City Government's Role in the Community Development System

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Introduction and Summary of Findings

City governments play a pivotal role in helping community developers to revitalize low-income neighborhoods. Cities set local development priorities and allocate public funds to affordable housing and other community development initiatives. They decide whether or not to make community development corporations (CDCs) their primary development partners. And they oversee the disbursement of land, housing, and other city-owned resources. Rare is the developer that can move forward in neighborhood development without active city government participation.

The good news in this paper is that city governments, often criticized for their inefficiencies and thought to be resistant to reform efforts, can improve the way they carry out their community development responsibilities. Moreover, there are concrete ways in which national, state, and local funders and supporters of community development can encourage city governments to take steps toward streamlined and effective delivery of neighborhood revitalization programs.

This paper examines city government's influence on community development activities, principally as carried out by including community development corporations—community-controlled nonprofit organizations that develop affordable housing, commercial real estate, community facilities, and other projects. This influence is not exerted in a vacuum, but in a context of other organizations and institutions. During the 1990s, community development "support systems" emerged in many cities to channel money, expertise, and political support to community development. City governments are major players in those support networks, which also include other public, private, and nonprofit institutions across multiple sectors. Before such systems evolved, financial and technical assistance for CDCs was poorly coordinated. Today, as CDC support becomes more institutionalized, CDC capacity and production are increasing.

While all participants in the support system are important, city governments hold a special place. A 1998 evaluation of The National Community Development Initiative (NCDI), launched by a consortium of funders to advance CDC production in 23 target cities and now in its second decade as Living Cities, underscored local governments' importance to CDCs.¹ "Cities that worked most closely with CDCs showed the greatest community development gains," the report noted. By contrast, a hostile, disengaged, or marginally competent local government had a powerful negative impact on CDC productivity.²

To assess city government's role, this paper examines three questions:

1. What makes city government an effective member of the community development support system? In the best cases, what contributions can cities offer?
2. How do local governments get into the position of effectiveness? What combination of circumstance and action produces favorable results?
3. What can cities do to emulate those municipalities that demonstrate the most effective community development supports?

Notes from this section

1. Launched in 1991 through a collaboration of national foundations and corporations, Living Cities: the National Community Development Initiative has since that time committed more than $350 million to CDCs and the local institutions that support them. Living Cities has relied on two national community development intermediaries—the Local Initiatives Support Corporation and the Enterprise Foundation—to carry out the national program. For a comprehensive report on the first ten years of the initiative, see Christopher Walker, Jeremy Gustafson, and Chris Snow, National Support for Local System Change: The Effect of the National Community Development Initiative on Community Development Systems (Washington DC: Urban Institute, 2002).

2. Chris Walker and Mark Weinheimer, Community Development in the 1990s (Washington, DC: Urban Institute, 1998), p.10.

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

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.

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