Backt a SICS

Susan J. Winterberg & Sean P. Bender

Introduction

At the heart of every city lies a market. Cities that suffer from disinvestment do so because there are common barriers to investment that prevent the market from developing. This paper describes seven principles that explain why urban revitalization projects work while others fail. These seven principles may not encompass every imaginable detail of every successful place. However, they form a reasonable model from which we can begin to not only understand revitalization, but also make it happen.

For many cities revitalization has become merely facade building. Such solutions give the appearance of economic health without ever addressing the llllderlying causes of disinvestment. While there is no "one size fits all" formula for revitalizing a city, this paper offers a strategic framework to help leaders critically analyze their ideas to determine whether or not a proposed project is 1 ikely to attract large seale private investment. We identify common themes in successful projects and common themes in projects that were not successful.

"Back to Basics': focuses on the social and

economic forces that are already at work in the city. Experience has shown that successful plans and planners are those that capitalize upon those forces to create new opportunities for urban reinvestment By focusing on the basics and applying the seven principles, city revitalization strategies are transformed from an abstract phenomenon into a clear and understandable process that can happen anywhere.

In this paper we will first identify ahandful of common barriers to revitalization, and then we will explain the seven principles of successful revitalization followed by complimenting case studies. In its closing this paper will leave you with the pitfalls of the revitalization process and methods on how to avoid them.

The Seven Principles of Successful Revtilization

Respect the city's hierarchy of needs

Address old before new

Assemble a critical mass

Use streetscaping and aesthetics

Allow the market to work

Capitalize on the city's unique assets and

opportunities

Develop and follow a strategic plan

2

The Barriers of Revitalization

Creating a revitalization project that is able to attract reinvestment into a city first requires that existing barriers to investment be identified and removed. Such barriers can come in a variety of forms including impractical zoning regulations, rigid building codes and property tax structures that encourage disinvestment and land-hoarding. Sometimes projects implemented with the intention of revitalizing a city can themselves become barriers of investment through the excessive use of public subsidies and eminent domain.

Eminent Domain as a Barrier

Eminent domain has been a widely used tool ofplarmers and the "reformers" of our nation's cities for over a half century now. Urban Renewal, interstate highways, sports stad.iwns and a multitude of other conunon urban redevelopment projects have depended heavily upon the forceful taking of private property for implementation. The implications of the widespread use of eminent domain are incredible, as can be seen by taking a closer look at the city of Cincinnati.

Since 1960, downtown Cincinnati has seen billions of dollars in public investments through highway developments, stadiums projects, and other significant economic development schemes_ At the same time, the downtown area has seen tremendous losses in every category of private enterprise. Even further, downtown population has declined by over 55 percent since 1960, from over 12,600 persons to just tmder 5,000 persons in 2000. (15)

The efforts, when compared to the results, are dumbfounding. Since 1 960, public investments have built highways cormecting the downtown to the entire region and super-region. The City has built three stadiums; the latest two will cost two billion dollars when paid for. The City has a] so built, and expanded, a downtown convention center, and is currently considering yet another expansion

estimated to cost 200 million dollars. (4)

In most, if not all ofthe aforementioned efforts the government's right to take property for public investments has weighed heavily . Over the past forty years City, County or State govermnents have come to consume as much as fifty percent of the property in downtown through purchase or the

The Distortion of the· CBD Real Estate Market

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use of eminent domain. Some of the property was taken for redevelopment purposes and has been recycled into the market, while a large percentage remains in public hands for purposes as parks, highways, and stadiums.

The demographic analysis of downtown Cincinnati shows that the aforementioned investments, and the use of eminent domain as a tool for their implementation, have not improved the CBD. Since 1960 downtown has lost 420 of 595 retailers. It has lost 118 restaurants, 30 hotels, and hundreds of other small enterprises, industrial outfits, and professional practices. Even further, it has lost close to 8,000 residents. ( 15) Often, the properties claimed by eminent domain contained

businesses and residences that despite compensation closed down or relocated outside of downto"W!l or the City. In the case of the stadiums and highways, thousands of properties were taken, while in some of the "smaller" efforts entire blocks have been cleared. In the case of more than one development, property has been taken twice or more through eminent domain.

Even further, the widespread use of eminent domain bas drastically impacted property values in Cincinnati's CBD. Since 1960, as much as 50 percent of the land in the CBD has been owned, purchased, or forcefully taken by City, County, or State governments. In a dozen recent eminent domain

Attrition in Downtown Cincinnati

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cases in downtown Cincinnati, government agencies have paid an average of over 1.5 million dollars per acre for seized properties. Those same properties had an average pre-seizure market value of just over 63 7,000 dollars per acre. With such a large economic force consmning properties at above market rates in a concentrated location, an artificial, if not monopolistic, condition is created thus destroying the markefs ability to operate without further government involvement.

The use of eminent domain, in corn bination with Cincinnati's big ticket revitalization efforts has led to fruitless results. Small businesses struggle for existence, with hundreds disappearing from the downtown. Larger businesses have seemingly grown dependent upon subsidies and other governmental assistance, often threatening to leave the downtown if their demands are not met. Downtown Cincinnati has incredible access to super-highways, state of the art sports complexes and arts venues, a major convention center, dozens of high rise towers containing over ten million square feet of office space, and thousands of hotel rooms. However, the overall demographic data suggests that it is anything but an economically or socially vibrant place. Despite over two billion dollars in public investments in the CBD over the past half decade, City leaders continue to struggle with maintaining and improving the economic and social vibrancy of the downtown. (4)

Source: Some Proposals to Revitalize Our Community

Business Subsidies as Ba.rriers

Many public leaders assume the reason the urban core is disinvested is because govennnent subsidies are required to bring investors to the city. To this end, cities have poured billions of dollars into subsidies to attract and maintain businesses in the downtown. Cincinnati, for example, recently pushed a plan to subsidize Nordstrom Department Stores to locate within the CBD. Within this plan the city offered nearly 60 million dollars of subsidies to develop and maintain the store for an undetermined number of years. In addition, the City cleared half a block (containing a 15 story tower and garage filled with offices and lower scale retail) and paid millions to relocate numerous existing businesses. Ultimately, N ordstrorn pulled out of the deal due to market conditions and the City still has an empty block near its most vital CBD properties, and is in the process of clearing part of another block to relocate a displaced drug store. (17)

Cincinnati has developed a track record of subsidies that stretch beyond the Nordstrom fiasco. Saks Fifth Avenue, across the street from the failed Nordstrom site, was recently granted 6.6 million dollars to refurbish the interior of its not quite 20 year old facility. The latest subsidy also restructured previous subsidies originating from 1996 and the early 1980's when the store was first constructed as a part of a larger development. ( 1 7)

Across the street from the failed Nordstrom site is the infamous

the 1980's half of a city block containing a department store and offices was cleared for a new high rise mixed use development. Several portions of the mixed use high rise fell through due to low demand for office space and the project was halted for nearly a decade. In the mid 1990's theprojectfmally came to fruition as a three story facility containing Lazarus, Tiffany's, Brooks Brothers and a restaurant. (20)

Other cities have tried the subsidy approach to attracting investment back into downtown and have been met with similar ambiguous, if not disappointing results. The City of Detroit has also invested billions in taxpayer dollars over the last three decades in an attempt to revive their downtown. In 1977 the city embarked on what was to become the epitome of failed revitalization attempts with their investment in the Renaissance Center, a complex oftubular office towers and retail space on the Detroit

riverfront. Financed with a combination of corporate and city money, the Renaissance Center was designed with the intentions of creating a renaissance in a city that was plagued with riots, racial tension, uncontrolled arson and vandalism and among the highest rates of abandonment and suburban flight in the country.

The project cost $3 57 Million in 1977. During its first five years it ran at an operating loss of $130Million(9). Now, twenty-five years later, and after the city has built numerous other attractions including a new opera house, a people mover (an elevated monorail built around downto\\111), and two new stadiums, Detroit's population is still declining. Further, the city still remains among the highest rates of abandonment, crime, and poverty in the nation, and among the lowest in downtown property values.

FountainPlace West Development. In 5th & Race Streets Cincinnati, site ofthefailed Nordstrom project

Sports Stadiums as Barriers

Almost every major city in America has built a "renaissance center" of their own with the promise of a magical transformation of an abandoned and largely under utilized do\Mltown into a bustling twenty-four hour community with new places to shop and places to eat. During the last decade, one of the most common forms of these "renaissance centers" has been the new sports stadium. However, the ability of such a project to attract investment into nearby neighborhoods is highly questionable.

With increased pressure from teams to relocate if their host city did not provide them with newer and bigger facilities, cities across American have scram bled to win over public support, levy taxes, and issue the debt necessary for the hundreds of millions of dollars required to provide sports teams with their new facilities. In an effort to raise public support, studies were commissioned indicating that investment made on the new facility would be recovered multiple times over by increased jobs and towi.sm. Further, as was claimed by many stadium supporters, and most recently by supporters of the new Yankees stadium that was to be built in the Bronx neighborhood ofNew Y ark, the stadium when combined with other large city investments such as the expansion of a nearby convention center, would serve as a catalyst for reinvestment in the nearby neighborhoods (23 ).

It is true that sports stadiums do attract a certain number of new

businesses aroWid them (a few bars and restaurants~ souvenir shops, a hotel or two). (23) However, their total economic impacts appear to have been grossly overestimated. A 1997 study conducted by the Brookings Institution titled Sports, Jobs and Taxes examined the proposed economic impacts of new stadiums in cities across the country includingBaltimore,NewYork, Twin Cities, Cincinnati and Cleveland and their actual results. The research team found that reports commissioned by cities or sports teams intended to persuade public opinion on the construction of new stadium facilities have incorporated a variety of methodological discrepancies including equating new spending with spending diverted from other locales within the city, attributing all out-of-town spending as being related to the sports stadium regardless of the reason of the visit, as well as a number of manipulations in calculating the multiplier effect, ignoring the opportunity cost, additional infrastructure costs and negative effects of applying the taxes to the stadium. After considering the various studies, the Brookings Institution concluded that sports stadiums did not significantly promote the economic development of a metro}X>litan area, did not significantly assist in maintaining the vitality of an urban center, nor did they promote micro-enterprise development within a small defmed district of the city. In fact, the overwhelming consensus of these studies revealed that «the local economic effect of a sports facility is between nonexistent and extremely modest." (18)

Large Investment Total Impact

On the whole, large public investments have proven to be an ineffective method to revitalize a city. However, this should not be interpreted as building such projects is wrong, or that cities ought not prioritize the building of stadiums and other fonns of entertainment or retail venues if it is the voters' will to do so. Rather, such evidence indicates that claims that these large public investments will attract people to live in the city and spark large scale reinvestment into dilapidated neighborhoods is illlproved. There is clearly a significant degree of popular support for the public financing of stadiums, retail and office complexes, and other public projects as can be inferred from the wide scale political support and proliferation of such projects across the coillltry. However, while citizens may support the use of their tax dollars to finance such projects, it appears these projects do not provide a sufficient economic incentive for these same individuals to relocate their residence or to invest in the areas surrounding the project in the form of property ownership and micro·enterprise development.

Here a distinction arises between what is merely a "drive-in attraction" and what is a true revitalization project. A drive-in attraction is a development that may attract individuals to visit the city a few times a month or a few times a year (for example, to see a sports game or a play or to shop at a particular retail center) but carmot by its own merit entice a significant number of individuals to locate their

residence in the urban center or invest in property O\\lllership there. These projects are typically designed to cater to loyal suburban dwellers, some of whom, research bas revealed have a fear of the city ( 11 ) . These attractions target suburban visitors by providing them a drive· in controlled environment divorced from the rest of the city.

A true revitalization project, in contrast, raises the livability of a city as well as the economic attractiveness of investment there. While what one might call a drive-in attraction certainly does add value to a city, it cannot, by its mere presence, transform a neglected and abandoned downtown into a desirable place to live. The challenge then becomes developing a method by which leaders will be able to evaluate whether a proposed revitalization project will become only another drive-in attraction or a project actually capable of bringing investment back to the city.

Foutain Place West, Downtown Cincinnati

The Case for Revitalization

Revitalization and economic development are two terms that are frequently used interchangeably. While there are many overlaps between the two concepts, there are some clear differences that must be understood before attempting to evaluate a revitalization project. Economic development is the process of building upon and expanding the economic base of a city. While economic development is critical for the long-tenn health of any metropolitan region, it must be understood that the economic development process cannot be equated with the revitalization of the inner city. Increasing the number of companies located in the downtown, the number of jobs, or even attracting higher paying jobs to the downto\\TI is no guarantee that the city will experience increased livability or reinvestment in the form of property ownership. Such a paradigm of revitalization can be seen in the all too common "office slums'' in American cities that become abandoned after 5 p.m. and on weekends. While increased economic development may not be a reliable method to revitalize a city, there is evidence to suggest that revitalization can play a significant role in increasing a city's potential for economic development.

In recent years the economy has gone through a transformation from being focused on manufacturing and production to one that has been focused on the setvice sector and on knowledge-based or information age products. Subsequently, business location is becoming less dependent on the local geography, on the availability of natural resources, waterways and pools of cheap labor. Instead

businesses are now able to locate virtually anywhere they choose, free of the typical constraints of geography. (8) This has meant new opportunities for vast wealth creation in certain areas of the country, able to attract these high paying jobs including most notably the Silicon Valley/ San Francisco Bay area, the Research Triangle of North Carolina and Boston. Many other cities have launched campaigns in an effort to attract these types of companies. Some have been successful, while many others have not. It appears that the over all quality of the living experience in the city itself plays an important role on a city's ability to attract these new forms of economic development.

In a 1997 study conducted by the Real Estate Research Institute, information age companies from across the country were interviewed and asked to describe the process they use in making site selection decisions for their company. Among the factors they considered were typical economic factors such as local property taxes, income taxes, cost of office rents, and cost and availability of land. However, the most important criterion in site

selection was "quality of life." The primary considerations of quality of life companies were seeking (and hence their potential hires were seeking) were good housing options, easy commuting, and overall visual attractiveness of the place. Secondary factors under quality of life were access to public institutions such as libraries, museums and sports venues (19).

I terns such as housing options, quite naturally, vary depending on the individual's preferences, his income, and the needs particular to the current stage of his life. For some employees good housing options may mean suburban style housing. For others (particularly young new hires who the company is trying to target with their location) good housing options may mean rental or condominium style housing in an urban setting (8). In any instance, a boarded-up downtown is not an attractive selling point for any potential relocation. Thus new strategies are needed to address the decaying core of the city.

While increased economic development may not be a reliable method to revitalize a city, there is evidence to suggest that revitalization can play a significant role in increasing a city,s potential for economic development.

8

Getting Back to Basics

At the heart of every city lies a market. Cities that suffer from disinvestment do so either because there are barriers to investment that prevent the market from developing, or because the private sector has not yet discovered an opportunity to develop profitably in the city. Most often, these two scenarios find their basis in a lack of understanding about the city, in the basic social and economic forces already at work there and in a lack of understanding of the potential to capitalize on these forces to create surplus value.

The Market Based Strategy

The market is the lifeblood of the city. Whether it be a market for housing, a market for commercial space, or a market for goods and services being offered by the city's entrepreneurs, a successful and balanced marketplace is both what keeps a city going and what makes it attractive to potential residents and potential new sources of business.

Yet policy geared towards the economic revitalization of a city is often divorced from this basic principle. Elected officials in City Halls often vote on appropriations to developers and retailers without any real consideration for whether a market exists locally for such products or whether their policy initiatives will be an effective attraction for further investment in the city. Revitalizing a city is a complex process, but it is based on basic principles of economics and sociology. Before attempting to construct a revitalization program, leaders must first have a solid understanding of the local market, in

particular the local residential market. Leaders must come to accept that the city is not the most desirable living arrangement for many people. However, there is a market for city living. It is those people that live outside the city, but show an interest in city living that should be targeted with revitalization initiatives.

Marketing firms that research trends for real estate developers use a statistical tool called lifestyle cluster analysis in identifying market opportunities for urban housing. This technique, which involves conducting market research on individuals who live outside a city's urban core, but show a strong affinity for the urban environment (a gee-demographic group termed "suburban urbanites") identifies what the determining factors were for these clusters of the population to choose to live outside the city.

Research in various metropolitan regions has revealed the choice was based on factors such as easy availability of parking, security, and increased privacy (11 ). Having gained this type of information specific to their own region, real estate developers and policy makers are then able to target their products and their initiatives based on the real market potential of their city.

The Seven Principles of Revitalization

Once the city's demographic trends and potential market opportunities have been identified, it is then necessary to find ways in which to capitalize upon these opportunities. Aga~ the city is a complex envirorunent. Yet its complexity derives from a few basic social and economic principles. For the purpose of evaluating a proposed revitalization program, the following seven principles may be used as a guiding framework for identifying opportunities to capitalize on the market potential in the city.

Respect the City's Hierarchy of Needs

In the 1950's, psychologist Abraham Maslow developed a theory about hwnan motivation. In Maslow's theory, all humans are motivated by general categories of needs that can be arranged in a hierarchical pyramid. On the base of the pyramid was the need for basic physiological survival such as food and shelter. On the next level was safety, followed by social belonging. On the higher levels include such needs as the pursuit of esteem, entertainment and high aesthetics. One's ability to be motivated by higher level needs is ftrst dependent on his lower level needs being met. Thus, one who is starving, lacks shelter or is constantly running away from a~als threatening his life will have no time or interest in learning about golf or abstract art.

A city is nothing more than a society of individual humans. And like individual humans, cities too have a hierarchy of needs they must advance upon over the course of time if they are to become strong

economically healthy habitats for their individual human beings. Cities that are abandoned, and have experienced serious disinvestment are suffering on the lowest levels of the hierarchy . When one approaches the problems of the city in the context of revitalization and attracting residents and other investment back to the city, he must begin where the city currently is on the hierarchy and work upwards.

When approaching revitalization projects, it is important to keep in mind that while luxuries like new stadiums and cultural centers can add value to a place that is already a great place to live, they cannot, by their own accord, make a city a desirable place to live. The reason is simple. For a city to be livable, it must have the basic necessities we need to live. It must have a variety of housing options. It must have easy accessibility to food markets and restaurants. Once these

needs are met, it must offer a feeling of safety and then have a variety of places for people to work and e~ money. Then. it must have a vanety of entertainment options and be aesthetically pleasing.

Just as we as individuals cannot pursue our need for high aesthetics or entertainment ifwe lnck more basic needs like food, shelter, and safety so is a city not an attractive habitat if it has only these higher level needs present. Cities that have experienced revitalization have targeted their policies and their financial resources towards addressing these more basic needs first, such as reuse ofthe salvageable abandoned housing and places of business, and incentives for starting small consumer-directed businesses such as grocery stores, small shops and restaurants as well as implementing strategies to reduce crime. Ifthis can be accomplished, the natural market will take care of

The Urban Socitrpsychological Hiearchy of Needs

Address Old Before New

There is an old saying that three things matter when it comes to investing in real estate-location, location, and location. Yet there is a tendency when thinking about revitalization to focus only on getting new buildings built and to completely ignore the "location," that is the condition of the existing properties in the city!

Tax credits and other subsidies will be provided for new construction, while everything else is left to rot. This may seem hannless on the surface, but for most cities, this ends up being their fatal flaw. Despite the widely held belief that matters relating to urban vitality are the responsibility of elected officials, revitalization happens primarily by investment from the private sector, and the role of the public sector is reduced to a bare minimum. To make revitalization successful, one has to be able to think like private sector investors and understand their interests and effectively address them in the planning process.

Investors in real estate are looking for opportunities to increase the value of their properties. Real estate derives its value from two sources. A bui I ding derives value first from itself-its materials, its design quality, its size. Yet a significant amount of its value derives from what is around it, it's "location" and the amount residents or businesses are willing to pay to locate themselves where that building stands.

Obviously. identical buildings in uptown Manhattan and in a dilapidated Detroit neighborhood do not have similar

The Detroit Opera House & the Ruins of the Madison Theatre (By Lowell Boileau)

market values! New construction can be subsidized, but if the condition of the buildings around it are in such a state of disrepair, ultimately, the value of the new building will be brought back down.

Successful revitalization takes advantage of the "location" source of value of real estate and targets existing buildings frrst. If it can be made feasible to bring back what is existing, then the area as a whole will become desirable and investors of new construction will come of their own financial interest.

Assemble a Critical Mass

Real estate development in dilapidated neighborhoods is a high-risk business. Rehabilitation costs of existing buildings can greatly exceed acquisition costs many times over and the probability of residential

Vine Street - No Critical Mass

developers fmding buyers and businesses fmding a large enough customer base is highly uncertain.

An investor's ability to earn a reasonable return and hence his willingness to invest in the project is dependent almost entirely on the property values around him rising and the neighborhood coming back as a whole. If one person goes into a dilapidated neighborhood of 100 buildings and purchases one bui I ding and rehabilitates it, the chances of the value of the building ever rising enough for him to recover his investment are slim. Similarly a housing initiative implemented without taking care ofbusiness owners' needs or a corrunercial district revitalization plan implemented without a housing plan to provide customers can quickly become a recipe for disaster. This "spot revitalization" approach does not work. A critical mass of investment in both residential and commercial properties must be established at one period in time to bolster confidence in other investors that their investment will be worthwhile.

Consider the case of two Cincirmati streets shown in the pictures below. The street on the left is Vine Street. A sole entrepreneur has purchased this solitary building and rehabilitated it. It is surrounded by dilapidated buildings and tax-

Main Street- Critical Mass

foreclosed properties. Just two blocks east is the picture on the right, Main Street. The buildings on Main Street were once in a very similar condition to the buildings on Vine Street. However, in the mid 1990' s a group of local developers worked together to buy out entire blocks of the street at one time. The rehabilitated building shown in the picture of V in~ Street has an assessed market value of $30 per square foot after its rehabilitation. The remainder of the buildings on the block have an average value of $16.77 per square foot. In contrast, the average value of a building on that same block of Main Street just two blocks east is $56.75 per square foot(22).

Critical mass can make or break a revitalization attempt both in terms of making a project financially feasible and in terms of making an area of the city feel safe and be an attraction to potential customers and residents. Use Streetscaping and Aesthetics

Good aesthetic treatment of the surrounding spaces is one of the easiest ways to boost the desirability of an area. Whether it be the gracious squares and towering oaks lining the narrow streets of Savannah or the interesting street furniture, lamp posts, and sidewalk designs of the

Waterplace Park, Providence (Before) (By Sandor Hobo)

new urbanism commwrity of Seaside, Florida, aesthetics plays a powerful role in raising the desirability of a place and in increasing property values_

Investors who Wlderstand the economic power of aesthetics realize the difference that simple investments such as burying utility lines, planting new trees, narrowing streets, planting medians in boulevards and successfully designing the zoning and design guidelines for infill construction can make on the success of a city.

Allow the Market to Work

Many public leaders assume that subsidies are needed to attract businesses to locate in the city. To this end city governments have subsidized high end retailers, shopping malls, and other commercial entities in an effort to compete with suburban shopping centers. Often times, these appropriations are made as a result of political pressure with no real consideration to whether a market actually exists for the businesses being subsidized. What normally happens in the long run, is that the

city became no longer able to subsidize the insufficiently profitable entity or it reprioritizes its allocations elsewhere. In most instances, their investment was lost almost totally lost. In addition to being ineffective in revitalizing the city, this approach has proven quite costly both to the taxpayers and to the developer. ( 17)

Successful revitalization utilizes the most powerful economic force in existence-the free market. City and private investment is targeted towards helping new businesses get started and existing businesses expand. However, the choice of what these businesses are is left for the local marketplace to decide. The burden of understanding the market, and making the strategic business decisions about what types of goods and seiVices should be offered is transferred away from policy makers in City Hall, and into the hands of individual entrepreneurs who will ultimately bare the accoWl.tability for the success or failure of the business. Successful revitalization is not an effort to create an artificial market, but instead to help stimulate a market that does exist and that will be able to exist on its own in the future without further public subsidy.

Use the City's Unique Assets and Opportunities

Successful revitalization is not a result of any one formula but instead of taking advantage of the unique opportl..Ulities present in one given place. Cities that have had successful revitalization projects were able to identify unique opportunities for investment in their community such as unmet housing needs for demographic groups that have an affmity for city living-young people, the elderly, immigrants, artists, small business owners. Projects are selected based on market research and local demographic trends rather than speculation about who might be interested in living in that particular city and what that group's needs are.

Further, successful revitalization requires utilizing existing resources and existing stores of leadership talent unique to a particular city. Successful neighborhood revitalization efforts have been led by for-profit developers, mayors, city council members, citizen groups, and historic preservation non-profits alike. Who is leading the efforts is not so important as the ability of those leaders to leverage talent and resources where they already exist, and bring leaders from public and private organizations together to work towards common goals. Every city has unique opportunities for reuse of the downtown and existing stores of leadership within its stock of elected officials and organizations that can coordinate activities and act on these opporttmities. Whether a

city is revitalized or not depends on the ability of leaders to find these opportunities and work together in a timely fashion to act upon them.

Develop and Follow a Strategic Plan

Revitalization is a many step process, however there is no faster way to guarantee failure than to take a step-by-step approach. Implementing individual projects (small business loans, housing plans, aesthetic improvement plans, etc.) although they may be good projects, cannot be successful when implemented sporadically and without the guidance of an overall long-term plan.

The objective of all revitalization planning must be to attract a large number of private sector investors. To do this, a critical mass must be established and individuals' must have their confidence boosted that entire neighborhoods where their property would be located will come back. There is no worse message to send investors seeking to decrease the amount of WlCertainty in their return than random city appropriations. With no long term plan in place, investors cannot feel confident that the commitment to bringing the neighborhood back is there for the long haul. Such random acts on the part of city government send a message to private investors that says revitalizing that area is yet another one of their many current ideas, and that next year they might very well reprioritize to focus on something else and leave them hanging. Further, there is no strategy in place for

investors to evaluate for themselves or to present to their stakeholders to boost their confidence that the neighborhood really will come back.

Strategic plans are needed to jump-start investment efforts, but long term, they wi11 also prove to be crucial to a city's continued success. Everything in the city is interconnected in a giant jumbled web. If some aspects of the city are able to be brought back up, while others are weighing it back down, ultimately, the city as a whole will come back down. If dwing your revitalization process you displace large numbers of people into worse conditions, or if you have a poor school system, or poor environmental planning, all of your other efforts can be brought back down.

The plan helps you prioritize your efforts as your work your way up the hierarchy of needs. But it also serves the purpose of integrating everyone's interests into one picture. Cities without these types of plans in place can become easily fragmented as special interest groups compete for political power and resources without any real consideration ever given to the quality of the urban environment as a whole. The planning process, when properly done, brings these special interests together and causes people to see them selves as interconnected, and understand their group's success as being dependent on the success of others. Having strong political and citizen support for a revitalization project is crucial for its success, and the strategic plan is the document that demonstrates how everyone is a stakeholder in this process.

The Seven Principles in Practice

All successful revitalization projects have multiple aspects to them and involve partnering with numerous public and private institutions. While no single template can guarantee success anywhere, certain principles can be extracted on how to best integrate the many aspects of the planning process and what roles each partner needs to play. A variety of innovative and creative solutions-far too many to describe in detail in a report of this size-have been developed by city governments, non-profits, real estate developers, and citizen groups alike that have been able to lift the barriers of investment in their city and bring back residents and large scale investment into the urban core.

Developing a successful revitalization program requires that leaders are able to construct a revitalization partnership of multiple organizations and develop roles and responsibilities for each of the revitalization partners. Effective solutions for each of the main partners of govenunent, for-profit and not· for profit leadership are described in this section along with a description of a few city's successful revitalization programs and the principles that can be attributed with their success.

Effective Uses of City Government

The role that city government plays in the revitalization process varies from city to city. In some situations the mayor or city council members have spearheaded revitalization efforts, implementing the stages through the operations of the city government In other places,

revitalization efforts have been led by private or non-profit groups. and leaders from city government were brought in as partners in the planning and implementation process. The most important principle that must be kept in mind, regardless of who is leading the efforts, is that city government must be 'treated as a partner in the revitalization process, and not as the sole provider of funding, ideas, and other resources.

When the revitalization efforts are being led outside City Hall, public leaders need to be approached from the earliest planning stages to gage what type of political and other fmancial support might be available to supplement the privately led efforts. Effective advocacy and public education of the project also play an important role in gaining the political support needed to gain city· backing of the efforts.

When the revitalization efforts have been successfully led by elected officials then several key changes usual1y have been implemented in the organizational culture of the city government. The most effective of city governments tend to operate more like private organizations than like the government services monopolies that they are. They have visions and mission statements, along with specific goals, plans and timetables for achieving those goals and clearly defmed accountability (See Case Study: Transforming City Hall). (24)

Such cities also tend to have customer service high on their list of priorities. For city leaders this means fmding ways to slash red tape and create an organization whose culture is entrepreneurial and focuses on attaining quality outputs as well as reducing costs. The city of Portland,

Oregon has been particularly successful in its efforts to create a customer-setvice oriented culture.

The city began its efforts with a competition to develop a motto for the city government. The winning motto, "The City that Works," was then plastered onto every city vehicle and other publicly visible items. To live up to their new title, the city continually encourages individual departments to develop new initiatives to slash red tape and improve customer service. The goals and results of the departments are published every year in a document available for all citizens and other city employees to review (5).

The most critical success factor for city governments leading revitalization programs though has been including private sector investors in the revitalization planning and decision making process. The political process, particularly as it relates to matters of economic development or revitalization, has a tendency to become easily divorced from the real issues and needs of the private sector developers and businesses. To help alleviate this tendency. cities need to create initiatives to include the feedback of local business owners, property owners and developers into the economic development decision-making process to ensure that the steps the city is taking are indeed lifting current investment barriers and are facilitating private investment back into the city.

Case Study: Transforming City Hall

This case study demonstrates how changes in the management philosophy and organizational culture in city government can help facilitate private investment in a city.

When Mayor Tom Menino took office in 1993 he found himself faced with the same problems that affect most major cities including decaying neighborhoods and crime. Mayor Menino began his administration by establishing a few simple priorities that were to guide every decision that is made by the City of Boston including: reviving neighborhoods and business districts. ensuring that the public schools can give each student the education he needs and deserves, creating more housing working people can afford, and building quality of life (16).

These priorities then translated into specific action plans with overall and intermediate goals. To avoid the inevitable delays in implementation, reasonable deadlines were set for each phase of a project to be completed. For example, in the city )s three year housing plan one long term goal was defined to be to create 2100 units of city-assisted affordable housing. An intermediate goal was set to have all 2100 units identified by June 30,2001 and the long-term goal for completion was set for June 30, 2003. Further, a person within the department was established as being accountable for meeting the goals (12).

Housing and economic development programs designed by

the City were based off local demographic trends and market research. Further, to ensure his policies were meeting the needs of private sector investors, Menino established a Mayor)s Advisory Panel of local developers and other private citizens who advise him and his staff on how city policy can better facilitate private investment in Boston. Facilitating private investment remained a: top priority throughout the various programs implemented by the City and city employees were continually encouraged to find new ways to attract private investment through their initiatives.

To help minimize the ineffective use of revitalization funding by non-profits> property owners and developers, Boston minimized its use of direct subsidies and instead focused on making matching grants and helping property owners and businesses achieve fmancial sustainability. Rather than subsidizing unprofitable entities, the City helped establish a network of twenty -one neighborhood Main Street non-profit organizations that provide technical assistance to small businesses and make grants and loans for fa~ade improvements and rehabilitation. Homeowners and property owners seeking city fmancial assistance are either offered low interest loans or are required to raise matching funds through other sources in most programs before they are eligible to receive city funding.

Boston has also developed several programs to find new uses for '(dead assets)' including an aggressive marketing campaign for the private sale of city-owned abandoned properties and a program

to shut down drug houses and resell them to frrst time homebuyers.

By basing their initiatives on facilitating private investment, complemented by having a clear set of priorities with a market-driven strategy and implementation plan for achieving their goals, Boston has been able to bring life back to all twenty-one of the city 's neighborhoods, has reached a thirty year crime low, and has become one of the top places in which to Jive and locate a business in America (14).

Effective Uses of Public Policy

For public policy to be an effective tool in revitalization, it must be enacted within the context of a strategic market-based plan. The goal of public policy as it relates to revitalization is to facilitate the private sector in making investments into the community. 1bis requires that policy makers have an understanding of what investors needs are, and how existing legislation can be modified and new policies can be enacted to better serve their needs.

Yet public policy can itself also be considered an investment. Mayor Vincent Cianci, while speaking of the revitalization of Providence, Rhode Island described the approach to policy he has used during his two and half decades in office as a strategic investment of public funds. In the revitalization of Providence's downtown core, officials had passed legislation exempting artists living in the downtown area and o\m.ing galleries there from paying state sales and income taxes (See Case Study: Creating a Critical Mass of Private Investment). On the surface such an exemption might have seemed arbitrary. However the move was strategically calculated, and when combined with the city's other revitalization programs, became a catalyst for the city's transformation. For each dollar the city Jost in tax revenues from the artists, the Mayor calculated, they would get back many times over from the resulting boost in hotel taxes, restaurant taxes, and other sales taxes from tourism, conventions, and new businesses

that moved in as a result of the downto'Ml coming back. It was a win-win situation for all involved (3).

Making effective use of public policy requires that elected and city officials leave their offices and go out and meet the citizens, business owners, and real estate developers and learn about their needs. There is no greater expert about what the city needs to improve than the people who live there and have invested interests there already. Sometimes there are barriers to investment that public policy can relatively easily overcome such as modified building codes for rehabilitation, zoning changes, or new sources of gap financing. Other times far more collaborative solutions will be needed beyond this, as was the case in Providence. In any situation, engaging current and potential investors, and fmding ways to work together towards mutual goals is where effective public policy begins.

Case Study: Creating a Critical Mass

This case study describes how public policy can be used to create a cn"tical mass of private investment in a disinvested urban neighborhood in a manner that is able to attract other outside investment.

Once a thriving and wealthy 19th century seaport, Providence fell into a state of decay in the post-World War II era like many other U.S. cities. In the 1970's and 1980's Providence's downtown was largely abandoned. Then in the early 1990's, city leaders realized they had a great opportunity. The city was home to one of the nation's fmest design schools: the Rhode Island School of Design, and culinary schools, Johnson & Wales University. Many young people who were graduating from these schools chose to stay in the Providence area. However, there was a lack of suitable housing for them.

Realizing that young people starting out, in particular artists, liked inner city living, the city realized it had an opportunity to bring back its abandoned downtown. In 1996, legislation was passed exempting artists living in the downtown area from paying state income tax and from paying sales tax on the sale of their artwork in downtown galleries-quite a nice incentive to a young, starving artist! They also offered a generous 30% state tax credit on top of the 20% federal tax credit to developers willing to purchase existing buildings and significantly rehabilitate them. A non-profit group, the Providence

Preservation Society, also started a revolving loan fund from a combination of city and private funds to help developers acquire and rehabilitate abandoned properties.

The result was the Downcity Arts District. The artists began moving into the newly renovated galleries and upper floor loft apartments. The critical mass was then established. Seeing that the area was becoming a chic and artsy place to be, other residents, as well as restaurants and other places of business soon moved in.

Providence also took great care to ensure that the streetscaping and public spaces in the city were of the highest quality. In 1995, a local architect was hired to uncover the city's two rivers that had been buried beneath pavement for the last 50 years. They built small arching bridges over the river and landscaped walkways the length of the river throughout the downtown area. Just five years later, do\\l!ltown Providence has risen to an 89% rental occupancy rate and property values are still rising (21 ). In 2001, Money Magazine awarded Providence with the title "Best Place to Live on the East Coast." The city is currently implementing its aggressive marketing plan to compete for corporate relocations with nearby Boston, whose office rents are two to three times higher. By targeting city and state legislation towards attracting existing demographic profiles with an interest in the inner city, and creating an environment that was not only financially attractive to private investors but also aesthetically pleasing and safe, Providence has been transformed from an old industn"al town to one of

the best places to live in America in less than a decade.

Commercial Disctrict Revitalization

Creating a successful commercial district, like any other aspect of revitalization, is dependent on assembling a critical mass of investment. This includes both critical mass of other businesses as well as critical mass of customers.

Creating strong commercial districts is essential to the health of any city. Yet in a time of increasing competition from big-box suburban retailers, small businesses face an enorrnous number of challenges just to survive. Having a do\VntO\\TI commercial district that is successful requires that business owners have a clear plan for how to compete in the local market and that their businesses can become sustainable over a short period of time without subsidiest.

Forming the critical mass needed to sustain a commercial district often requires collaboration among small business o\\-1lers and other public and private groups in the city. One model for commercial district revitalization that has yielded great results is the National Trust for Historic Preservation's Main Street Program.

Main Street Programs all use the same four-point strategy for commercial district revitalization that includes forming collaborative partnerships among the public and private sectors, expanding the districts existing economic base by helping current businesses become stronger and recruiting new businesses, improving the physical appearance of the commercial district, and promoting the district to current residents, investors, and visitors.

r·.~ain Street Four Point Commercial District

Revitalization Strategy

Organization: Bu:lc ,....;g consensus and c.ooper at1on anx.1r1g put·lrc: and pr vate gr:)ups and rndi'v'iclua:s. Jnd idt:nrifylnp sources of fundmg f:x re·/it;:;~>izatlon activ·::ies

Design: Ennancmg the d1stnct"s physical appeat·anc:e thrcugr--; bLJildin:;; tehabilitat;on. cornpatt1ie ne\•V construc:ion, ;::;ublic: imprO\:ernents. and design mana·;Jetrlen: systerr1s

Promotion: r,/arketin;] he commercia' distl1c:t throu~ni events and advertismg to attact custot:1ers, potenta: rn-...:estcrs ne,.-,,. businesses residents. and v1srtors

Economic Restructuring: Strengt'lenin~ the a~str·icts economic base anc cr·eatng neN opportunities tnrough CcHeful

nalysrs and aprxcpr1ate mixed-use de\.:e·rop;nent

Over 1600 comrn unities across America have Main Street Programs. Main Street has become one of the most successful economic development models in the nation, leveraging on average $3 9.22 in new investment for every dollar of comnnmity investment. (2) Most participants in the program are small to\\-115, however, the program has been used successfully as part of a comprehensive plan for revitalization in larger cites. The first City to implement a city-wide Main Street Program was Boston. Boston Main Streets is a city-initiated program that is implemented locally through non-profit organizations in each of the city's twenty-one neighborhoods.

The program began in 1995 with a citywide competition in which four districts were selected to receive funding for the program. Each district received technical assistance and intensive training from both the City of Boston Main Streets Office and the National Main Street Center in the four-point economic development strategy and in non-profit organizational management. Each Main Street organization then hired a full time Executive Director, raised matching funds, incorporated their organization and implemented its program according to an annual work plan. Districts selected in the competition received six years worth of city funding to help start their organizations. The program expanded over the next five years to include twenty-one Boston neighborhoods. Programs are managed locally in individual neighborhoods but all twenty-one programs are overseen by the city's Main Streets Office, which facilitates the exchange of information and ideas among the organizations.

The program focuses on helping small, usually sole proprietor or family owned businesses by making grants and loans for starting up, building restoration, and fayade improvements. They also sponsor seminars on starting and managing small businesses, as well as a number of district promotional events such as festivals and historical tours. The program is funded largely through city money and federal grants, but includes a Corporate Buddies program, to encourage large corporations in Boston to become fmancially committed and involved with improving the quality oflife in their city. Corporate Buddies are partnered with a Main Street neighborhood organization and commit $10,000 a year for a four-year period towards that organization' s operating expenses as well as providing technical assistance and resources such as office equipment (1).

During the program's first five years of existence from 1995-2000,356 businesses were created or expanded, 2555 new jobs were directly created, 203 storefronts were revitalized, and 349 businesses received technical or design assistance. The truly amazing part though, is that the City only spent $7.5 Million of public money and an additional $1.7 Million of privately raised money to make it happen (2).

One of the most common myths about revitalization is that increased economic impact is directly proportional to the amount spent in revitalization projects. Yet as Boston, and the more than 1600 communities nationwide that have experienced successful commercial district revitalization have demonstrated, it is the opposite case that is true.

Successful commercial revitalization is not a result of big ticket public projects, but instead a result of minimizing city investment to the level of gap financing, improving overall aesthetics and infrastructure and creating an environment fuat is favorable for private entreprenems to create and expand their businesses.

Boston Main Streets (Courtesy of Boston North End)

Housing & Revitalization

Market Rate Housing

Similar to successful commercial revitalization, for a market-rate housing plan to be successful, cities must learn to avoid the tendency to directly subsidize developers and instead work on fmding new ways to stimulate the local market In many cases, additional incentives have been needed either to attract interest in investing in the city or in making projects financially feasible. In such cases~ cities have successfully assisted by providing gap financing. Gap ftnancing is a fmancing of last resort though, and developers must provide proof that they have exhausted additional fundraising efforts through lending institutions, equity investors, federal grant and loan sources and tax credits.

Perhaps the most successful and widely used method for providing gap fmancing is the revolving fund. A revolving fund is a fund nonnally held by a non-profit corporation that may combine several revenue sources including privately raised funds, corporate gifts, and city appropriations. The fund may be used as equity or as low cost debt for a project that othetwise would be fmancially infeasible. Some revolving funds also purchase existing buildings, contract out the rehabilitation~ and then sell the building to a private owner. In all instances, the proftt earned from the investment is revolved back into the fund and is reinvested into other projects.

Like all good investment ftmd, revolving funds must have strategic investment criteria used when evaluating potential projects. Many revolving funds invest only in the rehabilitation of existing buildings. Further. they usually limit the geographic area they will invest in at one time to one particular neighborhood of a city to help establish a critical mass of investment. and increase the desirability of investment there for other private investors. Further. they limit their investment to a certain percentage of total funding sources to maintain a minority stake in the project.

Investment decisions are made by a committee of usually 6~ 10 people including neighborhood residents, and local professionals with expertise in real estate, architecture, law, and banking/ fmance. The organization employees one executive director, and depending on the size of the fund, a small staff. Cities as diverse as Providence, Pittsburgh and Charleston have successfully used revolving funds as a part of a comprehensive strategic plan to successfully revitalize entire neighborhoods.

Numerous other successful programs have been established to help current homeowners improve their property and new homeowners to fmd a suitable home within the city and fmance it. The City of Boston Homeworks Program, for example, offers low cost loans and grants up to one third of the total cost for homeowners to make exterior improvements to their home and property that will have a positive visible impact on the neighborhood. The City also operates Boston

HomeCenter, a one-stop organization for homeowners and home buyers offering courses and information on financing and how to purchase a home in a Boston neighborhood.

Market rate housing development, whether for rehabilitation or new construction, needs to be based in local market researc~ and cities must learn to resist the temptation to directly subsidize housing developers. Instead, financing should be limited to gap fmancing after all other potential funding sources have been exhausted, and even then, the city should be a very small stakeholder in any given project. If local public funds are going to be allocated to housing developers, the most successful method has been to channel the money through a fund that combines funding from other privately raised sources. Allocations of funding should be made on the basis of a set of strategic criteria which seek to raise the attractiveness of an area of a city to private investors to such a level that ftnther public investment will no longer be needed.

Affordable Housing, Gentrification & Displacement

Affordable housing is a critical part of any city's revitalization plan. In the past, affordable housing has been ignored during revitalization planning and was left to be the problem of the federal government and local slumlords outside the boundary of interest. What often resulted was cities with areas of high concentrations of poverty, interspersed with highly gentrified areas.

To avoid future blight and disinvestment in neighborhoods and future flight from areas being targeted for revitalization, low income housing needs to be acconnted for from the beginning stages of the revitalization process. There are two general rules for making affordable housing a successful part of the city's revitalization process. First, it must be deconcentrated, and dispersed among middle and upper income market rate housing. Second, it needs to be similar in appearance to nearby middle income housing to decrease the stigmatism and resulting disinvestment that is created from low income housing (6).

Affordable housing is also an important tool for helping current residents prevent nnwanted displacement in neighborhoods prone to gentrification and massive rent escalations. When properly structured, affordable housing options can also be used to help people of modest means become homeowners and build wealth.

Developing affordable housing in blighted neighborhoods has proven problematic in many places though. Converting existing

housing stock into below-market rate housing provides a substantial challenge to developers. Even with gap fmancing sources and other federal subsidies such as the Low Income Housing Tax Credit, many other factors can outweigh the rehabilitation of existing buildings for large scale new construction. The overall cost of construction of units is often greater in rehabilitation projects than in new construction where the construction can be standardized. Developers that seek rehabilitation projects for affordable housing also report difficulty obtaining the Historic Tax Credit because of the failure of their project to meet the "economic substance" clause for the credit in the IRS code (13).

Further, affordable housing projects that involve rehabilitating existing structures are more difficult to attain critical economics of scale. Rehab projects are usually much smaller in scale, are less predictable, have more stakeholders, and require more administration and property management, all of which adds to the costs of the developer (13). A recent study published jointly by the National Trust for Historic Preservation and the U.S. Department of Housing and Urban Development titled Barriers to the Rehabilitation of Affordable Housing discusses these challenges in further detail and proposes changes in policy at the federal level to encourage the rehabilitation of affordable housing and reduce unwanted displacement during the neighborhood revitalization process. Several key changes will be necessary in federal housing policy and in the tax code before

rehabilitation becomes a more viable means for affordable housing.

In the mean time, several solutions have been developed at the local level to successfully incorporate affordable housing into rapidly appreciating neighborhoods. In many places, the need for subsidized affordable housing is a result of zoning restrictions that prohibit market-driven affordable living arrangements (1 0). Under the asslUllption that permitting affordable living arrangements decreases neighboring property values, many cities have outlawed such affordable arrangements as boarding houses, single room occupancies, subdividing single family homes into apartments and other owner-occupied rental arrangements like basement and garage apartments. However, such arrangements, in addition to decreasing the need for housing subsidies, provide numerous other benefits including decreasing the concentration of low-income housing, allowing people of limited means to live in clean, safe neighborhoods as well as providing income to homeowners who otherwise may not be able to afford the mortgage payments on their horne.

Successful city or housing authority projects have used a similar strategy of reducing the concentration of affordable housing units. Stanley Lowe, Director of the nationally respected Pittsburgh Housing Authority described the key to successful affordable housing as being individual choice. The poor have the option in living in practically any neighborhood of Pittsburgh that they like. However, the number of units in any given area

is determined by the housing authority (14). Pittsburgh's Housing Authority also seeks opportunities to create value in neighborhoods throughout the city by redeveloping "white elephants" into affordable housing units. (7)

Revolving funds have also proven to be useful tools in providing affordable housing in middle income neighborhoods. By leveraging funds from private fundraising and city appropriations, as well as negotiating with banks, and attracting some volunteer labor, non-profits have played a powerful role in significantly reducing the purchase price of rehabilitated structures and reducing unwanted displacements in rapidly gentrifying neighborhoods (See Case Study: Balancing Revitalization with Gentrification and Displacement).

Above all else, for affordable housing to be successful it must be included it in the early planning stages. If affordable housing is not addressed as a priority from the beginning, after the local housing market begins to take off, it can become considerably more challenging to make such projects feasible.

Case Study: Balancing Revitalization

This case study describes how revolving funds can be used to encourage private reinvestment in low disinvested neighborhoods, while preventing displacement and helping low-income residents become homeowners and build wealth.

While the rest of America was busy razing their neighborhoods in Urban Renewal projects during the 1950's, Charleston was fighting to save theirs. What resulted in the decades that followed was one of the most desirable ten blocks of real estate in America. Charleston became

an inspiration to other civic leaders across the country, and its revitalization models developed in the 1950's became the basis for many more recent plans

Charleston had its share of problems though. The city, like so many others, has suffered from generations of racism and austere social class segregation. During the 1950's revitalization, the city's poor, large]y black

population, was uprooted from their homes in what would become multi-million dollar town homes and moved into housing projects on the outskirts of the historic districts and into other highly distressed once middle class historic neighborhoods . What resulted was a city ofvery highly priced homes next to disinvested poor communities, and almost no middle class housing. Community leaders wanted to fmd a way to provide opportunities for middle income residents to live in Charleston, while at the same time improving the condition for the city's current lower income residents.

The result was a new use of an old project caned The Neighborhood Impact Initiative. A local non-profit organization, Historic Charleston F otmdatio~ had a then twenty-year-old revolving fimd for the purchasing of distressed buildings. They used the ftmd to acquire a building, contract out the rehabilitation, and would then sell the building in the ever~appreciating Charleston housing market and reinvest the profit back into their fund. (26)

HCF saw a unique opportunity to use their fi.md for another pur-pose-to stabilize low-income communities, prevent unwanted displacements, and help people of modest income become homeowners and build wealth. The foundation moved into a moderately abandoned, highly distressed low-income cormnu-nity and began acquiring build-ings. To prevent displacement, they placed a stipulation that the person who would buy the building from the foundation would have to be a current resident of the neighborhood. To he] p reduce the purchase price of the buildings, the foundation did private fimdraising, partnered with local banks, worked with a local building crafts school for the carpentry and required their buyers to invest "sweat equity" by painting, and completing other work on the building.

The foundation's presence in the neighborhood was the critical mass needed to attract other investors to develop other buildings into market rate middle income housing. Further, the city got involved to help with general aesthetic improvements of the neighborhood. By reducing urban decay, and improving the opportunities for residents of modest means, Charleston has made what was already a great place to live even better.

Citizen Participation How to engage citizens in the

plarming decision-making process and to what extent to include their input is an issue of much debate. For the purpose of implementing a successful revitalization plan in a disinvested neighborhood, having citizen support for the project is absolutely essential. Yet often times, finding a consensus among citizens about their neighborhood's priorities and long term goals can prove quite trying.

Such was the case for one Pittsburgh community development corporation, who when trying to conduct sessions on creating goals for improving their neighborhood, discovered that most people only wanted to complain about very localized issues pertaining to their own property what was immediately surrmmding it (14).

Rather than let such localized concerns and personal issues hamper their efforts, the group was able to take that feedback and use it to solve some of the city's most serious problems. Citizens participating in the sessions were given a map of the city and were asked to produce a credit report. The participants were given two markers of a different color. In one color the participants were asked to color in areas they believed to be good credits for the city. In the other color, they were asked to fill in areas they believed to be bad credits for the city.

Credits can be interpreted in a variety of ways, for example where you feel safe walking by yourself. Common patterns among the participants can reveal where the city's greatest assets and sources of personal ownership and investment

are located and also where the biggest problem areas are.

During the exercise, the session leader noticed that one abandoned building kept getting marked bad credit. He asked the participants why they had marked that particular building a bad credit, and they explained how that was where one group of drug dealers would often hang out. Having learned this information, they were then able to contact the police and have the problem eliminated.

There is usually no one who knows a neighborhood better than the people who live there and 0\\11

property there. While the average citizen may not be overly concerned with city-wide issues and long term plarming decisions, one would be hard pressed to fmd a group of residents who doesn't have a complaint list a mile long for their own immediate area of interest. An effective session with neighborhood residents can teach planners important information about the social dynamics of the city that the best of research efforts cannot.

By engaging people where their interests already are, and asking them to provide feedback and take action on issues that are already important to them, people can feel personally invested in and subsequently supportive of the revitalization efforts.

The Pitfalls of Revitalization

Revitalization is by its very nature a comprehensive process. It is also a complex process, with factors impacting its success or failure coming from many organizations as well as by constantly changing social and economic conditions. In addition to the aspects just discussed of city government management, public policy, commercial districts, market rate and affordable housing and citizen involvement, many other factors must come together in a timely and cohesive manner including education, transportation, and public safety before a disinvested city can be transformed into a place that is attractive to residents and private investment.

Because revitalization is a complex process, sometimes what may seem to be relatively minor issues can easily bring down years of efforts. Leaders who have successfully led revitalization efforts in communities across the country have described several common pitfalls that can bring do\\11 or significantly delay the revitalization process, and the remedies that can be used to avoid these pitfalls.

Pitfall: Unfocused revitalization efforts Remedy: Strategic plans with cost-analysis

The easiest trap leaders fall into when making decisions about revitalization projects is to lose focus in their efforts and believe that because they are spending large amounts of money in the name of revitalization that they are somehow improving the livability of the city. The remedy for such a tendency is to have all their efforts grounded in a mutually agreed upon strategic plan.

The strategic plan for revitalization is comparable to a business plan for a private organization. It lays out who the partners are in the revitalization process, and what each partner has committed to do. It describes what the funding sources are for the efforts and in what manner they are to be spent. Most importantly, it lays out the strategy for the revitalization. It details local market trends and the specific opportunities the revitalization efforts will target. It provides a timetable for how the efforts will be strategically implemented. Efforts or other spending should not be diverted from the strategic plan. If circwnstances have changed, then the plan itself needs to be revised and new efforts should be incorporated into the long term perspective with an explanation of why this is now the more desirable route.

The goal of the revitalization process, ultimately, should be to improve quality of life. Because high quality of life means something different to different people, having a city that has an overall high quality of life means there must be a diversity of options available (3). Housing options and shopping options must be able to serve a diversity of income levels and tastes. Further, the city must be accommodating to car owners and non-car owners alike.

This need for diversity must also be incorporated into the performance measures for the efforts. For example, a revitalization program should not measure its success merely on the number of new jobs or the number of new housing units created, but also on the diversity of jobs and housing

created as it relates to the city's current needs. Other perfonnance measures commonly used by successful revitalization plans include the amount of private investment leveraged, the number of new business (small or family-owned) created or that received teclmical assistance, the number of storefronts revitalized, increase in building occupancy rates, and increase in property values.

While high quality of life is the end goal, cost analysis plays an important role in making decisions that are realistic and fmancially feasible. Every program has a price and those creating the strategic plan should consider their options to see if the same goals can be met by a less costly method.

Pitfall: Non-profits who do not follow through with projects after receiving city financial assistance Remedy: Require matching private funds far city appropriations to non-profits and make the process competitive

Cities that have had persistent problems with their non-profits not following through with projects in an effective or timely manner need to find ways to make their appropriations process more competitive and results-oriented. Require organizations to raise matching funds from businesses and private donors to receive appropriations. The organizations will be forced to demonstrate desirable results to attract private charitable donations from a pool of many other environmental and social organizations. (For example, the Boston Main Streets Program, which

requires their non-profits to raise matching funds before getting their operating funds money from the City.) Another effective method for dealing with appropriations is to channel it through an intermediary like a revolving fund. The revolving fund, which may be open to for-profit and not-for-profit organizations alike should have clear project selection criteria. The Providence Revolving Fund, for example, has applicants compete on the basis of how their specific project will become a catalyst for further investment in the city. Such criteria forces developers to become more creative in their methods and focus on overall neighborhood quality to obtain government money for their projects_

Pitfall: Hesitant investors Remedy: Consistent show of interest in their needs and actions that assist them

Often times when large concentrations of buildings remain vacant or in a persistent state of disrepair, it is because there are economic or legal barriers present Engage current property owners in the neighborhood as well as other developers who have considered investment there and gather an understanding of their reasons for not investing or not making improvements to their property_ If it is more profitable for current owners to leave their property in its current state or if potential investors determined they could not make a sufficient return on property there, then try to understand why that is the case, and develop specific remedies to tip the scale in the other direction for them. For example, perhaps

certain zoning regulations make good business models impossible or impractical rehabilitation codes drive costs up too high.

Citiesthathavelong histories of unfocused revitalization efforts may also encounter skepticism by investors to the city's interest in them. They may believe (and with good reason) that the city's intentions are not real, and that the city may change political hands or reprioritize their projects next year and abandon their needs. Building the trust of investors is critical before any real change can start to happen. If past city policy has been a cause of investment baniers then plans to correct such activities must be made clear in the strategic plan_

Make investors a central part of city policy_ Form a mayor advisory panel where investors needs are directly considered in all relevant policy decisions. Most importantly, the city must regain its credibility with the private sector_ If a few well known, successful developers can be convinced to get on board, other developers as well as individuals will have their confidence levels raised in the potential for success of the project and will be more willing to get involved.

Pitfall: Inertia in City Hall Remedy: Outsource certain activities

It must first be noted that activities related to the planning and implementation of revitalization efforts have been successfully led by non-profit groups and other arrangements outside of the city government directly. Even when the most motivated and capable leaders are in office though, inertia can still be enconntered within the city

government Public leaders must know what their city government's core competencies are, and know when the most efficient or effective way to deal with an issue would be to delegate it to another partner in the revitalization process. Most city governments will find that their core competencies lie in the areas of providing certain public services (24). They may fmd that while they are quite good at providing water service and maintaining city parks, that their staff and their organizational culture is ill-equipped to run a successful real estate investment ftmd. In these situations, leaders must have the savvy to recognize that this task would be best handled elsewhere, and delegate it to be the responsibility of another organization_

Pitfall: Long delays in the planning process Remedy: Only invite people capable of making the decision to the table

The revitalization plarming process requires partnering with multiple government offices as well as with mnnerous non-profit agencies and developers. The planning process can easily get tied up for extended periods of time while one partner is trying to get a decision approved through the many layers of bureaucracy in his organization_ Therefore, it is critical that the people who sit at the planning table are in a position of power to make the decisions for their organization that need to be made (14}

Pitfall: Conjlict3 qf interest among revitalization partners Remedy: Look for a win-win situation

Whenever dealing with people from multiple organizations with different interests and limited resources, conflicts are inevitable. At times. the partners may fmd themselves in situations where there seems to be no solution. One technique for resolving such situations is to first describe a situation that is win-win for alL Once the group is able to articulate what this 'Win-win situation looks like, then go back and fmd ways to utilize your resources or leverage new resources in such a manner that everyone ends up better off (14).

Concluding Remarks Revitalization is inherently a

complex process that requires cooperation across multiple organizations. No single model or single formula can be guaranteed to work for every city. However, having a fum understanding of the basic social and economic forces already at work in the city and being able to effectively identity current baniers of investment and potentials for new opportunities and address them in a timely and constructive manner can help leaders make decisions that will lead towards reinvestment in their city.

Many models, as well as legaJ and financial tools have been developed by cities across the country to effectively address neighborhood and downtown disinvestment issues. Beyond those just discussed, several other methods

are being tested by cities and many more exist that are well established and proven models for revitalization. The challenge to explain these revitalization methods~ which are often highly case specific, in general economic terms that can be applied to cities everywhere remains an important challenge to leaders in the revitalization and community planning fields. The persistent creativity of the many citizens and organizations that consider themselves stakeholders in the quality of the urban environment, combined with a renewed love for city living offers much promises to American cities in the twenty ftrst century.

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Special Thanks to Robert E. Manley; Manley, Burke & Lipton LPA; and our many supporters through this initial endeavor.