The story of Chatham, on the South Side of Chicago, while unique in many ways, can also sound familiar to those in neighborhoods of cities all across the country. Families moved here from far away, often fleeing violence and oppression. Parents found good paying, steady jobs. They put down roots and purchased homes. Children grew up with encouragement from parents, teachers, relatives and friends, some of them going on to Ivy League colleges and illustrious professional careers.
Nedra Sims Fears was one of those children. Her mother, a teacher, born in Shreveport, Louisiana, moved to Chicago in 1940, fleeing the Jim Crow South like so many African-Americans during the Great Migration. First living in nearby Hyde Park, then purchasing a house in Chatham, Sims Fears’ mother was the first in her family to go to college. Sims Fears’ father, a foreman at Ford Automotive, was originally from Joliet, Illinois, where his parents moved from rural Mississippi in 1915.
Describing her childhood in Chatham as “idyllic,” Sims Fears eventually earned an architecture degree from Cornell University and an MBA from Northwestern University, going on to a career in community development, first in housing, then economic revitalization. After living in Minneapolis and a few small towns throughout her career, Sims Fears returned to the South Side.
In 2014, special education teacher Dr. Betty Howard was killed by a stray bullet in Chatham, on 79th Street near Cottage Grove Avenue, across the street from the district office of Congressman Bobby Rush (D-IL). “It really shocked everyone, because Chatham was supposed to be the safe neighborhood,” Sims Fears says.
The tragic incident sparked a period of intense reflection and self-study in and around Chatham. Congressman Rush brought together clergy, elected officials including the mayor, business owners, community activists and residents, who drafted a comprehensive plan of action.
“They were able to document that Chatham’s middle class at that time was being hollowed out,” Sims Fears says. “Some of it was through the recession, some of it was the reduction in City of Chicago workforce, the auto industry, the steel mills, all those kind of higher-paying union jobs were disappearing — and we were attracting residents that had lower incomes and lower skill levels.”
To implement the plan of action, the Greater Chatham Initiative formed in 2016, with Sims Fears as executive director.
While other places may never have such a poignant moment of reckoning, one by one, across the United States, neighborhoods such as Chatham have realized that they, too, aren’t what they once were — thriving middle-class communities replete with bustling commercial corridors and residents with steady, good paying middle-class jobs that paid off mortgages. The world has changed. Factories have shuttered. Homeowners have aged; many are now retired and living on fixed incomes, while their children went off to live the life their parents imagined for them — somewhere else.
These neighborhoods aren’t distressed today, but they may become so sooner than anyone expects. Sims Fears and other practitioners in places like Chatham know that many neighborhoods currently in decline were once in this same position — poised between thriving and distressed, between a bright yesterday and an uncertain tomorrow. These are the “middle neighborhoods.”
What can be done to stabilize these communities? That’s the mission of local groups such as Chicago’s Greater Chatham Initiative, Cleveland’s Old Brooklyn Community Development Corporation, Milwaukee’s Riverworks Development Corporation, and others. These community organizations forge partnerships and leverage hyperlocal efforts to create job training programs, reinvigorate aged housing inventory and provide longtime residents with low-interest loans for necessary maintenance and renovations that will allow them to age in place safely and comfortably.
These practitioners have stepped up to keep their neighborhoods from sliding into a state of distress that they’ve seen happen elsewhere. “That’s why the Greater Chatham Initiative was set up,” says Sims Fears. “So we can be that firewall and turn [the neighborhood] around and make it thrive.”
Forty-eight percent of urban residents in the United States live in middle neighborhoods, with incomes generally between 80 and 120 percent of the median income for each metropolitan area. Home values can vary wildly in middle neighborhoods, largely because of the aging housing stock, although some middle neighborhoods have maintained stable home prices better than others. For example, sale prices in Baltimore’s middle neighborhoods range from $40,000 to $115,000.
Middle neighborhoods are racially diverse, sometimes within each neighborhood and also from neighborhood to neighborhood. Chatham, for instance, is 97 percent black. Cleveland’s Old Brooklyn is around 80 percent white. In Milwaukee, the adjacent middle neighborhoods of Harambee and Riverwest are a study in contrasts — 84 percent black on the Harambee side, 60 percent white and 25 percent black on the Riverwest side.
What unites middle neighborhoods are the challenges faced. Shifts in the global economy have meant the loss of jobs whose wages could pay back the mortgages that financed the construction and ownership of homes. Aging homeowners on fixed incomes live in aging housing stock and struggle to keep up with maintenance costs, which leads to a decline in home values. Potential new homeowners either aren’t excited to live in the neighborhood or can’t access the capital required to take on a “fixer-upper.” All of those factors are present in varying degrees in Greater Chatham, Old Brooklyn, and Harambee/Riverwest.
And yet advocates say policymakers still aren’t as drawn to middle neighborhoods as they are to glitzy downtown areas that offer ground breakings and ribbon cuttings and headlines for attracting big new employers. Distressed neighborhoods, they say, also draw more attention, providing occasions to announce multimillion-dollar initiatives to “save” such neighborhoods — or worse, they get headlines for police violence against innocent citizens. The ne of middle neighborhoods just don’t play well as local political theater. In Chatham, it took a tragedy to instigate the political will to do something.
These neighborhoods “require some strategic investments, but at a much smaller scale than is required to provide affordable housing in a hot real estate market, or to revitalize neighborhoods that have fallen into deep distress and are full of vacant structures, high crime, and poorly performing schools,” wrote David Erickson, director of community development at the Federal Reserve Bank of San Francisco, in 2016.
In Cleveland’s Old Brooklyn neighborhood, the moment of reckoning came in the 2008-2009 subprime mortgage crisis and Great Recession. In the aftermath of the crisis, the Old Brooklyn Community Development Corporation, founded in 1974, lurched into a new role.
“For most of our first four decades, we were a quieter organization,” says Jeffrey Verespej, executive director. “The neighborhood didn’t have issues of poverty. It didn’t have great wealth. It was what I would now consider to be a middle neighborhood, although we didn’t know it at the time.”
Old Brooklyn prides itself on stability, filled with long-time homeowners often with mortgages paid off after decades of working in Cleveland’s various industries, Verespej says. But many of those jobs were long gone by 2008, or those workers were retired, living on pensions, social security or some combination thereof.
“The industries that propped up the economy and the housing market, immediately adjacent to the neighborhood, are gone,” says Verespej. “The steel factory that I grew up next to and drove by multiple times a day, taking my dad to work with my mom, is now a WalMart.”
The subprime mortgage crisis and Great Recession blew the roof off Old Brooklyn’s sense of stability. While it’s true other markets were hit harder, the neighborhood probably lost 50 percent of its home value, Verespej says.
The Old Brooklyn Community Development Corporation became a sort of buyer of first-resort — they acquired vacant and foreclosed homes, rehabbed and resold them, as a way to restore confidence in the neighborhood’s housing market. “All of a sudden it puts confidence in [other homeowners in the neighborhood] that tomorrow will be a better day,” says Verespej. “They think, ‘Maybe I should re-do my kitchen, maybe I should repaint the house, maybe I should go out and fix the yard a little bit.’”
The Cuyahoga Land Bank, a county-level entity, played a key role smoothing out the process of acquiring foreclosed homes in those early days after the crisis, Verespej says.
There are 9,000 residential plots in Brooklyn, a neighborhood of about six square-miles, according to Verespej. And yet since the crisis, Old Brooklyn Community Development Corporation has only acquired and rehabbed around 60 homes so far — not a lot, but just enough.
“You’re investing into a place with strength, you’re investing to a place that is on the edge, still has assets, still has people who want to be there, but need a nudge to get over the top, versus investing 60 homes in a non-functioning market,” Verespej explains. “Sixty homes into a place that still has assets, still has desire, it can have a huge impact because it’s also about putting market confidence into other homebuyers.”
In Milwaukee’s Harambee and Riverwest, Maintaining Dignity
The subprime crisis and Great Recession was a reckoning moment for Harambee/Riverwest as well. Through the use of neighborhood housing surveys, focusing largely on the low-income neighborhood of Sherman Park, by 2008 Milwaukee had an established protocol of working with residents and community-based organizations to monitor for maintenance issues on residential properties.
Here’s how the protocol worked. Every spring, volunteer surveyors would drive around and do a “windshield” inspection of properties, noting maintenance issues, and following up with a letter to property owners inviting them to work with the community-based organization and the Department of Neighborhood Services to address the maintenance ne. In the Fall, surveyors would go around again to check if ne had been addressed. If nothing happened, they’d send another letter, and if nothing happened after that, they’d report the building and have appropriate penalties assessed.
The surveys began primarily as a way to hold absentee landlords accountable for maintenance ne on rental properties. But after 2008, those same surveys picked up a spike in maintenance ne on owner-occupied properties, according to Amy Rohan, a community asset development specialist at Riverworks Development Corporation.
“We said ‘what’s the protocol for this, we’re not going to report owner-occupants to the Department of Neighborhood Services and get them on these monthly fees, basically taxing people for being too poor to fix up their homes,’” says Rohan.
After the 2008 financial crisis, “homes and neighborhoods were decimated, but what kept those neighborhoods alive [were] the long-term homeowners. And yet there doesn’t seem to be support or assistance for those homeowners to be able to stay in their homes,” says Lynnea Katz-Petted, CEO of Revitalize Milwaukee, a nonprofit that provides free home repairs and modifications for homeowners in need. Photo by Jason McDowell via Flickr.
In Harambee particularly, these were aging homeowners in aging housing stock, Rohan says. They were stable in the sense that they had lived in their homes for decades in most cases. But now many were living on fixed incomes from retirement savings, pensions, or social security. Some may have spent a decade or multiple decades already living on those fixed incomes.
At Revitalize Milwaukee, a nonprofit that provides free home repairs and modifications for homeowners in need, CEO Lynnea Katz-Petted says they get 3,600 calls for assistance a year, including many from homeowners in that same situation.
“It was shocking to me to understand the sheer desperation some of the ways our residents were living,” Katz-Petted says. “The people we’re dealing with are homeowners, they’ve been in their homes an average of 30 years, they pay their taxes, they’re current on their mortgages, and something happens. They get sick, a family member gets sick, they lose their jobs. They find themselves in a situation where one thing happens and it sends them into a tailspin.”
After the financial crisis, “homes and neighborhoods were decimated, but what kept those neighborhoods alive [were] the long-term homeowners. And yet there doesn’t seem to be support or assistance for those homeowners to be able to stay in their homes,” says Katz-Petted. “We were overlooking what to me were the sustaining forces in these neighborhoods.”
Revitalize Milwaukee refers a lot of residents to other programs and partners, often for financial counseling to help get household finances back under control after a major life event such as a family member losing a job or being hospitalized.
After screening and referrals, Revitalize Milwaukee ends up working directly with around 350 homeowners a year, triaging their ne from large, major purchases such as a new water heater to other vital jobs, such as building a new ramp to make it easier for an aging homeowner to enter and exit their home. They’ll often bring an occupational therapist with them on a home visit to analyze potential difficulties, for example, shelves or counters that may be too high.
All of the repairs and modifications Revitalize Milwaukee provides are free to homeowners. Katz-Petted says they have an annual budget of about $1.5 million, nearly all of it coming from construction companies, banks, other companies, foundations, or individual donations. Just $120,000 of their money comes from the city government. It works out well that way for Revitalize Milwaukee, says Katz-Petted, because public dollars often require homes be brought up to code all at once, instead of working piecemeal on urgent ne one or two at a time, as is their typical approach.
For maintenance ne that go beyond what free repairs and modifications can provide, the city worked with community organizations to develop a “Compliance Loan Program.” The program provides zero-interest loans up to $15,000 for eligible low-income owner-occupied households — and they’re deferred, which means the borrowers don’t need to make any payments on them until they sell the house, in which case they have to pay back the loan. The program emerged out of the post-crisis discussions spurred by the annual housing surveys, according to Rohan.
The best part of the Compliance Loan Program, Rohan says: if you leave the house to your next-of-kin, the loan can roll over to your family member, keeping its deferred status. As long as the home stays in the family, it doesn’t have to be paid back.
In 2016 and 2017, Rohan says she is aware of at least $100,000 a year in compliance loans to homeowners in the Harambee neighborhood, helping them to address badly needed maintenance issues, while also giving them a major incentive to keep each home within the family.
Enticing the Next Generation of Owners
Verespej says the housing market is better now in Old Brooklyn. In fact, it’s doing so well, they now compete against bulk buyers, with investor cash from “China, Russia, who knows where,” he says, to keep up with acquisition and rehab of homes, to sell them back to new homeowners coming into the neighborhood. The bulk buyers typically end up renting the properties instead of selling back to a new homeowner in the neighborhood.
Under what has been the organization’s typical model, Old Brooklyn Community Development Corporation gets a loan from a local bank to purchase a home from the land bank or from the previous owner. Then the organization sinks some of its own cash into the rehab, and it can get that back and repay the acquisition loan, plus earn a little more cash, upon selling the newly rehabbed home to a new owner-occupant at a price that’s still affordable to the typical resident of a middle neighborhood.
Now, with a stabilized housing market and fresh competition from all-cash bulk buyers, there’s no longer enough cash left over after the acquisition to complete the necessary rehab. They need a new lending product, Verespej says, that covers more of the acquisition cost so that the organization has funds left over to subsidize the necessary rehab.
In Milwaukee, Rohan says their obstacle is not competition from all-cash bulk buyers, but rather the total cost of the rehab. Instead of the “buyer-of-first-resort” approach in Old Brooklyn — where a neighborhood institution fronts the cash for fixes and sells rehabbed homes to a new generation of owner-occupants — in Harambee the onus is on individual owner-occupants to have access to the required capital. But sometimes the cost of rehab can be higher than the value of a home for sale.
They’ve had some success working with local banks to create lending products for individual homeowners that cover more of the acquisition price, so a buyer can sink more cash into rehabbing a “fixer-upper.”