All around the Third District, we see evidence of cities reinventing themselves. Public officials and private citizens are working together to reverse a downward trend started decades ago. Earlier this summer we visited Scranton, where a new hotel and two parking garages were built downtown and plans to substantially upgrade commercial buildings on a main artery were being finalized. Some nonprofit housing developers also noted that their efforts buying, renovating, and selling homes for moderate-income families had spurred the private builders to do the same. In this issue of Cascade, we talk about efforts in two other cities – Wilmington, Delaware, and Trenton, New Jersey.
In Wilmington, the revitalization is happening on two fronts, downtown and along the riverfront, and there are other efforts throughout the city. The downtown and riverfront developments include residential and commercial buildings, some newly constructed, some in existing structures. The citywide efforts include one to reduce the inventory of vacant properties, both land and buildings, and another to provide affordable housing for lowincome families.
In Trenton, we have stories about redevelopment using new market tax credits (NMTCs). Although the program had a slow start, it has picked up steam. We write about projects using Wachovia’s and the New Jersey Economic Development Authority’s tax credits. While the projects are still new, it looks like both will strengthen Trenton by bringing jobs to the downtown. Early indications suggest that the NMTCs will be as valuable to community economic development as the low-income tax credits have been to rental housing.
Most urban revitalization still requires subsidy to make a redevelopment project possible, and often one of the sources of funds is the federal Community Development Block Grant (CDBG) program. While most people can see a visual change from community development efforts, we at the Fed are interested in measuring the economic outcome or impact of these efforts. In the long run, we believe we can help community developers everywhere if we help provide techniques and results for measuring impact.
For that reason, Marty Smith has reviewed a study George Galster and co-authors conducted on the impact of the CDBG program in 17 cities around the country. While the authors thought better data were needed, they did show that after a certain threshold, a change in housing values was identified.
Subsequently, the Richmond Fed hired Galster to conduct a similar study in Richmond, where the results, bolstered by better information from the city and the Local Initiatives Support Corporation on public- and privatesector rehabilitation efforts, demonstrated that at a threshold of $20,100 per block, improvements in several measures, including crime reduction and increased housing values, could be demonstrated. After reading Marty’s review, look for the Richmond study, “Neighborhoods in Bloom,” at http://www.richmondfed.org/community_affairs/topical_essays_and_resources/pdf/