The (foreclosure) Tale of Two Developments: A Sense of Community Makes One More Resilient

5.25.2012 | As I wrote last week, Charlotte, NC, has not been exempt from the housing crisis. Like cities in many locales, Charlotte rushed to build new developments to meet the surging demand. We all know how that story ended. Bust. Yet it wasn’t the end of the story for cities like Charlotte, which now faces empty subdivisions, threatening to become an even bigger problem.

BRR was in Charlotte recently for a series of panel discussions, and we learned first-hand how Charlotte’s community development organizations, the municipal government, and the nonprofit sector came together to begin to address this seemingly unmovable problem head on. The tale of two developments reveals how complicated the foreclosure crisis is, and how important a sense of community is to recovery.

As Aisha Alexander, Neighborhood Resource Manager at the City’s Department of Neighborhood and Business Services told the panel, beginning shortly after the financial meltdown in 2008, foreclosures began cropping up in the northern suburbs of Charlotte, where people had bought into the American Dream with a starter home costing $100,000 to $150,000. Two subdivisions hardest hit were Peach Tree Hills and Windy Ridge. The two stand out for a lesson in what not to do–and what to do– in the face of large numbers of foreclosures.

Peach Tree Hills, Alexander said, was at the outset more owner-occupancy with a diversity of home styles and residents. Windy Ridge, on the other hand, was an investor community, with buyers looking to profit from flipping and quick sales. Both had poorer design but Peach Tree was a little better.

As the recession took hold, families began to struggle and foreclosures spread. Homes in the two developments were boarded up, lawns went unmowed. Homeownership dues went unpaid, and with them the street lights went dim. Pretty soon, break-ins were being reported. Crime ticked up. Blight spread, and the death spiral took hold. Before long, murders were occurring, prostitution was gaining ground. People left in droves.

Alexander and her team were tasked with solving the problem. They used $1 million in a larger Neighborhood Stabilization Grant to try and rescue Peach Tree Hills and Windy Ridge. They knew they could not go it alone. The problem was too big and too diverse. They quickly partnered with nonprofit developers to purchase the homes, rehab them, and get homeowners back in. Other groups provided housing counseling with new and existing residents. They created a down-payment assistance program with up to $30,000  in gap financing plus additional funds to repairs homes and replace appliances—all in the hopes that people would reclaim the homes, and the neighborhood.

But money alone would not be enough.

Engaging residents, it turned out, was key. Residents, said Alexander, must care about their home and their community. To engage them, Alexander and the groups on the ground worked with residents to establish a viable neighborhood association, guiding them in running the meetings, getting people to attend, and a variety of other tasks that make neighborhood associations work.

To address crime and safety, the groups on the ground worked to create a public safety initiative. The first step was to rebuild trust between residents and the police. One of the most successful efforts was using a few of the  foreclosed homes as “threat centers” with  police on hand. This allowed neighbors to get to know the police and create a partnership to reduce crime and improve safety.

At the same time, the groups along with residents worked to improve the community’s infrastructure. Because the developers had gone bankrupt, the streets were not paved and  sidewalks ventured no farther than the front of a house. Alexander used the Neighborhood Stabilization grant to do these build-outs. They also got the street lights turned back on.

In the end, the team’s efforts worked– in Peach Tree Hill at least. Crime in Peach Tree Hill is down 70%, according to Alexander. The average home values have risen $25,000. Only nine homes are now vacant compared with 28 before. The crime watch organization is alive and well.  The City of Charlotte’s new tree planting service selected Peach Tree Hill as the pilot because of the strong neighborhood association.

But the story is not as uplifting in Windy Ridge. As Alexander notes, because it is a development with an investor angle, there is less a sense of community. Renters, she said, hated being there, so they left as fast as they could. While there’s been a drop in foreclosure rates and some improved aesthetics, not much has changed.

So why did the same approach applied in two neighborhoods facing similar problems only work in one?

In one word: empowerment. Alexander believes that the success in Peach Tree Hill is because of resident-driven projects. When residents take ownership and develop their  own work plans, it’s more effective.  In Peach Tree Hill, when asked what they wanted in the public space, neighbors voted for a playground. As a result of this voice and agency, on a hot day in May, the entire neighborhood came out and built the playground.

As Alexander said, the success of Peach Tree Hill and the lack of success in Windy Ridge shows that each neighborhood is unique. Windy Ridge was an investor community but Alexander and her team’s strategy was meant to address owner-occupiers. They didn’t have a strategy for the investors.

“We had a lot of carrots,” she said of the approach to redevelopment, “and maybe should have gone in with a few sticks and hold the investors responsible. We have to hold developers accountable for building quality product. This housing stock would not have held up for long.  The big bad wolf could blow these houses down.”

In the end, she says, they’re still learning as they go. She also feels that they are not addressing the problem at a level they would like. The Neighborhood Stabilization Program is a finite program, and there’s still a lot of work to be done.

As BRR member Todd Swantrom told the panel, the foreclosure crisis has a deep reach. Today, 8 million children have been directly affected by foreclosures. They’ve been uprooted from their schools and friends. Homeowners who remain see the value in their homes drop. Local government lose tax revenue, which sets off a vicious circle of underinvestment and worsening conditions. In the end, foreclosures not only displace individuals, they destroy the social fabric of a community.

To be resilient in the face of these strains, communities must learn to redeploy resources, collaborate across sectors, and mobilize resources, Swanstrom says. As Alexander’s story reveals, there is a crucial role for nonprofits and community-based groups, as well as municipal governments.  In Charlotte, groups on the ground knew that something was happening early on, and they have shown considerable resilience in redeploying assets and expanding their repertoire into new areas. In many respects it is their small size that makes them nimble. They were able to quickly shift their focus to housing counseling after a foreclosure and facilitate the emergence of a strong neighborhood in Peach Tree Hills.

However, they could not have done it without the resources. That will be the continuing challenge as cities across the nation struggle with budget deficits and fiscal crises. There is also a gap in that there are few truly regional responses–metropolitan-wide– to the foreclosure and housing crisis.  As this story reveals, this is not only a central city problem. Unlike transportation, however, there is no regional housing authority to tie all the needed players together.

Swanstrom sees the foreclosure crisis as a crisis of displacement on the order of urban renewal and highway building in the 1950s and 1960s. In this case, however, it is not a federal bulldozer ripping through communities, but a complex process that is displacing people from their homes.

For more on BRR’s work in Charlotte, see Urban and Regional Policy and Its Effects, vol. 4, (chapters 5 and 6), which features case studies on transit development as well as resilience after the economic crisis.  Our blog post on equity and transit development features Charlotte’s efforts.


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