The Positive and Negative Impacts of Gentrification

Gentrification is the complex social process by which large amounts of money and investment, pour quickly into lower income communities. Thus, leading to the displacement of many long-standing residents and local independent businesses. The effects of this process can be observed across almost every major city in The United States a prime example being, New York City. When New York comes to context, “the capital of the world” comes to mind, New York however is not what it used to be, it is becoming the capital of the world of gentrification. Gentrification is a two-way street, some head towards the idea that these neighborhoods are being poisoned, by the increase in the cost of living, discrimination towards minorities, and the overall loss of identity and culture in these places.

Others drive away from this idea and believe that gentrification is cleaning the stains of poverty ridden neighborhoods. That it results in crimeless, more sanitary, economically robust communities. Everything that shines is not always gold though. Gentrification is a negative driving force, that is pushing out native locals and businesses from their homes. Driven by the influx of the wealthy coming to less affluent communities, the exploitation of weak public policies and the thirst for capital. In order to combat these problems, communities need to get more active in public affairs, affordable housing needs to be developed, lastly new ideas must be experimented.

Gentrification is a fire that is fueled by many contributors. These factors are not independent variables, they are the cause and effect of each other. Alana Schubach cites a 2015 study from UCLA and Berkley researchers which concludes,” There are three factors driving neighborhood change, the movement of people, public policies and investments, and flows of private capital (2)”. The movement of people being described is the desire of people wanting to move to cities because of the amenities they provide. Amenities such as public transportation, nearby hospitals, job and educational opportunities are persuasive reasons for one to move to a city.

However, moving can be an expensive process, so the ones doing the moving are usually doing above average financially. According to Benjamin Grant this trend caught wind about 50 years ago, 'Starting in the 1970s and picking up steam in the 1990s, people with resources and choices 'rediscovered' cities, and the downside of the suburbs became very apparent, naturally prices started to come up [in cities] and investments were made (7)”. The more people were exploring cities, the more obvious the advantages of these cities became as well as the disadvantages of living in the suburbs. Therefore, leading to a higher demand for housing in these places. Which in turn lead to prices going up on property, as well as developers and investors building new houses in order to meet supply and demand.

In the 1960s, New York City quickly caught on to the problems that were afflicted upon lower income residents caused by the high demands for housing. Problems such as increase in rent, growing housing scarcity and arising conflicts. Officials in response created rent stabilization, which are certain regulations set by the city in order to protect lower income residents. An example of such, being the inability of a landlord to raise the cost of rent after a certain limit. However, in 1994 the New York City Council passed a vote that allowed landlords to deregulate apartments once the price of rent rises to $2000, today that cost has risen to $2700.

Alana Schubach quotes a Pro Publica report stating, “Of the 860,000 apartments that were stabilized in the mid-'90s, almost 250,000 have become market rate in the intervening two decades (7)”. Essentially this rule the City Council passed resulted in a loophole for apartment owners in which they can get their apartment out of regulation, and into the free market. This new rule drew pressure on landlords to persuade rent regulated tenants to leave their apartments, because of the higher amount of profit that could be made in the deregulated market.

In the chase of modernization, the mayor of New York during 1978 through 1989, Ed Koch, pushed the city government towards passing policies more biased towards privatization. Mayor Koch was focused on the rejuvenation of New York as a whole and the invigoration of the economy. To accomplish these goals, Koch wanted the city to appeal towards high class educated citizens for them to populate the city. Further wanting to make the city attractive to tourists and big business in order to stimulate the economy, Koch needed the help of developers and investors to rebuild the city. Celia Weaver elaborates stating, “Under Mayor Ed Koch, City Hall’s goal became to recreate New York, making it friendly to big business, tourists, real estate developers, and upscale professionals, the city brought in big real estate developers and corporations with generous tax abatements and other government subsidies (4)”.

In order to manifest this ideology, he persuaded “big real estate developers and corporations” with financial aid and the reduction, or elimination of property tax. However, these tax abatements and subsidies were public funds which were intended for the poor, ended up being invested in the wrong things. This is just the tip of the iceberg, bankers and investors viewed Koch’s proposition as the perfect opportunity to make capital observing the speculation of New York City as a goldmine.

The phenomenon known as Gentrification has many negative impacts on individuals. The heart of it being the displacement of low-income families. As gentrification takes course, affluent individuals and families begin to migrate to low- or median-income areas. In response, the demand for new luxury housing goes up, as well as the price of property. According to the Department of Housing and Urban Development housing is thought of as affordable when someone who earns 80% of the average income of an area, spends up to 1/3 of their money on rent.

As new expensive buildings go up with cheaper one's going down, as well as the influx of wealthier citizens, the AMI or the average median income goes up. AMI and affordable housing go hand in hand with each other. As the AMI of a neighborhood rises so does the standard of “affordable” housing in direct relation. Affordable housing is bought out and then transformed into a more expensive product which the average person can’t afford. Yazmine Nichols further elaborates,” As the number of luxury housing sites surges throughout NYC, fewer units of affordable housing are being built and even those few units that are deemed affordable are beyond the means of most community residents (2)”. The less affluent are struggling to keep up with the new economic standards and pressures in these cities. As scarcity of affordable housing goes up as well as the cost of living, low income families enter a chain reaction where they are moved into worse and worse housing options until they are eventually displaced.

On the contrary however, Richard Cravatts believes, “Market conditions that encourage the building of new housing have a two-pronged benefit for the community: as new housing is created and neighborhood residents who had been renters become owners of new units, their old housing-much of it rental-is freed up for a whole new group of renters who either move from less desirable units (freeing up more units) or come into the neighborhoods for the first time. Thus, gentrification, by making a community attractive to investors, actually enables many renters to move up the housing ladder into presumably better apartments, without displacing tenants and by making their old units available for yet another set of renters below them (1).” While it is understandable that Cravatts would think more housing development means more housing options, he is wrong because this does not account for the increased cost of rent that poor residents can’t pay. Only the ones who are financially able, are the ones moving up the housing ladder. The process Cravatts describes is backwards, as the wealthier move up the housing ladder the less fortunate either stay in place because of the unaffordable new housing or must leave because they simply can’t keep up with rising costs.

Gentrification is also a contributor towards the current discrimination of minorities, such as people of color. Instead of community integration what ends up resulting from gentrification is segregation due to the imaginary borders being created of the wealthy and poor in these cities. As the wealthier white citizen moves into a city with a predominant minority population, there is more pressure on law enforcement to regulate these areas thereby exponentially increasing the already underlying bias of police towards people of black and Spanish ethnicity. Adult minorities are not the only ones being affected by growing discrimination, “ This is most evident in the New York City public school system, where students are segregated by factors like race and income, and where Black and Latinx students are disproportionately punished for minor infractions” (Nichols 2). From adults in the street being targeted by police, to children in schools receiving unfair punishment, gentrification spares no victims in the minority population.

This gentrification fueled discrimination does not stop at over policing; minorities are having a harder time buying homes. Stemming from the imperfections of the community reinvestment act, which was ironically passed to help communities with a higher percentage of immigrants and African Americans. According to Aaron Glantz, “Banks meet their Community Reinvestment Act obligations by marketing affordable loan products to the neighborhood’s newcomers, who typically are able to get a conventional mortgage with a 3 percent down payment, compared with the industry’s gold standard of 20 percent (4)”.

What these banks failed to predict is that these newcomers are not the low-income immigrants or African Americans they were intended to protect, these newcomers are the young, wealthy white citizen. Under this regulation, it became more convincing and easier for the more affluent citizen to move into these once looked down upon neighborhoods. Naturally because of this movement, banks became more bias towards giving white people home loans instead of people of color regardless of their financial background.

People and their families are not the only victims of gentrification. Also suffering from gentrification are local and independent business. Long standing businesses are under constant harassment from developers to close up shop in order for them to create new projects that results in profit. These native stores are in danger of being bought out and replaced with new luxury housing or businesses preferred by the new wealthy citizen. It is harder for independent business to maintain in a gentrifying climate. Property cost goes up, leading to higher storefront rent making it hard for these local store owners to make profit. In response these owners must increase the price of goods or the cost of services to match the growing rent prices. With a new consumer identity, the displacement of old customers, increase in cost of services and goods as well as decreasing commerce, gentrification makes the ability of these businesses to strive and prosper very difficult.

An important way in fighting gentrification is the support of groups such as Community Land Trusts. Residents and landowners in neighborhoods with growing problems from gentrification need to come together in unity for their voices to be heard. As well as becoming aware and involved in community and public affairs when it comes to development. “Despite facing an uphill battle, many communities have developed a social ownership model that prevents developers from assembling large commercial sites.

These models are commonly known as community land trusts (CLT) a concept originally conceived by Black farmers in the Jim Crow South — and have spread across U.S. cities as residents strive to regain control of their neighborhoods and maintain affordable housing (Nichols 4)”. More groups such as CLTs need to be created and must act in collaboration with their city's government in order to meet eye to eye with each other when it comes to topics such as new developments or rezoning. Teamwork makes the dream work. Today's CLTs in New York have already begun making process, they received a grant from the city of $1.65 million to fund projects of theirs as well as being officially classified by city officials.

An important way in fighting gentrification is the support of groups such as Community Land Trusts. Residents and landowners in neighborhoods with growing problems from gentrification need to come together in unity for their voices to be heard. As well as becoming aware and involved in community and public affairs when it comes to development. “Despite facing an uphill battle, many communities have developed a social ownership model that prevents developers from assembling large commercial sites. These models are commonly known as community land trusts (CLT) a concept originally conceived by Black farmers in the Jim Crow South — and have spread across U.S. cities as residents strive to regain control of their neighborhoods and maintain affordable housing (Nichols 4)”.

More groups such as CLTs need to be created and must act in collaboration with their city's government in order to meet eye to eye with each other when it comes to topics such as new developments or rezoning. Teamwork makes the dream work. Today's CLTs in New York have already begun making process, they received a grant from the city of $1.65 million to fund projects of theirs as well as being officially classified by city officials.

In order to combat affordable housing scarcity, the development of new affordable housing complexes needs to be a priority. The strengthening of old policies such as rent regulation, new stronger policies focused on anti-displacement and regulation in the complexes to match. Having private investors fund this project would be walking backwards in a sense, the city should be the one investing in this effort. With the development of these buildings comes jobs in these areas, a further reason that city officials should consider. Celia Weaver explainss, 'The city needs to use public land to build deeply affordable housing for people who are at most risk, as speculative capital flows into neighborhoods,' she says. 'The entire city is attractive to investors, and the role of city government should be to build at the bottom and implement strong anti-displacement measures. There’s no reason for them to do planned gentrification—the market is doing that on its own. (11)”. There should also be rules which can limit the production of high-end housing for a certain time period.

On the contrary though fixing the problems of gentrification might not be as easy as it seems. In 2002 London experimented with the implantation of affordable workspace policies in multiple boroughs to protect small business. “In the early 2000s, a few London boroughs started to introduce affordable workspace policies, using planning gain to require that new mixed-use development on employment land should provide some 'affordable workspace' to be let at discounted rent to a workspace provider who takes on the lease, fits out the space and in turn sub-lets and manages the units to small business occupiers (Jessica Ferm 6)”. The purpose of this experiment was to save and provide affordable workspace store fronts in business districts where there was ongoing development.

These experiments ended in mixed results with the conclusion being that these workspace policies could mistakenly fuel the fire of the displacement of small business. The real concern being that it erodes the integrity of employment areas, which raises expectations that further redevelopment and loss of employment land could be achieved in an area (Ferm 15)”.

Displacement of people and the closure of independent business are the direct offspring of gentrification. The parents of gentrification being the mass movement of the affluent, the misuse of regulations, and the greed for profit. Instead of helping the whole community, gentrification enables the wealthier to move up in rank while the less fortunate are either running in place or going backwards, causing poverty and homelessness within the lower class, it is digging a deeper hole that the less fortunate cannot get out of.