There Goes the ‘Hood

How one of the city's most lauded urban-renewal programs is reenforcing Richmond's racial divide.

For nearly 40 years, Church Hill has been a mountain for Louise Broady.

The petite, round-faced resident of this historic neighborhood bought her modest three-bedroom house in 1968, in the last years of Massive Resistance, when city schools were still segregated and an annexation war was just around the corner. She held on during the years of racist federal housing policies and once-rampant discriminatory hiring practices. She’s survived the pressures of a poverty-stricken economy that’s plagued the city for much of the past four decades.

Yet only recently has she felt seriously threatened. Odds are she won’t survive the housing renaissance that’s pushing property values through the roof a few blocks over in Union Hill. While her new, more affluent neighbors are getting generous tax breaks on their renovated homes, she has enjoyed no such perks.

“It’s beautiful over here,” Broady says, her dark, dimpled face a contrast to the bright midday sun. Her words come in staccato, machine-gun bursts of perpetual energy that belie her age, which she doesn’t want to discuss. “I’m old enough,” she says.

She recalls exactly the day and hour she moved into her house on 28th Street, with its scroll-saw woodwork and postage-stamp front yard. After leaving work near midnight on the “last day of the last month of 1968,” she moved in, too tired to stake out more than her new bedroom. It was all hers.

Today it’s barely hers.

“I sort of own it,” she says, her toothy smile seeming to fade. “Just holding on:  Tax bill going up. Water bill going up. Everything going up — but your income.”

Each year she watches homes down the street and on nearby blocks turn over to new neighbors. She’s one of the few old-timers left, she says.

The new residents — many of them white families — are seizing opportunity. They snatch up good deals on old, dilapidated houses that have suffered the neglect of senior tenants who lacked the financial resources to keep up. They invest thousands of dollars in the houses, often flipping or selling them for two or three times what they paid.

Much of that turnover is fueled by the city’s real estate rehabilitation program, which grants property owners generous tax breaks for sprucing up any building that’s at least 15 years old. The incentive alone makes reinvesting in such properties extremely profitable. You put down $80,000 to fix up a house, add an addition, a new porch — whatever — and the program allows you to forgo increased taxes on the rising real estate assessment as a result. While such programs are available across the state and the country, Richmond’s is widely considered the most generous in Virginia.

Since the city extended and amended its real estate rehabilitation program in 1995, it’s worked unbelievably well. From 1980 to 1995, the rehab program netted about 2,300 tax-abatement applications. Since expanding the length of abatements homeowners receive from five to 15 years in 1995, the program has averaged 600 to 1,200 applications every year. Last year the abatements were scaled back to 10 years.

The program has been cause for much celebration in Richmond. It’s lured hundreds of millions of dollars of investment, and it’s sparked thousands of loft apartments filled with young professionals, and homes filled with young families and boomers seeking to escape the blandness of the suburbs.

But to many, it’s meant the loss of their homes. Although gentrification is nothing new, and is often driven by unstoppable market forces, there’s no denying that Richmond’s generous tax-abatement program has also served as something of a gentrification subsidy. While affluent Richmonders get a reprieve on taxes, the poorer neighbors are stuck paying higher taxes as a result of the improvements.

It’s not as if Broady wouldn’t love to join in on the improvements. She sees all the renovations and rehabbed houses on her street through twinkling gunmetal-blue eyes, dreaming of having the money to finally fix up her fourth, unfinished room. “They’re cleaning up Church Hill,” she says excitedly. “I’m proud of it.”

In the process, however, they may be cleaning out Broady.

“What we’re faced with is this program tends to stimulate more gentrification because a lot of the historic properties are in neighborhoods that are mostly poor,” John Moeser, professor of urban studies at the University of Richmond, says of the city’s tax-abatement efforts.

It perpetuates other societal problems, too. The low-income families being pushed out are usually African-American, many headed by single mothers already displaced by the decentralizing public-housing system.

It’s not an unfamiliar theme in Richmond. For many, it’s no different from the city tearing through black communities to build in the 1950s what became Interstate 95, which gave rise to public-housing complexes such as Gilpin and Mosby. It’s not unlike the federal housing policies created during the New Deal in the 1930s, which essentially determined who would qualify for federal housing loans based on the demographics of neighborhoods and, more blatantly, on skin color. And more recently, it’s the same current that has kept the GRTC from significantly expanding its bus lines into Chesterfield and Henrico counties.

“You go back to what unfortunately has been a long-standing pattern,” Moeser says. “It often seems to be at the expense of the poor.”

It’s not that no one saw it coming. When the city expanded the historic tax program, it took off immediately — so much so that some City Council members initially worried that it was working too well.

At the urging of former City Councilmaner Sa’ad El-Amin in 1998, council considered a proposal to scale back the plan, fearing that the city was needlessly robbing itself of valuable real estate tax revenue. But the opposition was immense. Against an effort led by the development community and downtown boosters such as Richmond Renaissance, the measure died from lack of support.

By 2001 at least $400 million worth of real estate property was enrolled in the rehab program. That resulted in $6 million worth of annual uncollected real estate taxes. Today the city has $1.135 billion worth of abated real estate, which equates to about $14.6 million a year in uncollected real estate taxes.

“Richmond has the most liberal use of the rehab in the state of Virginia,” says former City Assessor Richie McKeithen, who left to become Hampton’s assessor two years ago. Most cities don’t extend the tax abatement program to residential properties for those very reasons, McKeithen says, namely, that it can lead to “tax inequity.”

One of the reasons Hampton hired McKeithen away from Richmond was that the abatement program was successful, but McKeithen says he told city officials in Hampton a similar program wasn’t needed. Before he left Richmond, McKeithen says, he began pushing to see that the program was scaled back — to no avail.

The tax abatement program was being used in high-income neighborhoods, such as Ginter Park, when the intent of the program was to spur development in decaying areas of the city, McKeithen says.

In Richmond, initially commercial users were the biggest benefactors of the rehab program; today, residential developers and individual property owners dominate the program. Of the 4,674 properties enrolled in the program, 3,856 are residential. Small developers see the rehab program as payback for investing in a dying city — not government-induced removal of the poor.

“It’s called the food chain, isn’t it?” says one local developer who spoke on the condition of anonymity.

He’s small-time in the historic rehab world; one, two houses are plenty. He plans to fix up his houses — he bought one property for $20,000 — and put them up for rent. He’ll use historic tax credits to help cover the cost of the $100,000 or so he’s sinking into each property.

As it stands, that developer’s property is surrounded by subsidized housing, vacant lots and derelict buildings desperate for repair before they’re reabsorbed by the earth. What’s the harm, he wonders, in improving a neighborhood so clearly in need of help?

“Best to my knowledge, this house has been vacant for a while,” he says. “The houses around it have either been vacant or knocked down.” He doubts that his one or two rehab projects will significantly affect surrounding property values or put people out of their homes. “I don’t know what impact I’m really having on gentrification.”

The Rev. Ben Campbell, pastoral director at Richmond Hill, a retreat center in a historic Church Hill monastery, began seeing gentrification surge about five years ago. The trend of wealthy suburbanites buying old houses in Church Hill began in earnest after the post-9/11 stock-market crash. Real estate became a safer investment.

Campbell spent about eight years working for a nonprofit housing agency that attempted to provide low-income housing opportunities in Church Hill. But he says the accelerated pace of gentrification made it nearly impossible.

The weekend hobbyists, he says — the ones who are “so proud of themselves” for fixing up old homes and then selling them to wealthier homeowners for two or three times their initial investment — often don’t consider the consequences.

“Who are you doing this for?” Campbell recently asked an oh-so-proud hobbyist-turned-developer. “This hobby of yours is putting people out on the street.”

For many people, it’s difficult to see beyond the neighborhood microcosm where the tax abatement program has had the greatest impact.

Campbell concurs that the program has done much good — namely, it’s helping to lure back the residential tax base long lost to the suburbs. And ultimately those tax abatements expire. When they do, millions of new tax dollars will roll into city coffers. There’s no doubt that economically and politically there are obvious benefits to luring wealthier homeowners to the city.

The problem, Moeser says, is that while the wealthy are being courted, no one’s making an effort to protect the poor or to create housing opportunities for lower-income residents. Pushing them away and throwing up our hands in adherence to market forces, Moeser and Campbell say,  is not only a cop-out but also morally reprehensible.

In essence, the city government is aiding and abetting the gentrification with tax credits, which in turn puts many lower-income African-American families to pasture.

“The city would be heartless if it’s just concerned with luring wealth into the city,” Moeser says, adding that the surrounding counties’ refusal to help develop low-income housing is fueling the fire. “Ultimately, this is a moral issue.”

All urban cities face the problem of concentrated poverty — particularly as technology and globalization have eaten away the industrial economy, leaving cities like Richmond devoid of manufacturing jobs in the inner city. It used to be there was always work at one of the tobacco warehouses for those who wanted it, but that’s not the case anymore.

Elsewhere, cities have worked to counter the problem with programs that offer low-income housing incentives to developers.

David Rusk, an urban policy consultant from Washington, D.C., says that such programs work by allowing developers to build more homes and apartments than would typically be allowed, hence creating more profit, in exchange for carving out a percentage of their subdivisions for moderate-to-low-income housing.

The General Assembly recently passed a law giving localities in Virginia the ability to establish such programs, but so far metro Richmond hasn’t bitten.

In such a scenario, regional cooperation is critical. In cities such as Atlanta and Charlotte, N.C., where density incentives have worked, regional governments call the shots. In Virginia, cities operate independently of their suburban counterparts. Without laws forcing them to do so, few suburban counties are stepping in to help their urban neighbors shoulder the burden of poverty and public housing.

“Affordable housing has to provide opportunities to better jobs, to better schools,” Rusk says. “The typical inner-city public housing project just didn’t do that, and we know that now from decades of experience.”

Without a government mandate, ordinances such as the one passed by City Council in January — the ordinance offers density incentives to developers who include “affordable housing” units in residential projects, but developers can opt out by paying a cash equivalency — typically don’t work, Rusk says.

“Richmond has put such a statute into effect on a strictly voluntary basis, which essentially doesn’t achieve anything in any affordable housing getting built,” Rusk says. “My own concern is not with the city’s vitality, but the opportunities for [lower-income] people.”

For the past decade, new federal programs such as the U.S. Department of Housing and Urban Development’s Hope VI have worked to eliminate the public-housing projects created by the U.S. interstate system in the 1950s and replace them with mixed-income communities that provide better opportunities for escaping poverty.

Typically, however, Hope VI served to tear down public housing complexes and reduce the number of housing units available to the poorest residents. Hope VI aims to create mixed-income communities, establishing strict rules for residents, who are also offered job training and “self-sufficiency” training. It all sounds good, but often the poorest, most at-risk residents — often living with criminal records — won’t qualify.

Consider Richmond’s former Blackwell community: The Richmond Redevelopment & Housing Authority tore down the 440-unit Blackwell in 1999. The plan is to replace it with 583 units, but only 153 of those housing units would be made available for public-housing residents. To date, only 161 apartments and town houses have been erected in its place; the first apartments opened more than two years after the old Blackwell was torn down.

There’s been a similar effect in Chesterfield County’s only subsidized housing development, the much-celebrated Winchester Greens in Chester, off Jefferson Davis Highway. When the Richmond Better Housing Coalition purchased the old Park Lee development in 1997, a 424-unit public housing project that had become infested with crime, it forced the former residents to adhere to strict re-entry guidelines. As a result, only 74 of the former Park Lee residents moved into the bucolic Winchester Greens when it reopened. Most residents were forced to go elsewhere.

The push to create “better opportunities” for public housing residents has often meant simply pushing them out.

It’s also no secret that the city wants to eliminate more public housing. Richmond’s master plan calls for reducing public housing 25 percent by 2011.

But with no help from surrounding jurisdictions — neither Chesterfield nor Henrico County has plans to build truly low-income housing in the near future — where will the residents go? So asks Michela M. Zonta, assistant professor of urban studies at Virginia Commonwealth University.

Most of them wind up in slums, but now even the slumlords can make more money with the help of the city’s tax abatement program because they can sell to wealthy suburbanites. That’s exactly what’s happening in Manchester, which took off not long after the old Blackwell was torn down, forcing its residents to move out.

“Are we playing chess with these people? What’s going to happen to them?” Zonta ponders. The questions have been the focal point of her academic career.

The displaced poor are not just losing roofs over their heads, she says. What’s often overlooked is how low-income residents rely heavily on their neighbors for everything from child care to transportation. When older housing complexes, as bad as they are, are destroyed, so is the most important asset to those trapped in poverty — their community.

“In their little social microcosm, it’s devastating,” Zonta says. “They don’t have child-care facilities. They don’t have transportation. They rely on a very limited social network. I don’t think it’s just to simply forget about them.”

Ironically, the university that employs Zonta has played a significant role in the gentrification of the Carver community north of West Broad Street.

VCU has been moving north for the better part of two decades, and it’s forced many residents to find housing elsewhere. Much like the tax-abatement program, VCU’s rapid growth into the old, slum-ridden neighborhoods north of Broad has been celebrated as a raging success. It’s resulted in new retail — including a Kroger grocery store — and sprawling loft-style apartments.

These days, an entirely empty city block is a rarity on Leigh Street, but there is still some gentrification to be done a block away at the intersection at North Harrison and Catherine streets. Recent demolition activity is evident in the weedy, rough landscape where a few neighbors remain in rented row houses.

Catherine Street is little more than an alleyway, never meant to be revealed as it is to the open sunshine and drivers along Leigh Street. Its residents also are out of sight, out of mind to most commuters who pass by.

In a few months’ time, VCU will again draw the curtain on Catherine Street, according to its low- to no-income residents.

“I’ll tell you exactly what happened. The people know that they got the right to do anything they want to do to you,” says a scowling older man, wearing work pants and a worn plaid flannel shirt. “Ain’t nothing you can do about it.”

The man is no city planner and no economist – he’s not even employed in any regular capacity — but he understands that money talks and he’ll soon have to walk.

“They take advantage of all the poor people. They ain’t got no respect for you as long as they can get away with it,” he says, blaming the same government policies created to give people of his economic standing a better life.

Standing within a stone’s throw of a turn-of-the-century house on North Harrison undergoing an all-too-familiar transformation, he scoffs at the policies that are supposed to provide him with equal opportunity.

He points across the street to an already rehabilitated brick row house.

“See that house right there? I know the man that had that house. The man lost it,” he says. “Someone told me one side of that house sold for $400,000. If a man’s making $7 an hour, how can he afford to pay $800, $900 for rent?”

It’s about race as much as anything, he spits out. “I know that’s what it is. These people don’t care nothing about you,” he says. “They take all the poor people and run them off like roaches.”

The man’s neighbor agrees. Arthur Hamilton is 75 years old, gray-haired and light-skinned with eyes that fix angrily when he thinks about what’s fast becoming of Catherine Street, where he’s lived for 14 years.

“You know redevelopment is going to get all of these houses, too,” Hamilton says, shrugging off help that never comes from government-housing programs.  ”The [city’s housing authority is] no friend to me.”

In a city steeped in racial housing policies, it’s difficult to argue otherwise, Zonta and Moeser say. Both see race as an unfortunate, albeit underlying, factor in the city’s renaissance.  After all, the poor, mostly white Oregon Hill community effectively resisted VCU’s expansive appetite just south of the Downtown Expressway, VCU’s original target for growth in the early 1990s.

“When people think of poverty in Richmond, it has a racial dimension. It’s black,” Moeser says. “We’ve made some progress, but to say that race doesn’t play a role anymore when it comes to things like housing — well, that’s just not true.”

The federal government played a significant role in ensuring that the city’s racial divide was reinforced during Franklin Roosevelt’s New Deal policies in the 1930s to help homeowners avert bankruptcy during the Great Depression.

Cases in point: The New Deal-created U.S. Housing Authority and its partner program, the Home Owners’ Loan Corporation (HOLC).

“The purpose of the agency was to keep homeowners from defaulting on their mortgages,” Moeser says. It carried out that plan by marginalizing less-desirable populations through a grading system plotted out on regional maps. The maps, conveniently color-coded, told lenders which homes and neighborhoods were worth saving from foreclosure.

“Each neighborhood would get a grade — grade A being the highest, grade D being the lowest,” Moeser says. “What’s very interesting — and this is true not only of Richmond but other cities as well — every single neighborhood that got a grade of D was African-American. This was irrespective of income.”

For example, one form used to determine loan qualifications in a poor, mostly black East End neighborhood in Richmond referred to the quality of the houses as bad for white

residents, but “fair for darkies.”

“A lot of people think the kind of racism we experienced here in Richmond was caused by Jim Crow laws,” Moeser says. “The federal government itself fostered racism. What we have today in large measure harkens back to what happened in the 1930s and after the Second World War. And even though today the laws have been … taken off the books, we’re still living with the consequences.”

The racial segregation of Richmond hasn’t changed much since the New Deal. In presentations, Moeser often displays the HOLC map of Richmond, showing its large concentrations of D-graded housing in the East End and North Side of the city, then overlaps the old map with a more current one showing income concentrations for the entire metro area.

The result looks like drops of ink dripped onto paper. The original poverty concentrations — and upper-income concentrations — are still where they were when the federal government did its surveying in the 1930s. The only difference today is that the borders have bled outward into the suburbs.

“The federal government really helped segregate American cities,” Moeser says, setting the pace for future land development in Richmond.

Only in the past decade are some of these long-established patterns beginning to break up. In Henrico, the county’s east end is seeing high-end development such as Rocketts Landing and the planned massive development at Wilton Farm in Varina. “That’s good for eastern Henrico County,” Moeser says, “but to what extent is it likely to break up the concentration of poverty?”

The rapid rise of housing prices in the city is also jeopardizing the more successful mixed-income communities heralded by Richmond’s Better Housing Coalition. For instance, the coalition’s Cary 2000 subsidized-housing project, an oasis of brick homes that replaced decaying row houses along East Cary Street, is now surrounded by the rising tide of increasing property values in surrounding neighborhoods. Those increasing values mean the project can’t continue to grow as initially planned, says Lynn McAteer, director of fund development and marketing for housing coalition.

“Now we can’t really afford to buy property in this neighborhood because values have gone up,” she says. “We are a victim of our own success.”

McAteer says federal and local policies have not only failed, but in some cases, have followed intentionally destructive courses in terms of fair treatment of racial minorities and the poor. They provide incentives for rebuilding but fail to follow through with policies, tax breaks or other measures that would help poor and low-income families get to stay in their communities.

“I think all those policies just laid the foundation for the situation you have now,” she says. “There was a very clear racial divide. All those practices were laid down and it’s been very difficult to undo that.”

And the turnaround is not likely tomorrow, McAteer says: “If you’ve got 25 years of segregated housing, you’re not going to just say ‘OK, let’s mix it up.'”

If there’s any consolation, the rising property values aren’t discriminating these days. It’s not only pushing out the poorest residents, it’s also pushing out young professionals, schoolteachers, policemen and other workers who once called Richmond home.

The rising need for “workforce housing” for middle-income professionals and families has become the topic du jour in the business community, which is a promising first step, Moeser says. If successful workforce housing initiatives can be put into place, the door may open for an honest discussion about the city’s concentrated poor.

There’s a certain elegant irony to the position in which David Herring finds himself. The property and programs director for the Alliance to Conserve Old Richmond Neighborhoods, Herring spends his workdays trying to match derelict but deserving old houses with people of financial means willing to invest in their repair.

“I’ve lived in my house in Church Hill for 20 years — I’m in the same boat as some of the people you’re talking about,” Herring says. “Another two years of property tax increases … I’m going to be hard-pressed to make my house payment. My escrow is approximately 27 percent of my house payment.”

In 1987, Herring paid $65,000 for his modest Victorian row house on Marshall Street. Built around 1895 as a middle-class spec house, it’s typical of Church Hill. His home is currently assessed at $223,200.

“I’m not saying the assessment isn’t fair,” he says, “I’m just saying, Oh my God, I can’t afford my house anymore.”

Still, he knows too that the very progress to which he may fall victim is necessary.

“If you don’t have your history and you don’t have the neighborhoods, what do you have? A bunch of empty parcels,” Herring says. “The history is gone and you can’t get that back, which is why we advocate so hard to save these things.”

At the end of the day, it should be government’s mission to save the people doing the hard work of rebuilding these neighborhoods — regardless of income, Herring says. “You can’t have no value, create value, and not expect people to be displaced,” he says of the situation. “It’s a civic responsibility that the locality has to make sure programs are in place to keep people in their neighborhoods.”

“I think we roll out the red carpet in the city of Richmond — millions of dollars we subsidize for businesses,” Herring says. “You’ve got subsidies for everybody and his brother who is a developer, but what do you have for the people who make this town work? I don’t know.” S

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