New York is a patch work of non profit neighbourhood organisations. They grew up during the 1970s and 80s as a response to, what at the time, looked like the terminal demise of much of the inner city of New York. During this time the effects of 'white flight' were materialising with devastating consequences on the urban fabric. As middle income people moved out of urban neighbourhoods to the suburbs private landlords let properties to increasingly poorer households. The returns from property declined and investment declined. Properties became vacant and derelict. Utilities bills and property taxes were not paid by landlords. Ultimately these derelict or close to derelict buildings became the property of New York City. Whole neighbourhoods became depopulated, crime rose to intolerable levels and some areas became no-go areas dominated by drugs and gangs.
A number of people I have talked to have shown me photographs of this time and also directed my to the NYC website which has photographs of every building in New York taken in the 1980s. There are photographs of Harlem where I am staying showing derelict and blackened buildings, piles of rumble, burned out cars and deserted streets. Something akin to an apocalypse movie.
Out of this time grew voluntary tenants rights groups and neighbourhood development corporations. With the backing of the City and philanthropists these groups fought to save their neighbourhoods one building at a time. The link below is to a video of the history of 'Banana Kelly', a neighbourhood improvement group that successfully fought the urban dereliction of their South Bronx neighbourhood.
http://www.bkcianyc.org/?page_id=29
As well as the neighbourhood groups dealing with this problem at a local level, at a National level the Government were putting pressure on banks to invest in these areas. Banks avoided investing in the so called 'red lined' areas, so not only were these areas suffering massive decline and dereliction, there was little prospect of any investment in them either. In 1977 the Community Re-investment Act was passed which resulted in assessments and grading of banks performance in respect of investing in neighbourhoods in their area of operation. In 1994 the Riegle-Neal Interstate Banking and Branching Efficiency Act, changed the rules on interstate banking. This allowed banks to merge with or buy other banks in different states. However, these mergers and acquisitions had to be vetted and approved. Crucially, banks had to have an Outstanding CRA rating in order to be certain that their acquisition or merger would be approved. This had the affect of banks taking their community banking activity very seriously. Banks upped their game and increased their work with the non profit groups in the formerly redlined neighbourhoods to supply financial services and investment including investing equity into new affordable housing under the LIHTC programme.
The non profits were active in their communities and often had strong links with local politicians which encouraged New York City and State to support the investment activity with soft loans, gifts (or disposal for $1) of land and buildings from the City who had acquired them due to dereliction and non payment of property taxes. They also supported preservation and redevelopment through zoning approvals.
This combination of activity - banks, local community improvement associations and the supply of property and support from the City has transformed New York over the last 20 years.
Returning to Harlem and the situation now. Harlem is being rapidly gentrified. This process has a geographical component with the most gentrified streets near Central Park and the area from 110th Street to 125th Street. Real estate prices in these areas are rocketing with new blocks and rehabilitated blocks being built. I am staying in a very beautiful apartment in an upgraded brownstone on 132nd Street. This is the next wave of gentrification. The first young professionals are moving into the area and it is starting to change. The facilities in the high street are changing too with some higher end restaurants opening - Red Rooster (apparently a favourite of President Obama) and Maison Harlem. I can personally attest to their high standards having now eaten at both. The super market near 125st sells more speciality foods including gluten free and organic etc.
The role of neighbourhood improvement non profits when neighbourhoods are improved
I visited Chris Cirillo, the Executive Director of Lott Community Development. Lott work in North Manhattan and their office is in Spanish Harlem. Spanish Harlem is less gentrified than the central Harlem area I described above. Lott own and manage just under 700 homes. They were founded 25 years ago by Father Lott who is a catholic priest. At the time Spanish Harlem was suffering many of the familiar problems of dereliction and abandonment typical of many of the poorer neighbourhoods in New York. During the last 20 years Lott worked as a community development organisation and was effective in improving the neighbourhood. Spanish Harlem is now 'stabilised'. Developers are starting to build new buildings in Spanish Harlem and not just around the subway and rail stops.
There are hundreds of non profits through out New York that were created in the same way as Lott Community Development but now things are changing. New York City has run out of land and buildings to pass to non profits to develop and areas have been improved. The for profits and larger non profits are undertaking most of the new affordable housing development in New York. The many smaller neighbourhood non profits are developing only irregularly or not at all. These non profits who's business model use to involve securing developer fees from development are now more dependent on margins from cash flows from the revenue side of their activity and grants for non development activity e.g. employment projects.
Essentially, there are too many small non profit organisations in New York. The reasons for their formation have been significantly tackled and the development income that had supported their business plans and growth has reduced dramatically. A new model is needed for their on going operation. The big challenge moving forward is preserving affordable housing in their neighbourhoods as real estate values soar and the existing population is displaced. There are too many small organisations essentially doing the same activity. Without development income operational efficiency becomes a major issue and size of operation becomes crucial .
Lott recently teamed up with 4 other non profits in north Manhattan with 3,200 homes in ownership between them. They received a grant from Enterprise Communities to determine proposals on how they want to fund themselves and operate going forward.
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