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HUD’s Challenge – Implementing AFFH While Interfering with the Evolution of Free Enterprise

More U.S. Cities, Downtown is a Center of Economic Strength, WSJ

Introduction by Smith Young “:)”  See WSJ article below and related WSJ article , click The Carving Out of the Urban Middle Class and use buttons to see demographic changes in median household income for 1970, 1990, and 2014.  The changes are amazing showing three examples of U.S. cities where concentrated wealth has risen next to a rapid decline in median income.

In contrast, click HUD’s data mapping tool (Need an example?  Use Arapahoe County (CDBG), CO as your jurisdiction and select and enjoy the the Racial map.) will be used for the purpose of for example identifying identifying racially/ethnically-concentrated areas of poverty (R/ECAPs) where protected classes disproportionately reside.  This is and example of where the community taking grants is required to consider the listed factors and any other factors affecting the jurisdiction and region.  Identify factors that significantly create, contribute to, perpetuate, or increase the severity of R/ECAPs.

  • Community Opposition
  • Deteriorated and abandoned properties
  • Displacement of residents due to economic pressures
  • Lack of community revitalization strategies
  • Lack of private investments in specific neighborhoods
  • Lack of public investments in specific neighborhoods, including services or amenities
  • Lack of regional cooperation
  • Land use and zoning laws
  • Location and type of affordable housing
  • Occupancy codes and restrictions
  • Private discrimination

WSJ – For More U.S. Cities, Downtown Is a Center of Economic Strength

PHILADELPHIA—Theresa Lounsbery sets out from her apartment in this city’s blue-collar Lower Northeast section each workday. Her neighborhood, Oxford Circle, a district of 2 square miles, has been hammered by manufacturing’s long slide. Median household income in her immediate area is down more than 30% since 2000 to roughly $37,000.

But less than 40 minutes later, the 43-year-old sat on an elevated train approaching Philadelphia’s Center City, a 7.7-square-mile mini-boomtown framed by a skyline about to reach new heights with a 1,121-foot office tower under construction. The median income in parts of greater Center City has shot up nearly 90% to $80,000 in the past 15 years. High-earners scoop up townhouses for $800,000 or more, while businesses and law firms lease gleaming office space.

Ms. Lounsbery moved to Oxford Circle with her teenage sons two years ago because of cheap rent: $670 a month for a two-bedroom apartment on the upper floor of a row house. A preschool teacher for 10 years, Ms. Lounsbery studied to be a paralegal to earn more money after her divorce. Last summer, she started working at a personal-injury law firm, making double her teacher’s salary and gaining a foothold in the Center City economy.

Theresa Lounsbery commutes from her home in Philadelphia’s Oxford Circle neighborhood to downtown Center City.
Theresa Lounsbery commutes from her home in Philadelphia’s Oxford Circle neighborhood to downtown Center City.PHOTO: KEVIN COOK FOR THE WALL STREET JOURNAL

Ms. Lounsbery’s 10-mile commute highlights the little-noticed polarization under way in many postindustrial cities in the Northeast and Midwest.

For years, economists and urban experts talked about the doughnut hole of decay in city centers. But increasingly, many urban cores are islands of economic strength surrounded by decay that reaches out into inner-ring suburbs—beyond which fortunes rise again in more distant suburbs.

Polarization has increased within other U.S. cities, where a turnaround for city centers has been accompanied by economic decline or stagnation in many longtime middle-class enclaves and lower-income neighborhoods with high minority populations, according to a census data analysis by The Wall Street Journal.

Many neighborhoods within city limits are sinking amid a continuing loss of lower-skilled jobs offering good wages, while downtowns benefit from an influx of often well-educated young adults drawn to urban living, and the arrival of businesses eager to hire them.

As in Philadelphia, gains in the heart of many U.S. cities have come at a time of wider neighborhood decline, the Journal analysis found. Since 2000, median income has fallen in a majority of census tracts in Buffalo, Baltimore, Cincinnati, St. Louis, Milwaukee and Chicago, all of which saw their downtown districts improve.

Developers are squeezing in more high-end housing around Baltimore’s revitalized waterfront. A new office tower is rising in Milwaukee that will be the city’s second-tallest. And Chicago boasts a parade of corporations relocating downtown.

As gentrification battles in hot global cities such as New York and San Francisco attract national focus, many more cities would like to spread recent economic gains in their urban core across the city, rather than temper them.

Job gains are concentrated in urban centers, largely to the benefit of downtown-area residents and suburban commuters, leaving many city dwellers with few good options, said Alan Mallach, a senior fellow at the Flint, Mich.-based think tank Center for Community Progress. Mr. Mallach has studied such polarization in former industrial cities including Detroit, St. Louis, Cleveland and Pittsburgh.

People in their 20s and early 30s now make up 40% of downtown residents in Philadelphia. Lunch hour in Center City, top, and the morning rush hour, above.PHOTOS: MICHELLE GUSTAFSON FOR THE WALL STREET JOURNAL

Over the past three decades, neighborhoods in urban cores have been growing richer, whiter and better educated, according to a study by Nathaniel Baum-Snow, a University of Toronto associate business economics professor, and Daniel Hartley, a Federal Reserve Bank of Chicago economist.

A study by City Observatory, a Portland, Ore., think tank focused on urban data analysis, found a tripling over the past four decades of urban census tracts where at least 30% of people live in poverty. Its authors, who analyzed a 10-mile radius around the city center in the 51 largest metros, found many more areas shifted into high poverty than experienced economic gains.

Overall, Philadelphia, the nation’s fifth-most-populous city, notched a 14.3% decline in median income from 2000 to 2014 on an inflation-adjusted basis, a drop that exceeded the 10.4% nationwide decrease. The census data analyzed by the Journal showed income gains in Philadelphia over the past 15 years have clustered around flourishing Center City.

For every area of the city that had income growth, more than two other parts posted drops—including swaths of traditionally middle-class Northeast Philadelphia, a 45-square-mile area that reaches to the city line and where more than a quarter of the city’s 1.57 million people live. Philadelphia Mayor Jim Kenney, elected last fall, has said residents’ ZIP Code shouldn’t determine their future.

A stream of immigrant and minority arrivals has made the Oxford Circle area of Northeast Philadelphia one of the most diverse parts of the city. Clockwise from top left: During the July Fourth weekend, a family barbecue; young soccer players; two Indian women and a resident took out old couch cushions.PHOTOS: MICHELLE GUSTAFSON FOR THE WALL STREET JOURNAL

Baltimore officials recently reached a local hiring and affordable housing agreement with backers of a proposed $5.5 billion development south of downtown led by Under Armour Chief Executive Kevin Plank. Critics want the developer to do more.

In Milwaukee, where nearly a fifth of the tax base is in 3% of the city’s land area, officials are pushing to send economic ripples beyond downtown. “We can’t have two cities. We can’t have a downtown that is successful and neighborhoods that are not,” said Rocky Marcoux, development commissioner.

There is some fear that growing urban disparities, if left unchecked, could spur more unrest like what shook Baltimore and Ferguson, Mo., in recent years, where anger at police only partly fueled heated protests. “We haven’t had that spark that has created that action, but it could happen at any point in some neighborhoods,” said Beth McConnell, policy director for a group of community development corporations in Philadelphia.

In Lower Northeast Philadelphia, housing prices have dropped 10.2% in the past 10 years—a span that includes the foreclosure crisis—compared with a 6.5% increase citywide, according to Kevin Gillen, a Philadelphia-based senior research fellow at Drexel University’s Lindy Institute for Urban Innovation. A three-bedroom row house on Ms. Lounsbery’s block sold in June for $103,000.

Theresa Lounsbery with her sons, Nick, 18, and Connor, 14, prepare dinner in their home. Ms. Lounsbery moved to Oxford Circle two years ago because the rent was inexpensive.
Theresa Lounsbery with her sons, Nick, 18, and Connor, 14, prepare dinner in their home. Ms. Lounsbery moved to Oxford Circle two years ago because the rent was inexpensive. PHOTO: KEVIN COOK FOR THE WALL STREET JOURNAL

Broadly, Philadelphia’s job mix has changed since 2000. Manufacturing accounts for less than 4% of jobs, down from 7%, and government positions make up 14% of the total, down from 16%, according to the Bureau of Labor Statistics. The largely low-wage hospitality sector accounts for 9.4%, up from 7.7%. Education and health have grown from about 25% of city jobs to about 31%. The professional and business services sector including law firms has edged up as well.

At the sprawling Cardone Industries plant, near Ms. Lounsbery’s Oxford Circle home, workers earn $15 to $20 hourly plus benefits remanufacturing used auto parts. This year, the closely held company said its brakes division will move to Mexico, claiming 1,350 of the facility’s roughly 2,200 jobs by May 2018. Spokesman Kevin Feeley said the company must compete with rivals and expects to add hundreds of higher-paying jobs locally in its electronics division over time.

Ms. Lounsbery, a Philadelphia native, has seen the decline firsthand.

“There aren’t a lot of industrial jobs in and around the city like there used to be,” she said. She thinks she may leave the neighborhood in a couple of years.

Oxford Circle and surrounding neighborhoods once teemed with middle-class workers laboring at factories as well as police officers and other municipal employees. The loss of public-sector jobs over the past decade has hit these areas hard, said Moody’s Analytics senior economist Adam Kamins.

“Those are the old white working-class neighborhoods. As jobs left, households left,” Mr. Gillen of Drexel said. “The revitalization of Philadelphia is really the story of the revitalization of Center City and adjoining neighborhoods….I’d like to see more neighborhoods in the city participating in the city’s renaissance. We have momentum, but it’s unbalanced.”

In the Northern Liberties neighborhood of Center City, shops, restaurants and cultural amenities proliferated along with a building boom.In the Northern Liberties neighborhood of Center City, shops, restaurants and cultural amenities proliferated along with a building boom. PHOTO: MICHELLE GUSTAFSON FOR THE WALL STREET JOURNAL

Since 2000, the population of greater Center City has risen 17% to 185,000. That area is 62% white, up from 53% in 2000, according to Center City’s improvement district. Median household income over that time jumped in most of greater Center City by at least 20%, census figures show.

Center City’s upward trajectory was aided by a pair of 10-year, property-tax breaks that drove a residential building boom starting in the late 1990s, and by the 1993 opening of a downtown convention center that added restaurants, hotels, shops and cultural amenities, said Paul Levy, chief executive of the business improvement district. The millennial surge that started roughly a decade ago has spilled beyond the traditional downtown boundaries.

Northern Liberties was once full of factories, but is now seeing more residential construction and an influx of young adults.
Northern Liberties was once full of factories, but is now seeing more residential construction and an influx of young adults. PHOTO: MICHELLE GUSTAFSON FOR THE WALL STREET JOURNAL

Longtime residents of Northern Liberties, a former industrial area considered part of greater Center City, say it has grown visibly denser and richer over the past couple of decades, with Teslas and BMWs plying the narrow streets. Housing prices there have risen 61% over the past 10 years, said Drexel’s Mr. Gillen.

This year, Shailee Viroja and her husband, both doctors, paid $830,000 for a new 3,500-square-foot townhouse in Northern Liberties. Dr. Viroja, 30, said the urban vibe attracted them.

“It seems like it’s all young professionals and young families,” she said. “It’s quiet, but there’s a lot going on, restaurants and bars.”

But there is no guarantee the progress downtown will continue. One key question is whether the young adults who have flocked to cities will stay.

In Philadelphia, which for years has retained a sizable share of recent college graduates, those in their 20s and early 30s now make up 40% of downtown residents. But a 2014 study by the Pew Charitable Trusts found that half of Philadelphia’s millennials didn’t expect to live in the city in five to 10 years, citing job and career reasons and concerns about schools, child-rearing and crime.

In Northern Liberties, people enjoyed a park, left, and brunch, right, during the July Fourth weekend.PHOTOS: MICHELLE GUSTAFSON FOR THE WALL STREET JOURNAL

There is already some data suggesting millennial population growth is shifting away from cities to the suburbs and exurbs, said Mr. Kamins of Moody’s Analytics.

Because that population bulge of young adults is “time limited,” cities must lock them in by focusing on the quality of public schools and public spaces, Mr. Levy said.

Center City still has a mix of job opportunities, with about a third requiring only a high school diploma, said Mr. Levy, but the rising economic disparity within his city concerns him. “To have huge poverty right next to wealth, that’s just not healthy for democracy,” he said.

Harold Epps, Philadelphia’s commerce director, said city leaders know they need to find a way to spread the prosperity. One broad goal is to get more residents the skills employers want, from software coding to plumbing. “We have to find jobs for our existing population,” he said.

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