DECENTRALIZATION ACCELERATES: HOUSING AND SLUM CLEARANCE BECOMES ECONOMIC DEVELOPMENT
During the New Deal, Herb Nelson and NAREB might as well have been in the middle of the Gobi Desert. It was his job to press for private housing solutions to inner-city revitalization and defense housing. He had better success with the latter. Nelson had argued for eminent domain/bond issuance powers associated with slum removal to go to the private sector; instead they went to public housers and wound up in their housing authority. The 1937 Housing Act, an unqualified victory for public housers, demonstrated business weakness in New Deal deliberations. By the late 1930s, with decentralization negatively affecting the CBD, the Building Owners and Managers Association (BOMA) entered the slum clearance/housing debate. BOMA provided Nelson what he needed most—a strategy to recoup policy leadership lost to the public housers.
Trouble Brewing in the CBD
The tale behind BOMA’s involvement was a decade in the making. During the 1920s the anchor of CBD retail, the department store, opened branches in suburban malls. This was worrisome enough, but in city after city downtown property values fell sharply even during boom retail years. Daytime population traffic, still the highest ever and retail sales at record levels, suggested loss of shoppers to the suburbs was not the problem. Downtown business elites believed that, no matter where people moved, they would shop, be entertained, work and spend their money downtown. In this “wishful thinking” vision, the car was downtown’s best friend, but downtown had to adjust physically (Fogelson, 2001, pp. 317–20). Better access, diffusion/traffic management and parking were the solutions downtown property owners advocated and pursued initially.
The Depression, however, was more concerning and chronic. Downtown property owners believed counter-measures were required—that CBDs:
would have to be at least as well organized as the outlying business districts … downtown business interests would have to form organizations devoted exclusively to the well-being of the central business districts, organizations of the sort that had already been formed in San Francisco and Los Angeles. (Fogelson, 2001, p. 234) So Oakland established its Downtown Property Owners Association in 1931, Milwaukee in 1935, Chicago and Detroit in 1939, and Baltimore in 1941. These ancestors of future Main Street and BIDs reacted to decentralization long before Levittown.
Downtown anti-decentralization initiatives included coordinated advertising campaigns to increase pedestrian shopping. Over-zoning surplus commercial space, excessive property tax assessments and stringent building/safety codes were also attacked. Downtown associations “grieved” property tax assessments, advocated for rapid transit and urged the construction of municipal parking garages. CBD property values, however, continued to fall. Worried about market and population dynamics, CBD property owners suspected decentralization:
was also “highly selective” … middle and upper middle classes were leaving the center [city]. But the lower classes made up in large part of ethnic and racial minorities, was staying behind … The central business district was losing many of its best customers, keeping many of its worst, and ended up surrounded by blighted areas. (Fogelson, 2001, pp. 231–2)
The worst fears of CBD advocates were confirmed by the 1940 census. During the prior decade, Boston, Philadelphia, Cleveland and St. Louis declined in population. Most of the Big Cities had only inched upward:
Of the ten largest cities in the nation, eight had either lost population or grown at a slower rate than the country as a whole … only Los Angeles could claim to be booming … After more than a century of rapidly rising population, growth of the leading cities, especially … northeastern … United States seemed to be coming to a halt. (Teaford, 1990, p. 10)
The Business Slum
The skyscraper-lined downtown, visible symbol of the metropolitan region, seemed a natural starting point to reverse decentralization. The visual appearance of most Big City CBDs by the late 1930s spoke for itself. Big Cities were visibly suffering from downtown “dry rot” and transition zones bordering downtown set the tone. CBD blight removal could not avoid adjacent neighborhoods, and so “blight” entered the urban redevelopment debates in Washington. The blight torch was mostly carried by NAREB and its newly formed research subsidiary, the Urban Land Institute (ULI).
To counter CBD decline the ULI focused on two key issues: (1) acquiring federal funds to leverage municipal revitalization efforts; and (2) designing a hybrid EDO, separate from housing authorities (closed to most elements of the business community, and not trusted), that included the private sector (real estate) and possessed required public powers. The ULI argument portrayed blight as the defining characteristic of the “business slum” and demonstrated the business slum’s link to the declining CBD. Through blight and CBD decline, the ULI redefined slum removal (and housing) in terms compatible with mainstream, chamber-style economic development. ED and CD increasingly saw themselves as enemies.
While the ultimate, bottom-line goal was to preserve CBD (central city) economic hegemony over suburbs, the intermediate goal was CBD revitalization, i.e. modernization. “Re-functioning” the CBD was in its early stages at this point. CBD modernization had been a central core of mainstream economic development since the 1880s. Not to be lost in tradition, however, is the ULI’s strategic reformulation which, in effect, set American economic development in a sort of Big City civil war with Progressives, public housers and community developers seeking not simply to preserve early success but to restart it—and mainstream economic developers seeking to garner what federal resources they could for their CBD/economic development program. While not totally zero-sum, an important dynamic was that future Housing Act legislation compromised between these two approaches, probably to the disadvantage of both. The tension that developed between the two ED approaches no doubt shaped post-1950 evolution of the profession in Big Cities.
The blighted business slum was a district-neighborhood, usually adjacent to the CBD, that needed to be removed, not on the basis of deteriorated housing alone (although that could be an element) but also because it had lost its value to the local economic base and stood in the way of the central city’s capacity to counter decentralization. ULI-conceived slum clearance attacked downtown blocks with deteriorated housing/commercial structures, especially the so-called “lung blocks,” “Bedbug rows” and “Whiskey Islands”: [The] concern was the business slum created by the Depression-induced collapse of real estate values and investments, high interest rates, low municipal revenues and weak profits” (Beauregard, 1993, pp. 86, 231–2).
The Housing Act of 1937 did not address these downtown properties—they were not eligible for federal funds. New York City, for example, had conducted a dozen slum clearing projects with and without federal assistance between 1935 and 1942, but only two were in Manhattan—half were in Brooklyn and a quarter in Harlem. Slum clearance in Big Cities created acres of low-income public housing projects whose resident disposable incomes would do little to reverse declining CBD sales. Slum clearance as defined in the 1930s offered little to those interested in CBD redevelopment.
What downtown business interests needed was therefore a form of slum clearance that would wipe out not the worst slums, but rather the run-down neighborhoods adjacent to the central business district, some of which strictly speaking might not even be slums. A form of slum clearance in which the slums would be used not for public housing for the poor, but for private housing for the well-to-do, high quality housing that would attract the upper middle and middle classes … [with] great purchasing power. (Fogelson, 2001, pp. 345–6)
But building housing for the affluent is never an easy case to make. It was, after all, not the function of the government to subsidize affluent housing. BOMA and downtown business leaders countered that the land in question was priced very, very dearly. Affluent housing could pay for itself in areas adjacent to the CBD. Low-income housing should be sited in low-cost city peripheries, as Mumford and Bauer argued. What’s more, appealing to planners, low-income housing was far from the “highest and best use” for the CBD. This argument also appealed to Progressive mayors tasked with finding revenues for budgets and services. Fiorello La Guardia, a deeply committed public housing supporter, supported the ULI position:
slum clearance was designed “to provide decent homes in decent neighborhoods for American families,” the process will frequently leave land that should be used for a variety of purposes, rather than housing alone, and we should turn to good city planning for a guide to what these uses should be, as well as for the general physical pattern according to which redevelopment should take place. (Fogelson, 2001, p. 356)
NAREB/ULI’s (1941) Housing and Blighted Areas Report catapulted these issues into the federal arena—and challenged any housing reformer hope that a successor Housing Act would follow lines set in 1937. Authored by Herb Nelson, the task at hand was to confront obsolescence of Big Cities, and that was beyond state and local resources— federal funds were an absolute necessity. The report called for a tri-parte federal/ municipal/private partnership that alone could amass resources, powers and expertise sufficient to take advantage of the automobile (Gelfand, 1975, pp. 114–17). Slum clearance needed to be “redirected” from public housing projects. Also necessary was an administrative structure whose powers, leadership and capacity would be sufficient for the task of CBD redevelopment.
To remedy the latter problem, the report called for the creation of “metropolitan land commissions,” representative of the community (i.e. business) and accountable to the municipality and its political leadership. The key element was the inclusion of “write down” that reduced initially high property values downward, allowing subsequent new construction after demolition. The write down cost, Nelson proposed, would be shared by the federal, state and local governments. In a stroke of brilliance, the NARED/ULI proposal required that redevelopment of cleared land conform to a “comprehensive plan” adopted by the municipality The linkage of slum clearance–blight-removal–CBD redevelopment with comprehensive planning proved vital in attracting the support of planners and planning commissions (peeling them away from housing reformers) and to the state courts in justifying the use of eminent domain for land ultimately to be transferred to private parties for private use (Gelfand, 1975, p. 116).
THE SCENE SHIFTS TO THE MUNICIPAL LEVEL
After 1942 public housing and CBD redevelopment legislation stalemated until 1949. FDR and the New Deal had long run out of steam. Republicans, intermittently in control of one or both houses of Congress, and World War II priorities assumed center stage. Between 1942 and 1945, three major legislative debates attempted to amend the 1937 Housing Act. They were unsuccessful. Others followed in the postwar period. They too failed. No consensus between public housers and the ULI could be found. Left to their own devices during these years, the story of slum clearance, housing and now CBD revitalization finally “decentralized” to the municipal level.
The Redevelopment Agency
The ULI metropolitan land commission definitively nailed the coffin of the pre-1937 limited-dividend corporation. A structural alternative was independently being adopted by several Big Cities in the early forties. Big Cities did not take the results of the 1940 census lying down; nor were they willing to wait on Washington to get its act together.
Cities, more precisely large corporate leaders, devised their own responses to blight and decline. The earliest and most watched local initiative was New York City’s.18
The first known instance of a “CBD redevelopment-like agency” originated from a 1940 proposal developed and advocated by the New York City Merchants’ Association.19 In April 1941 the legislature approved the proposal that authorized municipal powers to “take” and raze land in the slums and blighted areas, and to lease or transfer ownership to private corporations to build housing projects (for all income levels) on the cleared sites (Teaford, 1990, p. 27). By summer’s end, three states with the largest urban populations (New York, Michigan and Illinois) had authorized city governments to join with private enterprise in CBD reconstruction.
Each measure authorized eminent domain and bond issuance for the benefit of private corporations willing to invest in housing projects for all incomes. If the plans of a private corporation won the city’s approval and the developer had already obtained more than half of the property necessary for the redevelopment project, then the municipal government or its agent was authorized to use eminent domain and condemn the remainder of the holdings in the project site. The New York law also authorized cities to exempt local real estate taxes for ten years on any increase in the value of the property improved by the developer.20 During the war years, other states approved similar legislation: Maryland (1943), Minnesota and Pennsylvania (1945), Massachusetts (1946) and Ohio and Missouri (1949). Other enabling acts delegated non-housing redevelopment authority to public housing authorities: “Over the next four years [after 1941] thirteen additional states enacted basically similar laws. But little work actually resulted from this legislation. … The fatal defect of the laws was their failure, except in two instances, to provide any state subsidies for ‘write downs’” (Gelfand, 1975, p. 137).
Municipal redevelopment agency initiatives exploded in the postwar period. City after city established redevelopment agencies: Indianapolis in March 1945; Baltimore and St. Louis a few months later; Philadelphia in 1946. By the late 1940s almost all Big Cities had either established redevelopment agencies or turned housing commissions (in Detroit) or city planning commissions (in Minneapolis) into them (Fogelson, 2001, p. 366). Alexander von Hoffman reports that, between 1941 and 1948, 25 states passed redevelopment acts establishing a non-low-income housing redevelopment agency (Hoffman, 2000, p. 304). In the forties, this transition decade, the CBD-focused redevelopment agency, broke away from the slum clearance for low-income public or defense housing focus and moved into privately owned commercial property and housing for those not on low incomes. These projects were not eligible for 1937 Housing Act/Defense Housing funds and definitely outside the community development/public houser nexus.
Despite this flurry of activity, few projects went anywhere. Despite bond approvals, the complete financial package required to start a project was seldom assembled. Complexity inherent in implementing a very sophisticated series of actions was an issue. Also, many state supreme courts were fine with redevelopment agency authority exercise of eminent domain, but to lease/transfer the “taken land” to private parties was another matter entirely—and to transfer to private hands at “below market value” still another. As soon as a project commenced it was subject to a series of legal actions. Controversy followed—frequently paralyzing city councils and mayors. Contrary to today’s belief, local, ethnic and racial groups fought back with all sorts of action. States and state courts were inconsistent. The period between 1942 and 1949 was a mixed bag at best. Absent federal funds, most states and Big Cities couldn’t quite get it all together to commence CBD redevelopment. Few projects were even attempted; none were completed—except New York City and Pittsburgh.
Still, the period between 1940 and 1949 is critical to our economic development history. During these years one can examine four cities (Baltimore, New York, Pittsburgh and Hartford) and discern different paths. These very different paths found expression in other cities in later decades, and they demonstrate the remarkable diversity of something that came to be called “urban renewal”—the last phase of the 1920s’ slum clearance strategy.
The Baltimore Path
Baltimore follows a community development path. Its CBD-focused economic development will spin off only in the middle 1950s. In 1937 a voluntary organization, the Citizen’s Housing Council, was formed to monitor a Progressive-era housing ordinance “on the Hygiene of Housing” administered by the city’s Department of Health. Its focus, in an era of 1937 Housing Act slum clearance for public housing, was on the quality of neighborhoods, and housing in particular. In many ways this early private, voluntary, unstaffed organization bridged the transition from our “old style” community development to an early version of contemporary community development.
The (Housing Act) Baltimore Housing Authority was formed in 1937; in 1940 it opened its first public housing (Poe Homes). Ten additional projects were opened before the end of 1942 and two others before war’s end.21 There were 14 additional defense housing projects constructed during World War II (Williams, 2005, p. 99, Table 3.1). Baltimore, in short, followed a highly aggressive slum clearance/public housing program that in 2016 made the Baltimore Housing Authority the fifth largest in the nation. The Citizen’s Housing Council, however, moved in another direction. Concerned more with neighborhoods and their quality of life than with housing per se, it realized the Department of Health and the Ordinance on the Hygiene of Housing weren’t living up to hopes and expectations.
So in 1941 the Council expanded membership to include professional architects, planners and university professors, forming a new entity—the Citizen’s Planning and Housing Association (CPHA). Its purpose was “To foster good city planning, … better land use, … improve housing and living conditions … and correct urban decay … by means of research, public discussion, legislation, law enforcement.” It prioritized code enforcement, and its first major victory, in 1947, was the formation of a city housing court—the first known housing court in the nation (Lyall, 1982, pp. 21–2). A year later, it successfully advocated the formation of a Department of Planning charged with “mapping out a strategy for stemming neighborhood blight through … a master land use plan.” “For over a decade CPHA teamed with law enforcement and sanitation departments in a block by block, neighborhood by neighborhood effort to remove code violations, clean streets, and enforce the rule of law.” By the end of the decade it had achieved approval of the “Baltimore Plan” and had organized programs and neighborhood-based organizations in 104 neighborhoods.22
Neighborhood/housing projects ran into considerable difficulty in rather short order. The path-setting Baltimore Plan launched in 1945 by Mayor Theodore McKeldin coordinated city bureaucracies in a hopefully sustained joint program we today label “concentrated code enforcement of targeted neighborhoods.” Committees of neighborhood residents were established to ensure sustained housing rehabilitation, and a housing court empowered to enforce it (1947). McKeldin also founded the Baltimore Redevelopment Commission in 1945 (with CBD-focused powers but with no private membership) in which he housed the various city entities conducting elements of the Baltimore Plan. Selected blocks were designated for new public housing. Philadelphia (St. Louis and Detroit also) followed with similar style initiatives. By the middle 1950s all had either failed or exhibited serious flaws. The housing–neighborhood model generated more than its fair share of acrimonious conflict and public discussion: “At first, [neighborhood organizations] served as the focus of local self-help, clean up, and fix-up efforts; but gradually they evolved into powerful neighborhood improvement associations.” Worse, the Baltimore Plan yielded few permanent results; Baltimore’s suburban exodus was in no visible way ameliorated.
In Philadelphia as in Saint Louis, Detroit and Baltimore, a blitzkrieg attack by city inspectors and an aroused grass-roots leadership were intended to galvanize blighted communities and rid them of their worst features. Yet in one city after another community organization and rehabilitation campaigns produced disappointing results. In too many cases effective community organizations did not perpetuate rehabilitation projects … Without these external supports the programs generally collapsed. (Teaford, 1990, pp. 116–18)
By the early 1950s several CPHA business members sought a different approach, visiting Pittsburgh to see its CBD model. Upon return they organized a CPHA public forum that prompted elite CPHA businessmen, notably James and Willard Rouse, to form the “vault-like” Greater Baltimore Committee (GBC). In 1956, with the Housing Authority charged with “corruption and inaction,” a new entity, the Baltimore Urban Redevelopment and Housing Agency, merged with the Redevelopment Commission. Its first CEO, Robert C. Embry Jr. (a CPHA member), became a Department of Housing and Urban Development (HUD) assistant secretary in 1977. At that point Baltimore embarked on a formal CBD-focused urban renewal program, and its chief catalyst, James Rouse, went on to be economic development’s arguably most famous private developer. The CPHA survived these reorganizations and continues to this day as a well-respected, highly successful, city-wide, neighborhood-focused CDO.
Ron W. Coan 