Helping residents of areas in flux

Oct 28, 2007
Chris Satullo
Inquirer columnist

The neighborhood forums that launched the Great Expectations project last winter began with this question: "Can you tell us one hope or one fear you have as your city elects new leaders?"

One potent fear was cited with surprising frequency: "I'm so afraid more houses near me will sell for $400,000."

Or: "I fear more condos will be built."

Or: "I'm afraid more middle-class people will move onto my block, and my taxes will go way up."

In some circles, the strong influx of young professionals and empty nesters into city neighborhoods, mostly in or near Center City and University City, is seen as a happy sign of Philadelphia's resurgence.

And out in the suburbs, rising home value is the Holy Grail. When values go up, the suburbanite lets out a whoop of joy, totes up his increased equity, and plots how to tap it to pay for college tuition or a nice trip to Majorca.

No doubt, it's good for a city when more people with money want to live there. That increases the tax base to support services. It increases disposable income to support stores, movie theaters and restaurants. It brings more life and safety to the streets.

And no doubt, rising home equity has been the most reliable form of wealth creation for the middle class for a long time.

So, the question arises, what's wrong with these bizarre residents of those long-scuffling Philadelphia neighborhoods now dotted with construction scaffolds and coffee bars? Why so fearful and angry? What's not to like about $100,000 of fresh equity in your home? Why do they say things like: "Messed-up as my block is, I'd rather see it stay the same than have these fancy houses built"?

In truth, nothing's wrong with them. They have reason to be anxious. They, or their parents, have seen this movie before. It did not end well for them.

"The response might seem irrational, but there are some very good reasons for it," said Angela Glover Blackwell, founder of PolicyLink, a national nonprofit that advocates "equitable development."

"Perhaps," Blackwell said, "these people lived through the urban renewals of the '60s and '70s, when the government and business sector truly did conspire to push them out of their neighborhoods. After that, the neighborhoods they ended up in endured decades of neglect."

All around Philadelphia, from Fishtown to Federal Street to the blocks just west of the University of Pennsylvania, the anxiety bubbles: My block is gentrifying, which means my time here is coming to an end.

Two trends intensify the worry:

Misdeeds and a meltdown in the subprime-lending market have dried up credit in urban areas, and caught a lot of people in bad loans.

Talk of a citywide tax reassessment has many fearing a whopping increase in their property-tax bills. That's why people fear the $400,000 price tag down the block: It may drive up their valuation with no regard to their ability to pay.

Jeremy Nowak, president of the Reinvestment Fund, which underwrites affordable-housing projects, tracks mortgage-foreclosure data closely. He said they looked scary, with foreclosure threats concentrated "pretty intensely" in some areas - often in areas where values have risen some. You have to have some equity first, for a predatory lender to come and strip it.

The tax revaluation - if done right, a big if - actually would be a boon to some who fear it. City assessments are so outdated and scattershot that a lot of moderate-income homeowners have long subsidized the tax bills of the more affluent. But if you're part of the old guard in a newly hot 'hood like Bella Vista or Northern Liberties, the soaring values around you could really mean a huge tax hit.

The city promises to install "buffers" to limit your pain year over year, but few are comforted. The details are hard to grasp. What's easy to feel is distrust for a City Hall that hasn't looked out for you in a long time.

But what about all that newfound home equity? Why not celebrate that, and benefit from it?

First, it's fragile. The one-two punch of foreclosures and subprime chaos could "cool housing values big-time" in some areas, Nowak warns. "That saps equity."

Second, many longtime Philadelphians simply don't have any history with assets that appreciate, or any knowledge of how to take advantage. They've lived their whole lives in a city where jobs disappeared and housing values sank. They live in places where borrowing against your house has long been seen as a fool's errand.

Sharmain Matlock-Turner, president of the Greater Philadelphia Urban Affairs Coalition (GPUAC), is an apostle of "asset appreciation," in several senses of the phrase. She is cohost of a weekly radio show, Financial Voices, on WURD-AM (900) to help Philadelphians recognize not just the threats from changes in the city, but also the potential to build assets, for families and communities.

Gentrification fears are a big topic on her show, she said.

"First thing I tell people is: Don't panic," she said. "Don't assume people are automatically trying to push you out. That can only happen if you ignore the tax bill or the call from PGW or if you take the call from a predatory lender. There's a gap in information. Banks aren't that visible in urban areas; people don't have the history with them the suburban middle class might have. I talk to people with perfectly good credit scores who got a predatory loan because the broker was someone they knew from church."

The gentrification issue has a lot to do with money, but it's equally about values and emotions.

Run-down as a neighborhood may seem to an outsider, it can be full of institutions, hangouts, networks and memories that make it precious to those who live there. The value of all that? As the MasterCard ad says: priceless.

The advent of newcomers, whether high-income thirtysomethings from New York or immigrants from Colombia, unsettles that sense of comfort. When city government and other powers seem to be favoring the newbies over those who struggled for decades to keep a block decent, it provokes anger. " 'Gee, why did these people get this tax abatement to move into that condo? Where's my break?' " Nowak describes the gripe. " 'Are you saying these people have more value than me?' "

Lucy Kerman, director of strategic initiatives for GPUAC, lived through these tensions as a key player at Penn as it tried to upgrade its neighborhood, while seeking to avoid falling into the role of Bigfoot booting out residents.

She sees the woes, from loss of comfort to loss of affordable retail, that can afflict the old guard in newly chic neighborhoods. But she's an optimist who fashions a strong case for the benefits such changes can bring to longtime residents - provided government and institutions act wisely to support mixed-income communities.

"You can talk about building neighborhood assets," she said. "In a mixed-income community, it will be safer. You'll get food stores that sell fresh fruit and don't gouge. It'll be greener. The schools will get better. Why? Because these are the things middle-class people will demand; they take them for granted in a place where they'd live. And they know how to get them."

What can city government do to bolster this happier prospect?

Provide more money and policy incentives for affordable housing, the experts agree. Nowak said the city needed a focus not just on new houses, but also on decent rentals for families, which are in short supply. Michael Nutter, the likely next mayor, has said he'd funnel new revenue from expiring tax abatements into affordable housing.

Be more welcoming to immigrants. High immigration rates have emerged as a key factor in the economic and social health of major cities. Philadelphia's is very low.

Pay attention to the neighborhoods often forgotten in this discussion, the working-class blocks far from Center City's towers or University City's green quads, where the displaced often move, bringing tension and ill feeling.

"What happens to Frankford?" Nowak asked. "I'm very worried about that.

"It's generally a question of leadership," Nowak concluded. "You have to make the case to your longtime citizens that they truly are valued, and that they, too, will get something of value out of these changes that are happening."