Commercial districts in low- and moderate-income urban neighborhoods can be sources of blight and crime or they can contribute to the economic and social health of the community. However, efforts to improve commercial districts often struggle with how to strengthen a district without contributing to gentrification and displacement. As part of their Equitable Development Toolkit PolicyLink asked me to write this paper describing ways that community groups are managing this tension and highlighting some initial lessons learned from these efforts. The paper provides real world examples that support the idea that stabilizing and improving a neighborhood serving commercial district can not only be achieved without fueling gentrification it may be a necessary step in preventing gentrification.
In the mid 1990s, Oakland’s EastLake District, then known as “New Chinatown,” was the site of a string of arson fires targeting Asian Groceries. The fires were a dramatic set back for a struggling commercial district. As Director of Neighborhood Economic Development for the East Bay Asian Local Development Corp., I oversaw the development of a revitalization strategy in the wake of the fires. The Strategy involved organizing a multi-ethnic merchants association, and coordination of an ongoing program of targeted business assistance, promotion of a new more inclusive image for the district (which was never predominantly Chinese), and a series of capital improvements. The EastLake Main Street Strategy outlined overall goals of this effort, identified key stakeholders whose support would be essential and spelled out a 3-year workplan and budget. The document led directly to multi-year funding commitments from the City of Oakland, the Local Initiatives Support Corp. and two foundations.
There are real neighborhood differences in the rate at which home mortgages were resold on the secondary market.
There is no doubt that information technology has brought about huge changes in world financial markets. Markets which used to be largely isolated are now inextricably interconnected by a real time network of transactions in which, generally, capital flows instantly to the highest bidder regardless of the location of that bidder on the globe. We might expect this trend, which Richard O’Brian calls this “the end of geography,” to be good news for low-income communities. One could conclude that the development of an integrated and standardized financial network, by reducing the role of potentially biased individual lenders, could reduce racial and income discrimination and move the economy toward a situation where capital is allocated based entirely on the real value which various sectors contribute. And yet low-income urban communities in America and elsewhere appear to be experiencing increasing capital shortages.
This paper identifies an emerging structural logic of the financial system under which investment decisions are made by a network that relies on previous transactions as the main source for information about credit quality. The home mortgage market in the United States is examined as a specific case of this more general global financial market transformation. Data relating to the secondary market for single family home mortgages in the Oakland, CA metropolitan area is employed to provide empirical support for the argument that the emerging financial network itself has distinct geographic preferences which place low-income and minority neighborhoods at a systematic disadvantage in the competition for capital.
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