CDFIs would qualify as CRA activity. By 2008, the latest survey of CDFIs, there were 1,295 CDFIs in the United States, and more than 800 of these were certified by the CDFI Fund. CDFIs operate in every state and the District of Columbia, serving both rural and urban communities (Coalition of Community

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Development Financial Institutions, n.d.). Some CDFIs have deliberately remained small and targeted; others have actively pursued work on a large enough scale to be self-supporting. Soon conventional financial institutions seeking community reinvestment credit with their regulators discovered that investing in CDFIs could help both groups. Banks could invest directly in these nonconventional institutions, or they could buy a portfolio of loans from them. The nonconventional institutions were close to the ground, they understood local circumstances, and they had unique skills in development banking. Moreover, they often had philanthropic and public support to cover some of the costs that would be considered pure overhead to a bank. On the other hand, the conventional institutions had the financial resources and access to secondary markets for replenishing capital and brought much to the partnerships (Wolff & Ratcliffe, 2008). i n di v i du al we alth b u i ld i ng

A family’s wealth determines much of its ability to become economically self-sufficient. A set of tools and programs have been deployed that focus on the individual outside of the context of developing a business or microenterprise. The simplest tool is financial literacy—helping heads of households and young people understand their personal and family finances, the options for financial management and credit building that may not be known to low-income people, and the best methods for succeeding in the mainstream American economy. The next step involves establishing and maintaining a banking relationship, debt consolidation, and credit score rehabilitation. Then comes saving, protecting assets, and learning to make investments. Protecting assets also involves staying out of the hands of predatory lenders, such as payday lenders. Saving and investment clubs can help people learn from and encourage one another. Modeled on age-old practices of encouraging children to save by matching their deposits in savings accounts, IDA programs create pools of funding available to family support agencies to match the savings of clients. As noted earlier in this chapter, the contemporary rendition of this program and its adoption by state and federal government are largely the result of the leadership and advocacy of the social work professor Michael Sherraden (Page-Adams & Sherraden, 1997; Sherraden, 2005), who saw IDAs

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and minority homeownership and microenterprise as means of addressing the huge disparity between whites and minorities in wealth. Savers often were required to enroll in other support programs such as credit counseling or savings circles. IDA programs were tied to other goals related to money, with participants saving for their own or their children’s college education or homeownership. IDA programs were also tied to special income sources, such as extensive campaigns to persuade eligible people to file for the Earned Income Tax Credit (EITC). Many people who had no need otherwise to file a tax return, for example, would miss the opportunity to get a payment from the Internal Revenue Service under the EITC. Organizations assisting them to file would also use IDA pools to encourage them to save rather than spend the refund check (Bhatt & Tang, 2001). The spending of IDA monies by recipients is limited to buying a first home, higher education or training programs, and creating or growing a small business. As the idea of IDAs was developed and to a large part implemented by social workers, this is an important area for practitioners in this field, as well as in the CED area, to know about. By helping build assets for the poor, IDAs takes a different approach than most traditional social welfare programs. Since low-income families have few, if any, assets, the idea of wealth building among the poor is crucial to their long-term chances of getting out of poverty. Importantly, the IDA concept is based on “an emerging institutional theory of saving and asset accumulation” (McKernan and Sherraden, 2008, p. xv). Since the emergence of federal legislation in 1998 encouraging the creation of IDAs, approximately two-thirds of all states have adopted IDA programs, and well over 500 IDA initiatives exist in the United States. con cl usi o n

The revitalization of a neighborhood might begin with residential development, but without vibrant and successful businesses, it is not sustainable. The businesses provide goods and services and produce jobs and wealth in the community. As difficult as it might be for community-based developers to master the skills needed for business development, business development needs their attention. More than one community has seen the ripple effect in its residential areas of revitalization on its commercial streets.

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This chapter has reviewed some of the tools that need to be used and some of the partners that need to be attracted when business development is part of the CED strategy. In addition, businesses and residents in the community need a reliable financial infrastructure for their transactions to be a vehicle for investment and to protect the growth of the community’s wealth. CRA has provided a wonderful incentive for banks to reestablish a successful business practice in revitalizing communities. Alternative financial institutions, especially the growing CDFIs, round out the picture of financial capability in vital neighborhoods.

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12

Lobbying and Advocacy

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most nonprofits need to be active advocates of the public policies that affect their targeted beneficiaries and their own operations. The best nonprofit leaders are masters at mobilizing a broad constituency behind their mission of change, reaching beyond their individual organizations and programs (Letts, Ryan, & Grossman, 1999). Many economic development issues, such as the zoning of property for development, are matters of local regulation and legislation, and addressing these will require direct involvement of community economic development (CED) practitioners with legislators. Others, such as the award of Community Development Block Grant or HOME Investment Partnership Program funds for a housing project, are matters of administrative action. Although no legislation is at stake in these cases, legislators can still influence the award process. Although very few issues on the CED agenda require federal or state legislation, state and local administrators often control the resources needed for projects, programs, and organization operations. In addition, a state legislator or congressperson can occasionally earmark resources for a project or the organization. Either directly or through local and state government, federal resources are available for housing, economic development, business development, workforce training, health, social services, education, arts and culture, technology, crime prevention, transportation and transit-oriented development, and environmental improvement. Beyond influencing the projects of community development corporations (CDCs), local, state, and federal legislation and regulations have a

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dramatic effect on the residents of CDCs’ target communities. The legislation and regulations encompass community residents’ eligibility for subsidized health care, certain education programs, income support, and food stamps; the state of the minimum wage and Earned Income Tax Credit; mandatory sentencing provisions; and the treatment and support of those who have been incarcerated and are returning to the community. The list of ways legislation and regulations affect community residents goes on and on. CED practitioners and their community leaders can be on the front lines of advocating for community residents on these critical issues. Unfortunately, many nonprofit leaders erroneously believe that nonprofits are prohibited by Internal Revenue Service (IRS) regulations from attempting to influence policy. Nothing could be further from the truth. In fact, most basic books on nonprofit management include sections on lobbying and advocacy that make clear that nonprofits may lobby (Olenick & Olenick, 1991). p er mi s s i o ns and p ro h i b i ti o ns o n lo b by in g

The IRS has always held that nonprofit organizations are permitted to engage in lobbying as long as it does not constitute “a substantial amount” of their activity as measured by the amount of resources devoted to it. The definition of a “substantial amount” has long been a matter of debate and litigation (IRS, 2011, July 20). The Independent Sector, a coalition representing a broad cross-section of donors and nonprofits, has pursued clarification of the rules around lobbying for decades, ever since the congressional controversy over the social change–oriented legislative advocacy funded by nonprofit foundations in the 1960s. The Independent Sector successfully won an amendment to the IRS code in 1976, but it took fourteen years for the IRS to issue the final regulations related to the amendment. The regulations provide an alternative way to measure lobbying activity in order to create a “safe harbor” within which nonprofits could know without question whether they were within the permissible boundaries of lobbying (Smucker, 1999). That change in the code allows nonprofits to be covered by a rule with quantitative measures rather than the older, but still available, “substantial amount” test. If a nonprofit elects to make expenditures to influence legislation, it is limited to spending 25 percent of its first $100,000 in organization expenditures, 15 percent of the amount over $100,000 and less than half a million dollars, and 10 percent of expenditures more than

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half a million dollars. No more than 20 percent of those amounts may be spent on “grassroots lobbying,” which is explained below (Olenick & Olenick, 1991). For further detail on all IRS regulations, consult IRS Publication 557: Tax-Exempt Status for Your Organization (2011, October), which is available and regularly updated online. These amounts are far in excess of what most nonprofits would ever consider devoting to lobbying; a nonprofit with a budget of $1 million could spend as much as $135,000. Those organizations that plan to spend more resources than allowable by the IRS in influencing public policy or permanently becoming involved in extensive lobbying usually set up a separate 501(c)4 organization, another type of nonprofit organization, to conduct that activity. While 501(c)4 organizations do not pay taxes like their 501(c)3 counterparts, contributions to 501(c)4 organizations are not tax deductible. Not only is the amount of money available for lobbying considerable, but the IRS has also narrowly defined what constitutes lobbying, limiting it to contacting a legislator or someone in a government agency directly charged with the enactment of legislation for the purpose of influencing the decision on a piece of legislation. If the issue under consideration is not the subject of a pending piece of legislation or close to being made one, the nonprofit’s advocacy work is not considered to be lobbying. If the person the nonprofit contacts is not directly involved in the legislative process, again, this advocacy work is not considered to be lobbying. There are many issues for which nonprofits can advocate that are not related to influencing decisions on specific pieces of legislation. For example, working to influence issues related to the entire realm of administrative processes and regulations is not lobbying based on the IRS definition. The level of enforcement of Community Reinvestment Act (CRA) regulations for financial institutions is a good example of an administrative decision that has a major effect on community development. No matter how much activity the nonprofit devotes to advocating for enforcement with federal regulators, this activity is not lobbying. In many instances, the details of the local, state, or federal budgets may not be a matter of legislation. There may also be public officials nonprofits want to influence but not specifically about legislation. All of this activity falls outside the definition of lobbying. There are also times that the advocacy work of nonprofits is not considered to be lobbying even when the issue under consideration is legislation. Nonprofits can be invited by legislators to testify regarding legislation.

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The nonprofit’s appearance and preparation of testimony are not lobbying activities. Nonprofits are permitted to provide a nonpartisan analysis of legislative issues, provided the analysis is genuinely nonpartisan, and they may even take a position on the legislation as a result of their nonpartisan analysis. Finally, nonprofits are free to lobby on matters of legislation that directly affect their status as a nonprofit or their organizations’ functioning beyond the activities included the IRS lobbying definition (Avner, 2002). The IRS restriction on the amount of grassroots lobbying is more problematic for nonprofits that depend on the willing participation of a large number of volunteers rather than on the skills of a high-priced lobbyist to advocate for or against a piece of legislation. Urging the public to take a position on a piece of legislation and to contact their legislators does constitute nonprofit lobbying; this activity is specifically termed “grassroots lobbying.” Even if a nonprofit does not elect to use the quantitative measurement of expenditures on lobbying activity that the amendment to the IRS code now allows, nonprofits that mobilize public support need to be particularly careful to track the resources they devote to grassroots lobbying. The IRS requires a report of the amount of the expenditure on the IRS Form 990 income report that must be submitted annually by nonprofits. Organizations that elect to use the quantitative measurement of expenditures must also complete a separate form requiring more extensive financial reporting. Lastly, nonprofits are not allowed to be directly or indirectly involved in the election of a candidate for office. That activity is not defined as lobbying; however, it is prohibited for all 501(c)3 nonprofit organizations. Outside of IRS regulations, however, nonprofits may be restricted in their lobbying based on the requirements of their funding sources. Private foundations are not permitted to lobby; therefore, they require that their grantees do not to use the proceeds of the grant for lobbying, even if the IRS would otherwise permit that lobbying. Many government sources of funding prohibit the use of funds for activities geared toward influencing legislation. The government restriction may even apply to attempting to influence administrative actions. These restrictions need to be explicit in the grant letters and contracts into which the nonprofit enters with its funding sources. Some federal legislators have sought, unsuccessfully, to prohibit all lobbying by nonprofits that accept government money, whatever the resources they use for that lobbying. Individual nonprofits are well advised to ascertain the restrictions on government money they receive

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from local, state, or federal government agencies. For timely information on current debates on policy and advocacy, consult the website and publications of the Independent Sector (www.independentsector.org). There are many good sources of information and advice on lobbying and the effective methods of lobbying in the public interest. A number of resource organizations have been established to assist nonprofits in mounting their advocacy campaigns within the lobbying restrictions of the IRS. Some provide not only basic guidance but also active counsel on particular campaigns. The Independent Sector provides such advice and has spun off an independent organization to do so. Its division devoted to lobbying technical assistance is now called the Center for Advocacy in the Public Interest. Public interest law firms, the Council on Foundations, and local associations of nonprofit organizations also provide active guidance. Any of the basic texts on nonprofit regulation in the literature of nonprofit management and on the Internet also provide guidance on lobbying. t h e me ch ani c s o f lo b by i ng

Many of the methods adopted by public and private sector bodies for lobbying are equally applicable to the nonprofit world. It is important to know when to mount a campaign, to whom to direct the advocacy, and the particular stage of enactment of the legislation that is the target of lobbying (Avner, 2002). Nonprofits need to become familiar at the local, state, and federal levels with the committees and subcommittees to which their issues of interest are referred when they are a matter of legislation. The public policy process starts well in advance of introducing actual legislation and requires CED practitioners to keep up on activity around their issues and those who may be allies in pursuit of public policy on them (Bryce, 2005). Community-based organizations practice both direct lobbying and grassroots lobbying. Direct Lobbying

There are usually two distinctive legislative bodies with jurisdiction over each government program, one charged with authorizing programs (the authorizing committee) and the other charged with appropriating funds to programs that are already authorized (the appropriating or appropriations

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committee) (Daschle, 2013). These committees typically have subcommittees. In the U.S. House of Representatives, housing programs, for example, are authorized by the Housing and Economic Opportunity Subcommittee of the Financial Matters Committee (a committee with a name that gives no indication to the lay person that it would serve as the committee for housing projects). The subcommittee reviews, makes changes to, and recommends to the full committee all housing acts. These acts set forth the goals and design of each program, the authority of U.S. Department of Housing and Urban Development (HUD) over the program, and the maximum amount of funding for the program. A separate subcommittee of the Appropriations Committee, the Subcommittee on Transportation, HUD, and Related Agencies, sets the exact amounts allocated for the program and each of its budget components for the fiscal year. These are almost always substantially lower than the authorized maximum in the law. The U.S. Senate and state legislatures have similar arrangements, although state committees often have fewer subcommittees (Avner, 2002). Regulatory legislation would seem to pass only through the committee that authorized the program; however, the enforcement of regulations requires the expenditure of funds that have to be appropriated to the agency’s budget. The passing of regulatory legislation and the enforcement of regulations are typically controlled by two different entities. In the U.S. Congress, for example, one committee is responsible for passing environmental legislation, but a separate appropriations committee controls the budget for the Environmental Protection Agency. More than one program has been effectively defeated when funds for enforcement or implementation have been cut from the agency budget despite the fact that the legislation enacting the program passed. Whatever the legislation, good advocacy begins with knowing the legislators in the organization’s jurisdiction at every level of government, knowing their committees and assignments, cultivating relationships with them through regular contact, inviting them to key organization events, and being able to identify the major issues that interest them. When legislators in the jurisdiction have no assignments or major issues of interest that relate to a CED organization’s issues, CED practitioners should work to identify their allies who do. Trade associations and state organizations are important way for front-line practitioners to keep track of policy issues and players in the process (Bryce, 2005).

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More often than not, lobbying involves contacting and winning over the staff of elected legislators. Legislators may have three kinds of staff, as does the U.S. Congress. The first staffing group is located in the legislator’s own office. Staff members perform constituency service or casework and are well known to leaders in the community. The legislative staff, the second group, follows matters of legislation and appropriations and are usually specialized to the member’s committee assignments. These staff members are often located only in the state capital or Washington, D.C., and are not usually known to the ordinary citizen leader. They are accessible, however, and often welcome direct contact with constituencies who understand the issues they have under review. They also have a wealth of knowledge and contacts with senior people in related agencies—information and contacts that may be helpful to CED leaders. Finally, senior legislators have considerable control, including hiring and firing, over the third group, committee staff members who work for and in the offices of the authorizing or appropriating committees and subcommittees. They function much like the legislative staff of individual legislators. Cultivating relationships with staff members often leads to inside information on the legislative process, the details of particular legislation, and the alignment of allies and adversaries of particular bills. The staff are often the ones who suggest to legislators the need for a hearing on the bill outside of the capital, an investigative hearing on an issue not yet even in legislation, or an oversight hearing on the whole agenda before the committee. CED practitioners should note that advocating for oversight hearings and investigative hearings is not usually considered a lobbying activity for nonprofits under IRS regulations because there is no particular piece of legislation being considered (Smucker, 1999). Individual nonprofits often have a difficult time acting alone as direct lobbyers in the legislative process. They should align themselves with trade organizations and issue groups to which they belong, actively participate in formulating the public policy agenda, and lobby for it. Associations often have specialized lobbying staff who can benefit local CED organizations. Grassroots Lobbying

Grassroots lobbying requires acquiring and using the skills of community organizing, political campaigning, and public advertising. It is the kind of

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lobbying most familiar to nonprofits that have come out of movements for social change. Picture thousands of people on the National Mall in Washington, D.C., rallying for civil rights. Imagine a letter-writing campaign with thousands of voters urging their legislators to vote for environmental legislation. Picture busloads of parents and educators descending on a state capital to push for school funding. It can also be as simple as bringing a large number of people to a hearing, conducting a door-to-door petition drive, or passing out a flyer on legislation urging residents to contact their representative (Avner, 2002). Mobilizing a voter base to contact legislators about a particular bill—that is grassroots lobbying. The current narrow limits on grassroots lobbying by nonprofits under IRS regulations reflect the reactions of conservative legislators to the period of more liberal social activism in the 1960s and a desire to curtail this activism (Smucker, 1999). Despite the narrow IRS limits, grassroots action is probably the most powerful tool of CED leaders. a dvo cat i ng f o r p u b li c p o li c y at t he fe de r a l l e v e l

Direct lobbying by a nonprofit at the federal level involves contacting congressional representatives or the legislative liaison to Congress within the federal agency responsible for the issue at hand. As mentioned above, there are many administrative issues in addition to legislative issues for which nonprofits need to be advocates with particular agencies. In order to be good advocates, nonprofits must know the agencies, how they are structured, and who is in charge (for a good basic manual on government organization, see Graham & Hand, 2009). They must know which officials are political appointees and which are civil servants; the former are more transient but are also often more responsive to political pressure from their appointing parties. Understanding into which division your matter of concern falls is also critical. For example, community development at the federal level is largely in the hands of HUD. HUD has separate sections for public housing, federal housing insurance, and federal housing subsidies outside of public housing; community development block grants and housing block grants; open housing enforcement; and research. Each section has its own assistant secretary, a political appointee subject to Senate confirmation, and is subdivided into offices with a director and then into divisions with their own directors.

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Most agencies are required to promulgate regulations that tell the public how they will administer programs or use their regulatory authority. These regulations often come after a series of hearings and usually are produced in draft form for public comment before they are finalized. Nonprofit advocacy on issues of regulations is not considered to be lobbying as defined by the IRS, which is good news, as this type of advocacy is of great concern to CED organizations. Community developers should tell legislators their positions on draft regulations, especially the legislators who authorized or appropriated funds for the area now being regulated. They should make them part of their advocacy for a regulatory framework that addresses their concerns related to how money will be spent for housing, who will be eligible for programs, how the agency will evaluate housing, and the level and shape of housing and community development funding programs, such as the amount and character of subsidy. These are all matters of regulation and in the public interest and public space. Finding federal programs that provide money for community development activity has become less challenging with the advent of the Internet. All agencies have websites. Federal website search functions and private search engines make it easy to find real-time information on program expenditures, agency structures, and personnel. However, organizations must determine whether they are eligible as nonprofits or whether nonprofits will be given preferential treatment (e.g., a set-aside of a portion of funds specifically for nonprofits). When fewer resources have been appropriated, lobbying at the legislative level is often focused on ensuring that the limited resources target particular groups, especially those most in need. Then, once funds have been allocated, it is up to the designated government agency to manage the disbursement of the funding, including the administrative oversight and evaluation of the use of agency funds. Administrative issues to address through advocacy at this point include the frequency of funding cycles, the methods of application, the right criteria for selection, and the frequency of payment, including whether advances will be allowed. The use of funds for technical assistance and training versus program delivery is often in the hands of the agency as well. Not all development finance is a matter of grant funding, however, as many financial supports are embedded in the tax code or in the treatment of bond financing. This takes the attention of nonprofit community

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developers to the U.S. Department of the Treasury. For example, affordable housing investments may lead to tax credits for the taxpayer: The purchase of buildings for affordable housing may allow the seller to take a charitable deduction for the “donation” if the appraised value of the housing is higher than the price the nonprofit pays the seller. The U.S. Department of the Treasury directly administers the matching funds for Community Development Financial Institutions (CDFIs) and for microenterprise loan funds. The U.S. Department of Commerce provides economic development funding and regulation and houses the Small Business Administration with its programs for small business community development. Community developers are also concerned with environmental regulation by the U.S. Environmental Protection Agency and that agency’s funding of cleanup for toxic sites for redevelopment. The U.S. Department of Health and Human Services (HHS) has the vestigial agency of the 1960s War on Poverty—the Division of Economic Opportunity—with funding for weatherization and economic and community development project financing. HHS also provides funding and regulates the welfare system. The U.S. Department of Education provides targeted funding for specific populations to local school systems. The U.S. Department of Labor controls workforce training, community college, and trade education funding. The actions of regulatory agencies can also have a direct effect on the community, including U.S. Department of Treasury regulation of financial institutions and U.S. Department of Labor administration of the minimum wage and pension protection. Even the U.S. Department of Defense, whether through the issue of base closings and utilization of military facilities or in the purchase of services from civilian contractors, could be on the agenda of community development organizations’ advocacy for public action. p u bl i c p o li c y at th e s tate , c i ty, a n d c o un t y l e v e l

Given devolving federal authority since the early 1980s, state government has become a bigger player in issues of community development. The state was always the main layer of government linking federal agencies for welfare, health, labor, and education to the local level. Cities have direct relationships with federal agencies on employment, training, and community development; the agencies provide funding directly to cities without

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passing it through the states. While the structures and names of each state’s functions are unique, they are analogous to the federal structures. The same is true for most cities and counties. Sherraden, Slosar, and Sherraden (2002) describe in detail the process they undertook to persuade the Missouri legislature to create a program of Individual Development Accounts (IDAs). Their experience could well be applied to advocacy with other state legislatures and even at the federal level. They begin with the proposal itself. It must be clear and easily communicated, based on empirical data and successful practice, and motivated by the larger values of social and economic justice. They stress the importance of using the proposal to help legislators understand the overall idea of a program before drafting or even considering a particular bill. They also recommend beginning with a number of possible approaches to implementing the program idea rather than putting forward only one option in the proposal. Sherraden then used a collaborative approach to drafting a bill that engaged state officials, legislators and their staff, and advocates for CED policy. They launched a sustained policy advocacy approach that included both direct lobbying and grassroots lobbying. They centered lobbying efforts in an already established coalition but also had to create and nurture a CED committee and reach out to gain membership across the state of Missouri to gain full support of and involvement in the lobbying effort. The established coalition helped frame model legislation for the IDAs, found initial legislators to sponsor the bill, and tracked and lobbied for the bill throughout the legislative process. The bill ultimately passed, and an IDA program was created by the Missouri legislature. Four particularly key partners in the effort to create an IDA program from idea to enacted legislation included university faculty and researchers, CED practitioners, advocacy and education organizations, and students. Faculty and Researchers

University faculty and researchers identified and analyzed potential programs and policies, provided consultation, and conducted research and assessment. Although university regulations prohibited them from being involved in direct lobbying, they were instrumental in developing the proposal and drafting model legislation.

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CED Practitioners

CED practitioners developed proposals, piloted IDA programs, identified “on the ground” experts, and involved affected constituents in the lobbying and legislatives processes. Practitioners, many of whom were reluctant to engage in lobbying, had to be encouraged. Seeing the clear linkage between their CED organizations’ missions and programs with the proposed legislation enabled them to realize the payoff of the new proposal for their work and the need for them to engage in lobbying to achieve the structural change they desired. The practitioners brought together a vigorous coalition of constituents and organizations, especially those who had been involved in pilot projects; allies from the financial services sector, some of whom had not been involved in servicing the IDA savings accounts; and social workers who saw the potential for families to support IDA programs. Advocacy and Education Organizations

Advocacy and education organizations worked on policy proposals, identified sponsors, evaluated and monitored daily and long-term policy changes, lobbied legislators, monitored grassroots and direct advocacy efforts, and helped find and organize supporters of the IDA bill. They also provided professional educational materials. The statewide advocacy organizations provided a bridge between legislators, practitioners, and researchers. These organizations also provide linkages to national and international organizations that may provide additional evidence for a bill and may actually participate in presentations or lobbying efforts. Statewide and national advocacy groups may provide or find funding for staff to coordinate the campaign and research to back up the proposal. One caveat that Sherraden and colleagues do note, however, is that although existing organizations bring their positive reputations and additional publicity, it is also important to take into account any previous alienating encounters they may have had with certain legislators before selecting organization partners. Students

Students were an invaluable free resource in summarizing and interpreting policy, developing the bill, providing information, organizing the coalition,

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and maintaining communication among disparate partners and between advocates and legislators. commu n ity d e ve lo p m e nt p o li c y age n da

While issues on the agenda of community development organizations regularly change with political conditions, some issues remain permanently on the agenda. These include: r
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Some issues that require lobbying and advocacy work are subtly buried in administrative procedures. Examples include: r
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Still other issues are not so clearly black and white; the constituencies of CED organizations may be divided on particular issues. For example, how should resources be targeted when there are not enough to go around? Some may make the case for first helping those most in need and then addressing others who are less needy only if there are surplus funds. Others may argue for a proportional distribution of funds from the beginning: The person with a broken leg has just as real a need as the person with a broken back. A broad distribution of resources builds a stronger political base for its survival. In community development, using public resources in healthier neighborhoods rather than heavily deteriorated ones leads to a greater likelihood of leveraging private investment. Sometimes nonprofits face tradeoffs between different kinds of programs, such as between public housing and privately developed and publicly assisted housing. It has proven to be highly challenging to create coalitions that are able to work through these tensions to arrive at a common position. Unfortunately, those entities in the city or state that are opposed to funding any of these programs will then typically exploit these splits in the coalition to create further division. The online Community Tool Box developed by the University of Kansas (ctb. ku.edu) provides excellent practical guidance on developing and maintaining effective coalitions that are able to achieve compromise for the greater good of the coalition. macr o ec o no m i c p o li c y i s s u e s

Despite that it may seem to be too large a task, community development leaders can and must advocate for public policies that affect the

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macroeconomy, as it dramatically affects low-income and distressed communities. As was illustrated in earlier chapters, macroeconomic forces are largely responsible for the deterioration of communities and the limited opportunities available to inner-city, low-income residents, especially minorities. For example, tax-regulated investment choices and governmentfunded public works projects historically resulted in job growth in the distant suburbs rather than close to the inner city. The private marketplace in America is not purely private; it is regulated and subsidized by government. To develop an agenda for national- and state-level advocacy that will effectively tackle these broader issues, CED leaders and practitioners need a sophisticated analysis of government economic and tax policies. They largely rely on national organizations and trade associations for this analysis and for assistance in organizing macroeconomic advocacy efforts. Beyond the broader impact of the macroeconomy on low-income constituents, there are also macroeconomic policies that specifically affect community development and on which community development leaders need to be active. Examples of these include mortgage interest rates, tax deductions for mortgage interest, tax regulation of real estate investment, tax incentives that affect job location, minimum wage policies, trade policies that shift jobs, tax benefits to low-income taxpayers (e.g., the amount of deduction per dependent, the amount of the Earned Income Tax Credit and threshold for eligibility, and farm subsidies and other corporate supports as well as corporate tax rates and breaks that divert funds that might otherwise go to community development). p r i vat e p o li c y i s p u b li c p o li c y, to o

Not all policy affecting the broad public within the field of community development is a matter of government action. Private institutions make policy decisions that have larger effects on communities than do some governmental policies. Financial institutions decide where to invest. The homebuilding industry decides whether or not to seek opportunities in cities or to build only high-end housing in the suburbs. Foundations decide whether to grant nonprofits general operating support. Individual private institutions make these individual decisions, but collectively they

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often move in the same general direction. For example, companies decide whether to put headquarters and new locations in the cities or the suburbs. Employers set criteria for the resulting entry-level positions that may or may not be consistently difficult for inner-city residents to meet. Insurers charge higher rates in cities and suburbs or abandon old geographies as a result of these earlier decisions. Community development advocates have a stake in the outcome of these private decisions. Because of their public effects, should these private decisions be subject in some way to public participation? Community organizers have successfully deployed methods of pressure and confrontation with private corporations and organizations. Leadership organizations have prevailed with persuasion and peer pressure. Action research and investigative reporting have also been effective in agitating the public and shedding light on corporate policies that are harmful to vulnerable people and communities. Development organizations with financial resources have influenced corporations through their business investment partnerships. The biggest obstacle, however, is the inertia that results from the belief that private decisions are outside of the public realm. That barrier is unacceptable, and CED practitioners must persuade their colleagues and organizations that successful efforts to influence private organizations’ decision making are possible. con cl usi o n

CED leaders and practitioners and nonprofit organizations involved in community development must be prepared to lobby for public policies and advocate for those private policies that foster neighborhood revitalization and provide resources for programs and projects. Although many agenda items will arise during the day-to-day activities of the organization, it is important to look ahead and make lobbying part of the long-term agenda and strategic plan of the organization. Coalitions can be prepared in general to lobby by regularly identifying and monitoring key issues and cultivating relationships with legislators, staff, training staff, and volunteer leaders in the techniques of lobbying and advocacy. Informed discussions among staff and board members can overcome the misperception that nonprofits are not allowed to lobby and the inevitable hesitation about “not biting the

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hand that feeds you” when it comes to advocating for change in funding and regulatory agencies that support the organization. Community leaders and staff should be encouraged to participate in the policy discussions and activities of trade associations and issue groups related to the work of the organization. Advocating for public policy is not a luxury but an essential function of nonprofit leaders.

p a r t 4

Putting It All Together of community economic development (CED) for implementing a community development strategy, this text now turns to other critical aspects of the CED field. The first of these key components is social capital, the “people” component of initiatives to revitalize distressed communities. Social capital has become the centerpiece of many CED strategies; indeed, the “people” component of the CED equation needs just as much attention as the “place” component. To illustrate the successful building of social capital and its utility for CED, a case study of the groundbreaking Dudley Street Neighborhood Initiative follows chapter 13. The last case study included in this text, this case also illustrates a number of the tools that this text has previously addressed and provides an excellent model of a highly functional CED organization. Following this, the text addresses two specific issues confronting the CED field: racism and regionalism. Clearly, in CED, race matters profoundly. One cannot escape the reality that race and poverty are closely connected in the United States. This reality fundamentally affects and shapes the practice of CED and presents both opportunities and challenges to CED practitioners. The challenges of regionalism, a growing focus on regions as opposed to cities, as metropolises expand through urban sprawl and globalization, also clearly influence the work of community developers. h av i n g r e v i e w e d t h e p r i m a r y t o o l s

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Those cities that have or are developing “smart growth” plans and engaging global partners in their economic development strategies are a step ahead of those cities and regions that are not taking such steps. Finally, we “put it all together” by first elucidating how the practice of CED is being redefined as community building and then sharing predictions for the future of the CED field. This text closes by providing social work students and budding CED practitioners with a clear picture of the field today and what might be in store for practitioners in the years to come.

c h a p t e r    13

Expanding Social and Political Capital

i n c h a p t e r 8 , the authors discussed the importance of investing in human

capital, in particular workforce development, youth work, and other work that enhances the capacities of people in the community to gain meaningful employment and higher wages. This chapter addresses another important aspect of community building—social capital, or the connections between people within their communities and the larger social systems to which they belong. Because the authors have postulated that the field of community economic development (CED) has now moved into a fourth wave of community building—one in which building social capital plays a major role—it is appropriate to address this topic in section IV, the section of the book that most addresses this fourth-wave shift, rather than in section III as one of the traditional tools of CED practitioners. Even though the concept of social capital originated much earlier, it is one of the newest concepts formally to be given focus in the CED field, and, until recently, it has been overlooked or addressed only informally in this practice arena. This chapter examines the role of Community Development Corporations (CDCs) and the evolution of the CED field relative to social capital. This analysis includes a survey of three experiments in building social capital for economic development at the local level: (1) community land trusts, (2) worker-owned businesses, and (3) consumer cooperatives. An overview of citizen involvement addresses the relationships among community organizing, community planning, CED, and social capital as well as the effects of political participation on social capital. Finally, the chapter addresses cross-cultural training and how it strengthens social capital in local communities.

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w h at i s so c i al c ap i tal?

Although there is some controversy over when the term “social capital” first appeared in the literature, it can at least be traced back to the early twentieth century and L. J. Hanifan, an educator and reformer during the Progressive Era who used the term when he was encouraging the involvement of the community in ensuring the success of local public schools (Putnam, 2000). The term eventually came into general usage in the social sciences by the late 1960s and early 1970s by political scientists (Salisbury, 1969), writers (Bourdieu, 1972; Loury, 1977), and sociologists (Coleman, 1988). Popularized in the late 1980s by the sociologist James Coleman, social capital comprises “the relationships formed among human beings [and] connotes the social relationships, ties, and networks established among people within the context of wider social systems” (Midgely & Livermore, 1998, p. 31). In his book Bowling Alone: The Collapse and Revival of American Community (2000), Robert Putnam further popularized the concept of social capital and demonstrated that social capital built through local community associations and community-based organizations helps build and strengthen “civil society,” a key component of maintaining a progressive citizenry and democracy (Putnam, 2000; Putnam, Feldstein, & Cohen, 2003). Putnam’s perspective on social capital is a variation of Alexis de Tocqueville’s observations in the 1830s, when he wrote of the impressive qualities of the United States as a democracy: “Our penchant for innovative civic association, our belief that individuals can bring about change, our openness to risk taking and to bridging lines of class, ideology, and party” (Peirce & Steinbach, 1987, p. 9). According to Coleman (1988), the more social capital there is in a community, the more economic development occurs; stronger social networks lead to greater cooperation and collective efficacy in the community, which in turn results in greater collective economic and social benefits to the community. Research has also shown that higher levels of social capital are associated with better health, higher educational achievement, better employment outcomes, and lower crime rates (Harvard Kennedy School, n.d.). However, as alluded to by the title of Putnam’s book, social connections in many local communities have been on the decline; while the number of bowlers in America has significantly increased, membership in bowling

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leagues has dramatically decreased—just one of many examples of declining social capital. This loss of social capital can have dire consequences for local communities and their economies as residents become isolated from their neighbors, lose empathy and trust, and are less invested in cooperating to improve the living conditions of all neighborhood residents. Building or strengthening social capital is the process by which connections are made, people create friendships, and new groups are formed. It is important to realize that people do not usually set out to build social capital itself but rather develop it during the process of achieving some other sort of objective or task. For example, members of a local church may organize a book club or a church food drive for a local homeless shelter. This is an example of what Putnam and Feldstein (2003) call “bonding capital.” Bonding capital is the kind of social capital found in close-knit groups of similar people, including families and friendships, in which people have close ties, likely have the same race or religion, tend to be insular, and help one another when in need. “Bridging capital,” another form of social capital, occurs across groups and necessitates that people reach out to people dissimilar to them. For example, a woman belonging to a local ethnic advocacy group works in a local retail business; through her workplace, she interacts with coworkers of other ethnicities who typically do not interact much socially in her community. Throughout the course of her work, networking for a variety of mutual benefits can take place, and social connections between local ethnic groups are developed (Putnam, Leonardi, & Nanetti, 1993). s o ci a l c ap i tal and th e e vo lu ti on o f t he c e d fie l d

Two farmer friends, each with their own farms, decide to share tools to get more work done and with less physical exertion and time than either could alone. In the process, they have both made their work more efficient and profitable and have increased their community’s social capital and economic health (Sirianni & Friedland, n.d.). The process of building social capital in a community is incremental and cumulative (Putnam et al., 2003). If one could identify and add up all of this kind of networking being done in a community, one would have a sense of the community’s total social capital value. In places with a greater density of social capital, of both the bonding and bridging kinds, it is easier to organize and mobilize people

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to tackle problems of public concern—the dumping of waste in a community or drug dealing and other crime—and easier to arrange for goods and services that benefit the group as a whole, such as a child care cooperative among low-income mothers, a community garden that yields fresh produce, or a microlending group that provides seed money for poor people to start businesses (Harvard Kennedy School, n.d.). With dense social capital, the community can better perform simpler tasks such as helping a community member network to find a job and sophisticated tasks such as rotating credit associations that support community members’ entrepreneurial activity (Sirianni & Friedland, n.d.). In short, social capital makes it easier to get things done. Effective CED, then, is not only about revitalizing the bricks-andmortar structures of a community but also about revitalizing its social structures through the engagement of its people. Although the formal tools of building social capital to achieve local economic development may be relatively new to CED, community organizers and CED practitioners have utilized the concepts underlying social capital intuitively and informally since the beginning of the field and more formally since the 1980s. For example, community organizers have long worked to create linkages between neighbors, natural helpers, and clergy with professionals and service providers to strengthen services for families in a community (Naparstek, Biegel, & Spiro, 1982). For community organizers and others engaged in community building, the strengthening of social networks has also been an effective way of increasing a neighborhood’s power and influence within a city and its political and economic structures in a nonmonetary way (Portes, 1998). The formal recognition of social capital’s importance to the CED field, as well as attempts to elaborate on the concept specifically for economic development, has yielded several mechanisms for explicitly building that capital. The concept of social capital in CED came out of the lessons derived from the successes and failures of CDCs, which were largely driven by the economic policies of the 1960s, 1970s, and 1980s. Historically, CED activity has focused on rebuilding the physical infrastructure of the inner city, primarily housing with a secondary focus on bringing businesses back into the community. While CED activity has evolved since the 1960s, CDCs’ activities today are still primarily focused on providing affordable housing for low-to-moderate income people. In the 1960s, with the initial

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formation of the first hundred CDCs, it was understood that not all innercity problems would be solved through these new vehicles. However, the expectation was that these new entities would make a significant dent in the problem of urban poverty. Increasingly, professionals in the field of CED acknowledged that another stumbling block to CED—and an issue that prompted the rise of social capital awareness—was inner-city flight. Despite improved housing, workers left inner-city communities that lacked resources as soon as they could afford to move. According to a paper presented by the Urban Institute in the early 1990s, African American populations in the suburbs in the thirty-nine largest metropolitan areas increased a dramatic 38 percent during the 1980s. Jobs migrated to the suburbs as well, reducing the ability of poor inner-city neighborhoods to create an employment base (Lemann, 1994, p. 31). In the 1980s and 1990s, it became obvious that while the focus on housing was successful to a degree, if CDCs and professionals in the field of CED were to meet the needs of those they served, they needed to consider strategies beyond improved housing and local business development. A new concept began to emerge—comprehensive community initiatives (CCI) and community building, which acknowledge that it is not enough simply to focus on the physical attributes in a geographically based community, improve them, and expect the community to turn itself around. As much or more emphasis has to be put on the people themselves, enhancing the social networks among them and their social capital, in order to make lasting changes in any poor community. CDCs serve as a repository of social capital as well as a bridge for creating it. By creating these organizations in low- and moderate-income neighborhoods, the stock of social capital can be increased either incrementally, through the accumulation of small changes in the community over time, or, occasionally, enormously all at once through a splashy project. Gittell and Vidal (1998) document this process well by showing how the Local Initiatives Support Corporation (LISC), through its National Demonstration Program in the early 1990s, attempted to rebuild certain low-income areas in the country, in part by focusing on social capital. What they showed is that in order to form critical bonding social capital, it is necessary to engage in activities like community organizing at a local level. Through this process, formerly disengaged residents in a community can come together to try to resolve problems in their neighborhood. Whether through a conflict

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or consensus model of organizing, social capital is increased between those living there through the act of organizing (Gittell &Vidal, 1998). Although bonding social capital is necessary for beginning to revitalize a community, in part by empowering residents to act on their own behalf, it is usually not sufficient to turn a neighborhood around. The LISC work showed that it is important to follow this process by developing bridging social capital by organizing those who can help bring in resources to a particular geographic area and engaging them in investing time and energy in the effort (Gittell & Vidal, 1998). This is the process through which community organizing and CED strategies come together to help effect real, long-lasting change in neighborhoods. The two activities, while not always necessarily connected, usually complement each other well. One can often accomplish what the other cannot alone. t h r ee ex p e ri m e nts i n s o c i al c apita l

Throughout the 1990s and to the present, experiments in social capital have been attempted with mixed results. Three examples are associated with land, work, and services: (1) community land trusts; (2) worker-owned businesses, including worker co-ops and employee stock option plans (ESOPs); and (3) consumer cooperatives. These experiments have been referred to by some CED professionals as the “third way,” as they appears to fall somewhere on the spectrum between capitalism and socialism (Bruyn & Meehan, 1987). The ideals they represent are local control, local selfreliance, local sharing, communitarianism (a movement emphasizing benefits to the community versus those to individuals), and bioregionalism (a movement in which one is aware of the ecology, economy, and culture of the place one lives and is committed to making choices that enhance them). In their book Beyond the Market and the State (1987), Bruyn and Meehan suggest that CDCs are like the hub of a wheel in which the experimental “spokes” are community land trusts, worker-owned businesses, alternative financial institutions (see chapter 11), and consumer cooperatives. All together, these experiments in social capital have affected the lives (both directly and indirectly) of more than 100 million people in the United States, more than 40 percent of the U.S. population. In Canada and the European Union, the numbers affected are much higher, and the political awareness and public consciousness surrounding these experiments is much greater.

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Community Land Trusts

The community land trust (CLT) movement began in the 1960s as a method to reform the way land was held in the United States with the primary goal of keeping housing prices affordable, especially in explosive housing markets (Soifer, 1990). CLTs are based on the premises that (1) land use should include social value, (2) the CLT holds the land “in trust” for the people or community, and (3) the residential structures built on the property are owned by the individual residents. According to the Institute for Community Economics (n.d.), a CLT’s goals are to (1) gain control over local land use and reduce absentee ownership, (2) provide affordable housing for lower-income residents in the community, (3) promote resident ownership and control of housing, (4) keep housing affordable for future residents, (5) capture the value of public investment for long-term community benefit, and (6) build a strong base for community action. CLTs rely greatly on social capital creation strategies in many ways for their successful operation. First, in order to create a CLT, various dedicated individuals, some with strong bonds, must come together to lay the groundwork. Second, CLTs must create bridges across various members of a community—from activists to politicians to bankers—to create a viable organization. Third, a network of those who become members and eventual homeowners in a CLT must be built. Finally, the local CLT will become a member of a regional and national network of land trusts throughout the country, trying to create an alternative model of affordable housing in the United States, building social capital on a grander scale. A person purchasing a home built on a land trust is, by default, subscribing to an alternative philosophy of land ownership, one that includes membership with the right of participation in the land trust. Members are entitled to attend meetings of the trust and vote on issues of importance to the trust. On the positive side, the members’ participation has the potential to increase social capital in the community. However, because members’ level of commitment may vary, problems can develop when homeowners do not actively participate, especially if they bought their homes in an explosive housing market and get a very limited return on the home. One of the best examples of a successful CLT is the Burlington Community Land Trust (BCLT) located in Burlington, Vermont (Soifer, 1990). The BCLT started in 1984 with a $200,000 seed grant from the city and

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a pledge of continuing support (Foldy & Walters, 2004). It was the first land trust to be principally funded by a city government. The BCLT has more than 2,500 members, with 370 single-family homes and condominiums and 270 rental units in its inventory, and is currently the largest CLT in the United States. By controlling such a large housing inventory in such a small city with a population of 40,000, the BCLT has had a major impact on affordable housing for city residents. As of 2013, there were 250 community land trusts in forty-six U.S. states and Washington, D.C. (Community Land Trust Network, 2013). While still a young movement, the CLT movement has the potential to influence housing markets in many cities across America because CLTs reduce speculation of real estate appreciation, maintaining a portion of the housing stock as affordable for generations to come (Soifer, 2012). The organization that created the CLT model and helped expand CLTs across the continent is the Institute for Community Economics (ICE), which was founded in 1967 and is located in Springfield, Massachusetts. ICE has been innovative in its ideas for promoting the equitable allocation of resources within a community in order to assist low-income families comprehensively. As of January 2006, the CLT network has been spun off from ICE into a separate, nonprofit organization called the National Community Landtrust Network. See the website www.cltnetwork.org for more information on CLTs. Worker Cooperatives and Employee Stock Ownership Plans

Another social capital experiment examines which areas of the local economy are undeveloped or are underdeveloped and then helps people— either through the creation of small businesses or, in some cases, worker cooperatives—develop alternative to traditional businesses. According to Williamson, Imbroscio, and Alperovitz (2002), the following CDCs across the United States have been or are involved in directly providing significant job employment opportunities to residents in their service areas over the last thirty years: Asian Design Center in Oakland, California; Bedford Stuyvesant Restoration Corporation in Brooklyn, New York (see chapter 1); Bickerdike CDC in Chicago; Dinah Cooperatives in Arizona, New Mexico, and Utah (serving the Navajo Nation); Esperanza Unida in Milwaukee (serving the Latino community); Ganados del Valle, in the rural area of Los

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Ojos, New Mexico; New Community Corporation in Newark, New Jersey (see chapter 2); the Quitman County Development Organization in Mississippi; the East Los Angeles Community Union; Coastal Enterprises in Maine; and the Kentucky Highlands Investment Corporation. Ownership and investment dollars of these CDCs are in the billions, and tens of thousands of jobs have been generated by their activities. There are two common worker-owned business models, the worker cooperative and the employee stock option plan (ESOP). A worker cooperative is a for-profit business that is owned and operated by its employeeowners. Ownership is in the form of shares in a business corporation, whereby the workers have a voice in the decision making of the business via a one person–one vote principle. A surge of worker cooperatives appeared on the employment radar in the 1960s with various levels of success. As interest in worker cooperatives increased, the nonprofit Industrial Cooperative Association (now the ICA Group) was formed in 1978 with a mission to create and save jobs through the development and strengthening of employee-owned cooperatives and community-based projects. Impressively, ICA Group has kept alive a network of approximately 200 U.S. worker cooperatives through its efforts (Williamson et al., 2002). Today, the primary trade association for U.S. worker cooperatives is the U.S. Federation of Worker Cooperatives. What does a successful worker cooperative model look like? One example of a true success story is Cooperative Home Care Associates (CHCA), part of the Paraprofessional Health Care Institute cooperative network. Founded in 1985, CHCA is a worker-owned home health care agency. CHCA (n.d.) now employs more than 2,000 African-American and Latina women in the home health care field. It was created in response to changes to the federal Medicare program in 1985 that resulted in greater numbers of patients needing more extensive health care in their homes, a need that overtaxed the available and underpaid home health care practitioners at the time. At present, more than 80 percent of CHCA’s members have ownership in the cooperative. The wages earned by its members average more than $8 per hour, one of the industry’s highest average wages. Worker turnover, a measure of worker satisfaction, averages 20 percent, compared with the industry average of 40 to 60 percent. It is also impressive to note that 75 percent of CHCA’s members had previously relied on public assistance.

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While this book focuses on CED and the role of the social workers in the United States, it is worth noting that the world’s best and largest example of a worker cooperative is found in the Basque region of Spain. Mondragon was founded in the 1950s by a priest, Father Don Jose Maria Arizmendiarrieta. It currently has 210 companies (half of which are cooperatives) in its network and employs more than 84,000 people, slightly less than half of whom are cooperative members. Total worldwide sales for Mondragon in 2010 were an estimated 14 billion Euros (Mondragon Corporation, 2011). However, Mondragon is more than simply a large collection of worker co-ops. Its Financial Group includes banking, social welfare, and insurance businesses. Its Industrial Group encompasses the production of goods and services through eight divisions. Its Distribution Group’s focus is commercial distribution and agricultural food enterprises. In addition, Mondragon has various research, vocational training, and teaching centers, including a university with an enrollment of 9,000 students (Mondragon Corporation, n.d.). Mondragon is a unique—and successful—social experiment. ESOPs are the second common type of worker-owned business. The mechanisms for ownership can be accomplished via various stock ownership plans. As the National Center for Employee Ownership (NCEO, n.d., para. 1) states: Employees can buy stock directly, be given it as a bonus, can receive stock options, or obtain stock through a profit sharing plan. Some employees become owners through worker cooperatives where everyone has an equal vote. But by far the most common form of employee ownership in the U.S. is the ESOP, or employee stock ownership plan. Almost unknown until 1974, about 11,000 companies now have these plans, covering over 8 million employees.

Thanks to the pioneering work of groups such as NCEO, millions of U.S. workers have some ownership in their companies. The numbers are actually quite staggering; ESOPs affect more than 8 percent of all stocks: a grand total of $800 billion. Examples of such companies in the United States include United Airlines, Home Depot, Microsoft, and Hertz. Though the workers through an ESOP own the majority of shares in the company, unlike Mondragon where workers have one vote for each share

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they own, U.S. workers have little or no say in the management decisions of the company. Hence, the workers at United Airlines, for example, are still unionized and can strike against management around wage and compensation issues (Williamson et al., 2002). Because most U.S. models of ESOPs do not translate into actual worker decision making for the companies, social capital development is limited. For worker-owned businesses of any type to be successful, strong bonds must be formed between the worker-owners of the business. Without this bonding capital, a worker-owned business cannot succeed. The level of trust among the workers must be very high, as all their livelihoods depend on it. Bridging capital is also important, as the worker-owners must build ties to various financial institutions (or in the case of Mondragon, create their own) to finance their operation successfully. Consumer Cooperatives

Consumer cooperatives, while not uniquely American, affect many more people in the United States than most realize. More than 100 million people, or about one-third of the U.S. population, are part of the consumer cooperative movement. These cooperatives include housing, food, health, finances, insurance, child care, utilities, and more (Consumer Federation of America, n.d.). A consumer cooperative is a user-owned, user-controlled business that distributes goods and services on the basis of use (University of WisconsinMadison, n.d.). The people belonging to a consumer cooperative control the organization and elect the board that governs it. In turn, the consumer members get discount rates on goods and services, as their capital makes the business strong and keeps it running (Consumer Federation of America, n.d.). What all cooperatives have in common is that they follow the principle of “one member, one vote.” Consumer cooperatives range greatly in size from tiny ones with few members to ones with millions of members. It is important to realize that the reason cooperatives exist is not to make a profit but to provide benefits to its members, whether in the form of goods or services. Given the nature and size of some cooperatives and the way they are managed (much like a traditional business), most consumer members have little or no influence over the organization or its governance (National Cooperative Business Association, n.d.).

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Consumer cooperatives have been around for well over a century. Some of the better known are the National Rural Electric Cooperative Association, an energy company; Recreational Equipment, Inc. (REI), an outdoor and sporting equipment company; and Puget Consumer Cooperatives, a food purchasing cooperative. In many cases, the consumer members of a cooperative do not realize they belong to one, such as their local funeral home, credit union, or health care provider, nor are cooperatives necessarily advertised as such. The economic effect of the cooperative movement is rather large; almost 30,000 U.S. cooperatives have $3 trillion in capital assets, more than $500 billion in income, and more than $25 billion in salaries. Moreover, almost $80 billion is paid back to its members in the form of “patronage refunds and dividends” (University of Wisconsin Center for Cooperatives, 2009). There are various trade associations and financial supports for consumer cooperatives, including the Consumer Federation of America, the National Cooperative Business Association, Co-ops USA, and the National Consumer Cooperative Bank. The University of Wisconsin Center for Cooperatives offers a repository of information about cooperatives and does extensive research into their nature. One of the best features of its website is a map of all U.S. cooperatives by categories and sectors (http://www.uwcc. wisc.edu/). Consumer cooperatives are an excellent example of building social capital, particularly bridging capital. There is typically not strong bonding capital among most consumer cooperative members, but by coming together and combining their purchasing power, members are linked in such a way as to provide important benefits to one another. bui l di n g and i nc re as i ng th e val ue o f so c ia l c a pita l

The 1960s urban renewal model efforts are often looked to for lessons of how not to plan community revitalization, as there was typically little to no community involvement in those processes. Simply bulldozing decaying neighborhoods and relying on city leaders to decide what to build next turned out to be a disaster for those living in the community. Urban relocation, not unlike the removal of Native Americans from their homelands a century before, was not a model to emulate. In 1966, Congress acknowledged the need for community involvement in effectively revitalizing the

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urban areas when it enacted the Demonstration Cities and Metropolitan Development Act of 1966: The Congress hereby finds and declares that improving the quality of urban life is the most critical domestic problem facing the United States. . . . The Congress further finds and declares that cities, of all sizes, do not have adequate resources to deal effectively with the critical problems facing them, and that Federal assistance in addition to that now authorized by the urban renewal program and other existing Federal grant-in-aid programs is essential to enable cities to plan, develop, and conduct programs to improve their physical environment. (“Demonstration Cities and Metropolitan Development Act of 1966,” P.L. 89–754, sec. 101; 80 Stat. 1255)

A key component of this legislation was its citizen participation requirement, which essentially codified citizen involvement in decision making during the community development process. Yet even with this important piece of legislation, the boundaries and roles of citizen participation and involvement were not yet clear. An excellent example of blurred boundaries and citizen participation can be seen in work to develop the People’s Park in Berkeley, California. In the late 1960s, the University of California– Berkeley purchased a parcel of land bordered by Haste Street and Telegraph Avenue. The housing on the property was primarily inhabited by political activists and people who described themselves as part of the counterculture. The university cleared the land with the intent of constructing new athletic fields, angering its displaced residents. The community was then mobilized by the protesters, who protested so strongly that the construction plans were put on hold, which left the cleared land vacant and angered the displaced residents even more. On April 18, 1969, an article appeared in the underground newspaper The Berkeley Barb that rallied citizens to gather on the land to erect a “People’s Park” on the site in protest, even though they had no legal right to do so. Hundreds of people showed up and cleaned up the vacant lot, planted flowers, created a walkway, and built a sandbox. University officials were furious at the legal trespass, leveled the plot of land again, and erected a fence around it. Outraged, several thousand protesters showed up, and a riot ensued, necessitating the deployment of the National Guard

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by Governor Ronald Reagan. Many people were injured, one person was blinded, and another was shot and killed. The unrest was so strong that the National Guard maintained a presence in the area for weeks. Eventually, the university and community came together, and the park was reinstated. An agreement between the two entities provided that the city would maintain the property, which it did for a time. The management of the park was then taken over by the university, which sees to its management to this day, and it is still known as the “People’s Park.” One influence on this was the work of Paulo Freire, especially his classic book Pedagogy of the Oppressed (1970). This book laid out a plan whereby ordinary citizens, even those who could not read, become self-educated and powerful through participation in action and reflection, thus breaking their bonds of oppression and at the same time liberating the oppressors in the process. Most commonly applied to literacy programs in South America, his ideas have strongly influenced many facets of education in the U.S. and elsewhere. Many battles are still being fought over citizen participation, but the fight today is typically over how much, not whether. It is much less common for something significant to occur at the neighborhood level without some community reaction to it. Most local government officials seek citizen input on projects that are in the least bit controversial. This does not always mean, however, that citizens at the neighborhood level will get their wishes met; it simply means that citizen participation is sought. p o l i t i ca l parti c i pati o n and i ts e ffe c t o n s oci a l c ap i tal

Our system of government has the framework in place for political participation by its citizenry, but the system does not work if people do not avail themselves of the opportunity. In that regard, there is a direct relationship between social capital and the level of political participation within a community. By actively participating in the political process, social capital is increased, creating what could be termed “political capital.” Participatory engagement in the political process, especially on the local level, is ripe for the development of social capital and, ultimately, community building. For instance, a neighborhood zoning issue might be of concern to a local business owner. The owner becomes aware of the potential

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effects of this issue on the business and the community. The owner’s awareness leads to opinion, which in turn leads to debate, and perhaps even action, through the mobilization of affected individuals. Thus, the process of political participation facilitates the acquisition of skills that are a natural byproduct of political involvement such as debate, consensus building, and the forming of coalitions, which ultimately contributes to the empowerment of the individual, resulting in an increase in social capital. Voter registration and voter mobilization are two important vehicles of political participation that directly promote empowerment and the enhancement of social capital. The greater the numbers of people who exercise the right to vote, the more influence the community has collectively on decisions affecting the just allocation and development of a community’s resources. The power created by making politicians accountable to an informed and active constituency is tremendous. Conversely, an apathetic voting community results in inadequate representation, leaving the door wide open for disenfranchised people to continue to be cut out of the economic pie. Supporting voter registration is a nonpartisan activity that can be performed by a CDC without fear of jeopardizing its tax-exempt status. By encouraging and facilitating the voter registration process, CDCs can promote citizen participation and effective dialogue, thereby contributing to CED. Politicians representing the area in which CDCs are operating must know that the people who live there are registered voters. Involving people in the neighborhood in meetings with members of the city council, state legislators, and, when needed, federal officials and politicians can both be empowering to neighborhood residents and make an enormous difference in the outcomes for the neighborhood. h ow cr o s s -c u ltu ral trai ni ng s tr e n gt he n s s o ci a l c ap i tal

Because macro social workers are trained to mobilize networks of people, they are in a unique position to support the expansion of social capital in local communities. A special issue in 1998 of the Journal of Community Practice entitled “Community Economic Development and Social Work” outlined the role of social workers in directing social capital toward economic development by, for example, facilitating community meetings, working

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with small businesses to promote cooperation, and promoting shopping locally (Midgley & Livermore, 1998). In a time of ever-increasing diversity among U.S. communities, it is imperative that social workers obtain training in multicultural awareness to do this work effectively. Working within a diverse community requires sensitivity to the community’s unique and often complex cultural composition. For example, written materials may need to be translated into the languages of the community’s residents. Cultural celebrations may revolve around ethnic holidays or traditions. Communication and/or interaction with residents may require knowledge of culture-specific etiquette. Social workers can (and should) take a leadership role in the community on this point. Through both example and action, the infusion of understanding and accommodation will assist those in the community who might otherwise be left behind. Social workers are uniquely poised to promote this connectedness by bridging cultural gaps through education and outreach, resulting in a stronger social capital for the entire community. See Gutiérrez and Lewis (1999) for a discussion of how empowerment can help build the social capital within oppressed populations. con cl usi o n

Building social capital is about creating opportunities and institutions in order to improve the quality of the society in which all people live. As social capital increases, the status quo will change, expanding outward in a ripple effect. One of its broadest effects will be on the conventional principles of capitalism and the currently held tenets of work, labor, and compensation. This raises a question: Are the changes already occurring enough to create the “third way,” a society that finds a balance between unbridled capitalism and socialism? Probably not. However, even today’s capitalist economic model includes socialistic institutions such as the U.S. Postal Service, Social Security, and Medicare, an outgrowth of changes made years ago in a society that challenged the status quo. Such is the historical mechanism of societal progress: reflecting and assessing where we are and what resources we have, accepting what works and discarding what does not, and embracing new ideas and creating new realities. As CED evolves, the prevailing experiments in social and political capital will also see change. It will be incumbent upon social workers

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to stay malleable in this fluid dynamic, with the ultimate goal of upholding the principles of social work’s core values through action, education, and service. The case study of the Dudley Street Neighborhood Initiative (DSNI) following this chapter illustrates various aspects of building social capital in a distressed community. By developing bonding and especially bridging capital, this CDC has been able to accomplish things that no other CDC in the country has been able to do. Bridging capital in the neighborhood was built between very disparate ethnic groups: White, Latino, African American, and Cape Verdeans. This was concretely manifested in the creation of a very strong DSNI board of directors, whose composition equally reflected the ethnic groups. DSNI also built bridging capital with key organizations outside of the neighborhood, particularly with organizations and people who were willing to fund various aspects of DSNI’s programs. dudley s treet n e i ghb or hood i n i t i at i v e (d s n i ) Description

Origins The Dudley Street Neighborhood Initiative (DSNI) is a nonprofit community-based planning and organizing entity based in the Roxbury/North Dorchester area of Boston. Once a vibrant commercial and residential district, the Dudley Street area of Roxbury/North Dorchester deteriorated into one of the poorest in Boston by the 1960s, when the neighborhood became a dumping ground for broken appliances and toxic waste and the site of regular arson fires and widespread home abandonment (Annie E. Casey Foundation [AECF], n.d.). By the 1970s, Dudley Street had been devastated not only by dumping and by abandoned and burned-out homes but also by divestment, neglect, and redlining by local financial institutions (“History,” n.d.). By the early 1980s, more than one-fifth of the neighborhood’s land was vacant (“History,” n.d.). In 1984, a Boston-area foundation unveiled plans to transform Dudley Street by building new and more expensive housing without having solicited input from the people who lived and worked in the neighborhood. Fearful of being forced from their homes by gentrification and angry about being excluded from planning, the ethnically and linguistically diverse residents of Dudley Street pulled together. That year, they organized DSNI to protect their neighborhood from real estate speculators and plot a community revival (Walljasper, 1997). DSNI began as a collaborative of residents, local businesses, social services agencies, and religious organizations (McNeely, Aiyetoro, & Bowsher, 2002). Now, DSNI

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has more than 3,600 resident members and partners with numerous businesses, religious institutions, banks, CDCs, and nonprofit organizations and agencies (“History,” n.d.). For more than twenty-five years, these members and partners have joined forces to maintain affordable housing in the Dudley Street neighborhood, provide critical services to neighborhood residents, and shape the area into a vibrant, dynamic, and culturally diverse neighborhood (DSNI, 2009).

Structure As a community-based nonprofit organization, DSNI is governed by a thirty-four-member board of directors (“Board of Directors,” n.d.). Community-wide board elections are held every two years at DSNI’s annual meeting. DSNI was designed to be a true democracy: Board representation of each of the community’s four major racial and ethnic groups— African American, Cape Verdean, Latino, and White—is required by the organization, and these groups are represented equally on the board, with four adult members each. In addition, three youth members between the ages of fifteen and eighteen from these groups sit on the board. The remainder of the board is composed of seven members from local nonprofit agencies representing the health and human service fields and two members each from small businesses, religious organizations, and CDCs in the neighborhood. The final two members are residents who are appointed by each newly elected board (“Board of Directors,” n.d.). DSNI operates with a staff of fewer than twenty paid employees (AECF, n.d.b). Staff members include community organizers and directors of research and evaluation, community planning, crime and safety education, leadership and capacity building, resident development, workforce development, and sustainable economic development and housing (“DSNI Staff,” n.d.).

Funding For the fiscal year ending June 30, 2009, DSNI had total revenues of $850,200, almost $300,000 more than the previous fiscal year despite the economic downturn at the end of the decade. It had total expenditures of $712,206, and net revenues of $137,994, which was $100,000 more than in the previous fiscal year. Net assets were $438,678 (GuideStar, 2009c). Current funders comprise a diverse mix of local private charitable foundations (e.g., Boston Foundation and Foley Hoag Foundation), regional foundations (e.g., EarthShare of New England), regional banks (e.g., Citizens Bank and Sovereign Bank), national banks (e.g., State Street Bank), and a private investment firm, a local utility, a local network of community-based organizations, and the Office of Community Services of the

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U.S. Department of Health and Human Services (“Our Funders & Partners,” n.d.). DSNI was also one of six organizations in the United States funded for seven years through AECF’s Rebuilding Communities Initiative, in which AECF partnered with community-based organizations across the United States to reverse social isolation and disinvestment in lowincome neighborhoods (AECF, 2002). Strategy and Programs

Target Community DSNI operates in a 1.5-square-mile neighborhood two miles from downtown Boston that is home to 24,000 ethnically diverse residents (McNeely, Aiyetoro, & Bowsher, 2002). The community is composed of African American (37%), Latino (29%), Cape Verdean (25%), and white (7%) residents, with large concentrations of Spanish-speaking, Portuguesespeaking, and French-speaking residents (Boston Local Learning Partnership [BLLP], 2003, June; “History,” n.d.). More than two-fifths of residents speak a language other than English at home, and population growth is occurring most quickly among residents who speak French Creole and Spanish (BLLP, 2003). Residents’ per capita income is $7,600, compared with nearly $16,000 for the city of Boston as a whole (“History,” n.d.). More than one-third of residents live below the federal poverty line (AECF, n.d.b). The average unemployment rate in the city of Boston is 10 percentage points lower than it is in the Dudley neighborhood. Although both the number of owners who occupy their homes and the number of residential properties have each increased and vacant properties have decreased in Dudley, Boston’s owner-occupancy rate is higher (32% compared with 27% in Dudley), and its vacancy rate is lower (5% compared with 10% in Dudley; BLLP, 2003). Families with children under eighteen years old make up nearly half of Dudley’s households, and these families have more than twice as large a share in Dudley as they do in Boston citywide (BLLP, 2003). Only 38 percent of these families earn an income that enables them to maintain economic self-sufficiency—a measure of the actual costs of living, working, raising a family, and paying taxes in Massachusetts—whereas 57 percent of families in Boston overall do (BLLP, 2003). Although capacity for child care is increasing, only half of children under five years can be accommodated in the Dudley neighborhood (BLLP, 2003). Over the past fifteen years, higher percentages of Dudley residents have graduated from high school and continued on to further education. Elementary and high school participation rates are high, and the rate of students receiving special education services, although still higher than in Boston, is decreasing (BLLP, 2003). Despite difficult economic times, the future of Dudley Street’s children is improving.

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Strategy The mission of DSNI is “to empower Dudley residents to organize, plan for, create and control a dynamic, diverse, and high quality neighborhood in collaboration with community partners” (“Home,” n.d., para 1). The earliest strategies adopted by DSNI to realize this mission focused on building the capacity of residents to plan for the neighborhood’s development and on renovating the community’s vacant land into parks, gardens, and playgrounds (Medoff & Sklar, 1994). Today, DSNI has expanded to operate in three main strategic areas: community empowerment, sustainable and economic development, and youth development. Within those areas, DSNI uses a comprehensive community revitalization approach in transforming the Dudley Street neighborhood, focusing on the community’s physical landscape and facilities, environmental needs and hazards, economic development, and human development and services (“History,” n.d.). In targeting this broad and inclusive range of community issues for change and growth, DSNI concentrates foremost on empowering residents, who develop the organization’s plans for everything from building affordable housing and community facilities on vacant land to increasing the number of neighborhood youth who attend college (“DSNI Historic Timeline,” n.d.; “History,” n.d.). In implementing its resident-developed plans for housing, DSNI for a period acted as its own housing developer. However, DSNI leaders found that the detailed work required for developing real estate projects and the process of securing financing constrained the organization’s role in empowering residents (Medoff & Sklar, 1984). Now, DSNI does not itself build housing or provide services; rather, DSNI serves as the planning force—the organizer, driver, and broker—and the plans are implemented in partnership with local developers, banks, businesses, religious institutions, CDCs, and social service agencies that serve the Dudley Street neighborhood (McNeely, Aiyetoro, & Bowsher, 2002). DSNI provides direction and formal training to the organizations that carry out the community plans and recruits experienced community leaders to provide training to emerging leaders (McNeely, Aiyetoro, & Bowsher, 2002). This process ensures that community guidance and desires are codified into standards that the partner organizations follow, and it enables residents and partners to engage in effective community decision making (“Community Empowerment,” n.d.). DSNI has also strategically cultivated community leaders who create and maintain productive partnerships with leaders in the Boston city government. When it formed, DSNI initially found itself in opposition to city officials, such as during its “Don’t Dump on Us” campaign to stop illegal dumping on its vacant land. Early on, DSNI struggled to create a working relationship with city administrators. As DSNI quickly evolved, the organization hired community organizers who had good connections with City Hall and could persuade politicians that collaborating with DSNI was to their political advantage (Walljasper, 1997).

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In fact, DSNI was later able to convince City Hall to grant it eminent domain authority—the right and authority to control private property—over the neighborhood’s 1,300 vacant lots. It remains the only community-based nonprofit in the country with that power (“History,” n.d.; Walljasper, 1997). This strategy has been critical to DSNI’s success and its ability to guide the development of affordable housing and land in the neighborhood.

Selected Programs and Projects co mmunit y cl eanup. DSNI’s “Don’t Dump on Us!” campaign in 1986 ended illegal dumping of waste on its vacant lots and led to the creation of DSNI’s annual neighborhood cleanup event. DSNI now holds Dudley PRIDE campaigns around community safety and environmental concerns, including lead abatement and hazardous waste clean up (“History,” n.d.).

susta ina b l e ho usi ng development. In 1988, DSNI created a community land trust called Dudley Neighbors, Inc. (DNI). DNI applied and was approved to become a Massachusetts 121A Urban Redevelopment Corporation. This status is what enabled DNI to use the power of eminent domain to acquire privately owned vacant land in the Dudley Triangle area of the neighborhood legally. DNI temporarily leases these vacant lots to private and nonprofit developers for the purpose of building affordable housing consistent with the community’s master plan. DNI then leases the houses built on the lots to individual homeowners, cooperative housing corporations, and other forms of limited partnerships at affordable rates, often for tens of thousands of dollars less than the homes cost to build. As a community land trust, DNI retains the lots’ ninety-nine-year ground lease, and DNI can require that properties built on the lots be used by lease holders only for purposes set forth by the community. It can also establish parameters for the prices that homes on the land can sell and be resold for. DNI is DSNI’s vehicle for ensuring that residents have control over any development in the neighborhood and that homeownership opportunities created in the neighborhood remain affordable not only to current residents but residents of future generations (“Dudley Neighbors,” n.d.; Walljasper, 1997). Since 1994, DNI and DSNI have facilitated the construction of 155 new homes and two community spaces on land acquired by DNI. When Winthrop Estates, the first set of thirty-six homes, were constructed, each cost approximately $150,000 to build but sold for $90,000. Families needed to have an annual income of $18,000 to be eligible buyers. DNI and DSNI are currently developing another 200 new homes in the Dudley Triangle area. In addition to these new homes, future development projects in the Triangle area include the construction of a community green house, parks, gardens, open space, and a revitalized local shopping area (“Dudley Neighbors,” n.d.).

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co mmercia l a nd m i xed-use developm ent. Through its Dudley Street Build Out project, DSNI is developing commercial and mixed commercial-residential properties on four sites on vacant land in the neighborhood. Just as with its housing projects, DSNI’s commercial and mixed-use developments are driven by the organization’s comprehensive neighborhood plan and controlled by residents in collaboration with the City of Boston and the developer partners. They are intended to create jobs, greater access to consumer goods, and to improve residents’ quality of life (“Community Economic Power,” n.d.).

kro c co mmu nit y center. In 2005, DSNI entered into a partnership with the Boston Salvation Army to construct a community center in the Dudley neighborhood (“Kroc Community Center,” n.d.). Armed with more than $85 million granted from the national Salvation Army as well as additional funding from the Boston chapter, DSNI and the Boston chapter worked closely with residents to develop a plan for the center. Key to the plan was taking steps to ensure that the center would not lead to gentrification of the community but rather serve as a source of economic development for residents in addition to providing them with facilities and services. To that end, the community, the Salvation Army, and the construction company selected to build the center agreed that community residents would be hired for construction jobs as well as jobs in the center: At least 51 percent of employees would be from the local area, 51 percent would be members of a racial and ethnic minority, and 15 percent would be women. To ensure that hiring goals were achieved, DSNI launched the Dudley Workforce Committee, a collaboration of local nonprofit organizations, advocacy groups, and labor partners, that developed best practices for recruiting the center’s workforce and building economic power for residents, minorities, and women. The community center is under construction and contains a swimming pool, theater, gymnasium, dance studio, chapel, and classroom space.

sch o o l a nd yo uth i ni ti ati ves. DSNI has created several programs and initiatives to improve opportunities for children and youth in the neighborhood, starting with early childhood services and going all the way to job and college preparation (“Youth Opportunities,” n.d.). Dudley Children Thrive partners with local children’s agencies to build the community’s capacity to provide high-quality programs and services, including child care, for children from birth to five years old. For school-age children, DSNI engages parents around education reform in Boston Public Schools through its membership on the board of the Boston Parent Organizing Network. For adolescents, DSNI operates a collaborative called GOTCHA (Get off the Corner Hanging Around). At twenty different community partner sites, GOTCHA connects youth with meaningful employment opportunities, opportunities to develop professional skills and leadership, and personal and emotional

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support services. Ultimately, its aim is to strengthen the economic power of residents. College Bound, another DSNI program for adolescents, has the same goal. The program organizes trips to visit colleges, links high school students to college students from the neighborhood, and holds workshops on applying to college. Finally, DSNI has created the Dudley Youth Council to empower youth to meet and have a voice in the Dudley community’s revitalization.

l ea d ership a nd trai ni ng. In the early years of DSNI, grassroots leaders in the community were not developing fast or effectively enough through informal means (AECF, 2002). DSNI created the Resident Development Institute (RDI) to create a shorter learning curve for new community leaders (“Community Empowerment,” n.d.). RDI developed a leadership competency curriculum, trains potential grassroots leaders, and offers a leadership series and board development workshops. RDI has now expanded to serve as a consulting, training, and technical assistance provider to local, national, and international community building organizations. Major Successes The subject of the book Streets of Hope: The Fall and Rise of an Urban Neighborhood (Medoff & Sklar, 1994) and the award-winning documentaries Holding Ground: The Rebirth of Dudley Street (Lipman & Mahan, 1996) and Gaining Ground: Building Community on Dudley Street (Lipman & Mahan, 2013), DSNI is considered a highly successful CDC and has received much attention and praise for its continuing transformation of the Dudley Street neighborhood. A year after DSNI launched its “Don’t Dump on Us” campaign to clean up vacant lots and stop the illegal dumping of garbage in Dudley Street, the campaign successfully closed the illegal transfer stations operating in the neighborhood. After their history-making win of the right of eminent domain power in 1988, DSNI successfully transformed the Dudley neighborhood. Today, more than half of the 1,300 vacant lots that existed in the 1980s have been rehabilitated and are now the site of affordable homes, gardens, parks, playgrounds, schools, and community service organizations (“DSNI Historic Timeline,” n.d.). More than 400 new homes have been built, and more than 500 housing units have been rehabilitated. DSNI also now has more than 3,600 resident members. Residents who were children when DSNI formed in 1984 have been trained as community leaders, including DSNI’s current executive director named in 2000 (“DSNI Historic Timeline,” n.d.). DSNI has been recognized as a successful CDC by the U.S. government and honored with several awards, including the prestigious American Planning Association Award for housing planning (“DSNI Historic Timeline,” n.d.). In 2000, the Fannie Mae Foundation

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selected Dudley as one of ten “Just Right” neighborhoods for affordable home ownership. The recognition has lead to DSNI’s attracting significant funding in the 2000s, including from the Ford Foundation, which granted DSNI a $2 million low-interest loan to buy private vacant land, and from AECF, which granted DSNI funding through its Rebuilding Communities Initiative (AECF, 2002). In 2010, DSNI won one of twenty-one large federal planning grants to become a Promise Neighborhood and develop a continuum of services for children living in concentrated poverty from birth to age twenty-one (U.S. Department of Education, 2010).

c h a p t e r    14

Special Challenges in Community Development RACISM AND REGIONALISM

far has focused on the challenges that the field of community economic development (CED) and community building faces within local communities and from market forces that affect strategies and projects within these communities. There are also overarching issues faced by CED organizations that affect the people of the community and CED organizations. We have chosen two special illustrations of these dilemmas and the potential of CED practitioners to address them: racism and regionalism. Racism is an old and persistent barrier in addressing poverty, urban development, and equity. Regionalism is a new concern, emerging slowly in the consciousness of front-line CED practitioners. There are certainly other barriers and challenges for CED practitioners arising from the larger environment, from national policies such as macroeconomic policy to futuristic trends such as increased globalization. However, the challenges of racism and regionalism, different but related, are very much on the front burner of the CED field and illustrate both the resilience and limitations of the field (Cummings & Volz, 2003). much of this text so

con fr onti ng rac e Race Matters

The strong association between race and poverty continues to be an undeniable barrier to successful community development. Data from the U.S. Census (2011b; 2011c) show that African Americans and Hispanics suffer almost three times the poverty rate of whites (27.4%, 26.6%, and 9.9%,

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respectively). Neighborhoods with a high concentration of people of color are more likely to have a high incidence of disinvestment, vacancy, and substandard housing. As described in earlier chapters, concentrated urban poverty, which became more prevalent over the last three decades of the twentieth century, was a direct result of both the restructuring of the U.S. economy and racial discrimination. However, it is not only the poor, who are often the focus of CED efforts, who are victims of discrimination. African American and Hispanic working- and middle-class families are far less likely than white families to achieve an adequate family income, and the disparity in wealth is even greater than the disparity in income. While 10.1 percent of whites have income levels of more than $75,000 per year, only 5.7 percent of African Americans do (U.S. Census Bureau, 2011b; 2011c). The difference in wealth accumulation is almost entirely attributable to differential rates of homeownership, which stand at 74 percent for whites and only slightly more than 44 percent for African Americans (U.S. Census Bureau, 2011b). How, then, can CED leaders not be vocal and active in directly and vigorously combating racism? As demonstrated from the outset in this text, the roots of community development go deep into the civil rights and antipoverty movements, including the 1960s’ War on Poverty. Nonetheless, one does not often encounter programs specifically directed at achieving racial equity among community development corporations (CDCs). The language of community development is more likely to be about reinvestment, market competitiveness, and success in capturing market opportunities for neighborhoods and individuals than it is about racial justice. Have community developers been missing the point? Many of otherwise carefully designed CED programs of the past suffered from being “race neutral” in environments that have been anything but race neutral. CED solutions must take the power of race and racism into account in the design and implementation of every program and project. The lessons of ignoring racism are too painful and numerous. As the leading academic Cornel West titled his seminal 1994 book, race matters. Race and racism are often ignored, however, because the most insidious forms of racism are not in the form of personal or overt bigotry. Racialized outcomes do not even necessarily require personally racist actors. john powell, the executive director of Ohio State’s Kirwin Institute for

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the Study of Race and Ethnicity, examines the components of racism in the post–Jim Crow era from personal racism to institutional racism to structural racism. Structural racism refers to interinstitutional arrangements that lead to inequitable outcomes and a caste-like social system, a system of social structures that produces cumulative, durable, race-based inequalities. “The structural racism lens helps us trace current disparities to the structures in which they are embedded” (powell, 2007, p. 11). This lens provides means for analysis of how historical legacies, individuals, and structures and institutions have combined interactively to distribute material and symbolic advantages and disadvantages along racial lines. Over time, these structural impediments create a history of discrimination and disadvantage that perpetuates the effect of the structural impediments even when they are removed. Generations of white privilege and black deprivation, white wealth and black poverty, white access to major institutions and black segregation from them, bestow advantage to one that creates deficit for the other. Government—whether local, state, or federal—in particular has been one of these structures. Federal housing insurance of the 1940s, public housing expansion in the 1950s, and major housing development programs of the 1960s, for example, each directly or indirectly perpetuated racial segregation. In fact, the largest expansion of direct support for homeownership of minorities was undermined by racial steering and, in the case of some corrupt real estate professionals, was used as a tool for the blockbusting that accelerated white flight from the cities in the late 1960s and early 1970s described in chapter 3. Racism deeply influences real estate practices, whether those practices are driven or reinforced by Americans’ aversion to racially mixed communities. Settlement patterns have turned out to trump school-based desegregation, welfare reform, and workforce preparation efforts at equality. Workforce development and training programs successfully prepared people of color for positions that discrimination prevented them from obtaining or from which they would be the first to be laid off. Failure to be explicit about race in CED “strengthens the racially hierarchical patterns that are reflected in structures and inhabit our implicit mind. Our willful blindness leaves us in the grip of a false naturalness that robs us of hope and possibility” (Rudd, Johnson, Staats, powell, & GrantThomas, 2009, table of contents).

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How CED Can Address Racism

CED and community development leaders have been most successful in dismantling racial barriers when they have done so in the concrete terms of problem analysis and systematic implementation of solutions to those problems. In powell’s terms, they assess and then attack the structures in which inequality is embedded in their local communities. Disparities in mortgage application rejection in which black mortgage applicants are rejected 2.7 times as often as comparable white applicants—in spite of decades of antidiscriminatory policies and training of staff of lending institutions—presents a good example of such a structure that local CED organizations have attacked. When the Federal Reserve Bank of Boston undertook an in-depth analysis of the dynamics of this persistent discrimination, it uncovered neither hidden policies that discriminated on the basis of race nor open bigotry. Rather, it uncovered subtle vestiges of historic racial discrimination and segregation that had been internalized by the white staff of lending institutions (Carr & Megbolugbe, 1993). The differential in the rates of mortgage application rejection were not found in the acceptances or rejections that clearly met or did not meet credit criteria. They were found among those applications that were marginal on credit criteria and where a decision required judgment on the part of lending institution staff. The unexpected indicator of the difference in treatment between applicants of one race and another turned out to be how thick their files were. The explanation for this emerged only by secretly observing the practices of the staff. Investigators sought to compare the credit review history and files of black and white applicants of identical education, employment, and family income characteristics. They found that, initially, both white and black applicants were treated the same. However, as is common in credit reviews, many people had unfavorable items in their credit history (e.g., a long-disputed credit card issue with a major department store). At the second review, when white staff of the financial institution reviewed the situation with white applicants and told them that their mortgage application would be turned down, there was a moment of quiet discomfort after which institution staff would suggest that such problems arose frequently and that the applicants could perhaps pursue the issues and resolve them or provide written explanations. Some interviewers

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even recounted personal credit problems that they had resolved. The initial discomfort was replaced by a warm collaboration and even a sense of humor. Soon the applicants were on their way to providing explanations, letters from creditors, and other documentation that eliminated their credit barriers and resulted in a thick file of paper. The second review played out somewhat differently for applicants of color after the same types of credit problems were identified. The institutional staff enumerated the problems and told the applicants that their mortgage application would be turned down. The moment of quiet discomfort stretched into a long silence, some shuffling of feet and chairs, and nervous coughing. Eventually the applicant politely accepted the verdict and shook hands and left, or the bank staff apologized for the disappointing news and encouraged the applicant to try again in the future. What happened during the quiet moment? Later interviews with participants revealed that, on the one hand, the white staff of the institution felt uncomfortable in turning down an applicant of color but felt that entering into a discussion of the family finances and history would be an unwelcome intrusion. Applicants of color, on the other hand, were often predisposed to accept the rejection as just another example of the racism they had been warned about or experienced in other aspects of their lives. Both parties reached an unintended and unwelcomed outcome. The white staff members of the bank were not particularly prejudiced but uncomfortable in crossing the racial divide. The black applicants had internalized oppression as resignation. Both were unconscious of their contributions to the denouement and were shocked when it was revealed. Banks across the country have responded to the Federal Reserve Bank of Boston study by successfully training their mortgage application staff in racial sensitivity and prevention of discrimination in lending. Of course, clear bank policies and hiring people of color also go a long way toward addressing the institutional racism that has become internalized and unconsciously perpetuated in the industry. In deeply troubled neighborhoods of intensely concentrated and isolated poor people of color, any community building program must develop approaches to address disparities in wealth and quality of life as well as the internalized racism community residents may be experiencing. A pervasive sense of alienation, deprivation, and hopelessness often

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leads to both self-destructive behavior and outward expressions of rage that evolve into cultures of violence and antisocial activity. As Earl O. Hutchinson (2000) and others observe: Many young black men in disinvested communities, in the absence of other options, desperately want to prove their manhood by obtaining the material possessions they see in movies, television, and advertisements, but they believe that they will never acquire them, at least not legally. Their negative behavior is selfdefeating and twists the idea of what it means to be a man in a consumeroriented culture. The effect is equally deleterious for young women, who also are subject to sexism. Evaluators of programs that helped inner-city families living in public housing move to units with better conditions in the suburbs found that teenage girls flourished immediately in their new surroundings. Their analysis: Young women in the inner city were under such constant threat from men, including members of their own family, that their ability to achieve in school and other forums was undermined. However much community builders recognize that the causes of racial segregation and disparity are structural, they also cannot deny the personal dimensions that will express themselves and constrain the success of any programs directed to these young men and women. But, again, the effect of race is not limited only to those living in dire poverty or to community development efforts for the very poor. Robert Wallace’s (1993) study of successful black entrepreneurs indicated that, to be successful, they needed to have all of the insight, creativity, ingenuity, salesmanship, business skills, and contacts demonstrated by successful white entrepreneurs. However, they also needed something more: the ability to deal with the inevitable racism in markets, financial institutions, and workers without either lashing out or internalizing the frustration in selfdestructive behavior. In the contemporary climate in the United States of polarization between liberals and conservatives and still in many communities between black people and white people, there is an increasingly a slippery slope for community building leaders. They must attempt the necessary complex analysis to find a middle ground that acknowledges structural racism without denying that personal dynamics and behaviors can encumber individual success. Nonetheless, embracing that complex analysis and fashioning

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a respectively complex answer is the challenge that the dynamics of racism brings to the practice of community building. Successful community builders primarily work for the success of concrete efforts to overcome family poverty and neighborhood deterioration. They build sustainable communities with access to, and adequate support for, families and children to capitalize on the opportunities of American society. They often seem not to be working directly on the issues of racial and ethnic inequality and discrimination. However, they are always conscious of the influence of racism on creating challenging neighborhood conditions and on the need for racial and cultural sensitivity in fashioning solutions. Moreover, they do not shy from overtly challenging policies, practices, and institutional structures that perpetuate segregation and disparities based on race or ethnicity. They are vigorous in their analysis and are forthright in concretely identifying racial barriers. They call on mainstream institutions and white partners to be aware of and to address the dynamics of structural racism actively. Successful community builders are less inclined toward general discussions of racial equality than to focused conversations that, for example, challenge the top leaders of a lending institution that is denying mortgages to African Americans twice as often as it denies them to whites on how the institution can uncover the causes of such disparities and address them. Successfully addressing racism within a community building context requires consciousness of racial dynamics, underlying issues, and solutions as well as the commitment to racial equity as a goal. Such successful community building requires increasing the capacity of individuals and institutions. It includes efforts to “identify key public policies and institutional practices that need reform and develop alliances with the power to change them” (Lawrence, Sutton, Kubisch, Susi, & Fulbright-Anderson, 2004, p. 38) in the context of the particular efforts underway. Cross-racial and cross-sector alliances can be difficult to build but are necessary. In twenty-first-century America, it is still all too infrequent that business and civic leaders sit at the same table with grassroots community leaders, especially people of color, and engage in collaborative problem solving. Because CED more than any other community-based endeavor is convening these cross-sector, interracial problem-solving sessions, its practitioners have more opportunity to uncover and address embedded practices that lead to inequitable outcomes.

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Special Pressures on Community Builders of Color

In another measure of CED overcoming racism, CED practitioners of color have notably transcended barriers to professional advancement, becoming, for example, president of the Ford Foundation (Franklin Thomas of the Bedford Stuyvesant Restoration Corporation), a congressperson (Esteban Torres of the East Los Angeles Community Union), and a subcabinet officer at the federal level (Arabella Martinez of the Spanish Speaking Unity Council). However, the path to such positions creates its own special issues. Both from within minority communities and from the majority leadership outside of minority communities, leaders of community building efforts find themselves pressured because of their racial identity to take on work not directly related to their program responsibilities. White professionals working in communities of color on exactly the same program responsibilities would not be asked to take on these extra burdens. However valuable these endeavors, they do take the time and energy of professionals of color away from their program and organization management work. Within the community, for example, a person of color with a leadership role in a CDC focused on housing development might quickly be pressed into service to help the community address an issue of police brutality or the dismissal of a popular high school principal. Outside the community, majority leaders are so desperate for “representatives of the community” whom they find to be well connected to the community as well as genuine and articulate that successful executives of community building organizations will quickly find themselves invited to a wide variety of boards and commissions unrelated to housing development. Some CDC executives of color joke that they have no time for their real job because they are so busy attending meetings all over the city. Failure to recognize and address these pressures has undermined the success of more than one executive of color. There are potentially three courses of action that can be undertaken: (1) find a way to limit the involvement; (2) provide supports for the executive to manage the increased burden effectively, in the same way that a major law firm will provide support to one of its partners who has been appointed to the zoning board or school commission; and (3) invest in identifying and developing more leaders from the community who have the ability to take on these roles. The latter

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two solutions require an investment of specialized resources, a price that society should be ready to pay for the leadership it asks. The Growing Impact of Minority Population Change

Most of our understanding of race in America arose on the context of the Southern legacy of slavery, as challenged by the civil rights movement. As African Americans moved to the North, the same paradigms of racial discrimination existed, though often more subtly. In the twenty-first century, however, a black-white analysis of racism no longer suffices. Other minority populations, especially Asian and Hispanic/Latino populations, have grown in number and brought their own experiences of discrimination to the discussion. Latinos are the fastest-growing minority in United States and now outnumber African Americans. Some historically African American communities are now predominantly Hispanic or Asian. Who would have thought, for example, that such an icon of African American identity and political power as the Watts community in Los Angeles would now be predominantly Latino? Southern states such as Georgia and North Carolina now also have substantial Latino populations. These changes affect both the politics and the understanding of racial discrimination. Politically, it can be difficult for African American leaders in a traditionally African American community with new immigrants to bring in new leadership to reflect the community’s multicultural composition. Each ethnic group tends to see its own experience of racism and discrimination as the defining one, making coalitions that should be able to address a common issue more difficult. For example, says an African American foundation program officer, “I think we blacks tend to own this issue [racism]. We tend to take it. There’s a history and there are reasons, but I’m just wondering what impact that has on . . . our ability to build cross racial coalitions” (Amulya, O’Campbell, Allen, & McDowell, 2004, p. 35). In their brilliant work Searching for the Uncommon Common Ground (2002), Angela Glover Blackwell, Stewart Kwoh, and Manuel Pastor describe several instances in which a simple black-white perspective would lead to a misunderstanding of the situation. For example, those involved in the 1992 civil unrest in Los Angeles following the acquittal of police officers accused of the videotaped beating of Rodney King, an African American, were portrayed in the national media as black, whereas, in fact, they were

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multiethnic. Latinos were the most numerous among those arrested. Poverty and disempowerment were driving the rage more than simply race. They point out, however, that we should not forget that “the Black-White tension remains fundamental, defining, and persistent, and it colors the experience of all minorities in this country” (pp. 46–47). r e g i o n a li s m : a ne w c o nte x t f o r commu n ity d e ve lo p e rs

The growing movement to consider regions in the work of CED derives from two recurring themes: (1) metropolitan regions are the new operative scale for planning and action on development, and (2) governmentsupported suburban sprawl is increasingly detrimental and needs to be reversed. The Emerging Globally Competitive Metropolis

Economists have long compared the competitive positions of nations around the world. For most of the twentieth century, cities also competed, although with less clear economic tools for analyzing their competitive position. As a result of the growth of the industrial and retail sectors on the outer rims of cities, nodes of economic strength and density outside of their central business districts became more important. First there were “edge cities” (Garreau, 1991), dense concentrations of businesses and retail at a few points on the beltway of each major city. Then, as technology enabled jobs and businesses to be more disbursed across sprawling developments, transportation and business parks for these new locations were created. To many economic analysts, it seemed that the whole region became the important unit of global competition rather than the city (Peirce, Johnson, & Hall, 1993). Some even went so far as to suggest that nations were irrelevant and that world-class metropolitan areas would be the economic units competing with one another in a global economy ( Jacobs, 1984). None could ignore that metropolitan areas had become a significant unit of analysis. The growing focus on the metropolitan area among civic leaders, politicians, and political analysts gave rise to a variety of forms of metropolitan governance, both government and civic. Some high-growth urban areas

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such as Miami, Jacksonville, and Indianapolis had already embraced metropolitan government in the 1960s. They merged local jurisdictions into one metropolitan-wide government unit, or they merged many local government functions into one metropolitan-wide unit while preserving a few functions at the smaller jurisdictional level. This was a movement, however, that did not spread to older cities. Cities in the Sunbelt took a different approach: Growing cities like Phoenix and Albuquerque were allowed to annex as much land as was developed on their peripheries. That power, wrote David Rusk (2003), a former mayor of Albuquerque, enabled these cities to avoid some of the most deleterious disparities and concentrations in poverty experienced by older Northern cousin cities. Even where cities did not fuse with their surrounding areas or annex areas of new growth, metropolitan planning was still required for transportation and other functions. Finding it expensive and dysfunctional to compete with one another for the location of existing businesses or the attraction of new industry, local jurisdictions combined efforts for economic development and the creation of sports and cultural venues. Civic nongovernmental and quasigovernmental governance structures, such as business leadership groups, tourism promotion agencies, and recreational leagues, also became more metropolitan (Peirce, Johnson, & Hall, 1993). Some states formed new authorities to operate regional facilities, such as ports or airports, rather than leave them in the hands of one jurisdiction. The metropolitan area emerged as the most important unit of planning, analysis, and action for many functions of urban development. Michael Porter, who first used the tools of measuring competitive advantage to determine the economic development potential of innercity locations, has analyzed the most competitive and prosperous areas in the United States. He found that these are characterized by several clusters of interrelated businesses in the same specialty area operating on and interconnecting on a metropolitan scale. For example, clusters of interconnected tourism businesses in the San Diego area make the metropolitan region more prosperous. Military and biomedical clusters also enhance one another. Those regions that concentrate their employment in their strong clusters do better economically. His argument is that the investment in such interrelated clusters can only be seen and effectively managed at the metropolitan regional level (Porter, 2000).

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The Emerging Issue of Sprawl

Suburbanization has been a feature of American urban development since the “trolley car suburbs” of the 1920s. Post–World War II public policy encouraged more rapid suburbanization to boost the nondefense national economy and to spread out the population in order to reduce loss in the event of a nuclear attack. The 1980s and 1990s produced the most rapid period of suburbanization in American history and intensified the cycles of movement from inner suburbs to outer suburbs and from outer suburbs to exurbs. These growth patterns have threatened to consume the last remaining green space from farming and forests. Many metropolitan regions consumed record-breaking acreage per capita and built significantly more net new housing units then there were net new household numbers. It seemed the quest for big houses on bigger lots would never end. And as trafficplagued commutes stretched further out and schools and other public facilities became congested, suburbanites themselves joined environmentalists in denouncing the sprawl. How Government Created Sprawl and Paid for It

Both politicians and policy analysts began to acknowledge that suburban sprawl was not simply a matter of consumer choice in a free-market system; it was deeply subsidized by government at every level and supported by government policy frameworks. Federal highway subsidies, the federal income tax deduction for home mortgages and local taxes, and a variety of direct and indirect federal supports for public works provided a financial infrastructure for sprawling development. State and local government provided monetary matches for the federal programs and shouldered the burden of constantly building new schools, public infrastructure, recreational facilities, transportation, and other amenities to support the development. Local zoning and building codes were just one example of regulatory policies that favored building on the edges rather than in already built environments. Tax policies encouraged less-built jurisdictions farther out from the center city to foster development in order to generate a new tax base, often at the expense of already built locations from which the new residents had moved, thereby reducing the tax base of the old areas. Within this luxurious network of public subsidy, the private developer and real estate industries

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were only too happy to encourage consumer choice away from the center and toward the periphery of cities. Soon, however, the business cycle of new development and sprawl began to falter and consequences emerged. Retailers who had been building bigger stores and bigger malls farther out from the center city were finding that the density of population in the exurbs would not support their economic models, and they, too, began looking at already built communities for new opportunities to expand—ironically, in communities where they had earlier closed smaller stores. Farmers and environmentalists teamed up in Oregon to pass the first of a new generation of strong growth-control legislation. States across the country followed with growth-control legislation and revenue-sharing mechanisms to reallocate some of the tax increase from new development to older already built communities. They issued administrative directives for “smart growth,” targeting the largest portion of public expenditure for development and infrastructure to already built environments. By the turn of the century, politicians at all levels were running on antisprawl platforms. Sprawl Begets Inner-City Deterioration

The rapid march of the population away from center cities and the development of new higher-tax-base communities in the outer suburbs had both direct and indirect negative consequences on the neighborhoods that were the targets of CED. First, and most obviously, the new development on the fringe drained the more affluent population from the center cities, creating an increasingly higher proportion of families in poverty and a higher proportion of dependent and vulnerable populations. Second, the subsidizing of suburban development redirected resources that might have been used to replace the older schools, infrastructure, and transportation systems of the urban core. Third, the encouragement to move jobs from center cities to suburban commuter locations that were supported by public expenditures for new roads, infrastructure, and facility development removed economic access for those at the bottom to enter the mainstream economy. How did this cycle work? The regions overbuilt the number of housing units needed for households in the regions; the more affluent—those who could afford to move—left the inner city, the outer ring of the city, and many inner-ring communities of the suburbs for the hinterlands. The excess

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housing units were abandoned, if not at first, then after several cycles of exploitation without improvement. Homeowners who were left behind and good landlords hesitated to fix up their properties while they waited to see what was going to happen. Next, institutions began disinvesting, “redlining” first deteriorating areas and then the whole city. Abandonment and disinvestment led to more abandonment and disinvestment. Seeing their customer base move to the suburbs and finding that their shoppers had become wary of city locations, retailers and providers of personal services also left for the suburbs, creating first the retail strip shopping center and then the enclosed mall, which was followed by the megamall and finally the big-box specialty stores. As the economic base of the United States shifted from manufacturing and technology freed the financial industry, the good jobs also left the city for the suburbs. Losing tax revenue through residential abandonment, retail flight, and job relocation, financially strapped cities cut back on services, further accelerating the flight of the middle class and disinvestment in city neighborhoods. Two Societies

The societal effects of sprawl were just as significant for the suburbs as for the city. The population inside the city was cut off from mainstream social, cultural, political, and economic institutions. The population outside the city became distant and unfamiliar with the issues and dynamics of the inside communities. Both lost the understanding of the other, which is essential to a well-knit and mutually supportive regional (and national) community. Each looked at the other with alienation and a mixture of contempt and envy. Increasingly, the majority voter population has been made up all of suburban voters who have grown up in the suburbs with no feel for or sympathy for the issues of experienced by people living in cities. As businesses moved away and a new generation of business leaders was chosen from those who had grown up in the suburbs, less of the region’s mainstream civic leadership was responsive to what corporate leaders of the 1970s called and responded to as the “urban crisis.” The CEO of a large urban utility, in a speech in 1980, suggested that his age cohorts would be the last CEOs raised in the cities. Geographic separation and alienation would have been bad enough for communities targeted by CED, but within the combined impact of

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the range of negative effects of sprawl was the emergence of an enormous disparity in wealth and income combined with intense racial segregation. The cities that lost population in the 1980s and 1990s soon found themselves with a median income half that of their regions, a poverty rate three or four times that of the regions, and high concentrations of social and health problems (Katz, 2000). So dramatic was the disparity that religious leaders began preaching on and adopting formal statements about the sinfulness of such social inequity. Progressive analysts began calling for and savvy organizers began mobilizing for more equitable patterns of regional development. The Smart Growth Movement

Between 1956 and 1996, the federal government spent $652 billion (1996 dollars) on highways but only $85 billion on mass transit, thereby promoting low-density, sprawling development around cities (Katz, 2000). The effect in 1950 was that 69 million people in urban areas lived on 13,000 square miles. In 1990, in the same urban areas 130 million people (88 percent growth) covered 46,000 square miles (255 percent growth, three times the rate of population growth). The federal subsidy for middle-class and affluent housing is harder to track because it resides in the tax expenditure budget rather than the straight expenditure budget. However, in fiscal year 2003, the federal government gave up $92 billion through the deduction for home mortgage interest and local taxes for homeowners; the federal government in the same year spent only $28 billion on subsidized housing for the poor. In other words, the total federal subsidy for housing was $120 billion, 77 percent of which went to the middle class and the rich in a system that disproportionately favors those with more expensive houses and higher incomes. The depopulation of cities fostered by sprawl was not merely a reduction in the number of people in the cities; it was a shift of whole economic segments of the population. In 1960, one-third of poor people in the United States lived in central cities; in 1990 half of them did (Benfield, Raimi, & Chen, 1999). The areas left were becoming more intensely poor and increasingly populated by people of color. The number of census tracts with more than 40 percent poverty doubled between 1970 and 1990 (Wilson, 1987). Government policy fostered this segregation as well.

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In the 1940s and 1950s, the Federal Housing Administration prohibited mortgage insurance in areas of racial diversity, maintaining, “it is necessary that properties shall continue to be occupied by the same social and racial classes” (Babcock, 1938, p. 137). Federally supported public housing was built only in the cities, not in the growing suburbs. In the South, public housing projects were segregated as a matter of law; in the North, they were just as often segregated by practice. Suburban local jurisdictions created their own legal framework for segregation through zoning that fostered large lots, limited the number of rental apartments, and provided few opportunities for smaller and more affordable houses, such as townhouses. Suburban local jurisdictions refused to establish public housing authorities, and many rejected any federal funds that required them to provide affordable housing or open housing policies. Private policies often operated in the same way. The early suburbs were famous for restrictive covenants in the deeds that prohibited resale to minorities, restrictions that were legally enforceable until struck down by the Supreme Court in 1948 (Hirsch, 2005). The practices enshrined in these formal restrictions continued, however, in the real estate practice of racial steering and resistance to open housing. In its 1969 report on the urban disturbances, the Kerner Commission warned that the United States was “moving toward two societies, one Black, one White—separate and unequal” (“Our Nation,” n.d., para. 1). By the 1990 census, it seemed that the separation had truly come to pass. The census showed 80 percent of whites living outside the cities, while 70 percent of African Americans and Latinos lived in cities or inner ring suburbs, and 86 percent of suburban whites lived in suburbs with less than 1 percent black population (Swanstrom & Judd, 2011). john powell (2007) succinctly describes the racial effects of this concentrated poverty: more poor people were living in areas of intense poverty and disproportionately more of them were people of color. Between 1970 and 1990, the number of people living in census tracts with more than 40 percent poverty doubled to 8.2 million people. More than half were black, and one-fourth were Hispanic. The number of African Americans living in such neighborhoods of concentrated poverty increased almost 70 percent between 1970 and 1990 even though the 1990 poverty rate for African Americans was the lowest ever. More African Americans who were poor were being concentrated in isolated communities (Katz, 2000).

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The initial suburban development set these patterns of segregation. Sprawling suburbanization at the end of the twentieth century then intensified class and regional inequities; once established, the inequities perpetuated the imbalance. That suburbia had become the place of opportunity is demonstrated by the fact that 90 percent of the new jobs created in the economic recovery of the 1990s were in the suburbs. By 1996, in cities including Cleveland, Baltimore, Pittsburgh, Detroit, and Philadelphia, less than 20 percent of the region’s jobs were located within three miles of the central business district. By 2005, fewer than one out of sixteen jobs in Baltimore were in the manufacturing sector, which provides important entry-level jobs that can build up to a living wage. However, in Maryland’s Harford County, until recently rural, one out of every five jobs was in manufacturing (Shelsby, 2005). Those needing access to become part of the American economic mainstream were then pushed even farther away. At the same time, the continuing movement of the population from the cities to the suburbs led to thousands of vacant and abandoned properties, the very presence of which drives down the value of the remaining properties, leading to more abandonment (Fox & Treuhaft, 2005). The outward spiral of development is one of economic opportunity; the inner one is a downward spiral. Both are self-reinforcing. Demographers are in agreement that census tracts with poverty rates of 40 percent or more are areas in which virtually everyone is unemployed. What happens when no one has a job, or, as William Julius Wilson puts it in the title of his brilliant book, When Work Disappears (1996), is devastating. It is work that creates a framework within which most people learn discipline, the habits of reliability, the resilience to juggle the chores of life with the demands of success at work, the persistence to perform under pressure or in adverse conditions, and the ability to work with people who are different and personalities who are uncomfortable. It is work that leads to exposure to the larger world. Without seeing people go to work and hearing the stories of work within the family, how does the next generation learn the habits one needs to latch onto a work opportunity when it does appear? The communities mired in concentrated poverty become an environment in which virtually no one in the population has the threshold of understanding or skill to get into or succeed in the workforce, much less the contemporary well-paying jobs that require a higher education and discipline.

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The backlash against the suburbs started by environmentalists spread to other constituencies concerned about these dramatic disparities and the loss of jobs for whole communities. Foundations supporting the environment and urban development formed their own organization, the Funders’ Network for Smart Growth and Local Communities. As noted in their very first Translation Paper: Sprawl is ascending as an issue in American political life because it is affecting a growing cross-section of suburban, urban and rural constituencies in negative ways. It is becoming inefficient and costly for suburban dwellers; it is encroaching on open space and farmland; and, it is seriously threatening the viability of urban centers. . . . Whether the new movement is called antisprawl, smart growth, livable communities, or sustainable development, the issue is the same: how to limit the seemingly inexorable waves of development on the fringe of Metropolitan regions and the simultaneous drain on resources from the urban core and inner suburbs. (Blackwell & McCulloch, 1999, p. 3)

Vigorous and successful regional coalitions grew in Baltimore, Milwaukee, Detroit, Columbus, Chicago, Los Angeles, and dozens of other cities across the country. They brought together people in the inner-ring suburbs and inner-city neighborhoods; environmentalists and city community developers; and religious congregations, labor unions, parent-teacher associations, neighborhood groups, and homeowner associations in forceful efforts to limit suburban sprawl, or at least the government subsidies for it, and foster revitalization of already built areas through equitable development. They demanded priority for city residents for jobs whenever public subsidies were underwriting major sports venues and office and retail complexes. They campaigned to redirect transportation funding to mass transit. They organized to improve bus service and make sure public transportation went to the places with the region’s good jobs. They lobbied for treatment on demand for substance abuse, recognizing that 60 percent of those addicted were in the suburbs but that the city was the site of the open-air drug markets and the treatment beds. They wanted tax base sharing mechanisms to redistribute the benefits of economic development throughout the region to places where they were most needed. As summarized by the Funders Network report referenced above, they wanted to be sure that

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“public funding for regional infrastructure, transportation systems, education and services are distributed in a manner that ensures that everyone has an opportunity to benefit from a growing regional economy” (Blackwell & McCulloch, 1999, p. 6). Connecting the Regionalism Movement and CED

Tony Proscio (2003) provides one of the best descriptions of the organic and natural connection between development inside and outside of the center city: “arguably, any realistic approach to smart growth (in fact, the very thing that makes it ‘smart’) starts with the assumption that neighborhoods at the core of metropolitan areas need to maintain or increase their population levels if the whole region isn’t just going to sprawl into eternity” (p. 4). From the outside growth controllers’ perspective, stopping suburban development will not be enough; built places in the center city must be actively made attractive for population growth, even the areas ravaged by the flight of the middle class in the 1970s and 1980s. Working from inside the city, community developers gain help from this smart growth movement to understand how to develop their neighborhoods and make them attractive enough to compete in the region for a better mix of income in their population without foolishly trying to replicate the large lots, small jurisdictions, and economic and ethnic homogeneity offered by the suburbs. Proscio goes on to describe striking examples of center-city community development using smart growth principles and a savvy understanding of regional dynamics: 1. Linking neighborhood development to regional transportation in Minneapolis, Chicago, and Oakland 2. Salvaging commercial and industrial space, and the jobs that go with them, in Kansas City and Philadelphia 3. Using mixed-use development to create regional attraction in Virginia, New Jersey, and Maryland

However logical Proscio’s argument, though, CED practitioners have a hard time looking up and out to the region in practice. Their success has traditionally come from focusing on their community and specific projects rather than regional policies, so at best, they look to regional information

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to identify the competitive niche of their neighborhood within the region. They may recognize a certain amount of churning in the population and believe that outmigration to the suburbs is inevitable. They may believe that there are others who will work on open housing and helping the families that want to move get to powell’s areas of high opportunity; they just need to focus on the concrete projects at hand. The regional perspective is challenging for CED practitioners to take in formulating strategies and is hard to find time for in the midst of their work. If the regionalists are right, however, CED practitioners will have to adjust. The work of the Brookings Institution Center on Urban and Metropolitan Policy (n.d.), for example, suggests that the federal policy of the future that is relevant to CED will not be an urban policy but a metropolitan policy based on competitiveness and oriented to prosperity. con cl usi o n

This chapter examined two of the major issues facing neighborhood-based community development: racism and regionalism. To some critics of CED, these are issues on which CED organizations have come up short. CED is focused too narrowly, they say, on improving existing neighborhoods of low-income people of color while ignoring the racial barriers in the larger mainstream society and failing to mount aggressive action to desegregate all parts of society (Edelman, 2012). That criticism may be unfairly based on the assumption that any one approach, like CED, should address all aspects of racial inequality, social justice, and community development in America. Nonetheless, CED practitioners need consciously to incorporate the issues of racism and regionalism in their practice to do their neighborhood-based work effectively. The issues of racism and regionalism are both contemporary and historic. In the sense that they are contemporary, the practitioner needs to understand the current barriers and opportunities they pose for program and policy action. In the sense that they are long-term and widespread, the practitioner needs to understand how these and other macro forces constrain the micro activity of CED organizations. While these are macro forces that must be addressed by the larger society, local neighborhood leaders can play a role in doing something to change them in the present context.

c h a p t e r    15

Community Building A N E W SY NTHESIS

t h i s c h a p t e r e x p lo r e s c o m m u n i t y b u i l d i n g ,

a broader, more holistic way of viewing community economic development (CED). Though the roots of the activities that define community building arguably go back to CED’s earliest days, the idea of comprehensive community development and its attempted widespread application is relatively new to the CED field. What is this phenomenon? Chaskin and colleagues (2001) state that, “community building . . . consists of actions to strengthen the capacity of communities to identify priorities and opportunities and to foster and sustain positive neighborhood change” (p. 1). They introduce the notion of community capacity, that is, “the interaction of human capital, organizational resources, and social capital existing within a given community that can be leveraged to solve collective problems and improve or maintain the well-being of that community” (p. 7). Milligan (2008) also emphasizes community capacity when she defines community building as “involv[ing] tapping into the social infrastructure of the community as a key step in catalyzing collective action, building collaborative relationships among key community members, and building community capacity” (p. 371). Community building integrates the tools of CED addressed in section III of this book along with the tool of social capital addressed in chapter 13 to revitalize neighborhoods from the inside out, fostering the collaborative and problem-solving skills of the residents to effect change.

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commu n ity b u i ld i ng th e m e s

Though they were not referred to as community building initiatives, such successful initiatives have been going on since the War on Poverty in the 1960s. However, they did not receive significant attention from policymakers. The media attention that inner cities received in the several decades after the War on Poverty was often negative, focusing on all the ills that existed there—high crime, high unemployment rates, poor schools, drugs, gangs, teen pregnancy, and more (Kingsley, McNeely, Gibson, 1997). Many attributed these problems to what was called the “culture of poverty,” a social theory introduced in the 1960s that poor people share a set of beliefs, values, and behaviors that leads to their continued poverty (Lewis, 1961). Others at the time knew better than to offer such a simplistic answer, but their voices were muted. The “culture of poverty” theory has clearly been challenged in the late twentieth and early twenty-first centuries. In their now classic monograph Community Building: Coming of Age, Kingsley, McNeely, and Gibson (1997) offer at least three lines of counterevidence: 1. The loss of manufacturing jobs in the cities—jobs that had once provided decent wages to low-skilled workers—and the loss of community were part of a constellation of factors that intensified inner-city problems following the War on Poverty. 2. People’s values and goals in low- and moderate-income communities are not significantly different than in wealthier communities; they desire good jobs and a stable community, too. However, young people in these communities face many challenges that do not often exist in wealthier parts of a city or town, and these present substantial hurdles to economic stability. 3. The social service delivery systems in poorer neighborhoods do not often effectively meet the needs of poor residents or ameliorate the effects of living in concentrated poverty. Bureaucracy and the lack of coordination among agencies along with other factors contribute to this problem.

There are two other trends identified by Kingsley, McNeely, and Gibson, whose work explains how community building efforts can greatly benefit low- and moderate-income neighborhoods. First is the emphasis community building initiatives place on the importance of creating a stronger civil

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society and community life for America as a whole. Actively building upon existing neighborhood networks and institutions is critical to making a significant difference in poor communities. Second is an interdisciplinary approach to rebuilding neighborhoods, drawing on the experience of practitioners in a number of different fields. Partnerships that would not have occurred in the past, for example, between neighborhood leaders and the police department, characterize community building initiatives. Kingsley, McNeely, and Gibson go on to identify seven themes that are at the heart of the late twentieth-century emergence of community building. Importantly, these themes distinguish between this new approach and the more singularly focused neighborhood-based approach to economic development used by CED practitioners that preceded it. If properly utilized, these seven themes form a framework for community building that can effectively help poor communities begin the revitalization process. Successful community building initiatives are: 1. “Focused around specific improvement initiatives in a manner that reinforces values and builds social and human capital” (p. 6). Those doing community building activities work in distressed neighborhoods with residents on various local initiatives. The difference between this work and traditional CED work is that more attention is paid to creating and enhancing social capital, with the intent to make sustainable changes in the neighborhood bolstered by a strong community social fabric. 2. “Community-driven with broad resident involvement” (p. 6). Empowerment is the watchword of community builders, which is accomplished by including not only neighborhood leaders but also as many neighborhood residents as possible to achieve neighborhood transformation. 3. “Comprehensive, strategic, and entrepreneurial” (p. 7). Unlike CED efforts that focus primarily on housing or local business development, community building initiatives are comprehensive; that is, they set out to tackle a wide range of social and economic problems in the neighborhood. However, this cannot be done all at once, and practitioners must be strategic and nimble. Although there must be a long-term vision of what the neighborhood could look like ten years down the road, long planning processes can drain motivation and community participation. Starting to do something to address a problem incrementally, sooner rather than later, followed by continued activities as momentum builds, has proved to be key.

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4. “Asset-based” (p. 7). Community builders use a strengths-based approach, meaning that instead of focusing on an area’s deficits, they work with neighborhood residents to identify the assets that can help people move forward. Community builders comprehensively inventory existing businesses, schools, and other resources in the neighborhood and find ways to utilize them to accomplish neighborhood goals. 5. “Tailored to neighborhood scale and conditions” (p. 7). Ideally, community building efforts work in areas that are no larger than several thousand homes, not communities in which there are tens of thousands of houses. Beyond this number, it is difficult to build social capital, and the physical differences in geographic areas may require more strategies than is reasonable to manage. This does not exclude, however, creating umbrella organizations that coordinate community building efforts across larger geographic areas. 6. “Collaboratively linked to the broader society to strengthen community institutions and enhance outside opportunities for residents” (p. 8). Community builders build connections between the neighborhoods in which they are working and the wider community, whether the city, the state, or even the nation, to combat the isolation and feelings of invisibility that often exist in inner-city neighborhoods. For example, university-community partnerships can attract resources to a community, open jobs for community residents, and bring wider attention to the needs of neighborhood residents. 7. “Consciously changing institutional barriers and racism” (p. 8). Unlike traditional, more singularly focused CED efforts, community builders explicitly work to eliminate barriers created by structural racism that disconnect poor neighborhoods (which tend primarily to be communities of color, at least in urban areas) from the surrounding community and mainstream economic and social opportunities. Racial discrimination is often addressed head on, and its effect on poor communities is discussed openly in community building efforts.

t h e r ol e o f c o m p re h e ns i ve c o m m un it y i n i t i at i v e s (c c i s )

The community building model is being widely adopted by community development corporations (CDC), the major engine of CED efforts. In fact, there are also many public and private policy initiatives and various

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programs at the local and state levels that now incorporate what could be called a community building emphasis. One of the keys for the field is to be able to continue to build on the themes identified by Kingsley, McNeely, and Gibson by identifying, cataloging, and teasing out the essential elements of these successful initiatives so that they may be applied to future initiatives. Schorr’s Common Purpose (1997), which discussed successful programs, was a first step, but the work is meant for a general audience and does not provide guidance for community building practitioners on whether to replicate a local program across a state, or program operated across a state on across the nation, though examples of each are given in the book. As the successes of the New Community Corporation (see chapter 2) and other successful, more comprehensively focused CDCs attracted national attention in the late 1980s and early 1990s, a new concept began to emerge for national private foundations interested in overcoming poverty: comprehensive community initiatives (CCIs). Later, CCIs ultimately evolved into and merged with other forms of comprehensive community building; distinguishing the CCIs from community building efforts before this merger is critical to teasing out the essential elements of community building. CCIs: Contain several or all of the following elements and aim to achieve synergy among them: expansion and improvement of social services and supports, such as child care, youth development, and family support; health care, including mental health care; economic development; housing rehabilitation and/or construction; community planning and organizing; adult education; job training; school reform; and quality-of-life activities such as neighborhood security and recreation programs. (Kubisch et al., as cited in Ewalt et al., 1998, p. 3)

Ewalt and colleagues (1998) went on to add micro and macro enterprise and job development, community partnerships, and community control of governance to the definition. Ewalt and colleagues distinguished community building from CCIs, listing its characteristics as follows (p. xi): r
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Ewalt and colleagues emphasize that community building is different from CED and CCIs in that community members themselves identify and prioritize the changes that are needed in the neighborhood’s physical environment, housing, economic opportunity, safety, education, and social services. The distinction between the two concepts is one of outcome versus process, in which community building emphasizes a process that leads to broad community engagement and resident-led initiatives that help the community rebuild and renew itself rather than emphasizing from the outset specific outcomes such as housing development. The key to this model is collaboration, not just among people in the community, government, and business—as in the old model of CED—but across-the-board collaboration between the community and all of the institutions willing to contribute to the solution. One of the most cogent and sobering assessment of the state of the community building field today comes from a talk given by Anne Kubisch at the Aspen Institute entitled “Comprehensive Community Building Initiatives—Ten Years Later: What Have We Learned About the Principles Guiding the Work?” (2005). In the paper based on her talk, Kubisch compares two reports that were published by the Aspen Institute: Voices from the Field (Kubisch et al., 1997) and Voices from the Field II (Kubisch et al., 2002). The first volume examined the community building initiatives begun in the late 1980s and early 1990s that were supposed to draw on the lessons of the CDCs of the 1960s through the 1980s. As she states: “The premise was that if these new initiatives could concentrate resources and apply best practices from social services, economic development, education reform, and physical revitalization in targeted neighborhoods, we would get a ‘whole’ that was more than the ‘sum of the parts’ ” (Kubisch et al., 1997, p. 1). The goal was to be community transformation rather than community economic development.

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As with good social work practice, these initiatives transcended individual practice and took a systems approach, so that they focused on needs and assets at the family, community, and broader environment levels. They were also comprehensive, at least in their analysis of the problems at hand. Technical assistance strategies have changed significantly and pay much more attention to coaching, capacity building, and long-term partnership. Finally, they used the community building approach, engaging community residents, building their capacity and the capacity of local organizations, and fostering social ties among residents. While the high value placed on resident engagement and organizational collaboration is key, these initiatives also showed that not every resident has to be involved all the time; participation may naturally ebb and flow, and successful CCIs adapted. Once the broad framework of these initiatives was established, the relatively successful initiatives then set various goals and objectives in specific areas, with each activity to reach them building on the others to promote widespread community change over time. Kubisch’s second volume then examined what those CCIs that had been around for a decade were able to accomplish. Kubisch makes clear that CCIs that achieved some measure of success had implemented incremental, strategic change: [CCIs were] able to document some improvement in outcomes for children, for families and for neighborhoods in areas of, for example, health, crime, and employment. Most initiatives also can show that organizations have been strengthened, that new relationships have been developed, that new leadership has emerged in the neighborhood and that new resources have been brought to the neighborhood. . . . With regard to comprehensiveness, we’ve learned that it doesn’t mean that initiatives must do everything all at once from the outset. . . . Initiatives that try to do everything risk getting stymied or drowning under the weight of the comprehensiveness mandate. Instead, CCIs have found other ways of keeping the comprehensiveness approach while, for example, picking a strategic driver—for example, employment—around which many other activities can be built. (pp. 3–4)

Most significantly, however, Kubisch goes on to state that “CCIs have not yet proven to be the agents of major community transformation that

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everyone had hoped for” (p. 4). Despite what many may believe, the fact that CCIs have achieved only limited success is not always or even often because of a lack of funding. Although only tiny sums are spent in some of the most distressed neighborhoods in the United States, many initiatives purporting to be comprehensive in the past, such as urban renewal, model cities, and Enterprise and Empowerment Zones, spent enormous sums of money, often with little to show for it. Kubisch argues that two things need to happen in the future for neighborhoods to realize the promise of community building. The first is investing in capacity building, and the second is explicitly dismantling racial and class privileges. Because structural economic, political, racial and other factors have such an immense influence on the functioning of a neighborhood, CCIs need to be more sophisticated in their analysis of the problems a neighborhood is experiencing and more intentional in how they build capacity. Part of this process involves analyzing and working to change the power dynamics in a neighborhood, especially those that are related to policies, practices, and cultural representations that undergird structural racism and classism. Again, this requires CCIs to be much more sophisticated in order to transform the neighborhoods in which they work; otherwise, their activities will serve only as band-aids for the deep wounds afflicting the community. (Chapter 6 of this text provides tools CCIs may use to select strategies, and the tools presented in chapters 8 through 13 are the building blocks for implementing these strategies.) Herein lies a special convergence of the very deliberate foundation CCIs must lay with the organic evolution of community building in the growing handful of CDCs such as the New Community Corporation that have become comprehensive over time. These CDCs have a large, positive effect in their communities. The most recent data compiled by the National Congress for Community Economic Development (2005) on the activities of CDCs across the country document the prevalence of a multifaceted agenda among CDCs: housing and workforce development, commercial development, capacity building, and community organizing. CDCs at some point that roughly coincides with the turn of the new millennium entered what can be called their “fourth wave,” and the term that most characterizes this wave is “community building.” This term may well eventually replace the term “community economic development” in the field, as it implies much more of what is going on today at the local

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community level. The seven themes of community building (Kingsley, McNeely, & Gibson, 1997) outlined earlier in this chapter highlight the characteristics of this new phase of the movement, and Kubisch reinforces that these are indeed seen in higher functioning CCIs and critical to success. w h at wo rk s i n c o m m u ni ty b u i ld in g

The latest report on community building activities across the country comes from the Federal Reserve Bank report Investing in What Works for America’s Communities: Essays on People, Place, and Purpose (Andrews & Erickson, 2012). Although most of the report’s authors do not use the term “community building,” that is indeed what virtually all of them refer to in their discussions. The following section reviews the lessons learned in community building and for CED practitioners. Von Hoffman addresses two important points for the CED and community building field: (1) that health care is a necessary piece of the puzzle for initiatives to tackle in addition to the range of community problems that must be addressed, and (2) that Community Development Financial Institutions have stepped up in the last decade to play a crucial role in funding CCIs, investing billions of dollars in low- and moderate-income communities across the country. Belsky and Fauth’s vision seems on target when they state: “The field of community development is at an inflection point, poised to achieve scale, impact, and integration of the many lessons learned over the past 40 years. It is on the threshold of entering a new phase capable of meeting the twin goals of revitalizing low-income neighborhoods and narrowing achievement gaps of the poor” (p. 73). The key points that “promising models” have in common include: r
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Additionally, place-based interventions, such as providing affordable housing, is combined with people-based ones, primarily those focused on “human capital” development and the provision of appropriate social services to individuals and families, to help the community emerge from the cycle of poverty. Various initiatives by foundations are given credit for developing models that have helped define what works and what does not work in poor communities. They include: r
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According to Belsky and Fauth, these efforts attempt to bring about “transformative change through multisectoral interventions” (p. 78). Furthermore, the authors give two examples of today’s models that are bringing great praise and attempts to replicate elsewhere: The Harlem Children’s Zone (HCZ) in New York City and Purpose Built Communities (PBC) in East Lake, Atlanta. They end with a caveat, however: “Launching truly multi-focused, integrative initiatives is costly, and the road map for doing it right does not yet exist” (p. 102). In their essay, Donovan, Duncan, and Sebelius repeat a lot of what has already been said, but from their perspective as high-ranking federal government officials, they add a point that must not be overlooked: coordination. They state: “A comprehensive approach to transforming communities requires a strong partnership that includes the federal government, state and local government, and private and nonprofit partners” (p. 115). Seidman tries to sum up the lessons from the various essays in the volume and draws several conclusions. First, she states that “over the past decade . . . community development has undergone a subtle but important transformation, broadening its outlook from a primary investment in real estate, especially affordable housing, to include other types of real estate, such as charter schools and health clinics” (p. 354). Moreover, Seidman picks up on “integration” and “healthy communities” as being the two most important foci for community builders. Another shift in perspective, she says, is that “community development is about the

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entire life of the community” (p. 355). To be truly helpful, the effort must link low- and moderate-income neighborhoods to the economy as a whole. If the goal of community building is in essence to fix broken communities, then the highlighted promising models become crucially important as beacons of light to lead the way. Seidman attributes successful strategies to things identified before—“physical, human and financial capital”—though she leaves out social capital (p. 364). And, according to the author, “what distinguishes the newer strategies is a conscious effort to understand the linkages among, for example, housing, health, education, public safety, and economic development, and to tackle them in a manner that strengthens them in concert” (p. 367). There are several other things worth noting in Seidman’s assessment. First, it is important to acknowledge the vast differences between impoverished communities across the United States. One approach does not fit all, and ramping up activities with the goal of going to scale must take this into consideration. Second, while there are many institutions that have helped strengthen communities in need, especially the intermediaries, crossagency coordination requires practitioners to “break through silos of both substance and strategy” (p. 375). be yon d t h e g re at re c e s s i o n: c o m m un it y bui l di n g to day

There are a number of trends emerging in the 2010s that demonstrate how pervasive community building has become as an approach in the CED field. They are highlighted or alluded to in the work of several key CDC institutions, most notably Chicago’s New Communities Program (NCP), the Local Initiatives Support Corporation (LISC), the Massachusetts Association of Community Development Corporations (MACDC, one of the largest statewide networks), Living Cities, and new federal initiatives launched under the Obama administration. Funded by the MacArthur Foundation in 2003, NCP is a ten-year, almost $50 million effort to improve a large, fourteen-neighborhood area in Chicago. LISC is the intermediary for this comprehensive, community building initiative. LISC’s goal is to spark neighborhood planning for community betterment. One of the primary purposes of the MacArthur grant is to encourage collaborative efforts in the target neighborhoods.

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The networking of local organizations was another aim. By linking groups together that had never before partnered, community capacity was enhanced, and social capital was built in the neighborhoods. This allowed the project to increase actual dollar resources in the community several times, leveraging over $400 million for the initiative. NCP has launched 750 projects in the areas of education, workforce development, housing, and social services using comprehensive community building strategies (Greenberg, Verma, Dillman, & Chaskin, 2010). Even without the support of large foundations, CDCs in other locales have moved in the same direction as NCP. MACDC started in the 2000s by examining trends of successful initiatives in Massachusetts (2011). While some of the trends discussed are specific to Massachusetts, several others are applicable to many communities. Two reflect what NCP found: (1) a continued increase in collaboration will drive innovation, and (2) comprehensive, place-based strategies are gaining prominence. Areas for development targeted as a result of this analysis of trends were housing development, asset management, small business, green jobs, and public transit advocacy. MACDC identified the need to establish partnerships with agencies in public health, public safety, workforce development, public transit, clean energy, and education in order to make progress in each of these areas. The trends observed by MACDC and reflected by the work of NCP gave rise to new activities by LISC and several federal government initiatives such as Promise Neighborhoods, Choice Neighborhoods, and Sustainable Communities. Community building themes now permeate LISC programs that were once almost exclusively focused on the physical development of community and reflect how LISC is helping shape the future of the CED and community building field. With thirty-one local offices and thirteen national or special programs, LISC is in a state of rapid expansion and hiring. In 2009, the organization invested $607 million in community building efforts, which was able to be used to leverage more than two times that amount. Perhaps as important, LISC’s mission has become reflective of comprehensive community building: “Building sustainable communities by achieving five goals: expanding investment in housing and other real estate, increasing family income and wealth, stimulating economic development, improving access to quality education, and supporting healthy environments and lifestyles” (LISC, n.d.a, para. 3). Finally, LISC has

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undertaken a deliberate replication of the principles of NCP across all cities in which LISC operates. Living Cities, a national organization that has, like LISC, existed for more than two decades, has been at the forefront of community building with several initiatives. Living Cities is different in nature from LISC, however, serving as the funding arm for more than twenty of the world’s biggest banks and foundations. Recently, it gave $80 million to five challenged cities (Nasser, 2010). Its work emphasizes the need for green technologies in order to sustain urban communities (Living Cities, 2009). Living Cities funds initiatives focused on innovation in three areas: (1) an integrative approach, (2) a rapid response, and (3) partnerships with the federal government. As with the other initiatives discussed above, they stress comprehensiveness and partnerships as well as the requirement of organizations to be agile and to be able to respond quickly to events. Living Cities embraces not only the leveraging of funds for capacity building over the long haul but also explicitly focuses on developing leadership. Erickson, Galloway, and Cytron (2012) recognize this, and argue that organizations should develop “quarterbacks” in the CDC field to champion these activities across the country. One of the hallmarks of effective community building in the future is to develop and nurture leaders who can then go out and be effective community builders. Finally, President Obama’s initiatives at the federal level are based on the principles of community building. One initiative, Promise Neighborhoods, has already funded twenty-one neighborhoods with federal grants up to $500,000 to plan a strategy based on the Harlem Children’s Zone, a pioneering project to transform New York’s Harlem neighborhood and develop a cradle-to-college system of education and services to ensure economic and social success for children in the community (U.S. Department of Education, n.d.). Another initiative, Choice Neighborhoods, focuses on moving unstable, low-to-moderate-income neighborhoods toward becoming stable, mixed-income neighborhoods by linking housing improvements with social services, schools, public assets, transportation, and access to jobs. Finally, the Sustainable Communities initiative, led by the U.S. Department of Housing and Urban Development and the U.S. Department of Transportation, ties development of affordable housing to construction of better transportation alternatives for poor people, as the typical U.S. family spends 60 percent of its budget on these two costs alone.

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As CED initiatives become more comprehensive, they also still very much continue to rely on private sector strategies to create community change. Many no longer refer to CED as a “movement” but rather as an “industry” (Erickson, Galloway, & Cytron, 2012, p. 379). This change in terminology reflects the entrepreneurial spirit of CED as well as a greater reliance on the private sector and good old-fashioned capitalism in the field today. In fact, to survive the funding cutbacks at all levels, private sector strategies are a necessity. However, as Pinksy (2012) points out, CED has in some ways become “an ever-expanding big tent that morphed almost magically as if out of Harry Potter, to cover everyone making a claim to the name” (p. 247). Not all of these organizations purporting to do CED work and using private sector tools to do so are necessarily helping poor people in redeveloping distressed communities, and a few have even exploited them. CED practitioners of today must guard against this by using the community building strategies of community engagement along with private sector tools. con cl usi o n

The needs of poor communities in this country are vast. It made sense in the early years of the CED movement for many CDCs to focus on what was most necessary—affordable housing for the poor, especially as the federal government largely abdicated that role during the Reagan administration. Moreover, the housing model was relatively easy to replicate, and many CDCs cut their spurs on becoming housing developers. However, if it was not clear in the first place, it became clear shortly afterward that people need more than just affordable housing. With the ebbs and flows (and occasional crashes) of the economy, it was evident that people in distressed communities need jobs, transportation, health and child care, social services, and a variety of other things in order to thrive. Many CDCs as a result began trying to expand their repertoire of services. Some were successful, and others were not. A few even went to scale, that is, were able to provide a vast array of services to meet the needs of many of their communities’ residents successfully. Those that were often attracted local, state, and even federal attention, which helped them build even more successful programs.

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Conclusion

as discussed in chapter 15,

the term “community building” may have overtaken the term “community economic development” to describe the process of multifaceted comprehensive neighborhood revitalization involving planning and implementing a place- and people-based strategy that is community driven, democratic, and participatory. This fourth wave of CED is more comprehensive and more inclusive of providing family and individual support strategies to supplement the physical and economic agenda of CED. This movement toward more holistic, comprehensive, community-based solutions in CED is parallel to and has joined forces with a similar movement in the field of family and child support and antipoverty efforts from human service and educational organizations (Connell, Kubish, Schorr, & Weiss, 1995). t h r ee ove rarc h i ng th e m e s

Three overarching themes characterize the fourth wave of CED. First, community building has reached a new height as a model that guides CED practice. Interestingly, this model shares much in common with the very first attempts at creating community development corporations (CDCs) during the first wave of CED. They are big, have large financial budgets and staffs, and, most important, try to be comprehensive in nature with a wide variety of programs. The primary difference between them is their source of funding and their organizational development: First-wave CDCs were funded by the federal government, and fourth-wave CDCs are funded by

conclusion

4 84

a variety of sources as federal funding dwindled. Fourth-wave CDCs not only have housing programs but also provide job training for members of the community, offer financial programs, and have in place other necessary supportive services to help the less fortunate members of the community they serve. Perhaps most important, they address not only the physical infrastructural needs of the neighborhood but also provide opportunities for developing other forms of capital in the community—human, social, political, financial, cultural, and environmental. The second overarching theme is that community building should take an empowerment-oriented, strengths-based approach to CED, that is, an approach that focuses on individuals’ and communities’ assets, not their weaknesses, and on citizen participation in the CED process. This approach dovetails with strengths-based approaches in the field of social work. Individuals and communities have needs as well as assets, of course, but as social workers have discovered, focusing exclusively on the needs of clients, whether individuals or whole communities, does little to empower clients. There is indeed much overlap between social work, even when it is not explicitly focused on community building, and CED practice. The question we address later in this chapter is how to bring the two fields closer. Third, multiculturalism, diversity, and antioppression have emerged as another theme in the fourth wave of CED, and these are also clearly a major focus of social work today. Social workers and CED practitioners cannot ignore the “-isms” that disadvantage people living in the distressed inner cities that are the focus of CED—in particular, racism, sexism, and classism as they apply to low- and moderate-income communities across the United States and throughout the world. Whether social workers and CED practitioners are working with people of color, women, the elderly, children, or other marginalized populations, careful analysis of the ways these “-isms” affect the community and deliberate action to dismantle systems of privilege and disadvantage are fundamental to the work. t h e con v e rg e nc e o f s o c i al wo rk a n d c e d

Despite that social workers are underrepresented in the CED field, the goals of social work and CED are closely aligned; otherwise, there would be little reason for this book. However, in practice, many of the tools of

conclusion

485

CED are unfamiliar to social workers, who may lack skills in finance and real estate and take issue with its market orientation. And this leads to our own odyssey of the writing of this book. One of this book’s primary authors is a social worker and an academician in the CED field; the other primary author is an expert CED practitioner. Working through differences in perspective and knowledge has been a long journey. There have been many dialogues, disagreements, sticking points, and eventual insights on both parts as we engaged in this project. Ultimately, this venture has only convinced us of the need for more collaboration between schools of social work and CED practitioners in the field to ensure that social workers are prepared to enter the CED field and have the enormous effect they have the potential to make. The close alignment of social work and CED should appeal to macro social work students who desire to find sustainable solutions to poverty. Both social workers and CED practitioners create public-private partnerships to meet their objectives, and collaboration is equally important to both endeavors. Social workers’ networking skills can be most useful for fostering needed collaborative relationships in CED. Although the “place versus people” argument does not permeate the field of social work in the way it does the field of CED, social workers also must contend with how best to deliver services to its constituency populations. This involves neighborhood-based agencies and place-based strategies. Social workers can contribute substantially to the dialogue that takes place within the CED field on this topic. The necessity of comprehensiveness of services is common to both social work and CED, especially as CED has evolved into community building. Social workers struggle to meet this need all the time, realizing that their clients usually need far more than they can offer alone. In the CED field, while housing may have been the mainstay of the industry for quite some time, at the very least there is broad recognition that a whole host of issues other than housing need to be dealt with by an effective CDC. Both fields are evolving over time, and we believe that they are coming closer together in both perspective and practice as they evolve. Ultimately, social work’s person-in-environment perspective reigns, and however the community is shaped by current economic, political, and social trends, the end goal remains the same: helping those less fortunate live the best lives they can.

conclusion

486

s o ci a l wo rk e d u c ati o n and c e d

Where do the praxes of social work and CED dovetail to enable those social work students who are graduating from masters programs to develop knowledge and skills for this growing area of macro practice? The CED field has survived regardless of the economic and political challenges of the times. The raging Great Recession of the 2000s and 2010s may or may not be ebbing as of this writing, but while jobs have been scarce in many sectors, both social workers and CED practitioners are in demand. As community building efforts grow during the Obama administration and beyond, social workers are perfectly poised to take advantage, given their requisite values, skills, and knowledge. Social workers, however, do need to be trained in real estate and finance to make their education complete to enter competitively into the CED arena. People with skills that cut across both disciplines can write their own job tickets. People with graduate degrees in both social work and business are very well positioned for work, but knowledgeable and dedicated social workers without such a combination of degrees are also in demand. Moreover, salaries are comparable to those social workers would make in other positions, and the prospects for job advancement in program management and administration are stellar. A shift of focus in general and macro graduate social work education to organize it around community building as a central principle would facilitate more social workers being prepared to practice CED. The authors implore a rethinking of not only social work education but also the way higher education professionals think about educating students and providing internship opportunities and experiences for them during the alltoo-brief two-year graduate curriculum. Social work students need to be exposed to the CED field and see job opportunities for them in it. Unless and until there is a Master of Social Work curriculum built around community building as a field of practice, many social workers who could be highly successful CED practitioners with the right training may look to practice elsewhere. Those interested in seeing social workers follow a career path in CED must help steer them. This means at a minimum offering a course in the curriculum, field placement options, and opportunities to network with CED practitioners in the local community in which the social work school is based. A broader shift in curriculum, however, could well put social work on the cutting edge of the CED field.

conclusion

487

t h e fut u re o f p rac ti c e i n c e d

As described in other chapters in this book, CED practice at the local level emphasizes and will persist into the future with an emphasis on r
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The maturing of the industry, which saw the growth of professionalism in the 1980s (Brophy & Shabecoff, 2001) and a concerted effort systematically to address human capital investments in the 1990s, has led to a wide range of successful CED ventures. There will continue to be a strong emphasis on organization development and building high-performance organizations. Many will continue to work to promote talented young people of color to replace the retiring Baby Boomers who have dominated executive positions in CDCs but did not reflect the ethnic profile of the communities the CDCs served. The continued emphasis on market-oriented strategies might seem to social workers to exclude the most distressed inner-city neighborhoods where there is little market attraction. Nonetheless, there are demonstrations of CED strategies that work in those conditions, such as the Rockefeller Foundation and U.S. Department of Housing and Urban Development (HUD) project to embed comprehensive services in public housing developments (Riccio, 2010). A drill-down analysis of the indigenous market in very poor communities shows both that there is more money for potential recirculation in the community than census statistics first showed and that there is a thriving consumer market for savvy retail developers of consumer goods such as supermarkets. ch a l l eng e s to th e c e d f i e ld

It is not unexpected that CED efforts would be so dramatically affected by the economic collapse and beginning of the Great Recession of 2008. Insofar as CED had moved toward market-oriented strategies for real estate

488

conclusion

development, the field became more vulnerable to the volatilities of the real estate cycle. What happened in 2008, however, was not only the result of a real estate down cycle but also the collapse of the mortgage industry and the overall weakness of U.S. financial institutions. CDCs involved in real estate development took such a big hit that merely not going bankrupt was considered a mark of success in many local markets. Even cities with strong local real estate markets that had seen CDCs shift their emphasis to the preservation and development of affordable housing were severely affected by the economic downturn as government at every level cut back its resources for discretionary spending, including housing (Kriesberg, 2009). The dilemma facing many CDCs locally is whether to continue to have housing development dominate their agenda as a result both of these cutbacks and of the field moving toward comprehensive strategies in general. The CED trade press (e.g., McCue, 2010; Weiss, 2011) is full of articles about the survival of housing finance. Some observers, however, believe that the move away from housing is just what the CED field needed to rebalance and move closer to its roots in empowerment and a comprehensive agenda for community renewal. The field of CED has faced such critical challenges in the past. After the successes of the first wave of CDCs created during the War on Poverty 1960s and the community-based neighborhood revitalization efforts of the late 1970s, skeptics in the 1980s raised the question of whether these successes to date represented the results of charismatic leaders or unique circumstances that could not likely be replicated. In spite of severe government cutbacks in community development, the CED field doubled in size in the 1980s. In the 1990s, the challenge was whether the large number of CED organizations in existence could go to scale. Once again, CDCs with the help of local and national intermediaries proved they were consistent producers of housing units and other quantifiable CED outputs. Only then, in the 2000s, did CDCs face the challenge of achieving a more comprehensive vision. In that context, the present challenge in the 2010s is to survive in economic hard times and to sustain market-oriented strategies in a real estate downturn: This is just the next in a series of challenges the field has had to face since the 1980s. One challenge from CED detractors has persisted across time: If CDCs are so successful, why have they not eliminated poverty and turned the neighborhoods in which they work into shining market attractions? There

conclusion

489

are two answers. The first is to challenge the assumption that small organizations with meager resources can turn back macroeconomic forces, whether those derived from the manipulation of a national economy or from massive government subsidies for urban sprawl, which overbuilt regions, consequently leading to vacancies in older areas. The second response is a robust demonstration of the success of CED. For example, an examination of the effects of ten years of sustained support for CDCs in Cleveland demonstrated that, as a result of the CDCs’ market-oriented efforts, the city of Cleveland performed better than the surrounding region on all market indicators, and the neighborhoods in which CDCs operated performed better than Cleveland as a whole (Burns, Wing, Butler, & Weinheimer, 2001). Data shows that CED has created substantial change given where these neighborhoods started. An analogous criticism to the one above is that operating CDCs is not worth the effort because the average CDC has produced only twelve units of housing per year (Walker et al., 1994). That number sounds terribly low until one realizes that the average homebuilder in the United States during the same period of time produces only ten units of housing per year and that no one has called for the abolition of the homebuilding industry. Like the homebuilding industry, the vast majority of CDCs’ production is the output of a few very large organizations. Also like the homebuilding industry, the combination of large and small organizations makes a thriving industry on which the nation relies for the production of the American dream. The question of resources, especially for small CED organizations, haunts the field. Foundation resources are limited and subject to redeployment. Public resources have been in steady decline for the last thirty years with no prospect of substantial change. However, there are some avenues for future public funding. The Community Reinvestment Act (CRA), a genuine invention of community organizing efforts to revitalize neighborhoods, continues and must be used to the maximum. The HUD housing program HOME demonstrates how a combination of set-asides and general operating support can coexist with a mayoral or local executive-owned program. The CED intermediaries have been continuously inventive in finding new funding partners, and CDCs such as New Community Corporation (see chapter 2) have been successful in blending workforce development with sustainable neighborhood revitalization, and these successes can leave one wondering why more of the huge resources of the manpower

490

conclusion

system are not redeployed to similar CED organizations undertaking human capital development. Not all the challenges come from outside the CED field. The field also continues to be challenged by dilemmas that have been endemic from the beginning: r
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Some in the field are concerned that the high level of technical expertise needed for the sophisticated community development deals of the present day puts the field at risk of being dominated by technocrats and financing manipulators (Stoecker, 1996). On the opposite end of the spectrum, there are those who rue the lack of capacity in the community-based organizations for implementing very large projects, such as the Hope VI programs. That critique led Richard Baron of the successful McCormack Baron and Salazar developers to initiate a program at the University of Pennsylvania specifically to train people to do large-scale inner-city projects. Again, the authors argue macro social workers are well positioned to fill gaps in the field if they bring the values and skills of the profession combined with a technical understanding of the traditional tools of real estate and business development. The survivors of the economic pressures of the second decade of the twenty-first century will be strong sustainable organizations. They will have clear and compelling strategies, reinforced relationships with public and private leaders, effective community-driven governance, strong boards, and permanent mechanisms for investing in the human capital of the organization.

conclusion

491

t h e fut u re s tru c tu re o f th e c e d in dust ry

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achieve comprehensive community development and collaborations with a wider variety of other organizations, the field of CED is also changing its structure in important ways. In the future, there will likely be a reduction in the number of CDCs and small CED organizations given the lack of general operating support for small neighborhoods to support their own development organizations (Brophy, 2009). In some instances, organizations may give up their housing or CED work and focus on human-service or community-organizing agendas in order to remain viable. In other cases, there will be a smart consolidation within which several neighborhoods combine their CDCs into one CDC or in which single neighborhoods without their own CDCs retain the services of a CDC or housing organization that serves a large area or even the whole city or county. In these consolidations, community leaders will recognize that not every neighborhood needs technical development capability all the time and that through cooperative methods they can share that expertise. It still remains crucial that each neighborhood have its own strong community civic association with the capability to guide community development strategy, community participation in governance, leadership development, and community organizing around critical issues. Local intermediaries including private foundations have also been taxed by the economic downturn. The important financial engine of growth of CED in the 1980s was the rapid and broad expansion of the participation of local private foundations in funding CED efforts. Financial institutions anxious for CRA credit joined them. The devastation of the financial industry in 2008 redirected their focus from the CRA. Progressive local private foundations were wary of funding but seemed to become a permanent funder of CED initiatives. Many leaders in the field, however, did not recognize that the very characteristics that made progressive local foundations available to fund CED in the 1980s was that it was to them a new invention. These foundations prided themselves on being willing to take risks and invest in new practice. They did not expect to continue funding once new practices evolved into best practices and the norm in the field. CED simply aged out for many of these funders by the early 2000s.

492

conclusion

Those local private foundations were the core funding for the local intermediaries. Therefore, the structure of these intermediaries had to adapt. Where there is a already a strong multiparty local intermediary pooling resources and building the capacity of local CED organizations, its credibility and network of leaders may enable it to continue. It will be challenging, however, for new local intermediaries to be formed where none already exist. Nonetheless, there is evidence that a group of committed funders, recognizing the promise of CED, can form a local intermediary that in short order builds a successful infrastructure, as one in Washington, D.C., did in the 1990s after years of being behind many other large cities. In the long run, CED may well face a situation in which there is a divide between cities with a hearty core of CDCs and cities without them. At the national level, the crisis of 2010 may drive some collaboration in a field that has been notorious for its fragmentation at the policy level (Zdenek, Roberts, & Walsh, 2009). Ironically, the larger field of national housing policy has since 1930 been plagued by an almost dysfunctional amalgamation of conflicting interests: homebuilders, low-income advocates, local government and local public housing authorities, financial institutions, consumer protection advocates, civil rights advocates, and economists seeking to use government investment in housing as a national economic stimulus. CED advocates must be able to forge a permanent mutual position with the national organizations representing local government or advocating for neighborhood revitalization and community development. The environmental movement was transformed by a principled collaboration of the major national organizations’ CEOs (Shabecoff, 2003). A similar movement for CED is possible should the major national organizations set aside some of their own self-interest to create a national movement with cohesion and discipline. Such a movement would necessarily include genuine voices of CED practitioners and participation of partners and allied institutions and local leaders. As the field of CED and community building adapts to current challenges and opportunities, it is incumbent upon social workers to participate individually and collaboratively in CED programs by operating as a human bridge between the economics and logistics of community revitalization and the poverty, jobs, housing, education, and health needs of those individuals living in the community. Empowerment of local residents in distressed communities is necessary to accomplish comprehensive and lasting change, and social workers are uniquely poised to facilitate that goal.

appendix one

Anymidwest City

a ca s e ex e rc i s e

Your assignment, should you choose to accept it, is to act as a consultant to the Logan neighborhood. Assess each of the alternative strategies that have been suggested, indicating the strengths and weaknesses of each. Then, pick one of the strategies and brainstorm tactics that might be employed to implement it. Finally, given that the CDC can realistically anticipate only getting an additional $100,000 to $150,000 for the strategy this year, suggest the best starting point and sequence of early tactics that the CDC should adopt. Whenever you have questions as to regional or city conditions or government programs available, assume that the case is placed in your city and the current conditions and programs pertain. t h e a n ym i d we s t re g i o n

Anymidwest was once a thriving city, a manufacturing and distribution center, but is now economically challenged and blighted. A few years ago, as the global economy, downsizing, Sunbelt competition, and suburban sprawl began to take its toll on the economy, Anymidwest experienced double-digit real estate deflation and prolonged underemployment. Many of the good jobs never came back. Many families now depend on three or four part-time jobs and incomes just to make ends meet. Recently, there has been some hope on the horizon as new smaller companies are

494

appendix one: anymidwest city

locating in the area and some of the older corporate citizens are retooling and rehiring. Increasingly, the hotter firms in the economy are small businesses, many of which are concentrating on service businesses in so-called paper industries and some of the remaining high-tech niche opportunities of the nineties. Regional population: 1.5 million Annual household growth: −1.5% net Annual job growth: −2%, losing large, major regional employers in manufacturing and financial services (local banks bought up, consolidated) Average home annual appreciation: 2% Real estate sales vitality indicators: average days on market: 120 % of selling price to asking price: 85% Overbuilding: 2% of existing households Overbuilding accounts for about 10,000 units added to the market each year Most new construction is in the $300,000+ range; 3 BR 2½ bath, den attached, 2–3 car garage Very little new construction under $150,000 price Resales healthy in all price ranges; each year, fewer under $150,000 price (“they go like hotcakes”) Affordability index getting worse; regional median income is $45,000 City is one-third of regional population City is still losing population and jobs but more slowly than in past City median income is half the region’s 1/3 city population with incomes below poverty limits Unemployment rate: 12% Vacant houses are a big problem; foreclosures dramatically on the rise CDCs have built 1,000 units of affordable housing over the last three years City has a couple of “hot neighborhoods” that keep pace with regional prices and sales profile Recently annual property appreciation rates have been at or above the region’s in only 10% of city neighborhoods Average city selling price: $55,000; median $60,000

appendix

495

t h e lo g an ne i g h b o rh o o d

Logan is a long-time middle-class black area—the first area black professionals moved after integration—and the neighborhood stayed an integrated middle-class neighborhood for a decade; white residents and many African American professional families have since moved on, and the area population is now black and substantially poorer. The area has much fine architecture and many larger homes built between the world wars. Many, however, have not been kept up to date. Logan boasts some small parks and landscaped streets, some with planted medians, though most sidewalks are old and in need of replacement. Nonetheless, the community has a lot of spirit and a rich culture and history, some strong institutions, and adequately performing public schools. Catholic schools are also an option for families with young children. Logan has a good reputation, especially among African Americans. The neighborhood is close to expressways, so it has good transportation to employment centers for those with a car. A new and rapidly growing biomedical park is only ten minutes away by expressway. There is also shopping in nearby areas accessible by car. The local commercial area, Logan Avenue, is quite run down, however: a collection of second-rate commercial buildings. The theater is long gone—it is now used as a church. A second-floor bowling alley above the small grocery store has been closed for years. Little retail—bargain and secondhand—remains. There is some drug activity, though less than residents believe. n e i g h borh o o d p ro f i le

Population 12,000; 6,700 households (Average size 1.8) 15% households are elderly; 52% are female headed 25% of population with incomes under poverty limits Unemployment rate 13% Housing stock is single-family detached (some duplexes) Shingle, some brick Front porches; small front yards and large rear ones Generally 3–4 BR 1½ bath Often have finished basements Most have attached garages

appendix one: anymidwest city

496

Large percentage of the houses, especially those of elderly home owners, are in need of minor repair and do not have “contemporary” features, kitchens, or bathrooms Growing % of units are going rental, even being divided up, as they pass from elderly No new construction; vacancy rate increased in past few years from 10% to 14% 100 vacant lots, mostly scattered except in “Parkside,” area where a dozen or so blocks have 8–10 contiguous properties that are vacant houses or lots. Foreclosures seem to be on the rise Average sale price: $57,000 Cost to modernize fully, including new bath and half bath: $75,000–$100,000 Average home annual appreciation: 8% Real estate sales vitality indicators: average days on market: 120 % of selling price to asking price: 85% Commercial area nearby is very rough, a notable regional drug market s t r at e gy o p ti o ns

1. The CDC believes the target niche for the community could be moderateincome, first-time homebuyers starting families or with young children. They most especially will target those with some connection to the neighborhood or its families. The CDC has only modest resources, so it has decided to focus on the succession in ownership when the elderly die or move and on promoting the neighborhood through current residents including, and especially, the elderly themselves. 2. The CDC should attack the negative effect that the commercial strip has on the residential housing market. If the strip were more attractive and offered more alternatives for retail, dining, and entertainment to target populations, the private market will take care of itself. The CDC could launch a “Main Street” commercial revitalization program to spruce up the area. It should use some of its resources to option key buildings then attract entrepreneurs for a cluster of entertainment-oriented redevelopment collaborating with the City Department of Economic Development to provide incentives for those entrepreneurs.

Safety

Lack of affordable up-to-date stock

Education

Quality of life— entertainment

B. First-time home buyers

C. Single adult renters

D. Young upwardly mobile urban choice

biggest concern

Focus Group Data

A. Empty nesters

group

ta ble ap p. 1

Employment access; housing value

Children; schools

People; some good schools

Access to expressways; spirit and history

n e i g h b o r h o o d ’s g r e at e s t a s s e t

Access to regional economy; transportation

Poor services/lack of amenities

Commercial strip deterioration

Vacancies; not many cultural and entertainment options

n e i g h b o r h o o d ’s g r e at e s t l i a b i l i t y

Mass transit/more and better urban services

Housing—affordable rentals

More good schools/ more good jobs

Safety/health/arts

w h at neighborhood needs most r i g h t away

More leisure time and choices

Income/proximity to services

Income— Appreciation of equity

Choices—Custom housing/activity

w h at yo u r household needs most

498

appendix one: anymidwest city

3. The CDC will create a series of small new construction residential projects—with contemporary design—on key blocks in “Parkside” to change the dowdy image of the neighborhood. The CDC may do this by being the developer or by assembling the property and attracting a private builder. In either case, the CDC will invest in the marketing, developing a relationship, and even homeownership incentives, with employers in the biomedical park. Meanwhile, the CDC would attempt to create a low-cost land bank by acquiring long-term options on estate property of the elderly, foreclosures, and city-owned property and by attracting charitable donation bargain sales from discouraged owners of vacant property.

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index

ABCD. See Asset-Based Community Development ACA. See Affordable Care Act ACOSA. See Association for Community Organization and Social Administration Addams, Jane, 37, 38, 41 adjustable rate mortgages (ARMs), 153, 331 advocacy and education organizations, 249, 417 AECF. See Annie E. Casey Foundation AFDC. See Aid to Families with Dependent Children Affordable Care Act (2010) (ACA), 159 affordable development, conventional profits versus, 353 affordable housing, 15; organizations, 8; price for, 339–42, 341; rental, development problems with, 350 affordable housing financing: affordable house price, 339–42, 341; basic calculations, 329–30; conventional mortgage, 330–31; cost of money and financing, 334–37; demand-side versus supply-side policies for resident payment, 334; family borrowing potential calculations, 337, 338; financing gap, 333; foreclosure crisis, 154–55, 161–62, 332; mortgage-backed securities, 332; mortgage broker, 154,

331–32; simple transaction, 330–33; subprime lending, 143, 154, 331–32, 342 African Americans, 106, 190, 433, 455; business support for, 382–83, 397; concentrated poverty areas, 464; cross racial coalitions, 457; home ownership, 81, 114; income gap between whites and, 381; inner-city flight of, 429; Jim Crow culture, 69; local retail and service business ownership, 77; migration to Northern cities by, 70, 98; poverty of, 140, 449–50. See also minorities; racial discrimination agriculture, 434; industrialization of, 69, 95, 96; legislation, 128; subsidies, 420. See also rural areas Aid to Families with Dependent Children (AFDC) program, 149 Alinsky, Saul, 9, 105–7, 117; Back of the Yards neighborhood, 39, 105, 106; on community organizations, 106; FIGHT organization, 106; IAF, 39, 106, 118, 140; TWO organization, 106 alternative economies, vii; bartering goods and services, 201, 400–401 alternative strategies, 177–78 American economy: globalization and, 258; manufacturing changes, 17; restructuring of, 258; structural unemployment, 258

540

American labor movement, 98–99, 107 American Recovery and Reinvestment Act (2009) (ARRA), 158 America Works, 281 Amherst H. Wilder Foundation, 6 AMSHSP. See Arizona Migrant and Seasonal Head Start Program anchor project, 202 anchor tenants, in shopping centers, 359, 366 Annie E. Casey Foundation (AECF), 85, 138, 145, 274; Jobs Initiative, 277; Neighborhood Workforce Pipeline, 273, 274, 280, 281; RCI, 85, 210, 448, 478 anticapitalist strain, in social work education, 35 antipoverty programs, 16; of Nixon, 123 Appalachia community action programs, 102–3 Appalachian Regional Development Act (1965) (ARDA), 103, 108 appraisal, of real estate value, 236, 330, 342; in multifamily rental property financing, 349; for permanent financing, 368 “Approaches to Community Intervention” (Rothman), 50 architectural and environmental assessments, feasibility study, 324 ARDA. See Appalachian Regional Development Act Arizona Migrant and Seasonal Head Start Program (AMSHSP), of CPLC, 167 ARMs. See adjustable rate mortgages ARRA. See American Recovery and Reinvestment Act arson for profit, 75 Asset-Based Community Development (ABCD) framework, 16, 174–75 Association for Community Organization and Social Administration (ACOSA), 33, 41 Astor Foundation, 27 Atlanta Housing Partnership, 247 at risk population, 46; urban concentration of, 16; youth, 278

index

Back of the Yards neighborhood, of Alinsky, 39, 105, 106 bank CDCs, 245–46 Bank of America, 212, 284, 375; Neighborhood Builder Award, 32; NEI of, 378 Bank Powers Act (1988), 132 Baron, Richard, 490 Baroni, Geno, 124 barrier removal, in workforce services, 261 bartering goods and services, 201, 400–401 BCLT. See Burlington Community Land Trust Bedford Stuyvesant Restoration Corporation (BSRC), 1, 26, 27–32, 250, 279 best practices, 145, 146, 159, 291, 393, 491; in community building, 474; in human capital investment, 294; of organization development, 303, 308; services approach, 142; in workforce development systems, 282 Beyond the Market and the State (Bruyn and Meehan), 430 big development project, 202 big projects planning, in urban renewal, 189–90 Bill & Melinda Gates Foundation, Sound Families Initiative, 375 Bingham, R. D., 10 Birch, David, 192, 388 Black United Fund campaign, 85 Blackwell, Angela, 145, 457–58 block grants, 123, 124, 237. See also Community Development Block Grant board of directors: of CDC, 14–15; resolutions vote, in real estate development, 327 bond financing, at federal public policy, 414 bonding capital, 427, 435, 436 bottom feeders, 75, 78 Bowling Alone: The Collapse and Revival of American Community (Putnam), 426 BRIDGE nonprofit developer, 242 bridging capital, 427, 435, 436 Brookings Institution Center on Urban and Metropolitan Policy, 468

index

Brotherhood of Pullman Car Workers, 98 Brown v. Board of Education, 107 Brunner Foundation, 184 Bruyn, S. T. H., 430 BSRC. See Bedford Stuyvesant Restoration Corporation Budget Reconciliation Act (1993), 146 building at scale, 371–73 building operations, in commercial and industrial real estate, 354 Building Sustainable Communities Initiative, of LISC, 478 Burlington Community Land Trust (BCLT), 431–32 Burnham, Daniel, 69 Bush, George H. W., administration: churches prominence, 140; communitybased development and, 139–40; congressional initiatives, 139; HOME, 139, 144, 489; Human Resources Consortium, 139–40; National Community Development Initiative, 139, 144; National Housing Task Force, 139 Bush, George W., administration: CED and community building, 156–57; domestic spending reduction, 152; economic cutbacks of, 370; Economic Growth and Tax Relief Reconciliation Act, 152; faith-based organizations and, 152; federal programs for communities and poor, 151–53; housing programs and homeownership, 153; Jobs and Growth and Tax Relief Reconciliation Act (2003), 152; metropolitanism, 157; overall economic decline during, 155–56; state and local government responsibility, 153; third wave of CDCs and, 240; unemployment and poverty, 156 business: attraction, 387–88; real estate side of, 395 business development tools: business organization for better collective practice, 396–400; financing: debt, equity, microenterprise, 392–95; franchises, 366, 368, 387, 391–92; homegrown economy and business

541

attraction, 9, 192, 380, 387–88; incubators, 243, 387, 396; real estate side of business, 395; technical assistance, 233, 388–91, 390–91, 410, 490 business organization, for better collective practice: community equity, 400; competitive advantage, 397–98; neighborhood commercial revitalization, 398–99; sectoral intervention, 269, 396–97; special advantages of, 399–400 business plan, 389, 390–91 business principles application, in social work education, 35 business support, for African Americans, 382–83, 397 CAAs. See Community Action Agencies California Community Economic Development Association, CED terminology glossary, 8 capacity building: categorical funding and, 292; direct funding for, 292; elements of, 15; hierarchy of terms, 291; for high-performance organizations, 290–95; human capital investment, 294–95; Kubisch on investing in, 476; organizations, 246–47; planned organization development, 292–93; strategic planning in, 293, 294 capacity building providers, for highperformance organizations, 296–99; colleges and universities, 298; local and national intermediaries, 297; private consulting firms, 298; venture philanthropy packages capacity building, 298–99 capitalism, 25; anticapitalist strain in social work education, 35; community, of firstwave CDCs, 231; corrective, 6; vehicle, for CDC, 6 capitalization, 133, 231, 245, 298, 392; calculating and securing, 13; equity component of, 235; plan, 393 CAPs. See Community Action Programs career development and coaching, as workforce service, 264

542

Carter, Jimmy, administration: CDCs support by foundations, 248; National Neighborhood Commission, 128, 239; neighborhood programs, 128–29; private sector partnering, 130; second wave CDCs support, 239; UDAG Program, 129, 135; urban policy, 129; VISTA program, 110, 129, 132 Casa de Maryland, 275 cash calculation, for rental property, 345 cash flow diagram, 112 categorical funding, 292 Catholic Campaign for Human Development, 125, 131 Catholic Church, 124 CCIs. See comprehensive community initiatives CCRP. See Comprehensive Community Revitalization Program CDBG. See Community Development Block Grant CDC. See community development corporation CDCs: New Hope for the Inner-City (Faux), 120 CDFIs. See Community Development Financial Institutions CDPs. See community development partnerships CDS. See Community Development Society CEC. See Community Environmental Center CED. See community economic development Center for Advocacy in the Public Interest, 410 Center for Community Change, 118, 125, 138, 249 CEQ. See Council on Environmental Quality certification, of organizations, 290 Certified Development Companies, 393, 394 CETA. See Comprehensive Employment and Training Act Charity Organization Societies (COS), 36–37

index

Chavez, Cesar, 118 CHCA. See Cooperative Home Care Associates CHDOs. See Community Housing Development Organizations CHH. See Coalition for the Hungry and Homeless Chicanos por la Causa (CPLC), 2, 163–68 Choice Neighborhoods, of Obama, 160, 481 choices and sequences, in strategy development, 178–79 church prominence, in G. H. W. Bush administration, 140 CIBS. See Coalition for the Improvement of Bedford-Stuyvesant Cincinnati Unit Plan, 38 Cincotta, Gail, 125 Cisneros, Henry, 141 cities, 3; commerce and, 66; deindustrialization of, 76; depopulation, in smart growth movement, 463–64; filtering or trickledown in, 68, 184, 187; Forrester’s computer modeling of, 66; global partners in economic development, 424; growth of, 66–68; incorporation of, 67–68; making and unmaking of, 65–90; metropolis rise, 72; migration from, 71–72, 78–80, 100; migration to, 66, 70, 72–73; migration to, from rural areas, 67, 69–70, 72, 95, 98; problems, 68–69; radial, 66–67; shopping centers, 71; smart growth plans, 424; suburbanization and urban renewal, 69–72, 460, 461; urban renewal, after WWII, 101–2, 187 citizen participation legislation, 115–17 City in History, The (Mumford), 84 civil rights: confrontations, 107–8; in late 1960s, 119; legislation, in late 1960s, 98, 119; movement, 29, 97–98 Civil Rights Act (1964), 108 Clinton, William “Bill,” administration: CDCs and nonprofit housing, 144; CED and community building, 144–47; CHDOs, 142; community

index

development financial institutions, 147–48; Corporation for National Service, 141; Earned Income Tax Credit, 149, 276, 404, 420; economic recession, 150; on education, 150; Empowerment Zones, 137, 146–47, 148, 395, 400; families and workers, 148–49; Habitat for Humanity, 145, 154; housing and community development, 141–43; HUD under administration of, 142–43, 146–47; Low-Income Housing Tax Credit, 143, 351; NAFTA, 140; National Urban Policy, 141; NCBN, 23, 145; PICs, 149; private sector investment and home ownership, 143; prosperity under, 151; sprawl, smart growth, and regional solutions, 150–51; welfare reform, 148–49; YouthWorks, 145 CLT. See community land trusts Coalition for the Hungry and Homeless (CHH), 170, 250–54 Coalition for the Improvement of BedfordStuyvesant (CIBS), 31 Coleman, James, 426 collaboration, 89–90, 474 colleges and universities, as capacity building provider, 298 Collins, Jim, 290 commerce, cities and, 66 commercial and industrial real estate: analysis steps, 358, 364; basics of, 353–55; building at scale, 371–73; building operations, 354; CDCs for, 395; community facilities, 370–71; customer expenditure determination, 356; leasing, services, amenities, 367–68; new retail business determination, 355–64; operating expense management, 354; permanent financing, 388–89; shopping centers, 71, 354–56, 358, 359, 366–67; special CED issues in, 389–90; tenants and, 353–54, 365–67 commercialism, 220 commercial strip, population change, 75 Commission on Housing, by Eisenhower, 101

543

Committee on Equal Employment Opportunity, of Kennedy, 108 Common Purpose: Strengthening Families and Neighborhoods to Rebuild America (Schorr), 51, 473 COMM-ORG website, 52 community, 18; capacity, 469; capitalism, of first-wave CDCs, 231; empowerment, 91–92; equity, 400; facilities, 370–71; leadership, 232–33; money flow in, 10; participation, 9; stakeholders, strategic planning and, 182 Community Action Agencies (CAAs), 110, 118–19, 131 Community Action Programs (CAPs), 110 community action programs, of 1960s: Appalachia, 102–3; backlash of, 118–19; Gray Areas Program, 104–5; on juvenile delinquency, 103–4 community-based developers, human capital role of, 279–82 community-based development model: G. H. W. Bush and, 139–40; downscaling economic development, 135; housing partnerships, 135–36; local and national support in, 22; on poverty, 136–38; Reagan and, 132–38; rural crisis, 137; specialized intermediaries for, 134–35; underclass, rise of, 136 community-based neighborhood revitalization efforts, 488 community builders: of color, pressures on, 456–57; racism and, 454–55 community building, 469–76; activities, 19–20; best practices in, 474; beyond Great Recession, 479–82; G. W. Bush and, 156–57; CCIs and, 22–23; in Clinton administration, 144–47; efforts, of 1920s, 38; Federal Reserve Bank report on, 477; interdisciplinary approach to rebuilding neighborhoods, 471; Kingsley, McNeely, Gibson themes of, 471–72; multicultural variables in, 24; place-based interventions, 478; social work and, 33; for stronger American civil society and community life, 471; what works in, 477–79

544

Community Building: Coming of Age (Kingsley, McNeely, & Gibson), 470 community building-focused social work curriculum, 43; competency areas, 44; critical thinking, 46; curricular materials, 50–52; EBP employment, 46–47; engaging diversity, 46; environment changes, responding to, 47; field education, 48; human behavior and social environment, 47; professional social worker conducting, 44–45; social and economic justice advancement, 46; social work coursework, 48–50; values and ethics application, 45–46; working effectively at all levels, 47–48 community building-focused social work practice: CCI, 22–23, 53, 56, 429, 472–79; Great Society programs, 55, 109, 115–16, 381 Community Building: Renewal, WellBeing, and Shared Responsibility (Ewalt, Freeman, & Poole), 51 community development: approach to economic development, viii; credit unions, 244; market-oriented approach to, x, 68, 185, 194–97; policy agenda, 418–19; special challenges of racism and regionalism, 449–68 Community Development Banking and Financial Institutions Act (1994), 147 Community Development Block Grant (CDBG), 123, 129, 135, 143, 152, 229, 406 community development corporation (CDC), x, 119–20; board of directors of, 14–15; business ownership, 385–87; capitalism vehicle, 6; Carter administration on foundations support of, 248; Clinton administration and, 144; for commercial and industrial real estate, 395; faith-based, 20; financial institutions, lending and, 402; HHS programs of, 131; microlending by, 19–20; national foundations for, 15; Neighborhood Workforce Pipeline characteristics for, 280; resources

index

for, 15; social capital and, 428–29; social enterprises practice, 388; social entrepreneurship, 386–87; wealth building use, 382, 385–87. See also first wave of CDCs; fourth wave of CDCs; second wave of CDCs; third wave of CDCs Community Development Financial Institutions (CDFIs), 135, 147–48, 250, 371, 384; financial institutions, lending and, 402–3; social ownership, 244–45; Treasury Department matching funds for, 415 Community Development Journal, 52 community development organization, 214–56; categorization, 215–21; competing paradigms, 220–21; general types, 221, 222–28; first wave of CDCs (1965–1975), 7, 230, 230–37, 240, 279, 385, 483, 488; second wave of CDCs (1975–1987), 7, 55, 123, 124, 169–70, 210–13, 230, 237–41, 239, 240–41, 256, 279, 311–14; third wave of CDCs (1987–2000), 1, 8, 26, 27–32, 146, 170, 230, 239–41, 250–54, 256, 279, 373–78, 384, 392; fourth wave of CDCs (2000– present), 8, 55, 230, 241–46, 256, 282–87, 476–77, 483–84 community development partnerships (CDPs), 15 Community Development Society (CDS), 8, 96 Community District Needs for the Borough of Brooklyn, 29 community economic development (CED): benefits of, ix, 7; G. W. Bush and, 156–57; challenges to field of, 487– 90; in Clinton administration, 144–47; commercial real estate special issues, 389–90; criticism of, 25–26; crossracial and cross-sector alliances, 455; current state of affairs, 21–22; defining, 5–7; future of, 487, 491–92; for highperformance organizations issues, 304–10; multidisciplinary approach to, x, 24; narrow to broad perspective evolution, 7–8; need for, 16–18; Obama

index

and, 161–62; people focus in, viii–ix; policy debates and critique of, 24–26; practice, social work values and, 34–35; practice curricula, 34; practitioners, public policy advocating by, 417; related fields and terms, 8–10; rental property affordability in, 350–52; resources, 489; significance of work of, 18–21; social capital, and evolution of, 427–30; social work convergence with, 485–86; social workers and, viii, 33–64; structures of, 12–16 Community Economic Development and Social Work (Sherraden & Ninacs), 51, 52 “Community Economic Development and Social Work,” 439 community economic development curricular materials, 50–52 community economic development history, nineteenth century to Johnson administration, 91–121, 92–95; American labor movement, 98–99; citizen participation legislation, 115–17; civil rights movement, 97–98; community action program of 1960s, 102–5; community building origins, 94; community organizing, 105–8; New Deal, 38–39, 99–100; postwar housing policy, 100–102; settlement house movement, 37, 96–97; university extension service movement, 8, 95–96, 102 community economic development history, Nixon to Obama, 122–68; G. H. W. Bush administration, 138–40, 144, 489; G. W. Bush administration, 151–57, 240; Carter administration, 128–30, 132, 135, 239; Clinton administration, 23, 137, 140–51, 154, 276, 351, 395, 400, 404, 420; communitybased development, 132–38; Nixon administration, 122–27, 136, 142, 153, 154, 236, 243, 248, 297, 334–35, 343–44, 384, 480; Obama administration, 158– 62, 478, 479, 481; outer city organizing moves, 124–25; Reagan administration,

545

28, 41, 130–38, 148, 239, 370, 388, 389, 393–94, 415; redlining discovery, 125–27 community economic development tools: market-conscious neighborhood strategy outline, 204, 206–7; strategy development questions, 207–8; strategy statement, 204 community education of project, in real estate development, 321 Community Environmental Center (CEC), 31–32 Community Housing Development Organizations (CHDOs), 142, 144, 146 community land trusts (CLT), 244, 425; BCLT as, 431–32; ICE creation of, 432 Community Organization (Ross), 39 community organizations, 106; voluntary, 218 community organizing: Alinsky, 105–7, 117–18; consensus-based model of, 9; direct action strategies, 107–9; Eichler consensus-based model of, 9; expansion of, 117–18; Johnson administration, 109–15; Kennedy administration, 108–9; rural economic development and housing, 112 Community Progress, Inc. (CPI), 104–5 Community Reinvestment Act (CRA), 126, 136, 236, 344, 384, 489 Community Renewal Tax Relief Act (2000), 148 Community Services Administration (CSA), 28, 131 Community Services Block Grant (CSBG), 131 competitive advantage, 397–98; inner-city neighborhoods and, 192 “Comprehensive Community Building Initiatives—Ten Years Later: What Have We Learned About the Principles Guiding the Work?” (Kubisch), 474 comprehensive community initiatives (CCIs), 22, 53, 56, 429; Ewalt on characteristics of, 473–74; Kubisch on, 474–76; role of, 472–79; self-help nature of, 23

546

Comprehensive Community Revitalization Program (CCRP), 82, 175; quality-oflife improvement and, 197–98 comprehensive development action plan, 203 Comprehensive Employment and Training Act (CETA), 123, 128 comprehensive strategy, in strategic planning, 182–83 concentrated poverty, 76; areas, 72, 464; theories, 82–83, 465 concept formation, in real estate development: community education of project, 321; cost estimate, 320–21; dimensions identification, 320; feasibility determination, 320; financing sources, 320–21, 371; market determination, 320; project management, 323; role evaluation, 323; several potential projects, 323–24; users specification, 320 Congress of Racial Equity (CORE), 108 consensus-based model of community organizing, of Eichler, 9 constituency-based agencies, 240 construction. See project construction consultant management, 299–302 consumer cooperatives, 425; economic effect of, 436; trade associations and financial supports of, 436 Consumer Federation of America, 436 conventional business financing techniques, 12–13, 234 conventional mortgage, 330–31 conventional private sector financing, 234 conventional profits, affordable development versus, 353 Conway, Jack, 107 Cooperative Home Care Associates (CHCA), 433 cooperatives: consumer, 425, 436; IRS on, 244; social ownership and, of fourthwave CDCs, 243–45; worker, 433, 434 Co-ops USA, 436 coordination, in human capital development system, 268 CORE. See Congress of Racial Equity

index

Corporation for National Service, 141 corrective capitalism, 6 COS. See Charity Organization Societies cost of money: financing and, 334–37; mortgage table, 335, 336, 337 Council for Economic Development, 145 Council on Environmental Quality (CEQ), 116 Council on Foundations, 410 Council on Social Work Education (CSWE), 34, 39–40, 41; Educational Policy and Accreditation Standards, 43–44 Country Life Commissions, 96 CPI. See Community Progress, Inc. CPLC. See Chicanos por la Causa CRA. See Community Reinvestment Act credit tenants, in shopping centers, 366–67 credit unions, 401–2; community development, 244 critical thinking, 46 cross-cultural training, social capital strengthening, 439–40 cross racial coalitions, 457 CSA. See Community Services Administration CSBG. See Community Services Block Grant CSWE. See Council on Social Work Education cultural and gender competencies, in organization development, 305–6 culture of poverty, counterevidence for, 470 Cuomo, Andrew, 141, 144 deal making, in real estate development: board of directors resolutions vote, 327; construction terms, 326; financial commitments, 326; letters of commitment, 326–27; marketing and property management plan, 326 Death and Life of Great American Cities, The ( Jacobs), 84, 190 debt, 392–95 DECC. See Detroit Eastside Community Collaborative

index

decentralization, during WWII, 70 decline: economic, during G. W. Bush administration, 155–56; of neighborhoods, 73–77 defined geographic area, in first-wave CDCs, 232 deindustrialization, of cities, 76 Delancey Street Foundation, 388 demand-side policy, for resident payment, 334 Demonstration Cities and Metropolitan Development Act (1966), 437–38 density, of social capital, 427–28 Department of Agriculture, U.S., 96, 130, 371, 402 Department of Commerce, U.S., 235; economic development funding, 415; Minority Development Agency of, 382–83; SBA and, 415 Department of Defense, U.S., 415 Department of Economic and Social Development, UN, 10 Department of Education, U.S., 152, 160 Department of Health and Human Services, U.S. (HHS), 148, 152; CDC programs of, 131; Division of Economic Opportunity, 415 Department of Homeland Security, U.S., 152 Department of Housing and Urban Development, U.S. (HUD), 112–13, 115, 138, 152; under Clinton administration, 142–43, 146–47; Healthy Homes, 160; HOME federal housing program, 139, 144, 489; home ownership counseling services, 342–43; housing acts program authority, 411; mortgage calculator of, 337; Neighborhood Self-Help Demonstration Act, 129, 130, 131; Neighborhood Self-Help grants, 239; NHS and, 127; training programs emphasis, 238; Zero Down Payment Mortgage, 153 Department of Labor, U.S., 130, 152; minimum wage and pension protection administration, 415; workforce training, 415

547

Department of Treasury, U.S., 147, 415 depopulation, of cities and inner city neighborhoods, 74, 326–27, 463–64 DeSantis, Maggie, 85 deterioration, of neighborhoods, 78, 461–62 Detroit Eastside Community Collaborative (DECC), 89 developers: community-based, 279–82; management, in project construction, 328; nonprofit, 218–19, 242; social workers as community, 282; trade group, 355 development banking, 239 development pro forma sample, 346 development tools, 255–56; business, 387–400; community economic, 204, 206–8 Development Training Institute (DTI), 139, 238, 297; on CED history, 92–95; for executive leadership development, 249; on federal policy on CED, 92 direct action strategies, 107–9 direct funding, for capacity building, 292 direct investments, 380 direct lobbying, 410–12 direct practice social work, 43 discrimination: housing, 81; location, 381; quality-of-life improvement and, 199; race and gender-based, 7. See also racial discrimination disinvestment, 16, 76, 80–81, 462 diversity, 484; engagement of, 46; in organization development, in CED, 304–5; revitalization and, 191 Division of Economic Opportunity, of HHS, 415 domestic spending, G. W. Bush reduction of, 152 DSNI. See Dudley Street Neighborhood Initiative DTI. See Development Training Institute Dudley Street Neighborhood Initiative (DSNI), 55, 221, 422–48 Earned Income Tax Credit (EITC), 149, 276, 404, 420

548

East Bay Asian Local Development Corporation (EBALDC), 256, 311–14 East Liberty Development, Inc., 178 East Los Angeles Community Union, the (TELACU), 107, 386, 395 Eastside LAND, Inc., 87 EBALDC. See East Bay Asian Local Development Corporation EBP. See evidence-based practice economic analysis, 175 economic development, vii, 8–9, 63, 166, 415; community-development approach to, viii; downscaling, 135; global partners in, 424; in rural areas, 18, 112, 395; World Bank and, 9 Economic Development Administration (EDA), 112, 124, 129, 130, 131, 160, 399 Economic Growth and Tax Relief Reconciliation Act (2001), 152 Economic Opportunity Act (1964) (EOA), 27, 109; CAAs, 110; CAPs, 110; programs of, 110; VISTA of, 110, 129, 132 economic recession, Clinton and, 140 economic recovery, Obama on, 158–59 economic restructuring, in inner-city neighborhoods, 76 economic trends analysis, in strategy development, 176–77 economy: change in, 289–90; globalization of, 17, 71, 258, 271; homegrown, 9, 192, 380, 387–88; intervention, 259–60; local, 10–12; macro, 177, 259; mainstream, 198– 99; service, 2. See also American economy EDA. See Economic Development Administration Eden Housing nonprofit developer, 242 Edgar M. Stern Family Fund, 28 Edna McConnell Clark Foundation, 274 education: Clinton administration on, 150; of community on real estate development project, 321; poor, qualityof-life and, 199; in workforce services, 263. See also social work education Educational Policy and Accreditation Standards, of CSWE, 43–44 Eichler, M., 9 Eisenhower, Dwight, 101

index

EITC. See Earned Income Tax Credit employee stock option plan (ESOP), 433, 434–35 employer and provider groups, for workforce development, 270–71 employment: bifurcation in, 18; CED, of social workers, viii, 55; EBP, 46–47; public service, 269–70 Employment Act (1946), 276 empowerment: CED impact on, 20; community, 91–92; of neighborhood residents, ix, 5; opportunity, in strategy, 181; -oriented practitioners, 91–92 Empowerment Zones, 137, 146–47, 148, 395, 400 Encyclopedia of Social Work, 5–6 Enterprise Community Partners (Enterprise Foundation), 22, 134, 137, 220, 247, 249, 297; Neighborhood Transformative Initiative, 478 Enterprise Foundation. See Enterprise Community Partners Enterprise Zones, 53, 137 environmentalists, 466 environment changes, responding to, 47 EOA. See Economic Opportunity Act equal employment opportunity, 305 equity, 335, 392–95; community, 400; component, of capitalization, 235; no strings attached, 234–35, 237 ESOP. See employee stock option plan Espinoza, Tommy, 164 ethnic movement, 120, 124 evidence-based practice (EBP), 46–47 Ewalt, P. L., 51, 473–74 expansion, of community organizing, 117–18 faculty and researchers, public policy advocating by, 416 faith-based CDCs, 20 faith-based organizations, 8; G. W. Bush and, 152 Family and Medical Leave Act, 149 Fannie Mae. See Federal National Mortgage Association farming. See agriculture Faux, Jeff, 120

index

fear mongering, 81 feasibility study, in real estate development: architectural and environmental assessments, 324; community participation, 325–26; financial details, 324–25; operating pro forma, 325; project management, 325; property development rights, 324 Federal Emergency Relief Administration (FERA), 39, 99 federal funding, of first-wave CDCs, 279, 483 federal government, 92, 100, 151–53, 159, 394, 451; antipoverty programs, 29; bond financing, 414; employment and training programs, 279; on foreclosures, 115, 155, 158; funding cuts, 55; housing discrimination, 81; infrastructure investment in 1940s, 70; legislation for workforce development, 265–66; public works programs, 12; sprawl creation by, 460–61; subsidies, 15; urban renewal approach, 187–88 Federal Highway Act (1956), 117 Federal Housing Administration (FHA), 101; federal mortgage insurance program, 70, 464; loans, 153; redlining and, 125; restrictions, 81 Federal Housing Authority Section 235 homeownership program, 381 federal income tax deductions, for housing, 100, 188 Federal Institutions Reform, Recovery, and Enforcement Act (1989) (FIRREA), 132 Federal National Mortgage Association (FNMA, or Fannie Mae), 101, 143, 154, 220, 330–31 Federal Office of Economic Opportunity (FOEC), 230–32 Federal Reserve Bank: community building report by, 477; mortgage application racism study by, 452–53 FERA. See Federal Emergency Relief Administration Ferguson, Ronald, 216, 217, 218–21, 222–28, 229–50 FHA. See Federal Housing Administration field education, 48

549

FIGHT. See Freedom, Integration, God, Honor, Today filtering or trickle-down theory, of marketdriven real estate, 68, 184, 185, 187 financial capital, 43, 379, 405; business development tools, 387–400; CDC business ownership, 385–87; financial capital development purposes, 380–82; financial institutions and lending, 244, 400–403, 415; individual wealth building, 384–85, 403–4; wealth building approaches, 382–85 financial infrastructure development, 384 financial institutions and lending, 400, 415; banks, 401; CDCs and, 402; CDFIs and, 402–3; community reinvestment by banks, 402; credit unions, 244, 401–2 financial literacy, 403 financing, 393–95; bond, at federal public policy, 414; conventional private sector, 234; cost of money and, 334–37; gap, 333; multifamily rental property, 349–50; permanent, 329, 368, 388–89; working capital, 392. See also affordable housing financing financing sources: for community facilities, 371; concept formation, in real estate development, 320–24 FIRREA. See Federal Institutions Reform, Recovery, and Enforcement Act first-wave CDCs program model components: community leadership, 232–33; conventional private sector financing, 234; defined geographic area, 232; multiyear core support, 234; no strings attached equity, 234–35; professional minority staff, 233; public sector project funding, 236–37; technical assistance, 233 first wave of CDCs (1965–1975), 230, 240, 385; community capitalism of, 231; evolution of, 230–32; federal funding of, 483; federally supported employment and training programs, 279; FORD and, 7, 230–32; program model components, 232–37; War on Poverty and, 231, 235, 488

550

504 program, of SBA, 393 fixed-rate mortgages, 331 flipping real estate, 74, 81 FNMA. See Federal National Mortgage Association FOEC. See Federal Office of Economic Opportunity Ford Foundation (FORD), 6, 15, 21–22, 27, 28, 120, 274; Catholic Church and, NCUEA establishment, 124; first-wave CDCs and, 7, 230–32; CPLC funding by, 164–65; Gray Areas Program, 104– 5; LISC creation by, 134; Neighborhood Family Initiative, 138, 478 foreclosures, 30–31, 74, 177, 212, 342, 392; crisis of, 154–55, 161–62, 332; federal government on, 115, 155, 158 Forrester, J. W., 66 Foundation Center, 310 foundations, 247; national, 15, 22, 248 fourth wave of CDCs (2000–present), 8, 55, 230, 256, 476–77, 483; bank CDCs, 245–46; cooperatives and social ownership, 243–45; job training, 484; local economic development agencies, 246; multiculturalism, diversity, and antioppression, 484; neighborhood development planning bodies, 242–43; NEW, 256, 282–87; nonprofit housing organizations, 241–42; PHAs, 229, 242; program-specific development entities, 243; strengths-based approach to CED, 484; themes of, 483–84 franchises, 366, 368, 387, 391–92 Freddie Mac, 143, 154, 220, 330–31 Freedom, Integration, God, Honor, Today (FIGHT), 106 Freeman, E. M., 51 Freire, Paulo, 438 Friedan, Betty, 118 friendly visitor movement, 36–37 front-line organizations, specializing in CED: government community development agencies, 229; nonprofit development organizations, 229–30; first wave of CDCs (1965–1975), 7, 230, 230–37, 240, 279, 385, 483, 488; second

index

wave of CDCs (1975–1987), 7, 55, 123, 124, 169–70, 210–13, 230, 237–41, 239, 240–41, 256, 279, 311–14; third wave of CDCs (1987–2000), 1, 8, 26, 27–32, 146, 170, 230, 239–41, 250–54, 256, 279, 373–78, 384, 392; fourth wave of CDCs (2000–present), 8, 55, 230, 241–46, 256, 282–87, 476–77, 483–84 Funders’ Network for Smart Growth and Local Communities, 466 funding sources: nonprofits lobbying and, 409–10; technical assistance for, 391 GAO. See Government Accountability Office, U.S. gender inequality, x, 7 gentrification, vii, 193, 195 Geographic Information Systems (GIS) software, 196 G.I. Bill. See Servicemen’s Readjustment Act Gibson, J. O., 470 Ginnie Mae, 349 GIS. See Geographic Information Systems Glickman, N. J., 15, 295 Global Development Research Center, 389 globalization, of economy and, 17, 71, 258, 271 global partners, in economic development, 424 goals: implementation of, 179; short-term, identification of, 183 Good to Great: Why Some Companies Make the Leap . . . and Others Don’t (Collins), 290 Gore, Al, 141 Government Accountability Office, U.S. (GAO), 266 grants: block, 123, 124, 237; funding, at federal level, 414; Neighborhood SelfHelp, of HUD, 239; for rental property development, 352 grassroots lobbying, 409, 412–13 Gray Areas Program, of FORD, 104–5 Great Depression (1930s), 69, 133; FERA, 39; IAF, 39, 106, 118, 140; New Deal, 38–39, 99–100; Roosevelt, 38–39; Works Projects Administration, 39

index

Greater Southwest Development Corporation, 275 Great Recession (2008), 156, 487–88; community building beyond, 479–82 Great Society programs, of Johnson administration, 55, 109, 115–16, 381 Green Amendment (1967), 118 growth, of cities, 66–68. See also smart growth movement growth-control legislation, 461 Grzywinski, Ron, 402 Gutierrez, Alfredo, 163 Habitat for Humanity, 145, 154 Halpern, R., 5, 6 Hanifan, L. J., 426 Harlem Children’s Zone (HCZ), 146, 478, 481 Harrington, Michael, 111 Harvest of Shame (Murrow), 111 HCZ. See Harlem Children’s Zone Head Start, 55, 149, 165 health care industry, 272–73 Healthy Homes, of HUD, 160 Hewlett-Packard HP Way, 295 HHS. See Department of Health and Human Services High-Performance Nonprofit Organizations: Managing Upstream for Greater Impact (Letts), 290 high-performance organizations, 312–14; capacity building, 290–95; capacity building providers, 296–99; CED issues for, 304–10; consultant management, 299–302; Glickman and Servon on capacities of, 296; importance of, 288–90; Letts on characteristics of, 296; managing consultants, 299–302; organizational capacity, 296; organization development consultant, 302–4; resource capacity, 295–96 Hinden, Denice Rothman, 290 Hispanic Development Corporation, of NCC, 63–64 Hispanics. See Latinos historic preservation, reinvestment and, 191–92

551

Holman, Carl, 124 Homebuilders, 55 home construction industry, New Deal and, 99 HOME federal housing program, 139, 144, 489 homegrown economy, 9, 192, 380, 387–88 HOME Investment Partnerships Program, 229, 406 homelessness, 133–34, 142, 161, 170, 250–54 Home Mortgage Disclosure Act (1987), 125–26, 132 Homeowner Affordability and Stability Plan, of Obama, 161 home ownership: by African Americans, 81, 114; Clinton administration on, 143; whites rates of, 381 home ownership programs: home ownership counseling services, 342–43; NHS, 343–44; racism and, 21 HOPE I, 138 HOPE II, 138 HOPE III, 138 HOPE VI, 142, 153, 154, 188–89, 194, 372, 490 HOPE NOW, bank and mortgage services coalition, 155 Hopkins, Harry, 39 housing, 4; Clinton administration on, 141–43; discrimination, 81; nonprofit, in Clinton administration, 144; partnerships, 135–36; programs, of G. W. Bush administration, 153; trickledown policy, 78. See also affordable housing; postwar housing policy Housing Act (1949), 100–101 Housing Act (1954), 101 Housing Act (1961), 102, 109 Housing Act (1965), 112–13 Housing Act (1968), 114 Housing Act (1974), 123 Housing Act rehabilitation efforts (1964), 102 Housing Assistance Council for rural housing, 249 HUD. See Department of Housing and Urban Development

552

Hull House, 37, 38 human behavior and social environment, 47 human capital, 43, 257–87; communitybased developers role, 279–82; development in emerging industries, in organization development, 309–10; value increase, through workforce development, 275–76; workforce development, 258–77; youth development and youth work, 277–78 human capital development system, 265; coordination, 268; job development, 266; placement finding, 266–67; public service employment, 269–70; sectoral intervention, 269, 396–97; service integration, 266; targeted job creation, 268–69 human capital investment, in capacity building, 294–95 Human Resources Consortium, 139–40 Hurricane Katrina, 156 Hutchinson, Earl O., 454 IAF. See Industrial Areas Foundation ICA Group. See Industrial Cooperative Association ICE. See Institute for Community Economics ICIC. See Initiative for a Competitive Inner City IDAs. See Individual Development Accounts identity movement, 120–21 IMH. See Intercommunity Mercy Housing immigration, 66, 67, 69; of Latinos, 73; settlement houses and, 97. See also migration income: gap, between whites and African Americans, 381; before taxes, quintiles of, 360–63 incorporation, of cities, 67–68 incubators, 243, 387, 396 Independent Sector, on lobbying, 407–8, 410 Individual Development Accounts (IDAs), 20, 43, 149, 240, 385, 403–4, 416

index

Industrial Areas Foundation (IAF), 39, 106, 118, 140 Industrial Cooperative Association (ICA Group), 433 industrialization, of agriculture, 69, 95, 96 industrial real estate. See commercial and industrial real estate infrastructure development, 9, 70, 384 Initiative for a Competitive Inner City (ICIC), 398 inner-city neighborhoods, vii; African Americans’ flight from, 429; competitive advantage, 192; concentrated poverty of, 72; depopulation of, 74, 326–27, 463–64; deterioration of, from sprawl, 461–62; poverty in, 16–17; racial discrimination in, 76; redevelopment of, vii Institute for Community Economics (ICE), 431, 432 Institute of Real Estate Management, 355 Integration Initiative, of Living Cities, 478 Intercommunity Mercy Housing (IMH), 256, 373–78 interdisciplinary approach, to rebuilding neighborhoods, 471 internalized racism, 423–54 Internal Revenue Service (IRS): on cooperatives, 244; on grassroots lobbying, 409, 413; on nonprofits lobbying, 407–8 international context, social development in, 10 Investing in What Works for America’s Communities: Essays on People, Place, and Purpose, 477 investment capital, 78 IRS. See Internal Revenue Service iterative strategy, in strategic planning, 182 Jacobs, Jane, 84, 190 Javits, Jacob, 27 Jim Crow, 69, 98 J. M. Kaplan Fund, 28 job: development, in human capital development system, 266; placement,

index

in workforce services, 264; -related literacy, 262–63 Jobs and Growth Tax Relief Reconciliation Act (2003), 152 Jobs Initiative, of AECF, 277 job training, 415; in fourth-wave CDCs, 484; programs, of second-wave CDCs, 238; in workforce services, 263–64 Johnson, Lyndon B., administration, 55; ARDA, 103, 108; EOA, 109–10; Great Society programs, 55, 109, 115–16, 381; Housing Act (1965), 112–13; Model Cities framework, 113–15, 120; Section 235 Housing Program, 114; Section 236 Housing Program, 114–15; War on Poverty, 7, 16, 40, 109, 111, 115, 120, 123, 231, 235 Journal of Community Practice, of ACOSA, 33, 52; “Community Economic Development and Social Work,” 439 Journal of International Social Work, 52 Journal of Progressive Human Services, 52 Jungle, The (Sinclair), 68 juvenile delinquency: community action programs, 103–4; Juvenile Justice Program, 104; street workers outreach programs for, 103–4 Juvenile Delinquency and Youth Offenses Control Act, 104 Juvenile Justice Program, 104 Kemp, Jack, 137, 138, 142 Kennedy, John F., administration: Civil Rights Act, 108; Committee on Equal Employment Opportunity, 108; community organizing, 108–9; Housing Act (1961), 102, 109; PARC, 103, 108; Peace Corps, 108 Kennedy, Robert F., 27 Kingsley, G. T., 470 Kirwin Institute for the Study of Race and Ethnicity, 450–51 Kotter, John P., 290 Kretzmann, Jody, 137, 174–75 Kubisch, Anne, 474–76 Ku Klux Klan, 98 Kwoh, Stewart, 457–58

553

labor union movement. See American labor movement land development scheme, 205 Latinos, 283, 433, 456; concentrated poverty areas, 464; immigration of, 73; poverty of, 449–50. See also minorities Law Enforcement Administration Act (LEAA), 127 Leading Change (Kotter), 290 leasing, of shopping centers, 367 legislation: agriculture, 128; citizen participation, 115–17; civil rights, 98, 119; federal, for workforce development, 265–66; growth-control, 461; regulatory, 314, 411; testimony, of nonprofits, 408–9 Lemann, Nicholas, 110 lending: process terminology, 335; subprime, 143, 154, 331–32, 342. See also financial institutions and lending Letts, Christine, 290, 296 level of engagement, of consultants, 300–301 Linder, William J., 1, 58–59, 61, 64 LISC. See Local Initiatives Support Corporation literacy: basic and job-related, 262–63; financial, 403 Living Cities, 478, 479, 481 lobbying and advocacy, 406, 422; community development policy agenda, 418–19; Independent Sector on, 407–8, 410; IRS on grassroots lobbying, 409, 413; IRS on nonprofits, 407–8; macroeconomic policy issues, 419–20; mechanics of, 410–13; of nonprofits, 407–10; permissions and prohibitions, 407–10; private policy, 420–21; public policy advocating, at federal level, 413–15; public policy advocating, at state, city, county level, 415–18; technical assistance for, 410 lobbying mechanics: direct lobbying, 410– 12; grassroots lobbying, 409, 412–13 local businesses: helping growth, 384; retail and service ownership, 77 local economy, 10–12

554

Local Initiatives Support Corporation (LISC), 22, 134, 175, 220, 248, 249, 297, 479–81; Building Sustainable Communities Initiative, 478; National Demonstration Program, 429–30; as national intermediary, 371; quality-oflife improvement and, 197–98 local intermediaries: as capacity building providers, 297; financial, 247 locality development, 50; theoretical perspectives on, 10–12 location discrimination, 381 Logan neighborhood: background of, 493–94; case exercise, 493–98; focus group data, 497; neighborhood profile, 495–96; strategy options, 498 Logue, Ed, 188 Logue, Frank, 104 Lopez, Ronnie, 164 Lopez, Rosie, 163 Low Income Housing Coalition, 249 Low-Income Housing Tax Credit, 143, 351 MacArthur Foundation, 479 MACDC. See Massachusetts Association of Community Development Corporations macroeconomic policy issues, 419–20 macro economy, 177, 259 macro social work practice, 33, 41, 42, 439–40, 485 mainstream economy, 198–99 Making Cleveland a City of Choice: Strategy for Development and Revitalization in Cleveland, 197 Making Home Affordable program, of Obama, 161 management: consultant, 299–302; developer management, in project construction, 328; for nonprofit sector, 289; operating expense, 354; project, 323, 325; property, plan for, 326; sales or asset, 328–29, 368, 388–89 manpower development programs, 279 Manpower Development Research Corporation (MDRC), 274 manufacturing changes, in American economy, 17

index

market, 195; analysis, 202; -conscious neighborhood strategy outline, 204, 206–7; determination of, in real estate development, 320; forces, public benefit and, ix–x; private real estate, 17; pure, 77–79. See also real estate markets market-oriented approach, to community development: GIS software for, 196; NiB program, 197; private sector development, x, 4; revitalization strategies, 194–97; of TRF, 195; trickledown theory, 68, 184, 185, 187 market reliance, 184–85; profit driven, 186; tax policy and incentives, 186–87 market-to-market financial restructuring method, 143 Market Value Analysis (MVA), of TRF, 195–96 Marshall Heights Community Development Corporation (MHCDC), 55, 169–70, 210–13 MASO. See Mexican American Student Organization Massachusetts Association of Community Development Corporations (MACDC), 479–80 Masters of Social Work programs, 37; community building specializations, 43, 44 Maximum Feasible Misunderstanding (Moynihan), 111 Mayors’ Commission on Economic Opportunity, 29 Mayor’s Youth Council, in Burlington, Vermont, 278 McKinney-Vento Homeless Assistance Act, Obama and, 161 McKnight, John, 137, 174–75 McNeely, J. B., 470 MDCDC. See Marshall Heights Community Development Corporation MDRC. See Manpower Development Research Corporation Medoff, P., 447 Meehan, J., 5, 430

index

Mercy Housing Northwest. See Intercommunity Mercy Housing MESBICs. See Minority Enterprise Small Business Investment Companies metropolis: globally competitive, 458–59; rise, in cities, 72 metropolitanism policy framework, 73; G. W. Bush and, 157 metropolitan planning, 459 Mexican American Student Organization (MASO), 163 microenterprise, 392–95; federal program of, 394 microlending, by CDCs, 19–20 middle-city neighborhoods, 17; economic restructuring in, 76; racial discrimination in, 76 middle-class minority families, in real estate market, 76–77 Mier, R., 10 migration: of African American to Northern cities, 70, 98; from cities, 71–72, 78–80, 100; to cities, from rural areas, 67, 69–70, 72, 95, 98; national highways and, 100; to South and Southwest, 80. See also immigration minorities: business development support, 382–83; middle-class families, in real estate market, 76–77; population change, impact of, 457–58; professional staff, in first-wave CDCs, 233. See also African Americans; Latinos; racial discrimination; racism; segregation Minority Business Development Agency, 382–83 Minority Development Agency, of Department of Commerce, 382–83 Minority Enterprise Small Business Investment Companies (MESBICs), 394 model blocks, 202, 203 Model Cities framework, 113–15, 120 Mondragon worker cooperative, 434 money flow, in community, 10 mortgage, 30–31; application racism study, 452–53; ARMs, 153, 331; -backed securities, 332; bank sale to Fannie

555

Mae, Freddie Mac, 330–31; brokers, 154, 331–32; calculator, of HUD, 337; conventional, 330–31; fixed-rate, 331; insurance program, of FHA, 70, 464; self-amortizing, 70; table, 335, 336, 337 Mortgage Forgiveness and Debt Relief Act (2007), 155 Moses, Robert, 69, 188 Moynihan, Daniel, 111 multicultural variables, of CED, 24, 484 multidisciplinary approach, to CED, x, 24 multifamily rental property financing, 349–50 “Multi Modes of Intervention at the Macro Level” (Rothman), 50 multiyear core support, 234 Mumford, Lewis, 84 Murrow, Edward R., 111 MVA. See Market Value Analysis NAACP. See National Association for the Advancement of Colored People NACEDA. See National Alliance of Community Economic Development Associations NAFTA. See North American Free Trade Agreement NASW. See National Association of Social Workers National Alliance of Community Economic Development Associations (NACEDA), 20–21, 157, 250 National Association for the Advancement of Colored People (NAACP), 97–98 National Association of Housing and Redevelopment Officials, 250 National Association of Social Workers (NASW), 35, 39, 41, 45–46 national capacity-building organizations, 249 National Center for Employee Ownership (NCEO), 434 National Center for Urban Ethnic Affairs (NCUEA), 118, 124, 125 National Commission on Neighborhoods, 127 National Community Building Network (NCBN), 23, 145

556

National Community Capital, 250 National Community Development Initiative (NCDI), 139, 144 National Community Landtrust Network, 432 National Community Reinvestment Coalition, 249 National Community Stabilization Trust, of Obama, 162 National Congress for Community Economic Development (NCCED), 5, 18–19, 157, 250, 476 National Consumer Cooperative Bank, 436 National Cooperative Bank, 129, 371 National Cooperative Business Association, 436 National Council of La Raza, 124 National Country Life Conference (1919), 96 National Demonstration Program, of LISC, 429–30 National Emphasis Programs (NEPs), 118 National Environmental Policy Act (1969) (NEPA), 116–17 national financial intermediaries, 248–49 national foundations, 15, 22, 248 National Governor’s Association “Smart Growth,” 157 national highways, city migration and, 100 National Housing Task Force, 139 National Industrial Recovery Act (NIRA), 99 national intermediaries: as capacity building provider, 297; DTI, 92, 92–95, 139, 238, 249, 297; Enterprise Foundation, 22, 134, 137, 220, 247, 249, 297, 478; LISC, 22, 134, 175, 197–98, 220, 248, 249, 297, 371, 429–30, 478, 479–81; NeighborWorks, 22, 128, 139, 197, 220, 243, 248, 297 National Neighborhood Coalition, 124 National Neighborhood Commission, of Carter, 128, 239 National Organization for Women (NOW), 118 National People’s Action, 118

index

national trade groups, 250 National Training and Information Center, 125 National Trust for Historic Preservation, 399 National University Extension Association, 8, 96 National Urban Coalition, 124 National Urban Policy, of Clinton, 141 National Welfare Rights Organization, 118 NCBN. See National Community Building Network NCC. See New Community Corporation NCCED. See National Congress for Community Economic Development NCDI. See National Community Development Initiative NCEO. See National Center for Employee Ownership NCP. See New Communities Program NDPs. See Neighborhood Development Programs NEI. See Neighborhood Excellence Initiative Neighborhood Builder Award, 32 Neighborhood Design Centers, 246 Neighborhood Development Programs (1968) (NDPs), 102, 116 Neighborhood Excellence Initiative (NEI), of Bank of America, 378 Neighborhood Family Initiative, of FORD, 138, 478 Neighborhood Funders Group, 248 Neighborhood Housing Services (NHS), 243, 248, 297; FORD, HUD and, 127; home ownership programs, 343–44; redlining, 126–27 neighborhood programs, of Carter: agriculture legislation, 128; CDBG, 129, 135, 143, 152, 229, 406; CDC, 129; CETA, 128; EDA Office of Special Projects, 129; HUD Neighborhood Self-Help Demonstration Act, 129, 130, 131; National Cooperative Bank, 129, 371; NeighborWorks, 22, 128, 139, 197, 220, 243, 248, 297 Neighborhood Progress, Inc., 247

index

Neighborhood Reinvestment Corporation (NRC). See NeighborWorks Neighborhood Revitalization Initiative, of Obama, 159 neighborhoods: center approach, 200; commercial revitalization, 398–99; decline of, 73–77; deterioration of, 78; development planning bodies, 242–43; disinvestment, 76; making and unmaking of, 65–90; movement in 1960s, 73–74; organizations, 81; public service and, 75–76; residents, ix, 5; weak-market, 195 Neighborhood Self-Help Development Act, 129, 130, 131 Neighborhood Self-Help grants, of HUD, 239 Neighborhoods in Bloom (NiB) program, 197 Neighborhood Stabilization Program (NSP), 158–59 neighborhood strategy, in strategic planning, 182 Neighborhood Transformation Initiative (NTI), 195, 478 Neighborhood Workforce Pipeline, of AECF, 273, 274, 280, 281 Neighborhood Youth Corps (NYC), 262 NeighborWorks (Neighborhood Reinvestment Corporation), 22, 128, 139, 197, 220, 243, 248, 297 NEPA. See National Environmental Policy Act NEPs. See National Emphasis Programs net operating income (NOI), 345 NEW. See New Economics for Women New Communities Program (NCP), of Chicago, 479–80 New Community Corporation (NCC), 1, 55, 58–64, 279, 473, 476, 489 New Community Family Resource Center, 62 New Community Foundation, 61 New Community Harmony House houses, 62 New Deal programs, 38–39, 99–100 New Economics for Women (NEW), 256, 282–87

557

New Markets Tax Credit, 148 new urbanism, 190 New World Foundation, 248 NGOs. See nongovernmental organizations NHS. See Neighborhood Housing Services NiB. See Neighborhoods in Bloom Ninacs, W. A., 51, 52 NIRA. See National Industrial Recovery Act Nixon, Richard, administration, 122; anti-poverty initiatives, 123; block grants, 124; CDBG, 123; CETA, 123; CRA, 126, 136, 236, 344, 384, 489; LEAA, 127; National Commission on Neighborhoods, 127; NHS, 126–27, 243, 248, 297, 343–44; redlining discovery, 125–26; Section 8 rent subsidies program, 123, 142, 153, 154, 334, 335; urban and neighborhood policy demands, 127; volunteerism, 125 No Child Left Behind Act, 153 NOI. See net operating income nongovernmental organizations (NGOs), 5, 10 nonprofit agencies, legislation testimony, 408–9 nonprofit housing: in Clinton administration, 144; developers, 218–19, 242; organizations, of fourth wave of CDCs, 241–42 Nonprofit Organizational Culture Guide (Teegarden, Hinden, & Sturm), 290 nonprofit sector: growth of, 289; management for, 289; public pressure for accountability in, 290; Salamon paradigms of, 220–21 nonprofits lobbying: advocacy and, 314; funding source, 409–10; grassroots lobbying, 409, 412–13; Independent Sector and, 407–8, 410; IRS code on, 407–8; legislation testimony, 408–9; spending limitations, 407–8; trade organizations and, 412 North American Free Trade Agreement (NAFTA), 140 no strings attached equity, 234–35, 237

558

NOW. See National Organization for Women NSP. See Neighborhood Stabilization Program NTI. See Neighborhood Transformation Initiative NUCUEA. See National Center for Urban Ethnic Affairs NYC. See Neighborhood Youth Corps Obama, Barack, administration: ACA, 159; ARRA, 158; CED and, 161–62; economic recovery, 158–59; innovation, comprehensiveness, and place focus, 159–61; NSP, 158–59; White House Office of Urban Affairs, 158 Obama administration initiatives, 479; Choice Neighborhoods, 160, 481; HCZ, 146, 478, 481; Neighborhood Revitalization Initiative, 159; Partnership for Sustainable Communities, 159; Promise Neighborhoods, 160, 481; SC2, 160; Social Innovation Fund, 160; Sustainable Communities initiative, 481 OCCD. See organizing for communitycontrolled development Office of Economic Opportunity (OEO), 113 Office of Minority Business Enterprise, 124 Office of Special Projects, of EDA, 129 OIC. See Opportunities Industrialization Centers Oliver, M. L., 381 Olmstead, Frederick Law, 69 Open Society Institute, 274 operating expense management, 354 operating pro forma sample, 347–48 Operation Understanding, 61 Opportunities Industrialization Centers (OIC), 262 Opportunity Finance Network, 250 organizational capacity, for highperformance organizations, 296 organization development, best practices of, 303, 308 organization development consultant, 302–4

index

organization development issues, in CED: cultural and gender competence, 305–6; diversity, 304–5; human capital development in emerging industries, 309–10; sources of support for consultants, 310; succession planning and transition, 309; third-party payment, 306–8; transferability of models and practices, 308–9 organization levels, of Ferguson and Stoutland, 222–28; CDCs and nonprofit developers level, 218–19; competing paradigms for, 220–21; front-line organization specializing in CED, 229–46; level 2 organizations in community development, 246–48; level 3 organizations in community development, 248–50; local funders, policy makers, researchers, supporters level, 219; national funders, policy makers, think tanks, intermediaries level, 220; voluntary community organizations and informal networks level, 218 organizations: advocacy and education, 417; affordable housing, 8; certification of, 290; community, Alinsky on, 106; faith-based, 152; front-line, specializing in CED, 229–46; high-performance, 288– 314; national capacity-building, 249; neighborhood, 81; NGOs, 5, 10; nonprofit housing, 241–42; partnerships, ix; self-help, 4; singlepurpose, nonprofit affordable housing, 8; voluntary community, 218 organizations in community development, level 2: capacity-building, 246–47; foundations, 247–48; local financial intermediaries, 247; private consultants, 247; trade groups, 247 organizations in community development, level 3: national capacity-building, 249; national financial intermediaries, 248–49; national foundations, 248; national trade groups, 250; think tanks and advocacy organizations, 249

index

organizing for community-controlled development (OCCD), 6 Other America, The (Harrington), 111 out migration and racial change theories, 78–80 outreach and intake, in workforce services, 261 PAC. See Project Area Committee PACs. See project advisory committees Paraprofessional Health Care Institute cooperative network, 433 PARC. See President’s Appalachian Regional Commission Partnership for Sustainable Communities, of Obama, 159 Pastor, Manuel, 457–58 patch method, as social safety net, 200 PBC. See Purpose-Built Communities Peace Corps, 108 Pedagogy of the Oppressed (Freire), 438 Peirce, Neal, 72 Peninsula Housing Coalition nonprofit developer, 242 people focus, in CED process, viii–ix Perkins, Frances, 38–39 permanent financing: appraisal, of real estate value for, 368; in commercial and industrial real estate, 388–89; sources of, 388 Personal Responsibility and Work Opportunity Act (1996), 148, 276 person-in-environment perspective, 23 PHA. See Public Housing Authority PICs. See Private Industry Councils PITI. See principal and interest, taxes, and insurance place-based interventions, 478 place-based neighborhood revitalization, 7, 25 planned organizational development, in capacity building, 292–93 planning: big projects, in urban renewal, 189–90; metropolitan, 459; neighborhood development bodies, 242–43; neighborhood residents empowerment in, ix, 5; succession,

559

309; urban, 4, 117. See also strategic planning PlanWare, 389 policy: agenda, in community development, 418–19; debates and critique, of CED, 24–26; demand-side, for resident payment, 334; federal, on CED, 92; federal public, bond financing at, 414; macroeconomic issues, 419–20; metropolitanism framework, 73, 157; private, public policy and, 420–21; tax, incentives and, 186–87; trickle-down housing, 78; urban, Carter administration on, 129. See also postwar housing policy; public policy advocating PolicyLink, 145, 249 political process, social capital and, 438–39 Poole, D. L., 51 Porter, Michael, 18, 175–76, 397–98, 459 postwar housing policy: federal income tax deductions for housing, 100; FNMA, 101, 143, 154, 220, 330–31; G.I. Bill, 100; Housing Act (1949), 100–101; housing and suburbs, 100–101; national highways, city migration and, 100; two-tract housing system, 101; Urban Redevelopment Program, 100; urban renewal, cities and, 101–2, 187 poverty, x, 156, 488–89; of African Americans, 140, 449–50; communitybased development model on, 136–38; concentrated, 72, 76, 82–83, 464, 465; culture of, 470; inner-city neighborhoods and, 16–17; of Latinos, 449–50; Reagan administration on, 136–38; in rural areas, 16, 96; wealth retention and, 381 powell, john, 450–51, 452 Pratt Center for Community Development, 28, 29, 56, 238, 247 Presbyterian Self-Help Development Fund, 125 President’s Appalachian Regional Commission (PARC), 103, 108 principal and interest, taxes, and insurance (PITI), 335

560

private consulting: consultants, 247; firms, as capacity building provider, 298 Private Industry Councils (PICs), 149 private policy, public policy and, 420–21 private real estate markets, older areas disinvestment, 17 private sector: development, x, 4; financing, 234; investments, ix, 7, 143; partnerships with, 130, 194; tools, ix, 7 problem analysis, 174 problem- or issue-based strategic planning, 179–80, 180 profit-driven market reliance, 186 program funding, matching requirements for, 13 program-specific development entities, 243 Progressive Era, 36–37, 426 project advisory committees (PACs), 242 Project Area Committee (PAC), 116 project construction, in real estate development: developer management, 328; marketing, 328; monitoring in, 327 project management, 323, 325 Promised Land, The (Lemann), 110 Promise Neighborhoods, of Obama, 160 property abandonment, 75 property investors, for rental units, 74–75 property management, 326 Proscio, Tony, 467–68 prosperity, under Clinton, 151 Proxmire, William, 125 public benefit, market forces and, ix–x Public Housing Authority (PHA), 229, 242 public policy advocating, at federal level, 413–15 public policy advocating, at state, city, county level, 415; advocacy and education organizations, 417; CED practitioners, 417; by faculty and researchers, 416; IDAs and, 416; students, 417–18 public projects, large-scale, 4, 372 public sector: development, 4; project funding, 236–37 public service: employment, in human capital development system, 269–70; neighborhoods and, 75–76

index

pure market force theories, 77–79 Purpose-Built Communities (PBC), of Atlanta, 372, 478 Putnam, Robert, 426, 427 Quality Housing and Work Responsibility Act (1998), 142 quality-of-life improvement, 200; CCRP and LISC and, 197–98; discrimination, poor education and, 199; low-income families and, 198; mainstream economy and, 198–99; restoration and, 192 quality-of-life theories, 81–82 Quie Amendment (1967), 118–19 Race to the Top initiative, 160 racial discrimination, 199; in inner-city and middle-city neighborhoods, 76; Kubisch on, 476; in real estate markets, 17, 81; systematic disinvestment theories and, 80–81; wealth disparities and, 381; in workforce development, 258–59 racism, x, 79, 423; home ownership program and, 21; structural, 451 racism, in community development, 458; CED addressing, 452–56; community builders of color pressures, 456–57; federal government and, 451; impact of, 449–52; internalized, 453–54; minority population change impact, 457–58; mortgage application rejection, 452–53; real estate practices and, 451; sexism and, 454 radial cities, 66–67 Ramage, David, 248 RCI. See Rebuilding Communities Initiative “Reaching New Heights: Trends and Achievements of Community-Based Development Organizations” report, of NCCED, 19 Reagan, Ronald, administration, 28, 41; community-based development, 132–38; community reinvestment, 132; congressional response to cuts of, 132; CSBG, 131; economic cutbacks by, 370; economic development

index

downscaling, 135; housing partnerships, 135–36; Neighborhood Development Demonstration Act, 132; Neighborhood Self-Help Development Program elimination, 131; on poverty, 136–38; rural crisis, 137; SBA, 131, 148, 388, 389, 393–94, 415; second-wave growth in, 239; underclass, rise of, 138 Reagan Tax Simplification Act (1982), 135 real estate development, 237, 315–78, 488; affordable housing financing, 329–42; commercial and industrial real estate, 352–73; home ownership programs, 342–44; rental property, 344–52; of second-wave CDCs, 237 real estate development process, 315–29, 317; concept formation, 320–24; feasibility study, 324–26; five steps of, 319; making the deal, 326–27; project construction, 327–28; sales or asset management and operations, 328–29, 368, 388–89 Real Estate Investment Trusts (REITs), 350 real estate markets, 4, 87, 194, 395; flipping, 74, 81; middle-class minority families in, 76–77; private disinvestment in older areas, 17; pure profit in, 185; racial discrimination dynamics, 17, 81; segregation in, 70, 80 real estate projects, 12; racism and, 451 Rebuilding Communities Initiative (RCI), of AECF, 85, 210, 448, 478 Red Cross, 290 redevelopment: of inner-city neighborhoods, vii; of rural areas, 96 redlining, 76, 81, 462; discovery of, 125–27; LEAA, 127; NHS, 126–27; urban and neighborhood policy demands, 127 regionalism, in community development, 423; CED and, 467–68; globally competitive metropolis, 458–59; government and sprawl, 460–61; smart growth movement, 150–51, 463–67; societies in, 462–63; sprawl, inner-city deterioration and, 461–62; sprawl issue, 460 regional malls, 366

561

regulatory legislation, 411; nonprofits advocacy on, 314 reinvestment, 132, 402; historic preservation and, 191–92; in local businesses, 384; revitalization and, 191 Reinvestment Fund, The (TRF), 176, 195–96 REITs. See Real Estate Investment Trusts Renewal Communities, 148 rental property, 344–73; affordability, in CED, 350–52; basics of, 344–45; cash calculation, 345; financing, subsidies for, 351; grants for development of, 352; multifamily rental properties financing, 349–50; NOI and, 345; sales or asset management for, 329; tax calculation, 345 replacement jobs, urban renewal and, 189 residential subdivisions, in rural areas, 99 resident payment, for demand-side policy, 334 resource capacity: Hewlett-Packard HP Way, 295; for high-performance organizations, 295–96 resources: for CDC, 15; for CED, 489; strategic planning and, 183–84 restoration, 188–89, 194; critics of, 193; quality-of-life and, 192; revitalization and, 190–91; theories, 192–93 restructuring: of American economy, 258; economic, in inner-city neighborhoods, 76; method, market-to-market financial, 143 Resurrection Project, in Pilsen neighborhood of Chicago, 183–84 revitalization, viii, 8; community-based neighborhood, 488; critics of, 193; diversity and, 191; homegrown economy and, 192, 380, 387–88; neighborhood commercial, 398–99; place-based neighborhood, 7, 25; reinvestment and, 191; restoration and, 190–91; Schorr on key characteristics of, 54; strategies, market-oriented, 194–97 Reynolds, Bertha, 39 Richmond, Mary, 38, 39 Riis, Jacob, 97

562

Rockefeller Brothers Foundation, 28, 137, 139, 145, 248 Roosevelt, Franklin, 38–39 Rosales, Arturo, 163 Ross, Murray, 39 Rothman, J., 50 Rouse, James, 187–88 rural areas, 2, 103, 137, 144, 161, 371; economic development in, 18, 112, 395; migration to cities from, 67, 69–70, 72, 95, 98; poverty, 16, 96; redevelopment of, 96; residential subdivisions on, 99. See also agriculture Rusk, David, 459 Salamon, Lester, 220–21 sales or asset management, in real estate development, 328; permanent financing, 329, 368, 388–89; for rental property, 329 Sanders, Bernard, 278 SBA. See Small Business Administration SBICs. See small business investment companies SC2. See Strong Cities, Strong Communities Schorr, L. B., 51–52, 54, 278, 473 SCLC. See Southern Christian Leadership Conference SCORE, for technical assistance, 389 Searching for the Uncommon Common Ground (Blackwell, Kwoh, & Pastor), 456–58 second wave of CDCs (1975–1987), 7, 230, 240–41, 279; block grant programs, 123, 124, 237; Carter administration support of, 239; development banking, 239; EBALDC, 256, 311–14; funding challenges, 237–38; job training programs, 238; MHCDC, 55, 169–70, 210–13; no strings attached equity, 237; Reagan administration growth of, 239; real estate and business development, 237 Section 8 rent subsidies program, 123, 142, 153, 154, 334, 335 Section 235 Housing Program, 114

index

Section 236 Housing Program, 114–15 sectoral intervention, 269, 396–97 segregation, 98; in real estate markets, 70, 80; in smart growth movement, 463–65 self-help nature, of CCIs, 23 self-help organizations, 4 separate but equal doctrine, 98 September 11, 2001, 152, 290 service economy, 2 service integration, in human capital development system, 266 Servicemen’s Readjustment Act (1944) (G.I. Bill), 100 Servon, L. J., 295 set-aside, making, 383 settlement house movement, 37, 96–97 7(a) program, of SBA, 393 sexism, racism and, 454 Shame of the Cities (Steffen), 68 Shapiro, T. M., 381 Sherraden, Michael, 51, 52, 385, 403, 416 Shopping Center Development Handbook, of ULI, 355 shopping centers, 71, 354; anchors, 359, 366; characteristics of, 357; credit tenants, 366–67; guidelines, 358; leasing in, 367; regional malls, 366; types of, 355–56 short-term goals identification, in strategic planning, 183 Shriver, Robert Sargent, 110, 113 SIC. See standard industrial code simple transaction, in affordable housing financing, 330–33 Sinclair, Upton, 68 Single Family Affordable Housing Tax Credit, 154 single-purpose, nonprofit affordable housing organizations, 8 situation analysis, in strategy development: ABCD, 174–75; by CCRP, 175; economic analysis, 175; by LISC, 175; problem analysis, 174; SWOT, 174, 177–78; by TRF, 176 skills gap challenge, 271 skills training, 259–60 Sklar, H., 447 Slum Clearance Program, 101

index

slums, role of, 79 Small Business Administration (SBA), 131, 148, 415; for commercial and industrial real estates, 388; 504 program, 393; SBICs, 393–94; 7(a) program, 393; for technical assistance, 389 small business investment companies (SBICs), 123, 393–94 smart growth movement, 150–51; coalitions for, 466–67; depopulation of cities, 463–64; federal subsidy and, 463; FHA and, 464; Proscio principles, 467–68; segregation, 463–65 smart growth plans, 424 Smith, Lloyd D., 210 Smith-Laver Act (1914), 96 SNCC. See Student Nonviolent Coordinating Committee social and economic justice advancement, 46 social capital, 43, 423, 425–48; bonding and bridging capital, 427, 435, 436; building of, 16, 436–38; CCI and, 429; CDCs and, 428–29; CED field evolution and, 427–30; CLT, 431–32; consumer cooperatives, 435–36; crosscultural training strengthens, 439–40; defined, 426–27; density of, 427–28; evolution, 427–30; experiments in, 430–36; LISC and, 429–30; political participation and, 438–39; voter registration and, 439; worker-owned businesses, 432–35 social change, 21 social development, 4; in international context, 10; by NGOs, 5, 10 Social Development Issues, 52 Social Diagnosis (Richmond), 38, 39 social enterprises practice, 388 social entrepreneurship, 386–87 Social Innovation Fund, of Obama, 160 social justice, 6 social ownership: CDFIs, 244–45; CLT, 244; community development credit unions, 244 Social Planning Councils, 38 social safety net programs, 16, 200 Social Security, 99

563

social service agencies, 240 social work, CED convergence with, 484–85 Social Work and Social Living (Reynolds), 39 social work education, 38, 486; anticapitalist strain in, 35; business principles application, 35; CED practice curricula, viii, 33–34; course work, 48– 50; field education, 48; Masters degree, 37, 43, 44; schools formation, 37–38 social workers, CED and, 33–64; CED employment, viii, 55; CED practice and social work values compatibility, 34–35; community building-focused social work curriculum, 43–52; community building-focused social work in practice, 53–57; as community developer, 282; macro economics and, 259; macro practice, 33, 41, 42, 439–40, 485; social work history, 36–42 social work history: community building efforts, 38; late 1800s beginnings, 36–37; Great Depression community work (1930s), 38–39, 69, 99–100, 133; in midcentury 1940s to 1960s, 39–40; in 1960s, 40; in 1970s, 1980s, 1990s, 40–41; in twenty-first century, 41–42; social work schools formation, 37–38 Social Work Today, 39 social work values, CED practice compatibility with, 34–35 Sound Families Initiative, of Bill & Melinda Gates Foundation, 375 South and Southwest: migration to, 80; urban development in, 71–72 Southern Christian Leadership Conference (SCLC), 108 Southwest Council of La Raza, 164 Special Impact Program, 27, 28 specialized intermediaries, 134–35 special population programs, for workforce development, 274–75 speculators, 81 sprawl, 150–51; emerging issue of, 460; government creation of, 460–61; growth-control legislation, 461; innercity deterioration from, 461–62

5 64

standard industrial code (SIC), 396 Star, Helen Gates, 37 startup capitalization, 12–13 state, city, county level of public policy advocating, 415–18 Steffens, Lincoln, 68, 97 Stoutland, Sarah, 216, 217, 218–21, 222–28, 229–50 strategic choices, in neighborhood change: alternative economies, 201; CDC role, 203, 204; market-oriented revitalization strategies, 194–97; market reliance, 184–86; options and tools, 201–3; quality-of-life improvement, 197–200; restoration, 190–94; social safety net, 16, 200; tax policy and incentives, 186– 87; urban renewal approach, 187–90 strategic planning, 181; in capacity building, 293, 294; community stakeholders and, 182; comprehensive strategy, 182–83; iterative strategy, 182; neighborhood strategy, 182; resources and, 183–84; short-term goals identification, 183; typical process of, 173 strategy, 61–62; options, 498; statement, 204 strategy, elements of: alternative strategies, 177–78; choices and sequences, 178–79; economic trends analysis, 176–77; implementation goals, 179; situation analysis, 174–76; vision, 172–74 strategy, of CED, 169–213; elements of, 172–79; empowerment opportunity, 181; problem- or issue-based strategic planning, 179–80, 180; strategic planning, 181–84 strategy development: choices and sequences in, 178–79; economic trends analysis, 176–77; leading questions for, 207–8; situation analysis in, 174–76; vision in, 172–74 Streets of Hope: The Fall and Rise of an Urban Neighborhood (Medoff & Sklar), 447 street workers outreach, for juvenile delinquency, 103–4

index

Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis, 174, 177–78 Strong Cities, Strong Communities (SC2), of Obama, 160 structural racism, 451, 454 structural unemployment, 258 Student Nonviolent Coordinating Committee (SNCC), 108 students, public policy advocating by, 417–18 Sturm, Paul, 290 St. Vincent de Paul Society, in Eugene, Oregon, 275 subdivisions: laws, 70; residential, in rural areas, 99 subprime lending, 143, 154, 331–32, 342 subsidies, 13; agriculture, 420; federal government, 15; national foundations for, 15; for rental property financing, 351; Section 8 rent program, 123, 142, 153, 154, 334, 335 subsidized housing, 333; New Deal programs and, 100 subsistence homesteads, NIRA creation of, 99 suburbanization and urban renewal, 69–72, 460; environmentalists and, 466; from 1950s through 1990s, 79–80; shopping centers, 71; subdivision laws, 70; subsidizing, 461; suburban mall in 1960s, 71; technology and, 71 suburbs: immigrants in, 73; retail changes in, 75 succession planning and transition, in organizational development, 309 Sullivan, Leon, 178, 262 supply-side policy, for resident payment, 334 support services, in workforce services, 264–65 Surdna Foundation, 138 sustainability, market-oriented revitalization strategies for, 194 Sustainable Communities initiative, of Obama, 481 SWOT. See Strengths, Weaknesses, Opportunities, and Threats

index

Taconic Foundation, 27, 28 TANF. See Temporary Assistance for Needy Families targeted job creation, in human capital development system, 268–69 targeted population, of CDC, 280 tax policy and incentives, 380; market reliance on, 186–87 technical assistance, 233, 388, 490; business plan, 389, 390–91; for funding sources, 391; Global Development Research Center, 389; for lobbying, 410; PlanWare, 389; SBA, SCORE for, 389 technology, x; suburbanization and, 71 Teegarden, Paige Hull, 290 TELACU. See East Los Angeles Community Union, the Temporary Assistance for Needy Families (TANF), 148 Temporary Woodlawn Organization (TWO), 106, 107 tenants, commercial and industrial real estate and, 353–54, 365–67 theoretical perspectives, on locality development, 10–12 Theories of Local Economic Development (Bingham & Mier), 10 therapeutic trend in social work, 41 think tanks, 249 third-party payment, in organization development, 306–7 third wave of CDCs (1987–2000), 8, 230, 239–41, 384, 392; BSRC, 1, 26, 27–32, 250, 279; G. W. Bush administration and, 240; CHDOs of, 146; CHH, 170, 250–54; constituency-based agencies, 240; IDA support of, 240; IMH, 256, 373–78; social service agencies and, 240 “Three Models of Community Organization Practice” (Rothman), 50 Tocqueville, Alexis de, 426 trade groups, 247, 250, 355, 436 transferability of models and practices, of organization development, 308–9 TRF. See Reinvestment Fund, The trickle-down. See filtering or trickle-down Truman, Harry, 101

565

TWO. See Temporary Woodlawn Organization two-tract housing system, 101 UAW. See United Auto Workers UDAG. See Urban Development Action Grant ULI. See Urban Land Institute UN. See United Nations underclass, rise of, 136 underemployment, 258 unemployment, 156, 258 United Auto Workers (UAW), 107 United Nations (UN), Department of Economic and Social Development, 10 United Way, 290 Unity Council, 177–78, 184 university extension service movement, 95; Appalachia and, 102; CDS formation, 96; National Country Life Commission, 96; National University Extension Association, 8, 96; SmithLaver Act and, 96 urban and neighborhood change theories: concentrated poverty, 82–83, 465; out migration and racial change, 78–80; pure market force, 77–79; quality-oflife, 81–82; racial discrimination and systematic disinvestment, 80–81 urban development, in South and Southwest, 71–72 Urban Development Action Grant (UDAG) Program, 129, 135 urban dynamics, 65–66 Urban Institute, 249, 274, 429 Urban Land Institute (ULI), 355 Urban League, 98 urban planning, 4, 117 urban policy, 127; of Carter, 129 Urban Redevelopment Program, 100 urban relocation, 436 urban renewal, 4; approach, after WWII, 101–2, 187; big projects planning, 189– 90; federal government approach to, 187–88; Kennedy administration and, 109; replacement jobs and, 189. See also suburbanization and urban renewal

566

Urban Strategies Council, of Oakland, 138 values: ethics application and, in social work curriculum, 45–46; social work, CED practice and, 34–35 Van Dusen Endowment Challenge Grant program, 86 venture philanthropy packages capacity building, 298–99 Veterans Act, 70 Veterans Mortgage Program, 100 vision, in strategy development, 172–74 VISTA. See Volunteers in Service to America voluntarism, 220 voluntary community organizations and informal networks level, 218 Volunteers in Service to America (VISTA), 110, 129, 132 voter registration, 439 Wallace, Robert, 454 War on Poverty, 16, 40, 109, 111, 115, 120, 123, 381, 470, 488; CED term origin in, 7; first wave of CDCs and, 231, 235, 488 Warren/Connor Development Corporation (W/CDC), 2, 84–90, 250 Watts Labor Community Action Council (WLCAC), 107, 279 W/CDC. See Warren/Connor Development Corporation weak-market neighborhoods, 195 wealth building, individual, 384–85; financial literacy, 403; IDA programs, 403–4 wealth building approaches: CDC and, 382, 385–87; financial infrastructure development, 384; helping local businesses grow, 384; minority business development support, 382–83; wealth building of individuals and families, 384–85 wealth disparities, racial discrimination and, 381 wealth retention, poverty and, 381 welfare reform, of Clinton administration, 148–49 West, Cornel, 450

index

When Work Disappears (Wilson), 465 White, Kevin, 117 white flight, 2, 74, 81 White House Office of Urban Affairs, 158 whites: ethnic movement, 124; home ownership rates, 381; income gap between African Americans and, 381 WIA. See Workforce Investment Act WIB. See Workforce Investment Board Wiley, George, 118, 125 Wilson, William Julius, 465 WLCAC. See Watts Labor Community Action Council work and work products, 301–2 worker cooperatives: CHCA example of, 433; ICA Group and, 433; Mondragon as largest, 434 worker-owned businesses, 425; ESOP, 433, 434–35; list of, 432–33; worker cooperatives, 433, 434 workforce development, 213, 489; best practices in, 282; coordinating mechanisms, 270–74; economy intervention, 259–60; federal legislation for, 265–66; human capital development system, 265–70; human capital value increase, 275–76; national models for, 282; racial discrimination, 258–59; skills training, 259–60; special populations programs, 274–75; structural unemployment, 258; summary of, 276–77; workforce services, 260–65 workforce development coordinating mechanisms: employer and provider groups, 270–72; neighborhood delivery pipeline, 273, 274; new workforce structure adjustment, 271–72; WIB, 270; workforce providers, 271 workforce development sector levels, 217; CDCs and nonprofit developers level, 218–19; local funders, policy makers, researchers, supporters level, 219; national funders, policy makers, think tanks, intermediaries level, 220; voluntary community organizations and informal networks level, 218

index

Workforce Development Strategy, of Pennsylvania, 269–70 workforce intermediaries, in workforce development: AECF, 85, 138, 145, 273, 274, 274, 277, 280, 281, 448, 478; Center for Youth and Communities, 274; Edna McConnell Clark Foundation, 274; FORD, 6, 7, 15, 21–22, 28, 104–5, 120, 124, 127, 134, 138, 164–65, 230–32, 274, 478; MDRC, 274; Open Society Institute, 274; Urban Institute, 249, 274, 429 Workforce Investment Act (1998) (WIA), 167, 267, 279 Workforce Investment Board (WIB), 266, 270, 279–80 workforce preparedness, in workforce services, 261–62 workforce providers, in workforce development, 271 workforce services, 260; barrier removal to, 261; basic and job-related literacy, 262–63; career development and coaching, 264; education, 263; job placement, 264; job-specific training,

567

263–64; outreach and intake, 261; support services, 264–65; workforce preparedness, 261–62 workforce structure, new, 271–72 workforce training. See job training working capital, 392 Works Projects Administration, 39 World Bank, 9 World War II (WWII): decentralization during, 70; home construction industry, 99; urban renewal approach after, 101–2, 187 YOE. See Youth on the Edge . . . of Greatness, Inc. YouthBuild USA, 55, 277–78, 279, 282 youth development and youth work, 277– 78. See also juvenile delinquency Youth on the Edge . . . of Greatness, Inc. (YOE), 88–89 YouthWorks, 145 Yzaguirre, Raul, 124 Zero Down Payment Mortgage, of HUD, 153

f o u n dat i o n s o f s o c i a l w o r k k n o w l e d g e

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Human Behavior and Social Environments: A Biopsychosocial Approach

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Boundary Spanning: An Ecological Reinterpretation of Social Work Practice in Health and Mental Health Systems

David M. Austin

Human Services Management: Organizational Leadership in Social Work Practice

Anthony M. Maluccio, Barbara A. Pike, and Elizabeth M. Tracy

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Critical Issues in Child Welfare

Robert G. Madden

Essential Law for Social Workers

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Psychodynamic Social Work

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Social Work Malpractice and Liability: Strategies for Prevention, Second Edition

Stuart A. Kirk

Mental Disorders in the Social Environment

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Work and the Workplace

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Social Work Values and Ethics, Third Edition

Nancy R. Hooyman and Betty J. Kramer

Living Through Loss: Interventions Across the Life Span

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