Repairing Neighborhoods - Rototilling Versus Sheet-Mulching

(A confession: I am not entirely satisfied with the piece I am writing this week, since some of the things I suggest here may require government intervention, and I think the government on all levels is probably not the wisest or most reliable partner in doing good at present. If anyone has any suggestions for how some of the suggestions in this post could be implemented without government help, feel free to share them.)

There are two concepts of neighborhood resilience nowadays, arising from two almost mutually exclusive views of our present and future economic, ecological and energy prospects. One concept defines resilience as the ability of a neighborhood to retain its property values and desirability as a real estate market amidst changing economic conditions in the larger world. An example of this concept is seen in a paper, “Foreclosure and Neighborhood Resiliency”(www.nw.org/network/training/upcoming/documents/foreclosure_paperFinal_Draft1_2_.pdf.), written by Michael Schubert of Community Development Strategies, a real estate development consulting firm. Another example of the same concept is an article, “The Bronx is Up” (www.manhattan-institute.org/email/crd_newsletter02-09.html), published in the February 2009 newsletter of the Manhattan Institute's Center for Rethinking Development.

According to the view of these articles, a resilient neighborhood is able to attract a high percentage of qualified owner-occupant buyers, and is able to quickly recover from foreclosures that happen in its midst, due to the general desirability of its housing and the attractiveness of other features, such as schools, restaurants, retail centers such as shopping malls, and other amenities. Such a neighborhood also makes a strong contribution to a city's tax base, and is an integral player in the official global economy.

Strategies for maintaining high property values include neighborhood associations and neighborhood involvement to maintain housing according to certain standards of appearance which have historically been associated with an image of prosperity, including things like well-kept lawns, ornamental shrubs, “acceptable” styling and color of housing exterior finish, and the absence of things considered to be “unsightly,” such as clotheslines. When foreclosures begin to happen in such neighborhoods, “resilience strategies” are suggested which include such things as neighbors maintaining adjacent abandoned properties and the aggressive marketing of the neighborhood and its vacant houses to new, highly qualified owner-occupant homebuyers. (Mr. Schubert's paper seems to imply that counseling families in trouble is less important than aggressive “recycling” of foreclosed or vacant properties to new, well-qualified buyers.)

But from time to time, even the best neighborhoods “fail” – the number of vacancies and foreclosures continues to increase, houses fall into disrepair, and property values and tax revenues decline. For those who view neighborhood resilience as the ability of a place to retain high property values, the proper approach to a failed neighborhood is redevelopment – either the expensive renovation of existing housing stock, or the demolition of existing stock to make way for new construction, which often consists of upscale condo's, townhomes, high-rises, or other high-density housing, along with nearby, conveniently-located new shopping and retail hubs, restaurants, health clubs and other “value-enhancing” amenities. The goal of this new construction is to restore the property values and tax revenues of a place to high levels.

It's easy to see why high property values are so important to many people nowadays, since for the last several years the American economy has been driven by an expanding bubble of debt backed by the use of real estate as collateral. This use of real estate required a corresponding real estate bubble, with housing prices that seemingly appreciated forever. Both bubbles are now collapsing, due to the discovery that America as a whole can no longer pay its debts, and that many Americans can no longer pay even the interest on their debts, let alone interest and principal. Our inability to pay is due to the collapse of our resource base (Peak Oil, peak minerals, water shortages, “peak everything”), as well as the fact that we no longer make enough material things of value in this country to finance our debts.

This means that the foreclosures that ravaged almost all neighborhoods in America are starting to ravage even the most upscale neighborhoods. Every day on the way to work I still pass by the same “Bank Owned” house I first saw two months ago in Lake Oswego. Lake Oswego, of all places! Another ritzy house near where I work has been vacant for nearly a year. There are also news reports of “rich” people in upscale neighborhoods who are now relying on pawnshops for emergency loans. In short, almost everyone is hurting and property values are collapsing. And there is almost no likelihood that anyone will be able to reinflate property values to their bubble heights ever again. There will soon be a lot of “failed” neighborhoods.

We therefore need a different concept of neighborhood resilience. Let's define resilience as the ability of the people of a neighborhood to take care of themselves and meet their needs without fear of displacement, in spite of stresses such as disasters or adverse economic conditions. According to that definition, most neighborhoods in America are not resilient. (In fact, not many middle-class or working-class households are resilient either.) The residents of most neighborhoods rely on a steady stream of income from the official economy in order to stay where they are (because they have to pay rent or a mortgage), and to buy their daily necessities. The threats to income posed by the present collapse are threatening the livelihood of these people.

Since the expense of housing is usually the biggest expense incurred by the people in a neighborhood, one way to increase neighborhood resilience is to reduce the cost of housing for families in a neighborhood. To this end, there are various governmental and non-profit groups working in the U.S. to provide affordable housing to low-income buyers, usually by building new, low-cost housing units for these buyers. I'd like to suggest a somewhat different approach, however, one which I touched on in my post, “A Safety Net Of Alternative Systems – Places To Live.”

There are three steps to this approach. First, there are now many abandoned houses in the U.S. Many of these houses are located in long-term “failed” neighborhoods in cities like Detroit, Cincinnati, Chicago and other cities listed in a recent Forbes Magazine “America's Emptiest Cities” article. The beginning of establishing resilient neighborhoods would consist of re-inhabiting these houses, since most of them are very cheap. Non-profit groups such as Habitat for Humanity could partner with city governments to buy these houses and repair them to a basic level, then sell (or give) them at a low price to low-income families.

Secondly, the non-profit groups could conduct “self-sufficiency” education programs for the new residents of these reclaimed properties. The goal of these education programs would be to teach residents how to be self-sufficient as individual households and how to set up local, low-energy economies heavily reliant on home-based industries, as well as systems of governance that met neighborhood needs. Such education might be patterned after the free classes offered during the neighborhood Portland Fix-It Fairs hosted by the city of Portland, Oregon's Bureau of Planning and Sustainability. Third, the city governments could grant extremely reduced property tax rates to neighborhoods that achieved a certain level of self-sufficiency.

There are also neighborhoods which until recently had been strong, yet are now starting to fail due to the collapsing economy. Foreclosures are starting to multiply in these places. For these neighborhoods there is a solution as well. First, city governments should “persuade” banks to forfeit to the city any bank-owned properties which remain abandoned or uninhabited for longer than a certain set time, such as nine months to one year. Such “persuasion” could be accomplished by continually raising taxes on these properties to cover such expenses as extra policing required to prevent vandalism, City resources required for upkeep of abandoned properties, and so forth. Once the city government owned these properties, it could donate them to non-profit groups with the goal of basic refurbishment of these properties in order to house low-income families. Large bank-owned properties such as McMansions could be turned into multi-tenant properties. The new residents would again be encouraged to enroll in neighborhood self-sufficiency education programs. Such an approach to foreclosure would also educate the banks to the realization that there's no longer a mathematical chance that they will ever get the payment they demanded, on the terms they once hoped for, for the properties they have repossessed, and it might make them far more willing to work with homebuyers who are now in trouble, though not yet in foreclosure. This would reduce the number of people being thrown out onto the street.

Trying to fix failing neighborhoods through redevelopment in order to “stimulate” the present official economy is like trying to start a garden by spraying and rototilling an existing grassy field. Much of the existing, beneficial life of the soil is killed in the process, and what's left usually needs lots of chemical additives in order to provide the fertility needed to grow useful crops. But building neighborhood resilience by making existing resources more affordable and educating residents in self-sufficiency is like starting a garden through the sheet-mulching method – where existing grass and weeds are turned into compost that enriches the soil and the existing life in the soil, so that the soil becomes naturally more fertile. We no longer have the resources to rototill our way to economic health. It's time instead for some sheet-mulching.