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The Impact of Community Development Corporations on Urban Neighborhoods

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Document date: June 30, 2005
Released online: June 30, 2005

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Note: This report is available in its entirety in the Portable Document Format (PDF). (File Size: 2.89 MB)


Executive Summary

Government and private supporters of urban revitalization have increasingly relied on community development corporations (CDCs) to carry a major share of the front-line burden of improving poor neighborhoods. This research presents new evidence that these community-controlled, market-responsive development organizations can indeed spark a chain reaction of investment that leads to dramatic improvements to neighborhoods. Advanced econometric analysis shows that CDC investments in affordable housing and commercial retail facilities have led to increases in property values—the single-best measure of neighborhood improvement—that are sometimes as great as 69 percent higher than they would have been in the absence of the investment.

To achieve these results, CDCs did more than just develop projects; they also brought business people, civic organizations, nonprofit organizations, and public agencies into the neighborhood improvement process. New community vitality led to cooperative investment agreements by local business, public pressure to steer public and for-profit development in community-friendly directions, and self-help efforts to improve neighborhood conditions and create new opportunities for families. CDC-led citizen involvement helped create a better neighborhood; it also created, sometimes serendipitously, a new cadre of energetic and skilled leaders, able to seize further opportunities to advance neighborhood interests.

Introduction

Since the 1960s, governments and foundations have invested heavily in nonprofit community development corporations (CDCs) out of a conviction that CDCs are uniquely positioned to build the economic and social strength of poor communities. Unlike government agencies, CDCs are agile and opportunistic in pursuing revitalization. And unlike private developers, CDCs maintain strong links to their communities by involving residents in their governance and development activities.

Have the substantial resources invested in CDCs paid off? Almost certainly, CDCs have raised living standards for those who occupy CDC-generated homes and apartments or who work in businesses supported by CDC economic development investments. But CDCs aim to do more: their goal is to catalyze a chain reaction of neighborhood-wide improvement. This creation of a public, neighborhood-wide benefit is the litmus test of CDC impact.

In theory, this virtuous cycle of new investment comes about in three ways. First, CDC housing and economic development projects remove the sources of blight that drag down the value of surrounding properties. These investments also create amenities—such as new retail establishments—that increase property values. Second, their leading investments demonstrate the profit potential of the neighborhood to the wider marketplace, leading others to consider the neighborhood a good economic bet. Third, CDCs help organize the multiple and simultaneous investments needed to overcome the reluctance of any single actor to go it alone.

These programmatic activities almost always work better if they have the active support of neighborhood stakeholders. By involving community residents in the planning and implementation of development projects (both their own and those carried out by others), CDCs can ensure that development projects respond to community needs. By demonstrating citizen involvement in their activities, CDCs can stake a valid claim on financial, technical, and political support from the broader system. And by investing directly in organizing strong neighborhood and business associations, and in other types of community action, CDCs help people cooperate to achieve neighborhood improvement goals.


Note: This report is available in its entirety in the Portable Document Format (PDF).



Topics/Tags: | Cities and Neighborhoods | Housing


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