«A Journal of Policy Development and Research HoPe VI Volume 12, Number 1 • 2010 U.S. Department of Housing and Urban Development Office of Policy ...»
Boston made major improvements to the area’s physical infrastructure, including upgrades to local streets, sidewalks, parks, and lighting. Some existing buildings were renovated, and city and state officials moved government agencies (the Boston Water and Sewer headquarters, for example) to the area. The various public incentives made possible the creation of a new post office, a major bus transfer center, and a local manufacturing plant, among other facilities. Area nonprofit organizations also embarked on revitalization projects. The Dudley Street Neighborhood Initiative developed a 30-acre plot to the southwest of Orchard Gardens into a mix of residential units. The local Madison Park CDC developed and rehabilitated several affordable housing properties in the area.
Patrick Lee, a for-profit developer who, along with the Madison Park CDC, redeveloped Orchard Gardens with HOPE VI funds, believes the project achieved its goal of getting people to think differently about housing in the area. He contends that retailers such as Payless and Footlocker would not have located in Dudley Square if Orchard Park had not been redeveloped. Madison Park’s General Counsel, David Price, contends that the development of Orchard Gardens made other investments in the area possible. He argues that it would have been very difficult to renovate Hibernian Hall without the improvements on the public housing site, and Next Street Financial (a for-profit financial firm) would not have located its offices in the Hall had the Orchard Park complex remained in its previous condition. Reggie Nunnally, a staff member at the Dudley-based Boston Connects (part of the city’s Department of Neighborhood Development), asserts that the area really had a different feel after the HOPE VI intervention. He believes that the property now has a much better mix of tenants, with many of the “undesirables” having been evicted: “It looks like a whole new development. … If Orchard Gardens had remained Orchard Park, [Dudley Square] would be a much tougher sell.” Dudley Square’s rebound “would have happened eventually—maybe—but Orchard’s redevelopment makes things a whole lot easier,” he claims. Pam McKinney reaches a similar conclusion: “Would [the area’s improvement] have happened without Orchard? Maybe— the Empowerment Zone incentives were huge.” Townhomes on Capitol Hill The Townhomes on Capitol Hill development has received widespread praise throughout the District of Columbia and has been touted in Congress as proof of the success of the HOPE VI model. Minimal turnover has occurred since the property’s opening in 1999. The developer, Marilyn Melkonian, describes the site as “great housing in a great location, with very affordable costs.” Within a few blocks of the site, developers have converted abandoned schools into higher end condominiums. Just a block and a half to the east, 8th Street has become a vibrant commercial
and retail strip, with an abundance of restaurants that cater to the entire Capitol Hill area. The dilapidated Barracks Row area on the same street north of Interstate 295 has been renovated as an entertainment district. Townhouses in the area now routinely sell for up to $1 million.
Our quantitative analysis indicates that the redevelopment of Ellen Wilson Dwellings had no statistically significant effects on surrounding property values, however. The explanation behind this seemingly incongruous finding lies in the fact that Ellen Wilson Dwellings was essentially a pocket of distress in an otherwise stable community that was beginning to experience gentrification even before the public housing redevelopment. In 1990, the census tract containing the public housing property had a median household income of $74,381 (adjusted for inflation to 2006 dollars), an unemployment rate of only 1.5 percent, and a poverty rate of only 7 percent. Home values around Ellen Wilson Dwellings had been declining, but values to the north and west had generally held steady or increased slightly. The redevelopment of the Ellen Wilson Dwellings coincided with a significant expansion of the Capitol Hill neighborhood, as developers and homebuyers sought to take advantage of the underdeveloped areas to the north, east, and south. In effect, the public housing development was part of the overall gentrification of the area. Whereas Ellen Wilson Dwellings was initially at the edge of the neighborhood, the redeveloped Townhomes complex is now in the heart of the community. As Capitol Hill has become more desirable, it has attracted a greater number of higher income residents.
Those familiar with the area contend that the HOPE VI redevelopment certainly helped improve the southern part of Capitol Hill. The demolition of the Ellen Wilson Dwellings eliminated the primary source of blight in the area. Melkonian claims that its redevelopment led to improvements on the border streets, noting that every dilapidated building has been renovated. She credits the Townhomes with sparking the development of new market-rate townhouses a block away. The finished Townhomes complex, with its brick homes and connecting streets, blends easily into the existing neighborhood architecture. Don Denton, a local realtor, notes that “everything from the landscaping to the roofs is still in tip-top shape,” and the development is “a pleasure to look at.” He contrasts the redeveloped Ellen Wilson Dwellings site with the traditional Potomac Gardens public housing complex a few blocks away. Denton claims that he could take 200 buyers to see a good property across from the Townhomes on Capitol Hill, and all of them would be willing to buy it. Were he to take the same people to a similar property across from Potomac Gardens, “half wouldn’t even consider it, and the other half would likely say no.” The redevelopment of Ellen Wilson Dwellings also had important political ramifications. According to Bob Moore, the executive director of the Development Corporation of Columbia Heights and a former director of housing for the District of Columbia, the HOPE VI project was “really important as a strategic move.” The redevelopment of the vacant public housing property proved not only that conditions in the surrounding residential area could improve, but also that very lowincome people could be integrated into a gentrifying community. He contends that “Ellen Wilson changed the perception” of public housing in Washington.
Wheeler Creek Estates Wheeler Creek Estates experienced modest increases in property values and neighborhood income but no relative change in crime rates. The positive effects are impressive because Washington
Highlands, the neighborhood in which Wheeler Creek is located, has long been one of the city’s poorest neighborhoods. According to the 1990 Census, the area had a poverty rate of 37 percent, an unemployment rate of 18.2 percent, and a median household income that was less than 40 percent of the metropolitan AMI. Nearly one-third of area residents received public assistance income, food stamps, or both. Section 8 properties were some of the few economically viable rental properties in the neighborhood. Because the prevailing Fair Market Rent (FMR) paid to landlords for the Section 8 units was about 43 percent higher than the rent that landlords could obtain for market-rate units in the area, the community had perhaps the largest concentration of subsidized housing in the District of Columbia, with roughly 700 public housing units and another 1,500 Section 8 apartments.15 Bob Moore contends that the razing of Valley Green signaled to people that something positive was happening in the neighborhood and that the area could be a potential destination for those looking for a place to live. Oramenta Newsome, the Washington program director for the Local Initiatives Support Corporation (LISC), believes that the blight of the Skytower-Valley Green site was “something that no developer could see past.” The William C. Smith Company has developed a series of townhouses along Mississippi Avenue, about one-fourth of a mile north of Wheeler Creek Estates, on the north side of Oxon Run Park. One set of homes sold for between $99,000 and $134,000 in the 1999-to-2000 period and is now reselling for between $300,000 and $325,000. Steve Green, a developer at the company, believes that they “probably couldn’t market [these and other nearby townhouses] at all without the clean-up of Valley Green. … There’s no question that Wheeler Creek was pretty bad and is now pretty successful. It was probably the worst property in a bad neighborhood.” The company’s chairman and CEO, Chris Smith, is even more laudatory: “I haven’t heard one negative thing from anybody about Wheeler Creek, and that’s unheard of.” At the same time, the underlying economic dynamics of Washington Highlands have been slow to change. Newsome describes Wheeler Creek Estates as “an oasis in the desert, no question.” Smith acknowledges that the neighborhood is still pretty troubled, but he believes conditions are slowly improving. The deteriorated Highland Addition public housing complex is slowly being redeveloped, and the historically problematic Wheeler Terrace property and a few others in the neighborhood are now under the control of locally based owners.
Conclusions and Recommendations Since its inception, the HOPE VI Program has had multiple, sometimes conflicting, goals.
Among them have been improving living conditions for very low-income individuals, facilitating tenant self-sufficiency, reducing the concentration of poverty, and sparking the revitalization of economically distressed neighborhoods. This study has focused solely on the last of these goals, See Kovaleski (1994) and Dance (1993). FMRs traditionally have been set for a comparatively large region—frequently a metropolitan area—usually at the 40th percentile of rents in the area. Because of the variety of micromarkets within the area, gaps frequently exist between the FMR and the actual market rent in a community. Areas where the FMR significantly exceeds the market rate tend to attract large numbers of Section 8 properties. Without diligent enforcement of housingquality standards, the properties can become increasingly deteriorated and contribute to neighborhood blight. See Zielenbach (2006).
Cityscape 123Zielenbach and Voith
documenting the economic effects that HOPE VI redevelopments have had in four different communities located within two economically strong cities. We have focused our attention principally at the community level, not at the individual one; we have not considered in this analysis the range of potential economic and social benefits accruing to the public housing tenants as a result of the HOPE VI redevelopment.
The HOPE VI redevelopments have had mostly positive, statistically significant effects on economic conditions in their surrounding neighborhoods. In three of the four cases we studied, the redevelopments contributed to substantial increases in residential property values and notable declines in rates of violent crime. In the other case, the effects were positive but not statistically significant.
In the surrounding neighborhoods for which sufficient data were available, the public housing redevelopment resulted in an aggregate increase in residents’ incomes.
The extent of the neighborhood spillover effects depended in large part on the location and market dynamics of the surrounding community. The economic effects of a HOPE VI redevelopment tended to be greater in communities where other development pressures and existing, stable institutions were in place. In this study, the redevelopment of Mission Main had the greatest local effects, in large part because of the presence of local universities, a stable residential neighborhood, and transportation lines in the area. Similarly, the Orchard Gardens redevelopment augmented existing redevelopment efforts and helped catalyze new ones in the Dudley Square area, but it had less significant spillover effect than Mission Main’s redevelopment because of Dudley Square’s relative economic weakness. In contrast, the relative dearth of development activity and institutional presence in the Washington Highlands area has limited the effects of the Wheeler Creek Estates development; while unquestionably positive and significant, the spillover effects of Wheeler Creek Estates have not been as great as those of the Boston HOPE VI sites. At the other extreme, the strength of the Capitol Hill market before the redevelopment of the Ellen Wilson Dwellings and the gentrification that was already taking place in the community minimized the spillover economic effect of the Townhomes on Capitol Hill. Ellen Wilson Dwellings was chosen for a HOPE VI grant in no small part because of the surrounding neighborhood’s strength and the political desire to achieve high-profile redevelopment successes.
To the extent that practitioners and policymakers try to maximize the community economic development benefits of a HOPE VI or similar major housing redevelopment, we recommend focusing resources on the redevelopment of properties in neighborhoods with neither particularly strong nor particularly weak markets. Such communities should have certain features—such as a location near a job center, transportation infrastructure, and local retail or other amenities—that make them potentially desirable areas for moderate- and middle-income households. They should have some institutional or other organizational anchors that are committed to the area over the long term. They also should have some development and investment activities already in process, indicating that the neighborhood is a potentially profitable place in which to invest and would benefit from improvements associated with the major redevelopment of a public housing site. The market should not be too strong, however; low prices reduce the barriers to new development, which enables an investment such as HOPE VI to have large, positive spillover effects. Communities with already strong markets (Capitol Hill in Washington, for instance) tend to have enough of a development buzz to overcome any negative influences that might be associated with a traditional public housing site.