As we are building toward Neighborhood Economics: Jackson, the emerging theme is this: creating assets to bridge the racial wealth gap. A big part of that focus will be on new innovative funds enabling sole proprietors to become job creators and to become eligible for the loans they cannot access now. Another focus will be ways to create assets through community ownership of commercial real estate and houses.
But another primary focus will be on what Andre Perry calls, “Economic Architecture.” He looks at Economic Architecture in his efforts to redesign the housing market for equality. Those are the sometimes hidden structures and rules that keep people of color from creating the assets that lead to intergenerational wealth, that create the rich aunts and uncles who can give an entrepreneur the currently missing friends and family funding that white families have always enjoyed. We will be highlighting several new ways that are upending the unjust economic architecture. Of particular interest will be a focus on the Black tax on HBCU bonds that cause the bonds for Black colleges’ new parking lots and gyms to cost two to three more percent more than white schools. Another interesting focus will be on ways of reversing redlining.
One of the worst of those barriers created by economic architecture, an artifact of structural racism, is the result of redlining. Redlining started in the 1930’s after the Great Depression when millions of houses had been repossessed by the federal government. Thinking to be prudent with these unfamiliar assets, government officials decided that African Americans were high risk and would not be granted the low cost, federally guaranteed mortgages that white people were getting. Those low cost loans became the path to intergenerational wealth through home-ownership for white families. Oddly, in Chicago, eastern Europeans were also initially thought to be higher risk and were denied government guaranteed mortgages. Ultimately, the politically powerful 650,000 Polish Catholics in the city got themselves reclassified as white in order to qualify for the loans denied to Black families.
The second slug of federally mandated discriminatory redlining happened after World War II when returning white GIs got VA loans, but Black vets, who had just returned from risking their lives to protect the country, were denied the same loans.
Because they got costly mortgages, homes in Black neighborhoods didn’t become the assets that enabled a father and mother to take out a second mortgage to lend a young son or daughter startup capital to start a business or grow their sole proprietor hustle into a job creating business. Lower property values meant that there was less money for neighborhood public schools, less money for trees on sidewalks, less money all around, so summer heat and winter cold are both worse problems in these redlined neighborhoods than in parts of town that were not redlined. The overlap of poor community health with redlining is as sharp as the redline itself; people across a road are healthier than those within a redlined neighborhood.
There are several methods we will be focusing on that reverse the impacts of redlining. DeAmon Harges and his group, Learning Tree, have made the social capital in his African American neighborhood in Indianapolis visible–the ways people give to each other without expecting a return, the network of babysitters and people who sit with the elderly, etc.–making these neighborhood assets clear enough to a local mortgage lender that the cost of refinancing a mortgage was reduced. Lenders realized they were seeing the neighborhood as more risky than it really was. That methodology is being turned into software so that it can be replicated in other neighborhoods.
A second method proven to reverse some of the impact of redlining is led by Urban3. They have a pilot, funded by the Kauffman Foundation, in a group of cities applying Urban3’s insight into the unfair tax structure that makes poor redlined neighborhoods pay more than their fair share of property taxes while affluent neighborhoods are undertaxed. This results in millions of tax revenues forfeited every year. If the tax burden on all neighborhoods are equitable, the city reaps an annual windfall of up to millions of dollars annually or more.
Finally, in Asheville, North Carolina, using the same analysis, Neighborhood Economics and Eagle Market Streets, a Black led community development corporation (CDC), have devised what we are calling a Repair Fund–an online marketplace that can take as small as $25 in donation to rectify the kind of historic injustice that Urban3 is focused on. Shiloh, a Black redlined neighborhood with low home property values has been overtaxed by $1.5 million over the last 20 years (to 2022), while the neighboring, affluent Biltmore Forest Neighborhood has been undertaxed, based on property values by $4.4 million.
Both the city of Asheville and Buncombe County have committed to a process of reparations; the three year expensive process led by consultants is ongoing. Rather than using the politically charged word reparations, Stephanie Swepson Twitty, who leads Eagle Markets, prefers repair: “There is not going to be any accounting to fix 400 years of injustice, but there is clear damage that needs to be repaired.”
If the local government-led reparation process comes to fruition, the unfair taxation of Shiloh is a clearly documented place to make some of that repair real. As the Repair Fund is described online, “The repair fund engages in restorative economic justice and acts as a quasi-homeowners association and resource to the rightful stewards of the Shiloh community. One that advocates for the preservation of the area, manages the upkeep of the land, and meets the needs of the community.” Eagle and Neighborhood Economics plan a campaign of community and congregational engagement around the Repair Fund.
Twitty and her team will be at Neighborhood Economics: Jackson on April 24-26. They are actively interested in making their online marketplace software and white to Black neighborhood taxation analysis available to other communities.
Economic Architecture is the set of the rules that preserve and continue historic injustice, but those rules are based on agreements that can be redrawn if people realize that injustice can be rectified in their communities. Local governments can be influenced to act in line with their values to repair the damage that’s been their history and create an economy that is fair and that works for everyone.
We plan to dig into these and many more examples when we come together in April. We hope to see you there.