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Has one CDC contributed to the gentrification of its neighborhood?

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Title:
Has one CDC contributed to the gentrification of its neighborhood? a case study of west Denver's NEWSED
Creator:
Sanchez, Debra Renee
Place of Publication:
Denver, CO
Publisher:
University of Colorado Denver
Publication Date:
Language:
English
Physical Description:
108 leaves : ; 28 cm.

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Subjects / Keywords:
Community development corporations -- Colorado -- Denver ( lcsh )
Community development, Urban -- Colorado -- Denver ( lcsh )
Gentrification -- Colorado -- Denver ( lcsh )
Lincoln Park (Denver, Colo.) ( lcsh )
Baker (Denver, Colo.) ( lcsh )
Genre:
bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

Notes

Thesis:
Thesis (M.A.)--University of Colorado at Denver, 2001. Political science
Bibliography:
Includes bibliographical references (leaves 104-108).
General Note:
Department of Political Science
Statement of Responsibility:
by Debra Renee Sanchez.

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University of Colorado Denver
Holding Location:
|Auraria Library
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All applicable rights reserved by the source institution and holding location.
Resource Identifier:
47916884 ( OCLC )
ocm47916884

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Full Text
HAS ONE CDC CONTRIBUTED TO THE GENTRIFICATION
OF ITS NEIGHBORHOOD?
A CASE STUDY OF WEST DENVERS NEWSED
B.A., University of Colorado at Denver, 1996
A thesis submitted to the
University of Colorado at Denver
in partial fulfillment
of the requirements for the degree of
Master of Arts
Political Science
2001
by
Debra Renee Sanchez


This thesis for the Master of Arts
degree by
Debra Renee Sanchez
has been approved
by
(o ~ 8' o l
Date


Sanchez, Debra Renee (M.A., Political Science)
Has One CDC Contributed to the Gentrification of its Neighborhood? A Case Study
of
West Denvers NEWSED
Thesis directed by Professor Tony Robinson
ABSTRACT
Americas inner cities have faced two crisis, disinvestment and gentrification. The
non-profit community development corporation (CDC) aims to stabilize the inner
cities from disinvestment, abandonment, and decay while preventing gentrification.
The CDC is no longer a grassroots, protest movement, rather it has evolved into a
conservative institution that operates harmoniously within the capitalist system.
This study examines historical movements and trends that lead the reader to believe
that the CDC is largely influenced by the political economic climate. The purpose
of this thesis is to determine whether or not NEWSED, a CDC located in the heart
of West Denver, has stabilized the La Alma/Lincoln Park and Baker neighborhoods
from further decline, while avoiding gentrification or is NEWSEDs ability to serve
the neighborhoods structured only by the surrounding political economic climate?
This abstract accurately represents the content of the candidatess thesis. I
recommend its publication.
Signed
in
Iny Robinson


ACKNOWLEDGEMENT
A heartfelt thanks goes out to the Graduate School and the Political Science
department for the opportunity. Lucy Ware and Anna Sampaio, thank you for your
time, comments, and suggestions. Tony Robinson, what can I say, words cannot
express my deep gratitude for your patience, understanding, and assistance over
these last five years.


CONTENTS
CHAPTER
1. INTRODUCTION.................................................1
Definitions and Characteristics of the CDC................2
Breakdown of the Literature Review........................7
The Three Fundamental Players of the CDC.................7
Overview of the Chapters..................................9
2. GOVERNMENTS ROLE IN URBAN AFFAIRS .........................12
The 1930s: the Beginnings of Government Intervention.....14
The 1940s: Slum Clearance and Community Development &
Redevelopment............................................18
The 1950s: Development Responsibility gets Placed on the Private
Enterprise...............................................21
The 1960s: Legislation Reflects the Militant Times.......23
The 1970s: A Response to the Legislation of the 60s......27
The 1980s & 1990s: The Conservative Era of Reagonomics and its
Lingering Effects into the 90s...........................30
The Year 2000s Legislation..............................33
The Effects of Federal Devolution........................37
The CDC: A Vehicle for Community Revitalization..........38
v


3. THE CDC IN OPERATION......................................41
Historical Roots of the CDC...'........................42
The Evolving CDC........................................43
Facing the Funding Challenges...........................46
A Complex Web of Partnerships...........................47
Social Capital and its Effects on Neighborhood Decline.52
4. CRITICISMS OF THE MOVEMENT................................56
Low Productivity Rates..................................56
CDCs Sell Out...........................................58
CDCs Do Not Accurately Mirror Their Neighborhoods......60
5. A CASE STUDY OF NEWSED.....................................64
History of the La Alma/Lincoln Park and Baker Neighborhoods. 65
Current Disadvantages the Neighborhoods Face............72
The Rise and Success of the For-Profit NEWSED..........73
The Beginnings of a Not-for-Profit NEWSED...............74
Santa Fe Drive: A Comeback Story........................78
NEWSED and the Housing Crisis...........................81
NEWSED Promotes Cultural Pride..........................91
NEWSED and Social Capital...............................95
The Decrease of Crime in the Neighborhood..............97
NEWSED in Relation To Two other Denver CDCs............98
vi


6. CONCLUSION OF CASE STUDY..................101
BIBLIOGRAPHY.................................104


CHAPTER 1
INTRODUCTION
The purpose of this paper is to determine whether not for profit community
development corporations (CDC) are beneficial in addressing the crisis of declining
cities or is its ability to serve communities structured only by the surrounding
political economic environment? This study focuses on one CDC in particular, the
New Westside Economic Development Corporation (NEWSED), which is one of
the largest CDCs, located in West Denver. CDCs claim to stabilize neighborhoods
from further decline by producing affordable housing units and implementing
programs to increase homeownership rates in its communities. The reason so many
CDCs focus on housing is because most urban neighborhoods are primarily
residential. A neighborhood can be considered stabilized if the housing stock is not
degraded and deteriorated, if living conditions are not inhumane, if crime is not
rampant, if buildings are not vacant and there is some economic prosperity
(excluding pawn shops, liquor stores, bars, etc.). As well, most CDCs aim to fight
the growth machine (Molotch, 1976; Logan & Molotch, 1987; DeLeon, 1992) that
significantly contributes to gentrification. Gentrification happens as low-income
inner city neighborhoods become prime for development. Once a neighborhood
becomes more attractive, economically and physically, a more affluent class moves
1


in, driving up property values. Property values become too costly for the
existing residents who are forced to move out of their neighborhood..
Throughout the chapter, I will define the CDC in order to allow the reader a
basic understanding of the not-for-profit community development corporation. As
well, the chapter will explain where I get most my data and information. I have
relied on various scholars on this subject matter for the purpose of this topic. This
chapter will also provide a basic introduction and breakdown of the chapters that
will be analyzed and discussed. The chapter is organized into the following
sections:
1. Definitions and characteristics of the CDC
2. Breakdown of the literature review
3. The three fundamental players of the CDC
4. Overview of the chapters
Definitions and Characteristics of the CDC
Community development corporations are non-profit tax-exempt
organizations, characterized by a 501(c)(3) government status. (Peirce & Steinbach,
1987; Keating, Krumholz, & Star, 1996; Robinson, 1996; Vidal, 1995; Stoecker,
1998). The not-for profit status allows for easier access to foundation and
government grants (Peirce & Steinbach, 1987). CDCs are community-based
organizations that undertake development activities for the betterment of their
neighborhoods. In fact, Kromer (2000) states that Any neighborhood-based or
2


neighborhood-oriented organization that starts influencing physical development or
other forms of reinvestment activity should be entitled to call itself a CDC (p. 114).
Community development corporations, by definition and intent [according to
Bemdt (1977)] are community controlled corporation(s) established to improve the
quality of life for the poor (34). CDCs, according to Kromer (2000), are created to
improve physical conditions and provide community members with better access to
human services (114). To improve the physical conditions of its neighborhoods,
the agencies purchase, develop; manage residential and/or commercial property
(Robinson, 1996) to directly benefit the community and its residents.
A successful CDC benefits its neighborhood by improving the existing
housing stock, providing additional affordable housing opportunities, improves the
economic down spiral, and offers a variety of community social services while
avoiding gentrification.
The most current estimate from the National Congress for Community
Economic Development is that there are over 2,000 CDCs operating in the United
States (Orlebeke, 1997; Vidal, 1996; Owens, 1997; Gittell & Vidal, 1998; Bratt,
1996). CDCs are most prevalent in the cities of the Northeast, Midwest, and along
the West coast. The movement is much weaker in the mountain states, the Great
Plains, the Pacific Northwest, and the south (Peirce & Steinbach, 1987; Gittell &
Vidal, 1998). Historically the mountain states the Great Plain and the Pacific
Northwest have been much more conservative, as far as protests movements. The
3


West Coast has traditionally played home to many grassroots movements, protests,
and demonstrations. As indicated later in this study, the CDC grew out of protest
movements and grassroots organizing.
The CDCs boards are generally comprised of neighborhood residents, non-
profit organizational representatives, private sector businesses, and government
representatives (Orlebeke, 1997; Robinson, 1996; Bemdt, 1977). Keating,
Krumholz, & Star (1996), explain that CDCs are examples of public-private
partnerships that provide various services within declining neighborhoods that are
no longer able to attract investment from the private market. They take advantage
of resources and attempt to clear obstacles in order for private reinvestment to take
place. Although CDCs vary from one another in terms of funding, size, and scope,
they essentially all share similar traits. They operate within defined low-income
neighborhoods that have lost the ability to attract private reinvestment.
Many pursue non-profit housing and economic development, as well as
provide various social services. CDCs also act as advocates for the community,
such as pressing city hall for better neighborhood services and pressuring banks into
increasing their lending practices in disadvantaged neighborhoods (Peirce &
Steinbach, 1987). Primarily, CDCs respond to inner city housing concerns and
needs to benefit its given neighborhoods. The concept of corrective capitalism is
the path the CDC follows. Since they operate within the capitalist system, they can
not very well protest the existing institutions that finance and fund their endeavors.
4


The model aims to assist those in gaining the capabilities to survive in the existing
system. According to Bemdt (1977) it is from the acceptance of capitalism, the
historical tradition of self-help and individualism that is the model for the CDC.
Since the CDC relies heavily on government involvement and private dollars, it
cannot alienate any potential funders. Thus the organization works within the
market to assist those that have been abused by the social injustices of a capitalist
society.
As I mentioned earlier, this paper focuses on one CDC in particular.
NEWSED pays much of its attention to the La Alma/Lincoln Park and Baker
neighborhoods. The area has experienced its share of crime, disinvestment,
abandonment, and an exodus of homeowners. At one time the neighborhood was
infested with crime, gang members, drug dealers, as well as other undesirables.
Santa Fe Drive, the corridor that runs through the neighborhood, witnessed
abandonment, boarded up and vacant buildings, disinvestment, and decay.
Currently the crime rate has gone down and Santa Fe Drive has had a
complete facelift and revival. NEWSED dedicates much of its resources to
increasing home ownership in the community. My initial thought was that
NEWSED seemed to have walked the fine line of avoiding decay and abandonment
while avoiding gentrification, which no longer seems the case. My thesis question,
to be tested, asks: has NEWSED been beneficial to the community via increased
homeownership, more housing opportunities for the existing low income and
5


working class residents, revitalization efforts, and decreased crime, while avoiding
gentrification or is NEWSEDs ability to serve its neighborhoods structured only by
the surrounding political environment? My initial thought was that NEWSED was
vital to the neighborhood and greatly benefited the existing residents with increased
housing opportunities, however as this study progressed, it appeared that while
NEWSED has reversed the economic down spiral by revitalizing the main corridor,
Santa Fe Drive it has not done so without inviting gentrification. As far as
increasing home ownership, they have a program in place to do just that, however it
is not targeted towards the low-income residents that occupy the neighborhoods.
Because the current political climate does not pressure organizations like NEWSED
to be more responsive to the needs of the residents, the CDC remains status quo.
Historically, as mass unrest and protest among the lower classes plague the country,
the government and institutions become more responsive to their needs.
6


Breakdown of the Literature Review
Much of the information presented comes from a wide range of literature.
The historical overview of the Federal governments role in housing, the criticisms
of the CDC movement, and other case studies come from the research of scholars
who have studied urban neighborhoods over time. A first-hand interview, by this
author was conducted with Leroy Lemos, Director of the PODER Project for
NEWSED. Two telephone interviews were conducted with Shawn Weston, Deputy
Director of the Inner City Community Development Corporation, and with Marvin
Kelly, Executive Director of the Del Norte Neighborhood Development
Corporation. Other statistical data and field interviews with NEWSED staff and
other local notables comes from the work of Santosh George, who wrote his Ph. D.
dissertation on NEWSED. George (1998) is very critical of NEWSED, which has
been important as it has allowed me the opportunity to consider another perspective.
All of the data and statistical information I have read has been reviewed and put
fourth by NEWSED, thus it has been very difficult to find another viewpoint.
Georges critiques have enlightened and broadened my own thoughts and work.
The Three Fundamental Players of the CDC
CDCs are comprised of three major players: the community, government at
all levels, and private corporations. The community provides the background and
7


setting within which the organization operates. Members of the community define
neighborhood problems and possible solutions. Non-profit development
corporations heavily rely on federal dollars and live under government regulations.
The government, in fact, provides the major source of funding for CDCs through
grants, contracts, and low-income housing tax credits (LIHTC) (Stanfield, 1995;
Bemdt, 1977). The private sector provides technical assistance, as well as financial
support. Many corporate executives sit on CDC boards to provide technical
expertise in many aspects of operation from training staff to handling legal and
complex ventures. According to Robinson (1996), sometimes board members will
be chosen by neighborhood residents in an election, but more often board members
are chosen by other board members, government officials, or by some other
standard, generally due to their status within another community agency. The
fundamental players are crucial to the organizations every day operations. There is
a lot of expertise and technical involvement in order to run such an organization.
The three players have their own policies and practices, but must comply with one
anothers regulations. Grant writing, tax credits, and government regulations often
are quite technical. The grant writing process can be precise and requires an
adequate knowledge of the process. It is a very complex web of partnerships, which
will be discussed in more detail in chapter 3.
8


Overview of the Chapters
Chapter two provides a detailed historical analysis of the United States urban
revitalization and renewal efforts. From the 1930s to the 1980s, the government
assumed the responsibility for urban revitalization and low-income housing efforts.
The New Deal initiatives of the 1930s began federal housing policy. The purpose of
the policy was to increase the public production of housing, as well as provide
subsidies to encourage private markets to produce affordable housing.
It was from many historical happenings that the CDC evolved. At a time of
radical uprisings in the 1960s the CDC evolved, to protest the social injustices of the
capitalist society. However as government became more conservative in the 80s, so
did the CDC. The CDCs began to operate within the realm of government and the
private market. The purpose of the more conservative CDC is to provide adequate
and affordable new housing via development, redevelopment, and rehabilitation.
The funding of such programs is pricey and without the help of government dollars
and private foundation philanthropy CDCs could not bear the costs.
Chapter three explains the rise of the CDC. A detailed historical overview
of the evolution of the CDC is provided. Most scholars agree that the CDC grew
out of the 1960s, with the Ford Foundations gray areas programs and with direct
funding from the U.S. Community Action Agency Programs. The chapter explains
the evolution of the CDC from the 1960s to the 1990s.
9


Currently CDCs are best known for their affordable housing production.
Over 90% of CDCs create affordable housing. Through their housing initiatives, the
CDCs share the common goal of creating neighborhood stability. The chapter
explains key factors in achieving neighborhood stability through housing production
and the CDCs role in fulfilling their goal.
Chapter four discusses the criticisms of the movement. No doubt, CDCs
operate in weak markets and do not produce mass numbers of units per year, which
some skeptics use to argue against their effectiveness. Others argue that CDCs
have sold out their innovative, protest-driven grassroots origins that gave many a
start. Since CDCs operate in weak markets it is crucial that they seek outside
funders and moderate their anti-establishment agenda if they are to survive
financially. Skeptics dont believe CDCs operate in the neighborhoods best interest
in mind by engaging in street-level neighborhood mobilization, as they do not want
to offend any potential funders (Piven & Cloward, 1979; Bemdt, 1977).
Chapter five includes a case study of NEWSED and the neighborhoods: La
Alma/Lincoln Park and Baker. The chapter provides a historical evolution of the
two neighborhoods, as well as their current state. NEWSED is profiled in depth,
beginning with its for profit status aimed at revitalizing Santa Fe Drive, to its
current not for profit status. NEWSED has put forth initiatives and programs aimed
at increasing homeownership and revitalization, which as the study progresses
further reveal that NEWSEDs initiatives have not always assisted those in the
10


neighborhood. It also asks the question, through NEWSEDs initiatives, has the
neighborhood begun to stabilize from further decline such as disinvestments,
abandonment, crime, degraded and deteriorated structures, and high absentee
landlord rates. Tire community has turned around economically, however as
pointed out later in the study, that hasnt proven to be beneficial to the community
as the neighborhood is witnessing some of the fastest rising housing costs in the
Denver metro area.
The theory of social capital is introduced in chapter 5 as well. An analysis
of social capital and how it applies locally to distressed neighborhoods is discussed.
Many scholars argue that bridging social capital is crucial in binding a
neighborhood for the collective good of the community.
Chapter 5 provides a final analysis of nonprofit CDCs to ultimately answer
the question as to whether or not, through initiatives and programs, CDCs can stem
further declination in distressed urban neighborhoods, while avoiding gentrification
or is the organization only able to truly benefit the residents in times of pressure.
This study develops to show that La Alma/Lincoln Park and Baker have witnessed a
stabilizing effect due to NEWSEDs efforts, but not while avoiding gentrification
11


CHAPTER 2
GOVERNMENTS ROLE IN URBAN AFFAIRS
From 1933 until 1980, the federal government assumed responsibility for
meeting the housing needs and revitalization efforts of Americas deteriorating inner
cities (Gratz, 1989; Goetz, 1996; Keating, Krumholz, & Star, 1996). Throughout
the 1930s and 1940s, debates between urban liberals and conservatives of the time
were fierce over the role of government in housing Americas poor. Interest groups
operated in full force to promote their deeply held beliefs as to the government's role
in the economy and in individual's lives. It was not until 1954 that the political
parties, urban liberals and conservatives, came together to promote economic
development as the answer to the declining cities.
From the 40s to the 60s, there existed many governmental actions in
response to urban problems (Stone, 1993). The 1960s experienced militant
uprisings on the issue of housing. Policies of the 1970s included direct grants
allowing local government to disperse money as local government saw fit. The era
of Reaganomics witnessed significant cutbacks when it came to housing
affordability programs. Government intervention remained relatively low during
the nineties. With the onset of the year 2000, housing initiatives seem to be
experiencing a bit more government involvement.
12


Housing policy reflected the times, as the government shifted supply side
economics to a demand-driven economy. From the 30s to the 80s, emphasis was on
heavy government involvement to regulate the economy, a concept that came to be
known as Keynesian Economic Theory, named after the English economist, John
Maynard Keynes. Keynesian economists supported an active role for government in
stabilizing the economy, as well as to promoting social goals, e.g. reduced poverty,
increased employment, and steady growth.
With the onset of the Reagan administration, the United States shifted back
to supply-side economics. This meant a return to the free market, limited
government activity, limited discretionary stabilization activity, and stimulation of
individual enterprise (Wilber & Jameson, 1990, p. 69). According to Grigsby
(1966), the invisible hand, which only infrequently produces the optimum spatial
deployment of land uses, with respect to renewal typically produces nothing at all
(p. 25). During this time, the poorest in the population were experiencing
tremendous cuts in programs aimed at assisting their situation. The thought
prevailed that individuals were responsible for their own destiny and demise. The
majority in power believed that it wasnt governments job to assist with the basic
necessities for those that couldnt provide for themselves; as the old saying goes,
pull yourself up by the bootstraps. It was an uncompassionate society of the time
that felt there was something innately wrong with those who couldnt provide even
the basic necessities for themselves. The role the government and the institutions
13


played in individuals lives during the 80s diminished and became more
conservative mainly because protest movements demanding relief disappeared.
As mentioned earlier, the housing policy changed throughout the times.
CDCs were no exception; as the government grew more conservative so did the
community development field. The chapter provides the reader a brief historical
journey in understanding the housing patterns and governments role in the housing
the nations poor. The chapter is organized into nine sections:
1. The 1930s: the Beginnings of Government Intervention
2. The 1940s: Slum Clearance and Community Development and
Redevelopment
3. The 1950s: Development Responsibility Gets Placed on Private
Enterprise
4. The 1960s: Legislation Reflects the Militant Times
5. The 1970s: a Response to the legislation of the 60s
6. The 1980s and 1990s: the Conservative era of Reagonomics and the
lingering effects into the 90s
7. 2000s Legislation
8. The Effects of Federal Devolution
9. The CDC: A Vehicle for Community Revitalization
The 1930s: the Beginnings of Government Intervention
According to Goetz (1993), federal housing policy began with the New Deal
initiatives of the 1930s, characterized by efforts aimed to increase the public
production of housing and subsidies to encourage private markets to produce
affordable housing. It was with the collapse of the mortgage and housing markets
during the depression that the federal government began to intervene in the housing
market. With the Great Depression, the nations economy faced a disaster, which
14


the nations public figures were stubbornly unwilling to recognize (Piven &
Cloward, 1977, p. 46). As the 30s approached unemployment continued to rise, the
wages of those still employed quickly dwindled, and the effects were hard felt.
Malnutrition and disease was rampant. Poverty deepened and as it did, so increased
crime, divorce, drunkenness, sexual promiscuity, and suicide (Piven & Cloward,
1977). Homelessness grossly increased. According to Piven & Cloward (1977), the
n umber of transients was not known, however Southern Pacific railroad reported
that it had ejected 683,457 people from its trains in 1932 (p. 48).
At the onset of the depression and the months that followed, people felt
ashamed of their plight. The government denied help and made those requesting
assistance from the dole feel inadequate. However, most often, the government
made the dole inaccessible. In fact, the discontent these poor might have felt was
muffled, in part by the relief system and the image of the terrible humiliation .
inflicted on those who became paupers (Piven & Cloward, 1977, p. 42).
As the government continued to deny the problem, people collectively began
to realize their shared plight. This collective realizations et the stage for political
uprisings, movements, and demonstrations. In city after city, mob looting was
taking place. This organized looting of food became a nationwide phenomenon
(Piven & Cloward, 1977, p. 49), which paved the way for the protest politics that
were rampant in the 1930s.
15


In the early 30s, demonstrations, marches, and rent riots were common.
However, as times got worse national organizations emerged on the scene. Relief
came, at first, in small amounts, but due to the political pressure, relief officials,
who were not accustomed to discretionary giving to a meek clientele and were not
much governed by any fixed set of regulations, usually acquiesced in the face of
aggressive politics (Piven & Cloward, 1977, p. 57). With Franklin Delano
Roosevelt election into office, the administration implemented a variety of housing
programs.
In 1932, the Federal Home Loan Bank System (FHLB) was created in order
to make mortgage lending more effective, stable, and profitable, while freeing
lenders from the economic liability to their depositors.
In 1933, Roosevelts administration established the Home Owners Loan
Corporation (HOLC), which allowed for the purchase of defaulted mortgages and
refinanced them for longer terms and equable rates of interest, through federal
grants. Lenders were still reluctant to make longer-term loans, which were
pioneered by HOLC, thus Congress passed the 1934 National Housing Act.
The 1934 National Housing Act created, through the new Federal Housing
Administration (FHA), a new institutional support to further residential lending, and
a mortgage insurance policy. This insurance was ultimately designed to increase
mortgage lending and the housing market, all the while decreasing the risks of
16


mortgage default and guaranteeing profits to the lenders and developers (Stone,
1993).
In 1933, Roosevelt passed the National Industrial Recovery Act, which
authorized public use funds to go towards financing the construction of low cost
housing, as well as the promotion of slum clearance. It was through the housing
division of the Public Works Administration that the government financed,
developed, and owned these projects.. Under this program, 21,600 units were
produced amongst 37 cities (Stone, 1993). This program collapsed as the use of
eminent domain to acquire land for the public housing faced many legal challenges.
It was not until 1937 that a legally successful public housing approach took its
place (Stone, 1993).
Urban liberals enjoyed the Housing Act of 1937, which created the U.S.
Housing Authority (USHA). The USHA lifted legal obstacles that previously
blocked federally funded public housing construction. Under the new law, local
housing authorities had complete responsibility to maintain and develop projects.
By 1939, 50,000 USHA units were under construction (Flanagan, 1997).
Government involvement prevailed not only throughout the 30s, but through
the mid 40s as well. The underlying conclusion was that the private market was
unable to cope with the housing crisis in the United States. For many years the
United States allowed the private market to provide housing without much
regulation or intervention. As time proved, the government became involved as
17


more and more of the population were denied access to affordable housing and
mobilized in great numbers to do something about it.
The 1940s: Slum Clearance and Community
Development & Redevelopment
As with the 30s and throughout the early and mid 40s governments role in
housing policy was dominant. As the 40s were ending, so was the governments
role in housing policies. Public housing continued to be the primary source of low-
income housing with the passage of the 1949 Housing Act. Public housing was
always a controversial issue that divided many. The pressure to rid the United
States of public housing was great, as real estate lobbyists operated in full force.
The lobbyists presented public housing as a program which did not house the poor
and which was somehow socialistic or communistic (Keith, 1973, p. 89). The
lobby was successful in blocking the program at the local levels by getting
neighborhoods to actively protest against designated sites. Since the majority of
public housing recipients of the time were minorities, it was not hard for the
lobbyists to initiate political pressure against public housing from neighborhoods
that were possible sites. To appease the real estate lobby the act further mandated
the provision that:
no public housing unit could be built in a locality unless a slum or other
unit had been demolished; and requirement of a 20 percent gap between the
maximum income of families eligible for public housing and the minimum
income needed for adequate private housing (Stone, 112).
18


The act authorized the construction of 135,000 dwellings per year, but by the
end of 1951, only 84,600 units had been produced (Keith, 1973). In other words,
the act authorized the production of 810,000 units over a five-year span, only a
quarter of which were actually started (Stone, 112). The Act stated that the only
way a public housing unit could be built was if a slum or other unit had been
demolished.
Urban renewal officially began with the 1949 Housing Act. Title I of the Act
established Slum Clearance and Community Development and Redevelopment
measures, which were the most famous of the urban renewal programs. The general
attitude towards Slum Clearance and Community Development and
Redevelopment was not nearly as controversial as public housing, which was
viewed as socialistic or communistic. Essentially, most viewed Slum Clearance as a
way of ridding the cities of social problems and fiscal shortages.
Title I allowed the federal government authority to provide localities funding
through loans and grants to obtain, demolish, and dispose of property designated as
blighted or slum areas for the purpose of private or public redevelopment.
Unfortunately the Act did not mandate the replacement of demolished or lost
housing units, which resulted in displacement. The law mentioned, however, that
displaced residents ultimately would be provided houses that were decent and at
prices and rents within the means of such families (Stone, p. Ill, 1993).
Government officials, however ignored this requirement. Many families never had
19


their housing replaced at prices they could afford. They were no longer protected
by the hand of government
Urban renewal was seen as way of alleviating social problems through
physical changes (White, 1980). Slum Clearance authorized private/public
redevelopment of urban land renewal, but did not require adequate attention to
displaced residents. Residents that lived in rundown degraded structures found
themselves with nowhere to go. The degraded buildings and eyesores that were
removed to create beautiful cities caused a large amount of displacement.
As the 40s ended, the governments commitment to house the poor was
about to change, as Uncle Sam got out of the construction business. No longer was
the country protecting those who could not provide themselves with adequate
housing. The reason the federal government came to appease the masses throughout
the 30s and early 40s was because they (government) could not ignore disruptions
so threatening to economic recovery and electoral stability (Piven & Cloward,
1977, p. 172). The government established programs to appease the population, but
only for as long as necessary in order to maintain electoral stability. Once stability
returns and the political climate calms, government becomes less involved, as
witnessed during the 1950s.
20


The 1950s; Development Responsibility Gets Placed
on the Private Enterprise
In 1954, a new Housing Act was passed, which according to Flanagan
(1997) marked a historic change in the production and nature of public housing as
well as an important turn in the political debate about the federal role in urban
affairs (p. 265). Because both political parties agreed in the 1954 Housing Act to
shift emphasis from the construction of public housing to commercial
redevelopment to answer the problem of inner city neighborhood decline, it was
celebrated. Both Republicans and Democrats came to believe that the only way to
save distressed neighborhoods was to emphasize commercial development, since
public housing was never produced at high enough rates to seriously address the
problem of housing Americas poor anyway.
During the mid 40s and into the 50s protest movements that were prevalent a
decade earlier were nearly nonexistent. World War II brought the Great Depression
to a halt. During those years production was followed by economic expansion
coupled with Keynesian macroeconomic policies, which created stability and much
improved conditions for the average American workers. These factors moderated
the political unrest that existed a decade earlier. Because the government no longer
had to answer to mass unrest and political instability, housing policies of the time
became more conservative.
21


The Housing Act of 1954 actually expanded Title I of the 1949 Housing Act
and officially named the program Urban Renewal (Stone, 1993). The legislation
did not entirely prohibit public housing, but it was quite specific, in that public
housing would only be built where slum clearance had taken place. Furthermore,
public housing could only be built per the localitys certification of relocation needs
(Stone, 1993). With the Act, the rate of public housing construction decreased
from 49,881, in the early 50s to about 20,448 units per year from 1955 to 1964.
From 1955 to 1988, only 27,356 public housing units were constructed (Flanagan,
1997).
The Act, as well, served to change the nature of public housing. It confined
public housing so that it would only serve as a mild and limited instrument of public
policy. According to Flanagan (1997) public housing in 1954 was only for the
impoverished, with such low production numbers that public housing could never
be offered as a serious housing alternative for large numbers of the middle class,
much less all the poor (p. 265). The 1954 Housing Act closed out the option of the
liberal/progressives role of creating a European-style public housing system that
would provide housing for a range of income levels.
With the implementation of the Housing Act and the Interstate Highway
program in 1956, urban enclaves were quickly transformed. With the
transformation of many urban cities, urban residents experienced massive
displacement. Programs, such as Urban Renewal, Slum Clearance, as well as
22


private redevelopment, further displaced Americas poor. Commercial
redevelopment advanced institutional expansion of urban medical centers,
universities, and commercial business districts, but did little in the way of housing
the impoverished.
The latter programs of Urban Renewal did not alleviate the many factors that
caused poverty. Policy mainly focused on the physical improvement of
neighborhoods (Glaser, Soskin, & Smith, 1996). Because the policies failed to
involve neighborhoods residents in development priorities and methods of
implementation, they may have actually contributed to the problems of poverty
(Glaser, Soskin, & Smith, 1996). Most neighborhood residents are not going to
support redevelopment and renewal that would lead to their displacement. The tide
was setting to make waves as the government was decreasing its involvement with
housing Americas poor. As this happened another force was about to rise to
compensate for the governments lack of involvement.
The 1960s: Legislation Reflects the Militant Times
The 1960s were a time of militant uprising, civil rights movements, and
grassroots organizing, which were prevalent in the legislation to alleviate the
housing concern in the cities. Because of the political climate, the new
administration in Washington initiated the War on Poverty campaign, which
included the 1964 Economic Opportunity Acts Community Action Program (CAP),
23


The Model Cities of 1966 and other low-income housing revitalization and
antipoverty initiatives. Once again the government was pressured to listen and
appease the masses.
The programs were based on the assumption that poor communities have
immense resources within them and, given a chance, the desire and the will to tackle
their own social programs (Bemdt, 1977, p. 32). The CAP, which was created by
Title Two of the Economic Opportunity Act of 1964, actually created the first
network of CDCs (Orlebeke, 1997; Bemdt, 1977). The purpose of the CAP was:
to work, and the opportunity to live in decency and dignity. To eliminate the
paradox of poverty in the midst of plenty in the nation by opening to
everyone the opportunity for education and training, the opportunity to work,
and the opportunity to live in decency and dignity
The goal of the CAP was to organize and mobilize the lower classes into the
local Community Action Program process to alleviate local poverty issues (Givel,
1991; Gillette, 1996). The Office of Economic Opportunity was responsible for
setting the standards on national regulations for the CAP activities, mobilizing
community resources, incorporating the impoverished into the CAP program, client
eligibility, local antipoverty Community Action Agency (CAA) eligibility, and
administrative procedures (Givel, 1991). The CAP emphasized the direct funding
of local Community Action Agencies, which were not local governments, but rather
neighborhood residents and organizations that oversaw policy decisions. The CAA
applied directly to the Office for Economic Opportunity for various grants, mainly
24


in three areas, local initiatives, national initiatives, and economic development. It
was from the economic development area, that the CDCs obtained money to fund
programs to increase jobs, business, and housing in its neighborhoods.
According to Orlebeke (1998), the Community Agencies began the CDC
movement, and acted as an intensive prep school for a cadre of African American
and Hispanic organizers and program managers who went on to careers in politics,
government, and non-profit development (Orlebeke, 1997, p.21). It has been
argued that Community Action Agencies challenged local public and private
powers, community involvement in decision-making meant shifting local balances
of power in which ruling elites had a stake (Vigil, 1999, p. 22). Thus mayors
attacked the program and fought back politically against community action, which
was ultimately discredited (Orlebeke, 1997). Many conservatives criticized funding
militant organizations that were widespread throughout the 60s (Givel, 1991). At
this time, CDCs were primarily grassroots protest movements that challenged the
existing system.
In 1974, due to extreme pressures from the conservatives Congress
abolished the Office for Economic Opportunity and replaced it with an independent
agency called the Community Services Administration, which was abolished in
1981 (Gillette, 1996; Givel, 1991). As this happened, CDCs were losing funding
and came to realize that in order to be viewed as credible for funding purposes, they
had better shed the angry protest rhetoric.
25


Another program from which the CDC arose, Model Cities, discouraged
large-scale development and focused on physical improvement programs, as well as
social services. The program was targeted to relatively small Model
Neighborhoods containing no more than 10 percent of a citys population
(Orlebeke, 1998). The mayors controlled the administration of the Model Cities
program, however it still had to include representation from neighborhood residents
and organizations. Unfortunately, Model Cities did not last long and the billions of
dollars flowing through the program were not effectively channeled to massive
projects with real uplift possibilities. According to Stone (1993) Model Cities also
moved the Federal Housing Authority into promoting urban homeownership. The
Model Cities program was short-lived and was folded into the Community
Development Block Grants of 1974.
The Ford Foundation was crucial in developing the CDC. Paul N.
Ylvisaker, head of the Public Affairs Department for the Ford Foundation in the 60s
toyed around with the notion that urban redevelopment should emphasize the
physical redevelopment of urban slums by mobilizing local self-help groups and
organizations. From this, the Ford Foundation initiated the gray area program.
The name came from the idea that there was a zone of deterioration that existed
between downtowns and suburbs in many urban areas (Givel, 1991). In order to
avoid such renewal practices as slum clearance, Ylvisaker created stand-alone
26


community organizations and groups based locally in urban cities across America to
handle their own antipoverty services for the poor (Givel, 1991).
The government was not only giving funds to local community
organizations, but implementing legislation as well. The Housing and Urban
Development Act of 1965 created Rent Supplement and Leased Public Housing
programs, both of which had the same requirements for eligibility as public housing
had. The programs also aimed to disperse the poor rather than to segregate them in
large enclaves. Private homeowners could use their properties as rentals if they
passed government standards, to house the lower classes. The landlords were paid
rents by the government. In 1969 the Housing and Urban Development Act made it
law that rent for public housing could not exceed 25 percent of a tenants adjusted
income.
The Uniform Relocation Act of 1968 made it much more procedurally
difficult and more expensive to displace those people that were living along the path
of federally sponsored developments (Orlebeke, 1998), which indicates the protest
movements had an effect on government legislation. The pressure was on as angry
inner city residents mobilized to ease problems amongst their neighborhoods.
The 1970s: A Response to the Legislation of the 60s
Legislation of the 60s, namely the Civil Rights Act of 1964, calmed the
masses. When the 70s approached the political climate was calm and once again
27


government involvement greatly decreased. The 70s experienced the Community
Development Block Grants, the Neighborhood Self-help Development Grants, and
Urban Development Action Grants (Krumholz, 1996; Goetz, 1993 ). The
aforementioned programs were in response to the governments 1960s style urban
renewal. Rather than giving money to local organizations, of which many were
deemed radical, the government gave grant money to local governments which, in
turn, channeled the money as deemed appropriate. Because the radical
movements had lost much influence into the 70s, the government was no longer
pressured to appease them. President Carter signed Urban Development Action
Grants (UDAG) into law in 1977. UDAG amended the Housing and Community
Act of 1974, to include a new section, which was called Grants for Severely
Distressed Cities. The bills preamble states:
In order to promote the primary objective of this title of the
development of viable urban communities, of the total amount of authority
approved in appropriation Acts under section 103(c) the Secretary is
authorized to make urban development action grants to severely distressed
cities to help alleviate physical and economic deterioration through
reclamation of neighborhoods having excessive housing abandonment or
deterioration and through community revitalization in areas of population
out migration or stagnating or declining tax base. Grants made under this
section shall be for the support of severely distressed cities that require
increased public and private assistance in addition to the assistance
otherwise made available under this title and other forms of Federal
assistance (Fitzgibbons, 1982, p. 3).
The UDAG program allowed for the dispersion of $675 million a year to
revitalize distressed cities by stimulating economic development, which created new
28


jobs and new tax revenues. In the first two years of funding, the UDAG began 493
projects in 374 cities, $934.9 million of the grants were awarded, $5.66 billion was
committed by private developers, 150,000 some odd jobs were created, 80,000 jobs
retained, and $89.4 million annual real estate taxes were generated to distressed
cities. The Research Division of the Urban Land Institute (1980) explained the
UDAG progress within those first two years: $6.05 of private investment for every
$1 of the UDAG, $.10 of annual tax revenues for every UDAG $1, new jobs at a
cost of $6,200 per job.
Public/private partnerships were a critical component of the UDAG program
since local governments channeled the funds. The demand for UDAG funding far
exceeded the appropriations, thus the applications considered were those that would
maximize the purpose of the grant. To maximize the purpose of the grant,
organizations had to show they could create jobs, stimulate private investments and
increase and develop a tax base. Around this time, the CDC recognized the need to
change its anti-capitalist agenda into a more professional conservative organization,
if it was to obtain any UDAG funding. Thus a new era of CDCs began, as
government funding became more conservative.
29


The 1980s and 1990s: The Conservative Era of Reagonomics
and Its Lingering Effects into the 90s.
Between the years of 1980 and 1988, the period known as Reagonomics,
federal budget authorization for low-income public housing assistance decreased
over 80% (Goetz 1993; Keating, Krumholz, & Star 1996; Eisinger, 1998; Peirce &
Steinbach 1987; Kozol, 1988). The economic shift began to focus on a supply side;
heavy government involvement ceased during this time. During this time CDCs
witnessed many cuts in their funding, namely the end of the Community Services
Administration. As the government shifted to the right, the CDCs, as well, became
more conservative. They became more business and development oriented, just like
the for profit sector.
The 1994 United States Conference of Mayors ([USCM 1994]) revealed the
severity of the federal cuts between 1981 and 1993. Funding of the community
development block grants Urban Development Action Grants, the Federal
Community Services Administration, HUDs Office of Neighborhood
Development, and the various programs of the Economic Development
Administration decreased by 66.3% in this period (Eisinger, 1998, Peirce &
Steinbach 1987). Federal housing assistance, according to the 1994 USCM,
decreased from $26.8 billion in fiscal year 1981 to $8.9 billion in fiscal year 1993, a
cut of over 66%. What this essentially meant for impoverished neighborhoods and
30


their residents is that little to no low-income housing units were produced and few
retained for existing tenants in the near future. This fact creates an enormous
problem for those financially unable to compete in the housing market. The above
figures are bleak for Americas low-income neighborhoods. However, President
Clinton has not entirely forgotten the cities. Federal funding for municipal
programs does still exist. From 1995 to 1997, funding, in some areas, has actually
remained steady:
housing opportunities for people with AIDS saw no change funding remains
at $171.0 million dollars
the HOME Investment Partnership remains the same at $1.4 millionthe
Community Development Block grant remains constant at $4.6 million
(Eisinger, 1998).
As of 1996, Public housing operating subsidies remains current at $2.9
million. In 1996, Congress actually approved funding for 50,000 new section 8
vouchers (Reforms to Project-Based Section 8, p 1-2, 12/3/99). There are two forms
of Section 8 subsidy: tenant-based and project-based. The tenant-based program
allows for vouchers that give residents the freedom to utilize their subsidies in a
wide range of private market housing. The government provides subsidies directly
to the owner of the property who then applies those subsidies to the rents they
charge low-income tenants. The project-based program provides subsidies to
specific properties so that the properties will remain subsidized. Roughly 3 million
households are enrolled in the Section 8 program (Reforms to Project-Based Section
8, p 1-2,12/3/99).
31


Unfortunately the increase is only a drop in the bucket compared to the
actual need of affordable housing. Section 8, in fact, is facing its own crisis. In
most communities around the nation, the waiting lists for public housing and
Section 8 assistance have been closed, as they are too long. Furthermore, in 1997
Congress passed legislation that establishes a program to acknowledge the
thousands of properties privately owned that receive section 8 subsidies and that are
facing the end of their government contracts. The high cost of renewing Section 8
contracts has been spinning out of control. The laws original intent was to reduce
costs through restructuring of mortgages and weeding out some bad owners.
However too many owners are opting out of the program in two ways: First HUD
insured, privately owned, Section 8 properties whose rents exceed market value are
eligible for restructuring. The Section 8 contract stipulates that if a unit is
restructured, then the landlord must agree to lower the rent to below market rates for
thirty years. Unfortunately, many property owners are opting to prepay their HUD
mortgages and raise their rents to market. HUD indicates that over 50,000 units
with rents below market have converted to market rate over the last two years, with
an average rent hike of 40 to 49 percent (Reforms to Project-Based Section 8, p. 1,
12/3/1999).
Second, as of October 1,1998, thousands of Section 8 project-based
subsidies are naturally expiring. Essentially owners do not have to renew their
contracts. They can opt for the restructuring program just mentioned, let their
32


contracts expire altogether and rent their units at market rate, or sell their property.
Unfortunately, opting out of the HUD contract or selling properties can lead to
massive displacement (Reforms to Project-Based Section 8, p. 1, 12/3/1999).
Although some programs have remained constant, nothing in the patterns of
federal aid in the 1990s suggests that city governments will be able to relax their
habits of fiscal self reliance (Eisinger, 1998; Peirce & Steinbach, 1987). From 1995
to 1997 federal funding for specific municipal housing programs saw the following
patterns:
Homeless Assistance decreased by 26.5%
Education for Homeless Children decreased by 13.8%
Public Housing Modernization decreased by 13.3%
Economic Development Administration decreased by 9.0% (Eisinger, 1998)
Funding for the Community Reinvestment Act, which does not actually
provide money, but requires lending institutions to invest in their local
communities, was dramatically cut back (Eisinger, 1998; Orlebeke, 1997). At the
onset of the year 2000, government increased some spending for the Housing and
Urban Development (HUD).
The Year 2000s Legislation
The year 2000 brought changes. The government allowed HUD more funds
to meet housing needs. Although HUDs budget was increased, the funds and
33


programs are not what they have been historically, as with the 30s and 60s. The FY
2000s budget for HUD:
signals a renewed and reinvigorated commitment to meeting the countrys
housing and community development needs. The bipartisan legislation is
going to significantly contribute to the expansion of affordable housing
through innovative economic development initiatives. This HUD budget has
been labeled as the smartest and strongest in over 10 years. Several funding
increases will put HUD back in the business of providing new affordable
housing opportunities (Back in Business, p. 1-7,1/17/00).
As well, the legislation will allow HUD to presume its role in helping low-
income families, the elderly, and the disabled to the decent, adequate, affordable
housing. The legislation aimed at expanding and preserving Americas affordable
housing is as follows:
60,000 families will receive new section 8 rental assistance vouchers, which
are 10,000 more vouchers than the previous year
An increase in the operating funds to modernize affordable housing from
$2.8 billion to $3.1 billion
A $45 million increase for HUDs homeless assistance and prevention
programs
A $7 million dollar increase in the Housing for Persons with AIDS
$44 million for Fair Housing Initiatives
$575 million for the HOPE VI program, which aims to replace obsolete
public housing with attractive, mixed income units
$1.6 billion for the HOME program
$10 million for the HUD Healthy Homes Initiative
$25 million for the Office of Rural Housing and Economic Development for
affordable housing for rural and Native American tribal areas
$2.9 billion for public housing capital improvements (Back in Business, p. 1-
7,1/17/00).
As well, Secretary Cuomo and members of Congress have joined forces,
announcing a bipartisan strategy to preserve the Section 8 housing from opt-outs.
34


Secretary Cuomo announced a Emergency Initiative that has cut opt-outs in half by
providing market rents to below market properties that are most likely to opt-out,
thus preserving high-quality housing within the Section 8 program. As well the law
has provided for many changes in HUDs mortgage programs to ensure that decent
properties have comparable incentives as the open market in exchange for continued
affordability. The legislation also increases HUDs ability to offer longer-term
contracts, which increases the reliability of Section 8 housing. The law provides
new resources for recapitalization of properties and incentives to transfer holdings
to non-profits that will keep them affordable over a long period. Finally the law
allows for enhanced vouchers to residents in units that opt-out, which aims to
protect them from rent increases and displacement.
The FY2000 budget is attempting to enhance the housing needs of the
nations poor:
Helping to keep seniors in their own homes with its Reverse
Mortgage program, which provides income to seniors based on the equity
built up in their homes. Building more affordable housing for seniors,
which maintains HUDs Section 202 program at $660 million (Back in
Business, p. 1-7,1/17/00).
The new commitment by Congress and the Administration to provide
decent, safe, and affordable housing to all Americans will distinctly put HUD back
in the business of housing Americans and creating opportunities for economic
development in many of Americas neighborhoods.
35


Still, because of federal devolution and the many cutbacks HUD faced in the
80s and throughout the 90s, the need far exceeds the current progress at the federal
level. The fact is, the housing crisis is phenomenal. It takes not only government
work, but also community, and the private market to help alleviate the burden. The
community development corporation claims to be an innovative force in addressing
the housing crisis.
36


The Effects of Federal Devolution
State and local governments have felt the effects of federal devolution. The
federal order of the 1990s devolved power from the federal government to the cities
(Eisinger, 1998; Stanfield, 1995;). The reduction in federal aid seems to be less of
a partisan issue today than in earlier years because not only is there now broad
interest in devolving power through block grants, but the intergovernmental aid
reductions put in place in Republican Washington in the 1980s are no longer
resisted by deficit-averse Democrats (Eisinger, p. 308,1998). The effects of
federal devolution have meant that the state and local governments, as well as the
non-profit organizations have accepted the disproportionate burden of housing
Americas poor.
The state and local governments can not bear the weight of urban
revitalization alone. The fact remains that it was the federal, not state, or local
government that dominated affordable housing construction from World War II
until at least the 1980s (Goetz, 1993; Keating, Krumholz, & Star, 1996; Stanfield,
1995). However, as a result of federal cutbacks, states, and cities have spent
unprecedented amounts of their own money for low-income and public assistance
housing. Although the state governments (all 50 combined), between 1980 and
1990, increased expenditures for housing by 350 percent and local governments
37


between 1982 and 1987 spent an estimated $3.1 billion, neither came near matching
the federal withdrawal (Goetz, 1993; Stanfield, 1995).
According to Stanfied (1995), Americas 100 largest cities are distressed,
with another 22 percent well on the way. According to the Housing for Urban
Development statistics, 5.3 million households lived in decrepit and degraded
housing units, or paid more than half their income for their residence, or both in
1991 (Stanfield, 1995). Despite the booming economy, in 1998, a record 5.3
million households with low incomes had a desperate need for housing assistance as
rents and substandard living conditions are on the increase.
(www.hud.gov/presrel/pr98-l/8-num).
Goetz (1995) indicates that the significance of the local response to
housing, however, is not in expenditure levels...the innovations at the state and city
levels have been more substantive than financial (p. 4,1995).
The CPC: A Vehicle for Community Revitalization
Gittell & Vidal (1998) argue that the devolution of responsibility to the
state and local levels will increase the demands made on the community
development field. With the lack of government funding over the last 30 years, the
responsibility of neighborhood revitalization has shifted to non-profit community
development corporations (Owens, 1997). As mentioned earlier, the CDC had to
become more entrepreneurial, technical, and professional as government funding
38


became more scarce for non-profits. CDCs began to forge partnerships with local
governments and corporations that were seeking to invest more responsible. (Peirce
& Steinbach, 1987).
Under current federal antipoverty programs, CDCs have fast become the
vehicle for community revitalization (Bemdt, 1977; Stanfield, 1995; Robinson,
1996). Solutions to neighborhood deterioration through local community-based
organizations is gaining widespread acceptance (Glaser, Soskin, and Smith, 1996;
Gratz, 1989). However, many scholars argue private philanthropy cannot pick up
in any way, shape or manner what the federal government does not do. According
to Avis Vidal CDCs are not the absolute solutions to neighborhood disinvestment,
macro forces in the economy, or the demographics of suburbanization (Stanfield,
1995). Non-profits do not want to be seen as the answer to housing policy.
(They) are not, (they)are a small part of the whole puzzle, but if nurtured properly,
they can be a vibrant part (Stanfield, 1995, p. 1763).
The intent of this paper was to argue the point that not-for-profit community
development corporations, specifically West Denvers NEWSED in times of federal
devolution, significantly address housing concerns and needs to directly benefit the
community by reversing the negative factors that deteriorate and threaten the
stability of a neighborhood, while avoiding gentrification.. As seen, historically the
federal government had assumed a large role in providing adequate housing during
times of instability. Organizations such as CDCs are similar in that they are
39


dominant forces during times of instability, however as government becomes more
conservative with funding, the institution does also.
40


CHAPTER 3
THE CDC IN OPERATION
Some scholars argue as to when the CDC actually began. Some trace its
beginnings to early American experiences (Peirce & Steinbach, 1987), while most
agree that they grew out of the 1960s (Bemdt, 1977; Robinson, 1996; Owens, 1997;
Goetz, 1993; Orlebeke, 1997; Gittell & Vidal, 1998). The CDC has shifted focus
over the generations, evolving into an important player in housing affordability.
The CDC faces funding limitations as it tries to produce and maintain affordable
housing units. The chapter discusses many challenges the CDC faces and how it
strives to overcome these factors. The CDC involves a complex web of
partnerships (Yin, 1998) made up of three key players, the government, private
philanthropy, and the community. As the chapter describes the CDCs evolution, it
explains how and why the CDC has grown from a protest movement to a
mainstream organization that utilizes a variety of mechanisms to obtain their goals.
The chapter is organized as follows:
1. Historical Roots of the CDC
2. The Evolving CDC
3. Facing the Funding Challenges
4. A Complex Web of Partnerships
5. Social Capital and its effects on neighborhood decline
41


Historical Roots of the CPC
By most accounts not-for-profit community development corporations
[according to most scholars] grew out of the 1960s War on Poverty, the Ford
Foundations gray areas programs of the same era, and direct funding from the
United States Community Action Agency programs (CAP) (Bemdt, 1977;
Robinson, 1996; Owens, 1997; Goetz, 1993; Orlebeke, 1997; Gittell & Vidal,
1998).
Other scholars argue that the federal government and the Ford Foundation
were a crucial part of the movement in that they provided funds, but they note that
the CDC was no invention of the federal government or the Ford Foundation.
Peirce and Steinbach (p. 20, 1987) claim that:
Its (CDC) roots can be traced to the earliest American experiences -
Mayflower pilgrims with their compact of mutual assistance to the
cooperatives of the great depression. From the utopian communities of New
Harmony and Oneida to Booker T. Washington and Marcus Garvey
organizing collective business efforts to help former slaves after the civil
war.
Keating, Krumholz, & Star (p. 145,1996) further argue:
The use of nonprofits as an appropriate vehicle to address community
problems is not new. The historical underpinnings of these organizations
can be found in the long-standing American tradition of the associations or
mutual aid society, the rise of the social settlement house movement, & early
efforts of non profits to meet the housing needs of low income residents.
42


The Evolving CPC
The earliest CDCs were seen as a way in which poor communities could achieve
greater political and economic power to offer better solutions and alternatives than
the initiatives put forth by the government and other service delivery agencies
(Goetz, 1993; Robinson, 1995; Bemdt, 1977). Unfortunately, many urban renewal
programs, like Slum Clearance, displaced the poorest populations into increasingly
concentrated, segregated, impoverished neighborhoods (Yin, 1998). Thus, the
purpose of the federal governments Community Action Agency Program (CAP)
was to mobilize, promote, and organize the poor. The basic assumption of this self-
help model was to give back power to the poor and to break the cycle of poverty
(Bemdt, 1977). The first generation CDCs, which it is estimated there were about
100 (Stoecker, 1997; Peirce & Steinbach, 1990), were deeply committed to
organizing the poor via new businesses, housing for low- and moderate- income
families (Givel, 1991) and jobs (Givel, 1991; Kelly, 1977).
Early CDCs broadened as neighborhood advocates that protested the
encroachment, displacement, gentrification, and redlining taking place in the name
of progress (Vidal, 1995; Gittell & Vidal, 1998; Orlebeke, 1998; Goetz, 1993;
Stoecker, 1997). Unfortunately, the governments revitalization efforts of the time
were characterized by high levels of displacement and gentrification of the poor
(Palen and London, 1984; Smith and Williams, 1986). While millions of dollars
43


were spent on creating offices and playgrounds (Goetz, 1993) for the upper
classes, residential neighborhoods for the poor were being destroyed. In response,
Peirce & Steinbach (1987) claim that in the 1970s community economic
development was no longer an alternative way to help poor communities; it was fast
becoming the chosen vehicle (p. 27). Between 500 and 1,000 second generation
CDCs formed (Peirce & Steinbach, 1990; Stoecker, 1997) to protest such
displacement based urban renewal (Stoecker, 1997; Vidal, 1992).
During the 1980s, CDCs responded to federal cuts in affordable housing
(Vidal, 1996; Gittell & Vidal, 1998). As the government became more conservative
with funding, neighborhood organizations, like the CDC became conservative as
well. Since then, the primary function of the CDC has been to provide affordable,
adequate, long-term housing (Robinson, 1996). According to Vidal (1992), CDCs
that arose in the 80s and 90s were more likely than their predecessors to make real
estate their primary activity. In fact, over 1,000 CDCs have emerged since 1981
(Peirce & Steinbach, 1987)as debt weary governments at all levels withdrew from
the pressing problem of urban poverty (Stoecker, 1997). According to Goetz
(1993), in 1989, 95% of cities with populations over 100,000 had one or more
CDCs operating in them.
The new generation of CDCs receive political and economic support for
housing production. In fact over 90% of CDCs primary mission is to create
affordable housing (Vidal, 1996; Goetz, 1993; Goetz, 1996; Gittell & Vidal, 1998;
44


Medoff & Sklar, 1994). Over the last 10 to 15 years CDCs have become major
players in urban and neighborhood housing revitalization. These CDCs have
matured into a fledgling industry, more and better support has become available to
new organizations (Gitell & Vidal,1998).
From 1960 until 1990, CDCs produced nearly 14 percent of federally
subsidized housing (Walker, 1993; Vidal, 1996). During the years of 1986-87,
CDCs were producing close to 45,000 units per year, while HUD was producing
38,682 units per year. According to Goetz (1993) the figures indicate that the CDC
sector has developed a production capacity roughly equal to the federal
governments low-income housing output (p.l 18). In 1993, according to the
National Congress for Community Development, CDCs produced around some
400,000 units (Vidal, 1992; Vidal, 1996).
Gittell & Vidal (1998) explain the two types of community organizing;
conflictual (traditional) and consensus. Conflictual organizing is the most basic
form and historically the first type of community organizing. Protest movements,
marches, demonstrations, sit-ins, are typical types of conflictual organizing.
Consensus organizing differs from traditional organizing in two ways. First
consensual organizing deals with non controversial issues, such as housing
improvement and redevelopment. Second, consensual organization believes there is
potential for low-income individuals to strengthen their power and influence without
overturning or changing the existing system.
45


CDCs, originally, may have been conflict organizations, but they have most
certainly grown into established, mature, and consensual organizations. Gittell &
Vidal (1998) state that they (CDCs) have matured into a fledgling industry, more
and better support has become available to new organizations (p. 34). The
organization has evolved from protest politics to professional development
corporations. Institutions that engage in street and political unrest, risk the potential
of alienating potential outside funders. Since handing is the biggest concern for
CDCs, it is important not to alienate its limited sources of funding. Without outside
funding it is impossible for the CDC to bear the costs of development alone.
Facing the Funding Challenges
Funding remains the biggest obstacle for CDCs and has been described as
creative and complex (Keating, Krumholz, & Star, 1996; Goetz, 1993). Since its
primary mission is to create affordable housing for low-income residents, the cash
profit from most CDC projects is minimal at best. Thus CDCs are in constant
search of binding for their administrative and staff costs. As well, CDCs are in need
of predevelopment funding, (Goetz, p. 120,1993) which covers costs before
actual production begins. The CDC does not have a ready reserve of cash flow on
hand to cover such predevelopment fees. However, the dilemma of funding does
not end there. After the predevelopment needs are satisfied, it is then necessary to
46


finance the hard costs (Goetz, p. 120, 1993) of production. Such financing
includes property acquisition, development, and construction costs.
Since CDCs operates in low income marginal neighborhoods that banks and
other for profit spectators tend to avoid, the agency must scramble for subsidies
from several different sources to patch together a financing package that works
(Orlebeke, 1997). This indicates the reason the CDC has had to moderate and
professionalize its behavior. With limited funding, as mentioned earlier, it is not
wise to upset possible contributors. Since funding is limited in scope, CDCs have
had to come up with some creative strategies, which has involved a complex web of
partnerships to fund their projects.
A Complex Web of Partnerships
Yin (1998) mentions over the last three decades, the story of CDCs has
progressed from that of the single organization making good in its community to
that of participation in a complex web of partnerships (p. 138). Keating,
Krumholz, & Star (1996) describe the CDCs as organization of public/private
partnerships that provide services within neighborhoods that are no longer attractive
to the private market (p. 145).
The community acts as the force behind community sensitive revitalization
efforts (Robinson, 1996; Bemdt, 1977). The assumption is that the community
47


knows what is best for its particular neighborhood. Thus the planning, developing,
and production should come from within (Peirce & Steinbach, p.30).
Although community development corporations are private [self help groups with
public boards and many community meetings], they still rely heavily on federal
funding and regulations (Stanfield, 1995; Bemdt, 1977; Robinson, 1996; Keating,
1996) since they operate in neighborhoods where the free market failed in the first
instance(Peirce & Steinbach, p. 58,1987).
Even with the devastating budget cuts, the federal government is still a
major funder for the CDC. Four federal programs are crucial for the operation of
not for profits: (1) federal low-income-housing tax credits, which provide tax credits
to corporations investing in low-income housing; (2) Community Development
Block Grants (CDBG), which are allocated locally and provide partial grants for
housing rehabilitation, primarily for owner-occupied housing; (3) the HOME
Investment Partnerships, which provides housing grants to localities and states.
These grants are used primarily for constructing and rehabilitating rental housing for
low income people; however the funds can also be used for loans, interest rate
subsidies, and tenant-based rental assistance to landlords (Stone, 1991). And (4) the
Community Reinvestment Act (CRA), which is aimed at reducing redlining
practices of banking and lending institutions. (Stanfield, 1995).
CRA has become a constructive legal and organizing tool for community
groups, as they have been successful at pressuring lenders and inducing
48


commitments for concessionary lending when banks seek favorable regulatory
decisions on mergers, branch closings, and new branches (Stone, 1993).
According to the NCCED (1995) one third of CDCs reported utilizing Homes
resources (Stanfield, 1995). Stanfield (1995) notes CDBGs are vital to the
operations of nearly four-fifths of the community development corporations (p.
1765). Without funding from the CDBG, most CDCs would have to look entirely to
the private sector for its funds.
It is unclear just how much state and local governments are incorporating
CDCs into housing policy implementation or whether they are providing the
assistance necessary for CDCs to operate effectively (Goetz, 1993). The methods
in which CDCs and local governments connect varies. According to a national
study, 53 percent of CDCs are receiving state funds and 42 percent are receiving
local funds (Goetz, 1993).
Foundation money is critical for nonprofits. National community
development intermediaries are also essential for CDCs operating in destitute and
degraded neighborhoods (Keyes et. al, 1996; Gittell & Vidal, 1998). According to
Orlebeke (1998, p.188) an intermediary is a nonprofit organization financially
backed by corporate investors and private philanthropy. Intermediaries function at
all levels of government: local, state, and national. The intermediaries provide the
necessary financial, technical, political, and moral support to enable local CDCs to
49


create a practical low-income housing industry (Keyes et. al., 1996; Gittell & Vidal,
1998; Bemdt, 1977; Robinson, 1996).
Three significant national intermediaries exist today. In 1979 the Local
Initiatives Support Corporation (LISC), which was founded by the Ford Corporation
and seven other corporations, began with $10 million in capital (Orlebeke, 1998;
Peirce & Steinbach, 1987). Since that time, LISC has raised more than $2.4 billion
from 1,600 sources, and has assisted CDCs in creating over 73,000 units of
affordable housing (Orlebeke, 1998). Another intermediary is the Enterprise
Foundation, which was founded in 1982. The Enterprise foundation to date has
assisted more than 550 CDCs, with $1.8 billion from private capital for grants,
loans, and equity investments (Orlebeke, 1998). CDCs have produced over 60,000
in units with the help of the Enterprise foundation (Orlebeke, 1998). Finally, the
Neighborhood Reinvestment Corporation (NRC) is a 1978 non-profit,
congressionally chartered intermediary. The NRC receives most funding from a
congressional appropriation, which in 1997 was near $49.9 million. Although most
funding comes from a congressional appropriation, they also receive revenue from
banks, corporations, and foundations.
Housing production is of a technical nature, thus specialists in the legal,
design, architectural, engineering, and construction fields are critical to CDCs. The
costs of housing production and technical expertise is burdensome for non-profits,
50


thus the intermediaries provide a large portion of the funding and the technical
assistance necessary for the CDC to operate effectively.
The CDC combines the aforementioned resources to develop innovative
funding strategies: tax foreclosures, linked deposits (which allow banks to lend at
reduced interest rates), investments from foundations, existing government
programs, and successful lobbying efforts (which created the 1986 Low Income
Housing Tax Credit). Such efforts provide direct impacts on neighborhoods, as well
as give the organizations and residents a significant stake in the projects and
community (Keating, Krumholz, & Star, 1996).
CDCs vary in size and scope, but they basically share common goals and
visions by operating in marginal neighborhoods stricken by poverty, disinvestment,
and abandonment. The neighborhoods that CDCs commonly represent are those
with fully depreciated structures, low income homeowners who are unable to afford
maintenance, high levels of absentee ownership rates, slumlords, and landlords
unable to upkeep their properties because they are unable to raise rents to recapture
reinvestment (Margulis, 1998).
The key to maintaining a viable neighborhood amongst so many negative
factors, according to Keating and Smith (1996) is neighborhood organization (p.
37). As Fisher (1996) indicates, neighborhood organization is important in three
ways: (1) it has strong historical roots and ties, (2) it cuts across the political
spectrum [appeals to mainstream society], (3) efforts at organization can expand and
51


transcend across borders. Vidal (1996) credits the neighborhood CDC with doing
the difficult job of providing service and leadership in communities that need help
and that other agencies cannot or will not serve (p. 153). As neighbors unite with
one another, they become a strong voice to the city. An organization that is based
and dedicated to a neighborhood is capable of further advocating the goals of the
residents, via grants, private philanthropy, business plans, etc., known as social
capital.
Social Capital and Its Effects on Neighborhood Decline
Historically, poverty-fighting legislation has to include community
organization and involvement in the decision making process. In response, urban
theorists are now calling for the development of social capital in urban
neighborhoods, as they believe it is necessary for economic growth, neighborhood
stability, and, most important, the ability to engage neighborhood residents to
connect with one another and act collectively for the better of themselves and their
community. (Temkin & Rohe, 1998; Putman, 1993, 1995). The 1995 Committee
for Economic Development called for CDCs to emphasize the creation of social
capital (Temkin & Rohe, 1998). Social capital, according to Coleman, is an
intangible resource that exists in the relations among persons (Temkin & Rohe,
1998). According to Saegert & Winkel (1998) social capital is a term much
invoked recently to describe the benefits of voluntary associations, which some
52


writers believe are necessary for a democratic society and for economic prosperity
(p. 20). Robert Putnam (1994), who actually popularized the concept, defines social
capital as the features of social organization such as networks, norms, and social
trust that facilitate coordination and cooperation for mutual benefit (p. 6). Putnam
divides social capital into two component: civic engagement and trust. Civic
engagement is the level at which citizens participate in the political process. Trust
is the level at which citizens trust one another, which encompasses talking about
neighborhood problems and solutions, helping one another, spending recreational
time locally, etc. If citizens actively participate in the political process and trust one
another, arid speak out more frequently, they are likely to come together and
enthusiastically address their communities concerns via the political process.
As mentioned earlier, CDCs were once at the center of grassroots
organizing. This allowed for neighborhood residents to come together, discuss
issues, and mobilize to fight for their rights, an initial form of social capital.
Ultimately the CDC and residents had to trust one another to fully develop a sense
of social capital in their neighborhood. Gittell & Vidal (1998) argue that;
community development in social capital and networking terms facilitates an
understanding of the role of community organizing in community development-
understood broadly as the restructuring of political, economic, and social
relationships to permit disinvested neighborhoods to produce a higher quality of life
for residents (p. 51). The consensual model operates under the notion that
53


neighborhood residents should have some say in the development agenda in their
community, while establishing strong relations with other development actors in the
larger metropolitan area (Gittell & Vidal, 1998). In doing this, they establish
positive linkages to other private, public, and nonprofit institutions. The blending
of and bridging social capital is thus at the core of consensus organizing (Gittell &
Vidal, 1998, p. 53).
According to Temkin & Rohe, (1998) neighborhoods with a strong sense of
social capital experience less problems with crime and experience a healthy social
environment, which should be capitalized into the value of housing within the
neighborhood (p. 65,1998). According to some scholars, social capital has affected
conditions in public & affordable housing (Spence, 1993; Keyes et al., 1996). As
neighborhoods enjoy higher levels of social capital, it is less apt to experience
decline.
Consensus organizing aims to build new organizations that can cut across
existing networks and develop new leadership (CDCs), which becomes the
communities institutional infrastructure. In doing this, the community is most
likely to support development and other agenda items set forth by the institutional
infrastructures since many projects are defined and prioritized within the community
for the betterment of the neighborhood.
Social capital, which is at the core of consensus organizing, strives to build
bridges that strengthen the institutional infrastructure that work on behalf of low-
54


income communities. The more social capital that exists within a neighborhood, the
better the chances of interaction at all levels, locally, as well as city wide.
Essentially, consensus organizing has participants actively pursuing resolution
through existing channels and taking advantage of the institutional infrastructure.
For social capital to exist within a neighborhood Gittell & Vidal (1998)
claim the CDC should be governed by leaders from the neighborhood and a variety
of other well-regarded citizens from the public and private sectors who can
contribute to the neighborhood revitalization process by virtue of their positions,
experience, or perspectives (p. 41). If the CDC does not get input from the
community on its projects, than the CDC is merely serving its own interest.
55


CHAPTER 4
CRITICISMS OF THE MOVEMENT
The CDC is not without its share of critics. In fact many dismiss the success
stories many CDCs have enjoyed. At times critics paint an accurate portrait of the
CDC. While this chapter acknowledges the validity of the opponents argument, it
also recognizes some of the accomplishments of the CDC. CDCs are not trying to
solve the housing crisis or other dynamics of neighborhood declination, but rather
they are a small piece of the puzzle working to offer more housing opportunities in
its communities. The chapter is organized into three sections:
1. Low Productivity Rates
2. CDCs Sell Out
3. CDCs do not Accurately Mirror its Neighborhoods
Low Productivity Rates
Opponents argue that the productivity rates of CDCs are just a drop in an
ocean of need (Twelvetrees, 1989, p. 155). Since the CDC lacks adequate funding,
it comes nowhere near providing (Twelvetrees, 1989; Stoecker, 1998) or saving any
notable amount of affordable housing (McAfee, 1986; Twelvetrees, 1989, Stoecker,
1998). Stoecker (1998) describes the CDC as a single small initiative in a sea of
decay (p. 7).
56


The above critique, unfortunately is accurate. CDCs operate in weak
markets, so naturally their productivity rates are not tremendous. In fact, Robinson
(1996) mentions that the non-profit ownership rate in the United States is less than 1
percent of all rental housing. The critique is valid, but if the CDC were not
developing in these deteriorated neighborhoods or working on behalf of the poor, in
the midst of government withdrawal? Currently, the CDC is the major producer of
low income housing, matching current federal affordable housing productivity
(Robinson, 1996; Goetz, 1993; Vidal, 1996).
Furthermore, Robinson (1996) indicates that to criticize the CDC for its
minimal units produced is to miss the point regarding their holistic agenda. CDCs
commonly engage in other community improvement activities (Robinson, 1996;
Gittell & Vidal, 1998; Vidal, 1996). In fact, 75% of CDCs provide weatherization
assistance, resident services, including counseling for both tenants and
homeowners, and aid for the homeless. (Gittell & Vidal, 1998). At least 70%
contribute to community empowerment initiatives, 60% furnish residents with
human services, such as job placement, drug, alcohol, and pregnancy counseling,
child care, etc., and finally roughly 25% engage in small scale commercial and
industrial development (Gittell & Vidal, 1998). Walker (1993) indicates that CDCs
have evolved from issue oriented community groups that were historically
established to challenge lending practices, demand improved city services, and fight
off gentrification into mature professional industries. Although the CDC may not
57


be producing housing in large amounts, it is providing a social services to
communities.
Although the CDC does not produce tremendous numbers of units, they are
still matching rates of production under federal programs at about 13 percent. The
CDC is not solely a housing producer either, it has evolved from its original roots to
become an established organization that works for the betterment of its
neighborhoods via community improvement initiatives.
CDCs Sell Out
Since the CDC is constantly scrambling for funding, many opponents argue
that the CDC has given up its innovative, protest driven grassroots movement that
gave most a start. Such theorists argue that CDCs, because they are less willing to
alienate potential funders (Piven & Cloward, 1979), will delegitimize protest or
organizational movements by dismissing their actions as militant and extreme
(Stoecker, 1998; Taub, 1990). Furthermore opponents claim that the CDC actually
diverts attention and efforts away from mass-based, protest driven actions (Lenz,;
Piven & Cloward, 1979; Stoecker, 1998). In fact many argue that protest
movements have more influence and have more lasting effects than formalized
organizations that (arise) on the crest of protest movements (Piven & Cloward,
1979). McAfee (1986) notes her frustration with CDCs in that they do not talk
about a revolutionary protest movement to replace the existing capitalist system that
58


allows there to be a housing crisis in the first place. According to Bemdt (1977)
CDCs have accepted the rationale of the corporation within capitalist society (p.
126).
For the most part it is true that CDCs are willingly operating within the
capitalist society and most do not promote active protest movements against
capitalism (Stoecker, 1998). They do, however promote community sensitive
programs and initiatives, such as housing. According to Robinson:
there is an imperative for successful low-income communities to move
beyond defiant resistance and to turn the forces of government and business
towards proactive, community-sensitive pursuits (1996, p. 1649).
Many believe in order for community sensitive development to exist, the
CDC must be a necessary and integral part of the process. The CDC reacts to the
lack of federal dollars flowing into urban neighborhood for adequate housing, but
does not stop there, it reacts by utilizing methods and strategies aimed at alleviating
problems urban neighborhoods face. Because CDCs are accepted by mainstream
society, the CDC is able to bring in more dollars to assist with community
initiatives, which can be quite costly. Without adequate funding, it would be
extremely hard for any organization to tackle such social ills.
CDCs are advocates for gentler change within its neighborhoods. CDCs are
becoming powerful vehicles in producing low-income housing because of its
increased professionalisation within the capitalist society (Robinson, 1996). Since
the CDC has evolvd into a mature professional organization, it is better able to
59


obtain federal grants and other types of funds. As the CDCs popularity increases
so does its production and activity rates (Vidal, 1997; Robinson 1996). As well,
Robinson (1996) has also noted that CDCs provide the avenues for bottom-up
citizen participation in politics; providing quality, flagship, neighborhood projects
which can act as emotional anchors for community aspirations to enhancement and
empowerment (p. 1662). Most CDCs still engage in some form of community
organizing. According to Walker (1993), nearly two thirds of CDCs conduct
community organizing activities and about 40 percent try to organize and mobilize
community residents.
At present, the purpose of CDCs is to establish habitable and affordable
living environment for its residents, not to change the existing system. The point
can be argued that the moderate approaches of CDCs have had such success is
because they operate simultaneously with oppositional movements that exhort and
pressure government and business. In times of federal devolution, it seems that the
only the CDC must maintain a conservative agenda to ensure limited federal funds.
CDCs Do Not Accurately Mirror Their Neighborhoods
Another common criticism is that CDCs are not truly representative of the
neighborhoods it represents (Bemdt, 1977; Stoecker, 1998; Lenz, 1988; Kelly,
1974; Giloth, et al., 1992 Stoecker). Some scholars believe that the true power and
control is not in the hands of the residents, but in a few powerful elites. As
60


mentioned earlier, CDCs scramble for funding and are entwined in a complex web
of partnerships between community, government, and the private sector. It is this
complex organizational structure that many claim devolves control from
neighborhood residents to the professional staff, who often live outside of, and
whose interests are not vested within, the community (Stoecker, 1998; Kelly, 1974;
Bemdt, 1977; Giloth, et al., 1992). Furthermore, many believe that to solicit
funding from outside the community via private and government sources, often
includes stipulations and conditions that pose a threat to community autonomy
(Glaser, Soskin, & Smith, 1996; Sharp, 1990).
The national intermediaries that fund CDCs, at the local levels, are
controlled by elites who often view redevelopment from an exchange value
perspective rather than a use value perspective (Stoecker, p. 8, 1998). It is argued
that the technical assistance and professional staff are always found outside of the
community. Further, boards are made up of businesses and professional individuals
who are not actually poor residents, thus the CDC is not an accurate advocate for the
neighborhood (Stoecker, 1998).
Primarily CDCs are interested in having its board members ethnically and
racially mirror its given neighborhoods even if they are not primarily made up of
neighborhood residents (Gittell & Vidal, 1998). In fact, the CDC boards that share
similar characteristics with its residents is important and viewed as credible (Gittell
& Vidal, 1998). Since CDCs are in competition for funding, it is of the utmost
61


important to possess the best credentials. However, the dilemma does exist. With
the lack of adequate public funding, CDCs must strive to maintain community
control, while relying on private dollars. Advocates do not dismiss this problem, as
Bratt (p. 25, 1998) notes the plausibility of Stoeckers (1998) argument, there
seems little way to escape (his) argument: How to support redevelopment that
allows for community control while needing to look to outside funders to write
down the cost of that development to make it affordable. Instead of wasting
energy on such limitations, Bratt (1998) concludes the effort should go toward
educating the funders of potential hazards to the community when there are
stipulations and conditions attached. Since most CDCs are organizations working
on behalf of the poor, most do not want to operate against community interests
anyway.
CDCs are not without its share of critics and in fact, most of the arguments
are valid. It is true that the CDC has given up the protest driven movements that
gave many a start. While the protest driven movements are working to change the
system, the CDC is working to better its community as long as the system exists.
CDCs cannot always mirror their neighborhood racially and ethnically, although
most try. If the CDC is comprised of some neighborhood residents and members
that share similar ethnic traits, there tends to be more trust and communication
between the agency and residents. With a constant scramble for funding the CDC
strives to maintain harmonious relations with the neighborhood as well as potential
62


funders. If a funder determines that the CDC is not working on behalf of the
neighborhood or if there is a lot of conflict between the organization and the
community as a whole, then funding may not be given to the organization.
Finally, it is true that CDCs operate in weak markets, and do not produce at
tremendous rates, but it is producing at the rate of federally funded programs.
Obviously, CDCs are not the answer to the housing dilemma, but with the units
produced along with other assistance and service, CDCs attempt to help residents
exist within the current system. Peirce & Steinbach (p. 12,1987) pose the question:
What manner of organization tackles the toughest societal problems, plays charity
and capitalist and community organizer at the same time, and can manage to bring
government, corporate, philanthropic, religious America all on board? The answer
is the non-profit Community Development Corporation.
63


CHAPTER 5
A CASE STUDY OF NEWSED
This thesis includes a case study of a major Community Development
Corporation, NEWSED, located in the heart of West Denver. The Westside is
delineated by Colfax to the north, Speer Boulevard and Broadway to the East,
Alameda to the south, and the railroad tracks to the west. La Alma/Lincoln Park is
the area immediately bounded by West Colfax Avenue, Speer Boulevard, West
Sixth Avenue, and the South Platte River. The Baker neighborhood is that area
surrounded by West sixth Avenue, Broadway, West Mississippi Avenue, and the
South Platte River. The Westside area, of which the La Alma /Lincoln Park and
Baker neighborhoods are a part, is an urban underclass community located in the
heart of West Denver. The neighborhood has experienced decline, disinvestment,
and also reinvestment over the last 50 years. NEWSED is primarily responsible for
the neighborhood experiencing economic revival once again. As well, NEWSED
claims to be deeply committed to providing affordable and adequate housing for its
residents.
The chapter will provide a history of the neighborhood and describe how the
neighborhood witnessed severe abandonment during the 50s and 60s. The chapter
discusses how and why NEWSED came into existence and current programs that
64


are in operation for the two neighborhoods: The chapter is organized into nine
sections.
1. History of the La Alma/Lincoln Park and Baker Neighborhoods
2. Current Disadvantages the Neighborhoods Face
3. The Rise and Success of the For-Profit, NEWSED
4. The Beginnings of a Not-for-Profit, NEWSED
5. NEWSED Gets Labeled an Urban Comeback Success Story
6. NEWSED Tackles the Housing Crisis
7. NEWSED Promotes Cultural Pride and Unity
8. NEWSED and Social Capital
9. The Decrease in Crime in the Neighborhood
History of the La Alma/Lincoln Park and Baker Neighborhoods
The Westside neighborhood is a neighborhood with considerable cultural
heritage and pride. Spanish sumamed individuals comprise well over 50% of the
total population. Latest census statistics (1994) had the total population in the two
neighborhoods at 11,802. The total population in La Alma/ Lincoln Park is 6,534
individuals constituting 2,767 households. The Latino population is at 64%. The
Baker neighborhoods total population is 5,268 individuals comprising 2,235
households. The Latino population is 55.5% (NEWSED Business Plan, 1998).
The Denver Westside is rich in history. La Alma Lincoln Park and Baker
are two of Denvers oldest neighborhoods, dating back to the 1880s an the
settlement of the Auraria City (Research Division of the Urban Land Institute, 1980;
Westside Neighborhood Plan, 1981). Once a booming industrial site along the
South Platte River, the Westside neighborhood was established adjacent to the
65


Denver and Rio Grande railroad lines. The city of Denver actually began in this
neighborhood in the 1850s. Groups of gold seekers from Auraria County, Georgia
came to the area and settled on the west side of Cherry Creek, which is now the site
for the Auraria Higher Education Campus (NEWSED Business Plan, 1998).
La Alma / Lincoln Park, originally known only as Lincoln Park, was
annexed to Auraria city under the Territorial Session Laws of 1874 and 1883
(Westside Neighborhood Plan, 1981). Only recently has Lincoln Park become
known as La Alma/Lincoln Park. In Spanish, La Alma means spirit or soul. The
neighborhood prefers the area to be known as La Alma/Lincoln Park. In fact La
Alma Park was the site for many neighborhood protests and organizations back in
the 60s (Westside Neighborhood Plan, 1981). In La Alma/Lincoln Park, 93% of the
residential structures in the neighborhood were built prior to 1900, with the
remaining 7% developed during the years of 1900-1914. The average year of
residential construction is 1893 (Westside Neighborhood Plan, 1981).
The Baker neighborhood was annexed to the city under the Territorial
Session Laws of 1883 (Westside Neighborhood Plan, 1981). By 1900, 82% of the
residential structures had been built. The remaining 18% of residential structures
were built between the years of 1900 and 1915 (Westside Neighborhood Plan,
1981).
In his Colorado Epic, James Michener described Santa Fe Drive as the heart of
Denvers Mexican community in the 1880s (The Denver Post, 1974). Santa Fe
66


Drive, the Westside neighborhoods main corridor, was significant to the early
Denver economy, as settlers exchanged goods, services, and commerce along this
main strip. Santa Fe Drive was also used as a wagon trail for travelers headed from
the east and south to the Great West (NEWSED Business Plan, 1998).
During the 1930s, decline set in. The neighborhoods fell victim to those
same pressures of suburbanization that plagued many other urban commercial
streets and districts across the nation: disinvestment, abandonment, and decay.
Mexican-American farmers and miners moved into the Denver area, settling in both
the Northeast part of Denver and the Westside of the city. Those two
neighborhoods had the largest influx of Mexican Americans, which is still the case
today. In fact, today, the Westside neighborhood has become the largest Mexican-
American neighborhood in the city (George, 1999).
During the 1950s and 1960s, many upper and middle class residents were
leaving the Americas inner-cities for the suburbs, and La Alma and Baker were no
exceptions. Veronica Barela, the Executive Director of NEWSED and a native to
the neighborhood, indicated that prior to the mass exodus to the suburbs, the ethnic
diversity of the neighborhood was amazing; it was like the U.N. (Interview of
Veronica Barela by Tony Robinson, September, 1999). The economy during those
years shifted from the manufacturing, rail and warehousing industry to a more
professional service industry (NEWSED Business Plan, 1998). Denver inner-city
working class neighborhoods such as La Alma and Baker began to deteriorate;
67


poverty and unemployment rates increased, capital disinvestment accelerated,
neighborhood businesses went bankrupt, crime intensified, and property
depreciated. At one time Santa Fe Drive was truly the heart of the community. It
had a supermarket, hardware store, bakery, and a meat packing plant. Once the
supermarket left the neighborhood, the other businesses soon followed.
The Westside neighborhood in the 60s experienced mass mobilizations to
protest police brutality, inadequate services, local and national discrimination, and
injustices against Chicanos. George (1999) indicates that West Denver became the
hub of radical organizing. A neighborhood organization created, Los Voluntaries.
Los Voluntaries launched voter registrations to increase neighborhood
empowerment in the political process. After time, it was realized that the
Democratic Party was not going to address the multiple issues that troubled low-
income neighborhoods. At this time, the neighborhood began to divide into two
groups: those who would support the mainstream electoral process and those who
would support radical movements, namely the Crusade for Justice, led by Rodolfo
Corky Gonzales (Vigil, 1999).
The Crusade for Justice had its start in the neighborhood and led many
successful liberation movements. According to Vigil (1998), for fifteen years the
Crusade for Justice was the most powerful, energetic and effective organization to
fight for Chicano rights in the state of Colorado. The Crusade for Justice, as Vigil
(1998) explains, was a catalyst for uncompromising political activism on behalf of
68


people of Mexican descent at a time when our population was growing and
becoming urbanized (p. ix). Gonzales wanted the Crusade for Justice to be a
national model for urban Chicanos to organize in order to achieve self-
determination, as well as resolve social ills that plagued their communities.
Gonzales was very critical of the electoral system and American society, often
claiming that the system (was) built upon racism and imperialism (Vigil, 1998, p.
3). Gonzales did not support mainstream politics, as he believed that the balances of
power needed to be shifted from the ruling elites to the community, a notion that
made many uncomfortable. Gonzales was appointed by Lyndon B. Johnson to head
Denvers anti-poverty programs. It was after this appointment that Gonzales felt
disgusted by mainstream politics. His ideas were not unwarranted as he had once
operated within the realms of mainstream politics.
Those that did not support the Crusade for Justice and worked within the
existing political system were known as the agency group, from which NEWSED
evolved (George, 1999). The agency group consisted of individuals that worked for
established Westside agencies such as: the Westside Action Council, the Denver
Inner City Parish, Brothers Redevelopment, Inc., the Mennonite Urban Ministry,
and the Westside Improvement Association (George, 1998). Basically the agency
group supported social services via counseling, housing, crisis intervention and
assistance, etc. (George, 1998)
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As the 60s came to an end and the protest movements of the time slowly
faded. The government headed into a more conservative position and funding for
local organization al movements became more mainstream. Without the presence of
a strong advocate to voice demands and concerns for the community, the
neighborhoods became to decline.
By 1970, the neighborhoods had some of the highest crime, poverty,
dropout, absentee owner, and rental rates in the city. The construction of the
Auraria Higher Education Center, in the 1970s, intensified the downward spiral of
the neighborhood, as many poor local residents were displaced. As well, it
accelerated middle class flight and led to an 85% rental rate neighborhood. To
assist Americas declining cities the government developed the Urban Development
Action Grants. The purpose of the Urban Development Action Grants were to
revitalize distressed core city neighborhoods by stimulating economic development.
UDAG funding, as mentioned previously, was dispersed locally to those
organizations that could maximize the use of the grant, e.g. economic development,
redevelopment, rehabilitation, etc, rather than political organizations who were
critical of the existing system. It was around this theme and philosophy, which
NEWSED grew to be discussed.
The agency group and the Crusade for Justice had different agendas, which
split the community for many years. The Crusade for Justice engaged in events
such as: led marches that manifested Chicano Power, supported active resistance
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against the police, and built autonomous Chicano institutions, e.g. La Escuela
Tlatleco, a school with a Chicano-centric curriculum. The agency group lobbied for
the Democratic Party and was generally opposed to radical marches and protests.
The agency group supported a civilian review for police actions as opposed to
resisting the police entirely. They also advocated for bilingual education within the
existing school system.
Both movements were needed in Denver. As police brutality and prejudice
against Chicanos was rampant in Denver, a protest movement was much needed to
demand social justice for Chicanos. The only way to get respect and equitable
treatment was to demand it, which the Crusade for Justice did. They organization
did not play a submissive role and try to work within society to change the social
injustices it faced. Rather many took to the streets and demanded change.
The Agency Groups agenda was to promote and bring back new capital into
the neighborhood, which was needed in order to save the neighborhood from the
destruction of disinvestment and abandonment.
Today, both groups are still in operation. The Crusade for Justice is still in
existence and focuses is mostly on its school, Escuela de Tlateloco and have had
tremendous impact on school board and city council elections. The agency group
has evolved into NEWSED.
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Current Disadvantages the Neighborhoods Face
Because both neighborhoods (La Alma and Baker) were developed in
Denvers history, the neighborhoods share similar traits associated with other inner
city neighborhoods nationwide: deterioration, disinvestment, abandonment, and
destruction. I focus on these two Westside neighborhoods specifically, as both were
designated, in 1972, as blighted by the Denver Community Renewal Program. As
previously mentioned, the neighborhoods experienced a lack of revenue for
revitalization, lack of employment opportunities for neighborhood residents, little or
no neighborhood or minority owned businesses, absentee ownership, and
deteriorating housing stocks. Both La Alma / Lincoln Park and Baker experience
poverty rates around 64% (NEWSED Business Plan, 1998). Since that time,
NEWSED has implemented efforts aimed at neighborhood revitalization.
NEWSED has claimed fame for the economic redevelopment along the
Santa Fe corridor and for promoting a strong sense of cultural pride in the
community. In 1995, NEWSED was recognized for its impressive record of
accomplishment for the economic redevelopment along Santa Fe Drive and for its
effectiveness in leveraging social, economic, and political change in the
neighborhood. NEWSED was awarded $500,000 a year to fund a multi-year
Rebuilding Communities Initiative by the Annie E. Casey Foundation. However,
currently, this award has not been renewed because of allegations that NEWSED
72


has not adequately shared those initial resources with other community agencies,
which will be discussed later.
The Rise and Success of the For-Profit NEWSED
NEWSED grew out of the 1960s Westside Action Council. The 60s, as
mentioned earlier, were a time of mass protests and grassroots organizing in
response to brutality, intimidation, terror, harassment, killings, and raids by city
police, as well as federal and state departments (George, 1999). In response, many
community organizations sprouted. The Westside Action Council was no
exception. By the late 60s, the Westside Action Council had established a
neighborhood co-operative grocery store hoping to pave the way for future
community owned businesses. The endeavor was unsuccessful. In 1975 the
Westside Action Council, along with the Mennonite Urban Ministries, the Auraria
Community Center, and the Denver Inner City Parish formed NEWSED (George,
1999). They formed NEWSED to gain, rehabilitate, and develop real estate in the
neighborhood, an agency that could effectively meet the needs of the neighborhood
(George, 1999).
NEWSED began as a for profit entity to revitalize the Santa Fe commercial
corridor. The thought was if the Santa Fe corridor was revitalized into a flourishing
economic center then the neighborhood in general would flourish. NEWSEDs
primary reason for revitalizing the corridor was due to the alleged impact the
73


Auraria Higher Education Center would have on the neighborhood. The Auraria
Higher Education project initially destroyed the core of the community, with dozens
of residential blocks being destroyed. NEWSED feared further encroachment and
displacement of existing homeowners, thus it developed the Zocalo shopping to
place a boundary between the campus and the neighborhood.
By 1979, NEWSED realized that the neighborhood has other needs as well,
which will be discussed in the next chapter. At the onset of the Reagan
administration, the Community Action Councils were defunded, as predicted by
activists of the Westside Action Council, who had already distributed NEWSEDs
share among the four other original organizations. The four shareholders combined
all shares to allow for a not-for-profit agency, NEWSED.
The Beginnings of a Not-for-Profit NEWSED
In 1983, NEWSED changed its identity to that of a not-for-profit community
development corporation characterized by an IRS 501 (c)(3) status. From the
beginning, NEWSED had a dream that community folks would own the businesses
within the community.. .it was always the vision that community folks would be
empowered (George, 1999, p. 62). NEWSED was initially committed in helping
Mexican business owners apply for loans and create opportunities that had not
previously existed Also, there other pressing issues to focus on; such as: creating
jobs for community residents, obtaining and managing resources for the
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revitalization of the Westside neighborhood, providing employment and training
skills to encourage self sufficiency, developing much needed shopping services,
boosting minority and community owned businesses, hosting cultural events, and
increasing homeownership rates (NEWSED Housing Development Plan, 1994;
NEWSED Request for Funding, 1997; NEWSED Business Plan, 1998). NEWSED
quickly changed its mission statement to include raising the income, educational
and political levels of West Denver residents, which remains today.
NEWSED attempts to empower community residents via the PODER
project, which will be discussed later. Many of NEWSEDs programs are defined
by neighborhood residents. The Board of Directors is comprised of 54%
neighborhood residents, although I have not been able to get a current list of the
Board of Directors. The Executive Director was bom and raised in the La Alma
neighborhood. NEWSED claims that prior to the implementation of the PODER
program, neighborhood residents were surveyed and interviewed to determine their
primary concerns. Of course residents can not be involved in every facet of the
organization, but they can be given reports and accountability of funding that comes
into the neighborhood. There is a controversial instance, to be discussed later,
where NEWSED refused to provide residents who were inquiring about grant funds
information as to how the funds were spent. I focus on these two Westside
neighborhoods specifically, as both were designated, in 1972, as blighted by the
Denver Community Renewal Program.
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The problem that I have faced is that most documents are produced and
written by NEWSED staff, thus it is difficult to determine if the projects are truly
indicative of the neighborhoods wants. However according to Georges (1999)
subjects, many in the neighborhood are often discredited by NEWSED if their
beliefs do not reflect the organizations, which will be discussed a bit later in the
paper.
NEWSEDs PODER project, which is funded by the Annie E. Casey
Foundations Rebuilding Committees Initiative, requires active neighborhood
involvement. NEWSED named the project PODER, power in Spanish, because the
ultimate goal is to empower neighborhood residents and equip them with the skills
to determine their own destiny. The PODER Advisory Council is comprised of 33
members, of which 17 are neighborhood residents (NEWSED Business Plan, 1998).
By walking the neighborhood and interviewing the residents, NEWSED designed
Priority Area Committees identified by neighborhood residents (NEWSED History
and Accomplishments, 1997
George (1991) argues that NEWSEDs board, which is not elected by the
community, is at the top of the decision-making process. Often the boards
decisions are reflective of the Executive Director and her beliefs. Among the many
respondents interviewed by George (1999), those not closely connected with
NEWSED or its staff, tended to be alienated by the organization. One of Georges
(1999) respondents said the agency is being capable of autocratic tendencies (p.
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76). Some residents have elevated their feelings to one of NEWSEDs major
funders, the Annie E. Casey foundation.
The Annie E. Casey Foundation, which originally awarded the grant has
refused to meet with NEWSED to consider renewal or additional funding because of
speculation from the community that the organization mishandled the funds from
the beginning. Since the foundation money was for a community initiative,
neighborhood residents felt that through questions and answer sessions the
community at large would come up with ideas for the betterment of their
neighborhood. As some residents were becoming concerned about the disbursement
of the funds, they demanded to see the budget to obtain a better understanding of the
projects. This is where the conflict began. According to one of Georges (1999)
respondents, the community members asking for accounting of fund disbursement
were discredited by NEWSED staff and were clearly advised that they were not
welcome (p. 80).
Since NEWSED did not provide direct answers about the funding, those who
were inquiring were forced to go directly to the Casey Foundation staff.
Unfortunately, at the time, the staff did not demand accountability of the funds from
NEWSED. Quite a few of Georges (1999) respondents said that Casey funds
provided NEWSED an opportunity for building its own capacity and empowering
itself economically and politically as an organization (p. 80).
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George (1999) states NEWSED views themselves as apolitical, as well as
technical experts. NEWSED has never claimed to be a social movement, but
rather a community based real estate developer working for the betterment of
residents via housing opportunities. However, I believe that in order to truly help
your community and neighborhood residents it is necessary to not alienate them.
NEWSED, since many candidates are nominated from existing staff.
Santa Fe Drive: A Comeback Story
In 1979, NEWSED created the Santa Fe Drive Neighborhood Business
Revitalization Area Program and the Santa Fe Drive Redevelopment Corporation
(SFDRC) merchants associations to promote economic development along the Santa
Fe corridor. Under the guidance of NEWSED, SFDRC has developed and owns
14,00 square feet of parking for area business, a 2,000 square foot service building,
a local bank,. NEWSED and SFDRC have captivated $5.5 million in public
support, as well as $1.4 million in private sector reinvestment.
The organizations have had a lasting impact on the economy of the Westside
neighborhood. In 1978 they submitted a paper to the City of Denver to develop a
$13.5 million Urban Development Action Grant, that ultimately produced 958 units
of middle income housing, 100 units of elderly housing, a King Soopers grocery
store, and an eleven story office complex (Research Division of the Urban Land
Institute, 1980). The purpose of the housing units was to bring back the buying
78


power of the 30% middle class residents displaced by the development of the
Auraria Higher Education Center (Research Division of the Urban Land Institute,
1980). Since 1980, NEWSED has built two more shopping centers, an automobile
service center, and a retail complex. Unfortunately, the residents that live in the
units have isolated themselves entirely from the community.
The strip of Santa Fe Drive between 6th and 13th, known as Old Town
Santa Fe, can be labeled as a comeback story. Graffiti, litter, vagrants, vacant
stores, and crime are becoming a mere memory of what once was along this
corridor. Not so long ago, Santa Fe Drive had a rough reputation. Many were
afraid to walk the streets as crime was rampant, storefronts were boarded up and
abandoned by investors, vagrants plagued the streets, and litter and graffiti were
plentiful.
Nearly 10 years ago, things began to change for this once booming corridor.
The Mayors Office of Economic Development began supporting the few businesses
along Santa Fe, as well as promoting and encouraging new growth, through the
federally funded Neighborhood Business Revitalization Program. For over 25
years, NEWSED and SFRDC have successfully collaborated in efforts to bring
economic prosperity to the neighborhood.
Nearly $5.9 million in small business, real-estate financing has been
available through the Mayors Office for Santa Fe Drive, with an additional $13
million in federal funds for private investment over the last ten years. City financed
79


streetscaping has also attributed to Santa Fes success story by getting business and
people back to the streets. Over the last 13 years, NEWSED claims that 180 new
businesses have made Santa Fe Drive their home
Santa Fe Drive is so attractive because it is close in proximity to downtown.
It is estimated that $3.9 million in private investment has been made over the last
couple of years along the corridor. When NEWSED originally started, the original
vision was that community residents would own the storefronts along Santa Fe
Drive. Its goal was to assist Mexican business owners, even if they could speak
little or no English. For example the Panderia (Bakery) owners spoke hardly any
English, but with their business plan they were able to open along Santa Fe Drive.
Nevertheless, the focus, today, is definitely not on aiding Mexican Business owners.
Nearly all businesses, and to date there are about 180 new businesses, are not owned
by community residents. Those businesses that have located along Santa Fe Drive,
have not done so for a love of the neighborhood. What has attracted business
owners to Santa Fe Drive is the fact that rents were still affordable, the close
proximity to downtown, and parking is less of a hassle for customers.
NEWSED helped revitalize Santa Fe Drive. The numbers are indicative of
extensive growth and investment along the corridor. The businesses that have either
relocated or started up along Santa Fe Drive are not necessarily characteristic of the
neighborhoods needs. Along the corridor, there exists pricey art galleries,
architectural firms, photography shops, antique emporiums, and computer stores.
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Except for a few exceptions, most of the shops are not owned by neighborhood
residents. The staff at NEWSED brag that the businesses along the corridor have
created job opportunities for neighborhood residents. It does not appear as if this is
necessarily true. Most of the jobs are professional in nature, not intended for the
unskilled worker. The few jobs that are relevant to the unskilled worker dont pay
much more than minimum wage, for example cashier, receptionist, janitorial, etc.
Minimum wage is not a sufficient amount to keep a family above poverty level,
especially with the rising cost of homes in the La Alma/Lincoln Park and Baker
neighborhoods. NEWSED has been successful in revitalizing the once abandoned
corridor of Santa Fe, but has not been successful in its original intent, which was
that businesses would be owned and ran by neighborhood residents.
NEWSED and the Housing Crisis
In 1995, NEWSED developed a neighborhood housing master plan, as a
result of surveying neighborhood residents, to increase housing opportunities within
the neighborhood. The plan identified three priority areas to for the plan: increase
home ownership for neighborhood residents; stem neighborhood and housing
deterioration; and reduce neighborhood crime (NEWSED Request for Funding;
Submission to the Southwest Initiative of the National Council of La Raza, 1997).
The three priority areas are necessary to achieve neighborhood vitality and stability.
As mentioned earlier, many scholars have argued that increasing
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homeownership rates within a community is the key to neighborhood stability
(Temkin & Rohe, 1996; Owens, 1997). NEWSED has recognized this as well, as
indicated in the Request for Funding (1997) increasing the ownership rate is
paramount to ensuring the overall long-term vitality of the neighborhood. The
effects would result in a more stable resident population while upgrading the overall
maintenance and conditions of existing housing stock (p. 74) NEWSED is
attempting to achieve its god of increasing home ownership opportunities within
the neighborhood.
Mr. Lemos, the Director of the PODER Project, indicated that while the goal
of the program is to increase home ownership, it is not necessarily worried about
gentrification, as the average income for neighborhood residents is well below the
average income for the city of Denver (interview Leroy Lemos, October, 1999).
However, his point seems a bit out of touch since the selling price of the average
home is increasing rapidly. Gentrification happens in neighborhoods where the
existing residents can not afford the increase in rents and property values, thus they
become displaced. Because the neighborhood residents income is well below the
average income for the city of Denver, this makes the neighborhood prime for
gentrification. Gentrification is definitely a problem that NEWSED is faced with,
whether they admit it or not.
NEWSED has begun some low-income housing production. El Palacio Inca
is a multi-unit housing development project located at 838-862 Inca Street, which is
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the Southeast quadrant of the neighborhood. The three-block area the project
encompasses have experienced some of the most severe decline and deterioration.
El Palacio Inca has been termed a low-income, multi-family, residential apartment
complex. El Palacio Inca is comprised of 12 units; 8 three and four bedroom
apartments and 4 two bedroom apartments. The residents that were chosen are
allowed to stay in the apartments for below market value rents. Essentially, their
leases never expire, they can remain tenants as long as they need (interview Leroy
Lemos, October, 1999).
NEWSED is negotiating to acquire a vacant 12,500 square foot property at
780 Elati Street. The intent is to develop the property into four to six residential
town homes, which will be sold at market value. Unfortunately, the low income
neighborhood residents will be unable to afford them. The organization is exploring
the plausibility of redeveloping its existing property at 1029 Santa Fe. The potential
plan would possibly result in 50 60 multifamily residential units, as well as some
retail use. Another plan under negotiations is to acquire the property located at
1214 Santa Fe Drive. NEWSEDs plan for the property is a mixed-use
residential/retail project.
NEWSED, under the Department of Justice Asset Forfeiture Project, intends
to obtain nuisance properties and rehabilitates them into rental and sale units
(NEWSED Business Plan, 1998). Many low-income Mexicanos were displaced in
order to acquire the property at 1214 Santa Fe Drive. As well, according to George
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(1999), the upscale art gallery that located along Santa Fe Drive, previously
consisted of four apartment units. The residents were ultimately displaced. Only
two of the residents were provided housing in the Palace Inca unit.
The Barrio Aztlan Home Ownership Program is another NEWSED initiative
created to increase home ownership opportunities for neighborhood residents. The
project is in collaboration with the National Council of La Raza, the Mile High
United Way, NORWEST, Wells Fargo Banks, the Denver Community
Development Agency, and two other established non-profit housing organizations
(Request for Funding: Submission to the Southwest Initiative of the National
Council of La Raza, 1997). The purpose of the initiative is to provide down-
payment and subsidy assistance to future neighborhood home buyers. NEWSED
conducts outreach programs in this area, provides pre-qualifying analysis, credit
counseling, and offers loan origination and referrals to other lenders. Since 1998,
through the Barrio Aztlan Home Ownership Initiative, NEWSED has provided
home buyer education and individual counseling to 135 neighborhood families
(NEWSED Business Plan, 1998), but does not require that homes be purchased in
the neighborhood.
Ten families have closed on properties; 8 clients received down payment
assistance; 14 clients received individual home ownership and credit counseling; 43
clients closed on properties in 1998. However, those that have benefited from the
Barrio Aztlan Home Ownership Initiative are not necessarily neighborhood
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residents. Those that benefit are those that can afford the current housing prices in
the neighborhood.
NEWSED is committed to fair housing activities. Currently a trained staff
exists in mortgage lending and rental discrimination testing methods. The staff is
dedicated to identifying redlining patterns that exist within the neighborhoods. The
staff also participates in outreach programs to organize landlord and tenants rights
and responsibilities through workshops.
NEWSED at one time focused on the restoration and rehabilitation of
existing housing stock, through its Anciano and Neighborhood Home Restoration
Program. This initiative is implemented by the NEWSEDs PODER housing
committee, which identifies elderly, low income homeowners. The purpose of the
program is to provide both interior and exterior repairs to those homeowners
mentioned above, as most are unable to maintain the upkeep on their homes. Ten
homes were rehabilitated through the program. NEWSED staff, PODER Housing
Committee members, neighborhood residents, and other volunteers; painted,
replaced a floor and a wall, cleaned yards, improved landscaping, and repaired some
basic electrical problems. The primary objective of the program is to reduce
housing deterioration to help promote a safer and healthier living environment for
elderly members of the community (NEWSED Business Plan, 1998).
So has NEWSED been successful at increasing affordable housing options
in their neighborhood? NEWSED has not significantly helped neighborhood
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residents by creating affordable housing units. When I realized that NEWSED
hasnt significantly increased the home ownership rates nor produced many more
affordable housing units within the community, I figured it was only because they
hadnt been in the housing business long enough to have a profound and lasting
effect, which doesnt appear to be the case. It seems as though the economic
success of Santa Fe Drive has greatly increased the housing costs in the
neighborhoods. As explained previously, housing costs in the La Alma and Baker
neighborhoods have risen faster than in any of the surrounding metro area cities.
Rehabilitating older homes and collecting windfall equity (George, 1999) is a
form of gentrification, which the two neighborhoods are experiencing.
Today, the neighborhood still faces the same problems as twenty years ago
e.g.,. homeownership rates are at an all time low. In the La Alma and Baker
neighborhoods, home ownership has decreased from 60% in the late 1970s to the
current 19% (NEWSED Request for Funding, 1997). Today owner occupancy rates
in La Alma Lincoln Park is 15.7% and 35.2% in the Baker area. NEWSED, through
the programs mentioned previously, has tried to increase homeownership rates,
however homes in the neighborhood are now too costly for the residents. Homes
have increased in price rapidly, e.g. in La Alma and Baker homes have witness over
a 200% increase over the last few years.
In fact, according to Denvers 1998 neighborhood level housing data, La
Alma and Baker have experienced the fastest rising housing costs in the city. La
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Alma/Lincoln Park has seen an increase in housing costs from $30,844 o $95,887, a
211% increase. The Baker neighborhood has experienced increases from $42,076
to $132,061, an increase by 214% (Neighborhood level housing data, 1998).
Purchasing and remodeling older homes is becoming popular in neighborhoods with
architecturally significant structures.
Santa Fe Drives has become popular with artists, businesses, and prospective
owners. In fact Olde Santa Fe Drive, from 3rd to 13th avenues, was voted the Best
Ten-Block Strip of Denver in Westwords Best of Denver, June 28,1998. The
article stated that:
smart new facades are popping up on this stretch of Santa Fe every time
someone sneezes, and with them come new businesses that mesh
comfortably with the old ones in an honest attempt at preserving and
enhancing the neighborhoods character. We like what we see: a friendly
cohabitation of computer stores and taquerias, graphics studios and
panaderieas, art galleries and antique emporiums, public libraries and
brewpubs. Make no mistake about it-this is still the heart of the barrio, and
its distinctly Hispanic character shines through beautifully (author
unknown).
The neighborhood is being referred by some as SODO, which stands for
South Downtown. The name sparked from lower downtowns LODO, which was
once an abandoned, deserted neighborhood that had its share of vagrants, graffiti,
litter, crime and economic disinvestment. Today, however, the neighborhood has
been completely transformed from the old warehouse, manufacturing, railroad
district into a theme city entertainment complex to service the upwardly mobile,
white-collar workers of a new, global Denver (Robinson, 1998). LoDo has
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experienced the trend of converting old warehouses into pricey upscale lofts, art
galleries, fashionable boutiques, coffeehouses, microbreweries, pubs, and
nightclubs. The LoDo area has been totally gentrified displacing the lower income
sector of the population.
Walt Weinburg, owner of the Santa Fe Pottery feared that rents along Santa
Fe Drive would go up as more and more new businesses moved in, forcing out
business owners who dont own their own buildings. Weinburg, explained that
Santa Fe Drive is one of the last frontiers of Denver (Washington Park Profile,
November, 1997).
It is a familiar story, many large vacant areas become prime for urban
renewal, which essentially attract artists as tenants. Basically, the area becomes
discovered by the artists willing to brave the frontier. The artists are the first
wave of gentrifiers as they are tolerant of diversity, both ethnically and
economically (George, 1999). Thus, the neighborhood begins building a strong
customer base, setting the mood for the second wave of gentrifiers. The second
wave of gentrifiers are those that are exchange-value oriented. Furthermore, they
have ready access to loans and insurance from banks to build. The public sector,
improves and increases services, and offers grants to rehabilitate, rebuild, and
revitalize the neighborhood. Property owners further contribute to the problem as
they raise rents or sell their structures at high costs. Ultimately, as this happens, the
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artists and lower income residents are forced to move out, as they are no longer able
to afford the high cost, of living in the given neighborhood.
According to George (1999), gentrification becomes a reality when any or
most of the following occur:
1. housing prices in the suburbs discourage potential new homebuyers
2. the costs of commuting and congestion on arteries mount
3. when there are older homes with architecturally notable features in old
core city neighborhoods
4. when central business district employment patterns change towards
administrative and business services, information processing and fire
zones
5. when the fear of crime, urban unrest, and poverty decreases
Most the staff at NEWSED, are not worried about gentrification taking place
in the neighborhood. Veronica Barela has indicated that they would not allow
gentrification to take place and that by redeveloping Santa Fe Drive NEWSED has
prevented the strip being tom down and high rises being built there (George,
1999). When asked in an interview if NEWSED was worried about the forces of
gentrification in their neighborhood, Leroy Lemos responded that they were not
worried (interview by Debra Sanchez, October, 1999). Brian Marschack, however,
has acknowledged that gentrification seems possible in the Westside neighborhood.
NEWSEDs position is to buy as many homes as possible, rehabilitate them and sell
them to first time home buyers (George, 1999). Unfortunately NEWSED is having
to sell their homes from $120,000 $140,000 because they are having to purchase
them at high rates to begin with (Robinson). NEWSEDs home counseling program
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attempts to connect potential homebuyers with homeowners within the
neighborhood selling their property.
The purpose of the program is to keep existing residents in the
neighborhood, while increasing homeownership rates. The reality is that existing
residents, whose average income is well below the average for Denver can not
afford the cost of homes in the neighborhood, which are now selling from $96,000
to $132,000. In 1998, the median household income of Lincoln Park was $15,223
compared to $35,397 as a whole for Denver. Over half of the total residents in
Lincoln Park are living in poverty. Since many of the residents income is at the
poverty level, apparently they are not the ones purchasing the homes. The majority
of the residents are renters, it can easily be assumed that once landlords and tenants
realize the value of their properties they may sell, which would result in
displacement of existing residents.
Ms. Veronica Barela in an interview with George (1999) indicated that
individuals and families with economic resources wouldnt necessarily want to
move in or settle into the neighborhood because of the two public housing projects,
as well as a park that has been deemed dangerous by some. Apparently, however,
somebody does not mind living in a neighborhood with two public housing projects
and a dangerous park because housing costs in the neighborhood have greatly
increased.
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George (1999) specifically cites an example of where the presence of a
public housing project has not been a factor or a guarantee against stopping
gentrification from taking place. Curtis Park (a neighborhood to the east of
downtown Denver) has fallen victim to the forces of gentrification. The Curtis Park
neighborhood is a perfect example of middle income gentrifiers coming in buying
and rehabilitating the existing housing stock, increasing the value of the homes
significantly. These new gentrifiers take over neighborhood associations and utilize
zoning code violations to get after their less affluent neighbors (George, 1999).
The Curtis Park neighborhood has lost the battle because of a lack of community
participation to oppose the process.
The employees at NEWSED explain that their mission is to avoid
gentrification, while preserving the ethnic and cultural flavor of the neighborhood.
George (1999) explains that preserving ethnic diversity is not always synonymous
with affordable housing. The possibility exists that a neighborhood can preserve
middle and upper class ethnic diversity, while driving out the lower class residents.
NEWSED Promotes Cultural Pride
NEWSED strives to keep Santa Fe Drive in time with the neighborhoods
Hispanic flavor and roots. Veronica Barela, in collaboration with neighborhood
residents and merchants, envision all buildings occupied and employing
neighborhood residents, which obviously has not and probably wont happen.
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Marie Addelman, Coordinator for Economic Development for NEWSED, has stated
that NEWSED wants to preserve the Latino culture and history of the neighborhood
(George, 1999). This is very important to the staff at NEWSED as they aim to bring
back businesses along Santa Fe Drive. In fact when Secretary of State, Madeline
Albright visited Denver for the Summit of the Eight, she dined at the landmark El
Noa Noa restaurant, shopped at the Santa Fe Pottery store, and visited the Chicano
Humanities & Arts Council, all located along Santa Fe Drive. There exists a strong
sense of pride among, what has been called, the most culturally condensed 7 blocks
in the city (Speike, source and date unknown).
Santa Fe Drive currently houses many artists studios, galleries, design
studios, theaters, museum, and a library. NEWSED, along with its spin off, the
Santa Fe Drive Redevelopment Corporation (SFDRC-), have been the driving forces
for revitalization along Santa Fe Drive. They envision Santa Fe Drive becoming a
premier Latino arts district in Denver. Many Latino artists are making their home
Santa Fe Drive, including many famous local artists (Miguel Camarena and Daniel
Luna). The Chicano Humanities and Arts Council (CHAC) has chosen Santa Fe
Drive to house its organization. Many established art galleries and studios are
located along the corridor, as well. Many theatres, such as the Phoenix Theatre,
Aztlan Theatre, and The Arts Center of the West are located along Santa Fe Drive.
The only Latino museum in the State of Colorado, Museo de las Americas, is
housed along Santa Fe Drive. According to one journalist, John Rebchook, of the
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Rocky Mountain News, indicates that Santa Fe Drive is an eclectic melting pot of
incomes and ethnic groups (not dated). NEWSEDs desire is to have Santa Fe
Drive designated as an arts district, such as LODO or Cherry Creek.
Unfortunately having a neighborhood designated as an arts district does not
stop the onset of gentrification, rather it contributes to it. An arts district doesnt
house people, it doesnt keep property values low, it doesnt force absentee
landlords to keep up with their properties. What it does do is create a trendy place
for chic galleries, shops, firms, and offices to locate, which arent indicative of the
neighborhoods needs. As these avant-garde type businesses move in it also brings
in a different class of people with money.
NEWSED attempts to preserve the Hispanic flavor of the community.
NEWSED sponsors and coordinates many special and cultural events. NEWSED
hosts one of the largest Cinco de Mayo celebrations in the country. Each year,
roughly 500,000 show up to the Cinco De Mayo celebrations that are put on by
NEWSED and the Santa Fe Drive Redevelopment Corporation. In fact, the
celebration has become so successful and huge that it outgrown its original home
along the Santa Fe Drive in favor of Downtowns Civic Center. NEWSED also
continues to sponsor the El Grito festival for the Mexican Independence Day
celebration held in September, which usually draws over 100,000 event goers each
year..
93


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HAS ONE CDC CONTRIBUTED TO THE GENTRIFICATION OF ITS NEIGHBORHOOD? A CASE STUDY OF WEST DENVER'S NEWSED by Debra Renee Sanchez B.A., University of Colorado at Denver, 1996 A thesis submitted to the University of Colorado at Denver in partial fulfillment of the requirements for the degree of Master of Arts Political Science 2001

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This thesis for the Master of Arts degree by Debra Renee Sanchez has been approved by Date

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Sanchez, Debra Renee (M.A., Political Science) Has One CDC Contributed to the Gentrification of its Neighborhood? A Case Study of West Denver's NEWSED Thesis directed by Professor Tony Robinson ABSTRACT America's inner cities have faced two crisis, disinvestment and gentrification. The non-profit community development corporation (CDC) aims to stabilize the inner cities from disinvestment, abandonment, and decay while preventing gentrification. The CDC is no longer a grassroots, protest movement, rather it has evolved into a conservative institution that operates harmoniously within the capitalist system. This study examines historical movements and trends that lead the reader to believe that the CDC is largely influenced by the political economic climate. The purpose of this thesis is to determine whether or not NEWSED, a CDC located in the heart of West Denver, has stabilized the La Alma/Lincoln Park and Baker neighborhoods from further decline, while avoiding gentrification or is NEWSED's ability to serve the neighborhoods structured only by the surrounding political economic climate? This abstract accurately represents the content of the candidates's thesis. I recommend its publication. Signed 111

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ACKNOWLEDGEMENT A heartfelt thanks goes out to the Graduate School and the Political.Science department for the opportunity. Lucy Ware and Anna Sampaio, thank you for your time, comments, and suggestions. Tony Robinson, what can I say, words cannot express my deep gratitude for your patience, understanding, and assistance over these last five years.

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CONTENTS CHAPTER 1. INTRODUCTION .................................................................................. 1 Definitions and Characteristics of the CDC .................................... 2 Breakdown of the Literature Review ............................................... 7 The Three Fundamental Players of the CDC .................................. 7 Overview of the ................................................................ 9 2. GOVERNMENT'S ROLEIN URBAN AFFAIRS ............................. 12 The 1930s: the Beginnings of Government Intervention .............. 14 The 1940s: Slum Clearance and Community Development & Redevelopment .............................................................................. 18 The 1950s: Development Responsibility gets Placed on the Private Enterprise ....................................................................................... 21 The 1960s: Legislation Reflects the Militant Times ..................... 23 The 1970s: A Response to the Legislation ofthe 60s ................... 27 The 1980s & 1990s: The Conservative Era of Reaganomics and its Lingering Effects into the 90s ....................................................... 30 The Year 2000's Legislation ......................................................... 3 3 The Effects ofFederal Devolution ................................................ 37 The CDC: A Vehicle for Community Revitalization ................... 38 v

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3. THE CDC IN OPERATION ................................................ 41 Historical Roots of the CDC ... : .................................................. .... 42 The Evolving CDC ........................................................................ 43 Facing the Funding Challenges ..................................................... 46 A Complex Web ofPartnerships ................................................... 47 Social Capital and its Effects on Neighborhood Decline .............. 52 4. CRITICISMS OF THE MOVEMENT ..................................... .56 Low Productivity Rates ................................................................. 56 CDCs Sell Out ............................................................................... 58 CDCs Do Not Accurately Mirror Their Neighborhoods ............... 60 5. A CASE STUDY OF NEWSED .......................................................... 64 History of the La Alma/Lincoln Park and Baker Neighborhoods. 65 Current Disadvantages the Neighborhoods Face ........................... 72 The Rise and Success of the For-Profit NEWSED ....................... 73 The Beginnings of a Not-for-Profit NEWSED ................ ............ 74 Santa Fe Drive: A Comeback Story .............................................. 78 NEWS ED and the Housing Crisis ................................................. 81 NEWS ED Promotes Cultural Pride ............................................... 91 NEWS ED and Social Capital ........................................................ 95 The Decrease of Crime in the Neighborhood ................................ 97 NEWSED in Relation To Two other Denver CDCs ..................... 98 VI

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6. CONCLUSION OF CASE STUDY ................................................... lOl BIBLIOGRAPHY ................................................................................... 104 Vll

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CHAPTER 1 INTRODUCTION The purpose of this paper is to determine whether not for profit community development corporations (CDC) are beneficial in addressing the crisis of declining cities or is its ability to serve communities structured only by the surrounding political economic environment? This study focuses on one CDC in particular, the New Westside Economic Development Corporation (NEWSED), which is one of the largest CDCs, located in West Denver. CDCs claim to stabilize neighborhoods from further decline by producing affordable housing units and implementing programs to increase homeownership rates iri its communities. The reason so many CDCs focus on housing is because most urban neighborhoods are pnmarily residential. A neighborhood can be considered stabilized if the housing stock is not degraded and deteriorated, if living conditions are not inhumane, if crime is not rampant, if buildings are not vacant and there is some economic prosperity (excluding pawn shops, liquor stores, bars, etc.). As well, most CDCs aim to fight the "growth machine" (Molotch, 1976; Logan & Molotch, 1987; DeLeon, 1992) that significantly contributes to gentrification. Gentrification happens as low-income inner city neighborhoods become prime for development. Once a neighborhood becomes more attractive, economically and physically, a more affluent class moves 1

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in, driving up property values. Property values become too costly for the. existing residents who are forced to move out of their neighborhood .. Throughout the chapter, I will define the CDC in order to allow the reader a basic understanding of the not-for-profit community development corporation. As well, the chapter will explain where I get most my data and information. I have relied on various scholars on this subject matter for the purpose of this topic. This chapter will also provide a basic introduction and breakdown of the chapters that will be analyzed and discussed. The chapter is organized into the following sections: 1. Definitions and characteristics of the CDC 2. Breakdown of the literature review 3. The three fundamental players of the CDC 4. Overview of the chapters Definitions and Characteristics of the CDC Community development corporations are non-profit tax-exempt organizations, characterized by a 501(c)(3) government status. (Peirce & Steinbach, 1987; Keating, Krumholz, & Star, 1996; Robinson, 1996; Vidal, 1995; Stoecker, 1998). The not-for profit status allows for easier access to foundation and government grants (Peirce & Steinbach, 1987). CDCs are community-based organizations that undertake development activities for the betterment of their neighborhoods. In fact, Kromer (2000) states that "Any neighborhood-based or 2

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neighborhood-oriented organization that starts influencing physical development or other forms of reinvestment activity should be entitled to call itself a CDC" (p. 114 ) Community development corporations, by defmition and intent [according to Berndt (1977)] are "community controlled corporation(s) established to improve the quality of life for the poor" (34). CDCs, according to Kromer (2000), are created to "improve physical conditions and provide community members with better access to human services" (114). To improve the physical conditions of its neighborhoods, the agencies purchase, develop; manage residential and/or commercial property (Robinson, 1996) to directly benefit the community and its residents. A successful CDC benefits its neighborhood by improving the existing housing stock, providing additional affordable housing opportunities, improves the economic down spiral, and offers a variety of community social services while avoiding gentrification. The most current estimate from the National Congress for Community Economic Development is that there are over 2,000 CDCs operating in the United States (Orlebeke, 1997; Vidal, 1996; Owens, 1997; Gittell & Vidal, 1998; Bratt, 1996). CDCs are most prevalent in the cities ofthe Northeast, Midwest, and along the West coast. The movement is much weaker in the mountain states, the Great Plains, the Pacific Northwest, and the south (Peirce & Steinbach, 1987; Gittell & Vidal, 1998). Historically the mountain states the Great Plain and the Pacific Northwest have been much more conservative, as far as protests movements. The 3

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West Coast has traditionally played home to many grassroots movements, protests, and demonstrations. As indicated later in this study, the CDC grew out of protest movements and grassroots organizing. The CDC's boards are generally comprised of neighborhood residents, non profit organizational representatives, private sector businesses, and government representatives (Orlebeke, 1997; Robinson, 1996; Berndt, 1977). Keating, Krwnholz, & Star (1996), explain that CDCs are examples of public-private partnerships that provide various services within declining neighborhoods that are no longer able to attract investment from the private market. They take advantage of resources and attempt to clear obstacles in order for private reinvestment to take place. Although CDCs vary from one another in terms of funding, size, and scope, they essentially all share similar traits. They operate within defined low-income neighborhoods that have lost the ability to attract private reinvestment. Many pursue non-profit housing and economic development, as well as provide various social services. CDCs also act as advocates for the community, such as pressing city hall for better neighborhood services and pressuring banks into increasing their lending practices in disadvantaged neighborhoods (Peirce & Steinbach, 1987). Primarily, CDCs respond to inner city housing concerns and needs to benefit its given neighborhoods. The concept of "corrective capitalism" is the path the CDC follows. Since they operate within the capitalist system, they can not very well protest the existing institutions that finance and fund their endeavors. 4

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The model aims to assist those in gaining the capabilities to survive in the existing system. According to Berndt (1977) it is from the acceptance of capitalism, the historical tradition of self-help and individualism that is the model for the CDC. Since the CDC relies heavily on government involvement and private dollars, it cannot alienate any potential funders. Thus the organization works within the market to assist those that have been abused by the social injustices of a capitalist society. As I mentioned earlier, this paper focuses on one CDC in particular. NEWS ED pays much of its attention to the La Alma/Lincoln Park and Baker neighborhoods. The area has experienced its share of crime, disinvestment, abandonment, and an exodus of homeowners. At one time the neighborhood was infested with crime, gang members, drug dealers, as well as other undesirables. Santa Fe Drive, the corridor that runs through the neighborhood, witnessed abandonment, boarded up and vacant buildings, disinvestment, and decay. Currently the crime rate has gone down and Santa Fe Drive has had a complete facelift and revival. NEWS ED dedicates much of its resources to increasing home ownership in the community. My initial thought was that NEWS ED seemed to have walked the fme line of avoiding decay and abandonment while avoiding gentrification, which no longer seems the case. My thesis question, to be tested, asks: has NEWSED been beneficial to the community via increased homeownership, more housing opportunities for the existing low income and 5

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working class residents, revitalization efforts, and decreased crime, while avoiding gentrification or is NEWSED's ability to serve its neighborhoods structured only by the surrounding political environment? My initial thought was that NEWSED was vital to the neighborhood and greatly benefited the existing residents with increased housing opportunities, however as this study progressed, it appeared that while NEWSED has reversed the economic down spiral by revitalizing the main corridor, Santa Fe Drive it has not done so without inviting gentrification. As far as increasing home ownership, they have a program in place to do just that, however it is not targeted towards the low-income residents that occupy the neighborhoods. Because the current political climate does not pressure organizations like NEWSED to be more responsive to the needs of the residents, the CDC remains status quo. Historically, as mass unrest and protest among the lower classes plague the country, the government and institutions become more responsive to their needs. 6

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Breakdown ofthe Literature Review Much of the information presented comes from a wide range of literature. The historical overview of the Federal government's role in housing, the criticisms of the CDC movement, and other case studies come from the research of scholars who have studied urban neighborhoods over time. A first-hand interview, by this author was conducted with Leroy Lemos, Director of the PODER Project for NEWSED. Two telephone interviews were conducted with Shawn Weston, Deputy Director of the Inner City Community Development Corporation, and with Marvin Kelly, Executive Director of the Del Norte Neighborhood Development Corporation. Other statistical data and field interviews with NEWS ED staff and other local notables comes from the work of Santosh George, who wrote his Ph. D. dissertation on NEWSED. George (1998) is very critical ofNEWSED, which has been important as it has allowed me the opportunity to consider another perspective. All of the data and statistical information I have read has been reviewed and put fourth by NEWSED, thus it has been very difficult to find another viewpoint. George's critiques have enlightened and broadened my own thoughts and work. The Three Fundamental Players of the CDC CDCs are comprised of three major players: the commwrity, government at all levels, and private corporations. The community provides the background and 7

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setting within which the organization operates. Members of the community define neighborhood problems and possible solutions. Non-profit development corporations heavily rely on federal dollars and live under government regulations. The government, in fact, provides the major source of funding for CDCs through grants, contracts, and low-income housing tax credits (LIHTC) (Stanfield, 1995; Berndt, 1977). The private sector provides technical assistance, as well as financial support. Many corporate executives sit on CDC boards to provide technical expertise in many aspects of operation from training staff to handling legal and .complex ventures. According to Robinson (1996), sometimes board members will be chosen by neighborhood residents in an election, but more often board members are chosen by other board members, government officials, or by some other standard, generally due to their status within another community agency. The fundamental players are crucial to the organizations every day operations. There is a lot of expertise and technical involvement in order to run such an organization. The three players have their own policies and practices, but must comply with one another's regulations. Grant writing, tax credits, and government regulations often are quite technical. The grant writing process can be precise and requires an adequate knowledge of the process. It is a very complex web of partnerships, which will be discussed in more detail in chapter 3. 8

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Overview of the Chapters Chapter two provides a detailed historical analysis of the United States urban revitalization and renewal efforts. From the 1930s to the 1980s, the government assumed the responsibility for urban revitalization and low-income housing efforts. The New Deal initiatives of the 1930s began federal housing policy. The purpose of the policy was to increase the public production of housing, as well as provide subsidies to encourage private markets to produce affordable housing. It was from many historical happenings that the CDC evolved. At a time of radical uprisings in the 1960s the CDC evolved, to protest the social injustices ofthe capitalist society. However as government became more conservative in the 80s, so did the CDC. The CDCs began to operate within the realm of government and the private market. The purpose of the more conservative CDC is to provide adequate and affordable new housing via development, redevelopment, and rehabilitation. The funding of such programs is pricey and without the help of government dollars and private foundation philanthropy CDCs could not bear the costs. Chapter three explains the rise of the CDC. A detailed historical overview of the evolution of the CDC is provided. Most scholars agree that the CDC grew out ofthe 1960s, with the Ford Foundation's gray areas programs and with direct funding from the U.S. Community Action Agency Programs. The chapter explains the evolution of the CDC from the 1960s to the 1990s. 9

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Currently CDCs are best known for their affordable housing production. Over 90% of CDCs create affordable housing. Through their housing initiatives, the CDCs share the common goal of creating neighborhood stability. The chapter explains key factors in achieving neighborhood stability through housing production and the CDCs role in fulfilling their goal. Chapter four discusses the criticisms of the movement. No doubt, CDCs operate in weak markets and do not produce mass numbers of units per year, which some skeptics use to argue against their effectiveness. Others argue that CDC's have sold out their innovative, protest-driven grassroots origins that gave many a start. Since CDC's operate in weak markets it is crucial that they seek outside funders and moderate their anti-establishment agenda if they are to survive financially. Skeptics don't believe CDCs operate in the neighborhood's best interest in mind by engaging in street-level neighborhood mobilization, as they do not want to offend any potential funders (Piven & Cloward, 1979; Berndt, 1977). Chapter five includes a case study ofNEWSED and the neighborhoods: La Alma/Lincoln Park and Baker. The chapter provides a historical evolution of the two neighborhoods, as well as their current state. NEWSED is profiled in depth, beginning with its for profit status aimed at revitalizing Santa Fe Drive, to its current not for profit status. NEWS ED has put forth initiatives and .programs aimed at increasing homeownership and revitalization, which as the study progresses further reveal that NEWSED's initiatives have not always assisted those in the 10

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neighborhood. It also asks the question, through NEWSED's initiatives, has the neighborhood begun to stabilize from further decline such as disinvestments, abandonment, crime, degraded and deteriorated structures, and high absentee landlord rates. The community has turned around economically, however as pointed out later in the study, that hasn't proven to be beneficial to the community as the neighborhood is witnessing some of the fastest rising housing costs in the Denver metro area. The theory of social capital is introduced in chapter 5 as well. An analysis of social capital and how it applies locally to distressed neighborhoods is discussed. Many scholars argue that bridging social capital is crucial in binding a neighborhood for the collective good of the community. Chapter 5 provides a final analysis of nonprofit CDCs to ultimately answer the question as to whether or not, through initiatives and programs, CDCs can stem further declination in distressed urban neighborhoods, while avoiding gentrification or is the organization only able to truly benefit the residents in times of pressure. This study develops to show that La Alma/Lincoln Park and Baker have witnessed a stabilizing effect due to NEWSED's efforts, but not while avoiding gentrification 11

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CHAPTER2 GOVERNMENT'S ROLE IN URBAN AFFAIRS From 1933 until 1980, the federal government assumed responsibility for meeting the housing needs and revitalization efforts of America's deteriorating inner cities (Gratz, 1989; Goetz, 1996; Keating, Krumholz, & Star, 1996). Throughout the 1930s and 1940s, debates between urban liberals and conservatives ofthe time were fierce over the role of government in housing America's poor. Interest groups operated in full force to promote their deeply held beliefs as to the government's role in the economy and in individual's lives. It was not until 1954 that the political parties, urban liberals and conservatives, came together to promote economic development as the answer to the declining cities. From the 40s to the 60s, there existed many governmental actions in response to urban problems (Stone, 1993). The 1960s experienced militant uprisings on the issue of housing. Policies of the 1970s included direct grants allowing local government to disperse money as local government saw fit. The era ofReaganomics witnessed significant cutbacks when it came to housing affordability programs. Government intervention remained relatively low during the nineties. With the onset of the year 2000, housing initiatives seem to be experiencing a bit more government involvement. 12

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Housing policy reflected the times, as the government shifted supply side economics to a demand-driven economy. From the 30s to the 80s, emphasis was on heavy government involvement to regulate the economy, a concept that came to be known as Keynesian Economic Theory, named after the English economist, John Maynard Keynes. Keynesian economists supported an active role for government in stabilizing the economy, as well as to promoting social goals, e.g. reduced poverty, increased employment, and steady growth. With the onset ofthe Reagan administration, the United States shifted back to supply-side economics. This meant "a return to the free market, limited government activity, limited discretionary stabilization activity, and stimulation of individual enterprise" (Wilber & Jameson, 1990, p. 69). According to Grigsby (1966), "the invisible hand, which only infrequently produces the optimum spatial deployment of land uses, with respect to renewal typically produces nothing at all" (p. 25). During this time, the poorest in the population were experiencing tremendous cuts in programs aimed at assisting their situation. The thought prevailed that individuals were responsible for their own destiny and demise. The majority in power believed that it wasn't government's job to assist with the basic necessities for those that couldn't provide for themselves; as the old saying goes, pull yourself up by the bootstraps. It was an uncompassionate society of the time that felt there was something innately wrong with those who couldn't provide even the basic necessities for themselves. The role the government and the institutions 13

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played in individual's lives during the 80s diminished and became more conservative mainly because protest movements demanding relief disappeared. As mentioned earlier, the housing policy changed throughout the times. CDCs were no exception; as the government grew more conservative so did the community development field. The chapter provides the reader a brief historical journey in understanding the housing patterns and governments role in the housing the nations poor. The chapter is organized into nine sections: 1. The 1930s: the Beginnings of Government Intervention 2. The 1940s: Slum Clearance and Community Development and Redevelopment 3. The 1950s: Development Responsibility Gets Placed on Private Enterprise 4. The 1960s: Legislation Reflects the Militant Times 5. The 1970s: a Response to the legislation of the 60's 6. The 1980s and 1990s: the Conservative era of Reagonomics and the lingering effects into the 90s 7. 2000s Legislation 8. The Effects of Federal Devolution 9. The CDC: A Vehicle for Community Revitalization The 1930s: the Beginnings of Government Intervention According to Goetz (1993), federal housing policy began with the New Deal initiatives of the 1930s, characterized by efforts aimed to increase the public production of housing and subsidies to encourage private markets to produce affordable housing. It was with the collapse of the mortgage and housing markets during the depression that the federal government began to intervene in the housing market. With the Great Depression, the nation's economy faced a disaster, which 14

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"the nation's public figures were stubbornly unwilling to recognize (Piven & Cloward, 1977, p. 46). As the 30s approached unemployment continued to rise, the wages of those still employed quickly dwindled, and the effects were hard felt. Malnutrition and disease was rampant. Poverty deepened and as itdid, so increased crime, divorce, drunkenness, sexual promiscuity, and suicide (Piven & Cloward, 1977). Homelessness grossly increased. According to Piven & Cloward (1977), the n umber of transients was not known, however "Southern Pacific railroad reported that it had ejected 683,457 people from its trains in 1932 (p. 48). At the onset of the depression and the months that followed, people felt ashamed of their plight. The government denied help and made those requesting assistance from the dole"feel inadequate. However, most often, the government made the dole inaccessible. In fact, "the discontent these poor might have felt was muffled, in part by the relief system and the image of the terrible humiliation inflicted on those who became paupers (Piven & Cloward, 1977, p. 42). As the government continued to deny the problem, people collectively began to realize their shared plight. This collective realizations et the stage for political uprisings, movements, and demonstrations. In city after city, mob looting was taking place. This "organized looting of food became a nationwide phenomenon" (Piven & Cloward, 1977, p. 49), which paved the way for the protest politics that were rampant in the 1930s. 15

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In the early 30s, demonstrations, marches, and rent riots were common. However, as times got worse national organizations emerged on the scene. Relief came, at first, in small amounts, but due to the political pressure, "relief officials, who were not accustomed to discretionary giving to a meek clientele and were not much governed by any fixed set of regulations, usually acquiesced in the face of aggressive politics" (Piven & Cloward, 1977, p. 57). With Franklin Delano Roosevelt election into office, tl:Ie administration implemented a variety of housing programs. In 1932, the Federal Home Loan Bank System (FHLB) was created in order to make mortgage lending more effective, stable, and profitable, while freeing lenders from the economic liability to their depositors. In 1933, Roosevelt's administration established the Home Owners Loan Corporation (HOLC), which allowed for the purchase of defaulted mortgages and refinanced them for longer terms and equable rates of interest, through federal grants. Lenders were still reluctant to make longer-term loans, which were pioneered by HOLC, thus Congress passed the 1934 National Housing Act. The 1934 National Housing Act created, through the new Federal Housing Administration (FHA), a new institutional support to further residential lending, and a mortgage insurance policy. This insurance was ultimately designed to increase mortgage lending and the housing market, all the while decreasing the risks of 16

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mortgage default and guaranteeing profits to the lenders and developers (Stone, 1993). In 193 3, Roosevelt passed the National Industrial Recovery Act, which authorized public use funds to go towards financing the construction of low cost housing, as well as the promotion of slum clearance. It was through the housing division of the Public Works Administration that the government financed, developed, and owned these "projects .. Under this program, 21,600 units were produced amongst 3 7 cities (Stone, 1993 ). This program collapsed as the use of eminent domain to acquire land for the public housing faced many legal challenges. It was not until 1937 that a "legally successful" public housing approach took its place (Stone, 1993). Urban liberals enjoyed the Housing Act of 1937, which created the U.S. Housing Authority (USHA). The USHA lifted legal obstacles that previously blocked federally funded public housing construction. Under the new law, local housing authorities had complete responsibility to maintain and develop projects. By 1939, 50,000 USHA units were under construction (Flanagan, 1997). Government involvement prevailed not only throughout the 30s, but through the mid 40s as well. The underlying conclusion was that the private market was unable to cope with the housing crisis in the United States. For many years the United States allowed the private market to provide housing without much regulation or intervention. As time proved, the government became involved as 17

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more and more of the population were denied access to affordable housing and mobilized in great numbers to do something about it. The 1940s: Slum Clearance and Community Development & Redevelopment As with the 30s and throughout the early and mid 40s government's role in housing policy was dominant. As the 40s were ending, so was the government's role in housing policies. Public housing continued to be the primary source of lowincome housing with the passage of the 1949 Housing Act. Public housing was always a controversial issue that divided many. The pressure to rid the United States of public housing was great, as real estate lobbyists operated in full force. The lobbyists presented "public housing as a program which did not house the poor and which was somehow socialistic or communistic" (Keith, 1973, p. 89). The lobby was successful in blocking the program at the local levels by getting neighborhoods to actively protest against designated sites. Since the majority of public housing recipients of the time were minorities, it was not hard for the lobbyists to initiate political pressure against public housing from neighborhoods that were possible sites. To appease the real estate lobby the act further mandated the provision that: "no public housing unit could be built in a locality unless a "slum" or other unit had been demolished; and requirement of a 20 percent gap between the maximum income of families eligible for public housing and the minimum income needed for adequate private housing" (Stone, 112). 18

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The act authorized the construction of 135,000 dwellings per year, but by the end of 1951, only 84,600 units had been produced (Keith, 1973). In other words, the act authorized the production of810,000 units over a five-year span, only a quarter of which were actually started (Stone, 112). The Act stated that the only way a public housing unit could be built was if a "slum" or other unit had been demolished. Urban renewal officially began with the 1949 Housing Act. Title I of the Act established "Slum Clearance" and "Community Development and Redevelopment" measures, which were the most famous of the urban renewal programs. The general attitude towards "Slum Clearance" and "Community Development and Redevelopment" was not nearly as controversial as public housing, which was viewed as socialistic or communistic. Essentially, most viewed Slum Clearance as a way of ridding the cities of social problems and fiscal shortages. Title I allowed the federal government authority to provide localities funding through loans and grants to obtain, demolish, and dispose of property designated as "blighted" or "slum" areas for the purpose of private or public redevelopment. Unfortunately the Act did not mandate the replacement of demolished or lost housing units, which resulted in displacement. The law mentioned, however, that displaced residents ultimately would be provided houses that were "decent and at prices and rents within the means of such families" (Stone, p. Ill, 1993 ). Government officials, however ignored this requirement. Many families never had 19

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their housing replaced at prices they could afford. They were no longer protected by the hand of government Urban renewal was seen as way of alleviating "social problems through physical changes" (White, 1980). Shun Clearance authorized private/public redevelopment of urban land renewal, but did not require adequate attention to displaced residents. Residents that lived in rundown degraded structures found themselves with nowhere to go. The degraded buildings and eyesores that were removed to create beautiful cities caused a large amount of displacement. As the 40s ended, the governnient's commitment to house the poor was about to change, as Uncle Sam got out of the construction business. No longer was the country protecting those who could not provide themselves with adequate housing. The reason the federal government came to appease the masses throughout the 30s and early 40s was because "they (government) could not ignore disruptions so threatening to economic recovery and electoral stability" (Piven & Cloward, 1977, p. 172). The government established programs to appease the population, but only for as long as necessary in order to maintain electoral stability. Once stability returns and the political climate calms, government becomes less involved, as witnessed during the 1950s. 20

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The 1950s; Development Responsibility Gets Placed on the Private Enterprise In 1954, a new Housing Act was passed, which according to Flanagan (1997) "marked a historic change in the production and nature of public housing" as well as "an important tum in the political debate about the federal role in urban affairs" (p. 265). Because both political parties agreed in the 1954 Housing Act to shift emphasis from the construction of public housing to commercial redevelopment to answer the problem of inner city neighborhood decline, it was celebrated. Both Republicans and Democrats came to believe that the only way to save distressed neighborhoods was to emphasize commercial development, since public housing was never produced at high enough rates to seriously address the problem of housing America's poor anyway. During the mid 40s and into the 50s protest movements that were prevalent a decade earlier were nearly nonexistent. World War II brought the Great Depression to a halt. During those years production was followed by economic expansion coupled with Keynesian macroeconomic policies, which created stability and much improved conditions for the average American workers. These factors moderated the political wrrest that existed a decade earlier. Because the government no longer had to answer to mass unrest and political instability, housing policies of the time became more conservative. 21

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The Housing Act of 1954 actually expanded Title I of the 1949 Housing Act and officially named the program "Urban Renewal" (Stone, 1993). The legislation did not entirely prohibit public housing, but it was quite specific, in that public housing would only be built where slum clearance had taken place. Furthermore, public housing could only be built per the locality's certification of relocation needs (Stone, 1993). With the Act, the rate of public housing construction decreased from 49,881, in the early 50's to about 20,448 units per year from 1955 to 1964. From 1955 to 1988, only 27,356 public housing units were constructed (Flanagan, 1997). The Act, as well, served to change the nature of public housing. It confined public housing so that it would only serve as a mild and limited instrument of public policy. According to Flanagan (1997) public housing in 1954 was only for the impoverished, "with such low production numbers that public housing could never be offered as a serious housing alternative for large numbers of the middle class, much less all the poor" (p. 265). The 1954 Housing Act closed out the option of the liberal/progressives role of creating a European-style public housing system that would provide housing for a range of income levels. With the implementation of the Housing Act and the Interstate Highway program in 1956, urban enclaves were quickly transformed. With the transformation of many urban cities, urban residents experienced massive displacement. Programs, such as "Urban Renewal," "Slum Clearance," as well as 22

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private redevelopment, further displaced America's poor. Commercial redevelopment advanced institutional expansion of urban medical centers, universities, and commercial business districts, but did little in the way of housing the impoverished. The latter programs of Urban Renewal did not alleviate the many factors that caused poverty. Policy mainly focused on the physical improvement of neighborhoods (Glaser, Soskin, & Smith, 1996). Because the policies failed to involve neighborhoods residents in development priorities and methods of implementation, they may have actually contributed to the problems of poverty (Glaser, Soskin, & Smith, 1996). Most neighborhood residents are not going to support redevelopment and renewal that would lead to their displacement. The tide was setting to make waves as the government was decreasing its involvement with housing America's poor. As this happened another force was about to rise to compensate for the governments lack of involvement. The 1960s: Legislation Reflects the Militant Times The 1960s were a time of militant uprising, civil rights movements, and grassroots organizing, which were prevalent in the legislation to alleviate the housing concern in the cities. Because of the political climate, the new administration in Washington initiated the War on Poverty campaign, which included the 1964 Economic Opportunity Act's Community Action Program (CAP), 23

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The Model Cities of 1966 and other low-income housing revitalization and antipoverty initiatives. Once again the government was pressured to listen and appease the masses. The programs were based on the assumption that "poor communities have immense resources within them and, given a chance, the desire and the will to tackle their own social programs" (Berndt, 1977, p. 32). The CAP, which was created by Title Two of the Economic Opportunity Act of 1964, actually created the first network ofCDC's (Orlebeke, 1997; Berndt, 1977). The purpose ofthe CAP was: to work, and the opportunity to live in decency and dignity. To eliminate the paradox of poverty in the midst of plenty in the nation by opening to everyone the opportunity for education and training, the opportunity to work, and the opportunity to live in decency and dignity The goal of the CAP was to organize and mobilize the lower classes into the local Community Action Program process to alleviate local poverty issues (Givel, 1991; Gillette, 1996). The Office of Economic Opportunity was responsible for setting the standards on national regulations for the CAP activities, mobilizing community resources, incorporating the impoverished into the CAP program, client eligibility, local antipoverty Community Action Agency (CAA) eligibility, and administrative procedures (Givel, 1991). The CAP emphasized the direct funding of local Community Action Agencies, which were not local governments, but rather neighborhood residents and organizations that oversaw policy decisions. The CAA applied directly to the Office for Economic Opportunity for various grants, mainly 24

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in three areas, local initiatives, national initiatives, and economic development. It was from the economic development area, that the CDCs obtained money to fund programs to .increase jobs, business, and housing in its neighborhoods. According to Orlebeke (1998), the Community Agencies began the CDC movement, and acted as "an intensive prep school for a cadre of African American and Hispanic organizers and program managers who went on to careers in politics, government, and non-profit development" (Orlebeke, 1997, p.21). It has been argued that Community Action Agencies challenged local public and private powers,. "community involvement in decision-making meant shifting local balances of power in which-ruling elites had a stake" (Vigil, 1999, p. 22). Thus mayors attacked the program and fought back politically against community. action, which was ultimately discredited (Orlebeke, 1997). Many conservatives criticized funding militant organizations that were widespread throughout the 60s (Give!, 1991). At this time, CDCs were primarily grassroots protest movements that challenged the existing system. In 1974, due to extreme pressures from the conservatives Congress abolished the Office for Economic.Opportunity and replaced it with an independent agency called the Community Services Administration, which was abolished in 1981 (Gillette, 1996; Give!, 1991 ). As this happened, CDCs were losing funding and came to realize that in order to be viewed as credible for funding purposes, they had better shed the. angry protest rhetoric. 25

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Another program from which the CDC arose, Model Cities, discouraged large-scale development and focused on physical improvement programs, as well as social services. The program was targeted to relatively small Model Neighborhood's containing no more than 10 percent of a city's population (Orlebeke, 1998). The mayors controlled the administration ofthe Model Cities program, however it still had to include representation from neighborhood residents and organizations. Unfortunately, Model Cities did not last long and the billions of dollars flowing through the program were not effectively channeled to massive projects with real uplift possibilities. According to Stone (1993) Model Cities also moved the Federal Housing Authority into promoting urban homeownership. The Model Cities program was short-lived and was folded into the Community Development Block Grants of 1974. The Ford Foundation was crucial in developing the CDC. Paul N. Ylvisaker, head of the Public Affairs Department for the Ford Foundation in the 60s toyed around with the notion that urban redevelopment should emphasize the physical redevelopment of urban slums by mobilizing local self-help groups and organizations. From this, the Ford Foundation initiated the "gray area" program. The name came from the idea that "there was a zone of deterioration that existed between downtowns and suburbs in many urban areas" (Givel, 1991). In order to avoid such renewal practices as slum clearance, Ylvisaker created stand-alone 26

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community organizations and groups based locally in urban cities across America to handle their own antipoverty services for the poor (Givel, 1991). The government was not only giving funds to local community organizations; but implementing legislation as well. The Housing and Urban Development Act of 1965 created Rent Supplement and Leased Public Housing pro grains, both of which had the same requirements for eligibility as public housing had. The programs also aimed to disperse the poor rather than to segregate them in large enclaves. Private homeowners could use their properties as rentals if they passed government standards, to house the lower classes. The landlords were paid rents by the government. In 1969 the Housing and Urban Development Act made it law that rent for public housing-could not exceed 25 percent of a tenant's adjusted income. The Uniform Relocation Act of 1968 made it much more procedurally difficult and more expensive to displace those people that were living along the path of federally sponsored developments (Orlebeke, 1998), which indicates the protest movements had an effect on government legislation. The pressure was on as angry inner city residents mobilized to ease problems amongst their neighborhoods. The 1970s: A Response to the Legislation ofthe 60's Legislation of the 60s, namely the Civil Rights Act of 1964, calmed the masses. When the 70s approached the political climate was calm and once again 27

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government involvement greatly decreased. The 70s experienced the Community Development Block Grants, the Neighborhood Self-help Development Grants, and Urban Development Action Grants (Krumholz, 1996; Goetz, 1993 ). The aforementioned programs were in response to the government's 1960's style "urban renewal." Rather than giving money to local organizations, of which many were deemed radical, the government gave grant money to localgovernments which, in tum, channeled the money as deemed appropriate. Because the "radical" movements had lost much influence into the 70s, the govenunent was no longer pressured to appease them. President Carter signed Urban Development Action Grants (UDAG) into law in 1977. UDAG amended the Housing and Community Act of 1974, to include a new section, which was called "Grants for Severely Distressed Cities." The bill's preamble states: "In order to promote the primary objective of this title of the development of viable urban communities, of the total amount of authority approved in appropriation Acts under section 103(c) the Secretary is authorized to make urban development action grants to severely distressed cities to help alleviate physical and economic deterioration through reclamation of neighborhoods having excessive housing abandonment or deterioration and through community revitalization in areas of population out migration or stagnating or declining tax base. Grants made under this section shall be for the support of severely distressed cities that require increased public and private assistance in addition to the assistance otherwise made available under this title and other forms ofF ederal assistance" (Fitzgibbons, 1982, p. 3). The UDAG program allowed for the dispersion of $675 million a year to revitalize distressed cities by stimulating economic development, which created new 28

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jobs and new tax revenues. In the first two years of funding, the UDAG began 493 projects in 374 cities, $934.9 million of the grants were awarded,$5.66 billion was committed by private developers, 150,000 some odd jobs were created, 80,000 jobs retained, and $89.4 million annual real estate taxes were generated to distressed cities. The Research Division of the Urban Land Institute (1980) explained the UDAG progress within those first two years: $6.05 of private investment for every $1 ofthe UDAG, $.10 of annual tax revenues for every UDAG $1, new jobs at a cost of $6,200 per job. Public/private partnerships were a critical component of the UDAG program since local governments channeled the funds. The demand for UDAG funding far exceeded the appropriations, thus the applications considered were those that would maximize the purpose of the grant. To maximize the purpose ofthe grant, organizations had to show they could create jobs, stimulate private investments and increase and develop a tax base. Around this time, the CDC recognized the need to change its anti-capitalist agenda into a more professional conservative organization, if it was to obtain any UDAG funding. Thus a new era of CDCs began, as government funding became more conservative. 29

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The 1980s and 1990s; The Conservative Era of Reaganomics and Its Lingering Effects into the 90s. Between the years of 1980 and 1988, the period known as Reaganomics, federal budget authorization for low-income public housing assistance decreased over 80% (Goetz 1993; Keating, Krwnholz, & Star 1996; Eisinger, 1998; Peirce & Steinbach 1987; Kozol, 1988). The economic shift began to focus on a supply side; heavy govern.rilent involvement ceased during this time. During this time CDCs witnessed many cuts in their funding, namely the end of the Community Services Administration. As the government shifted to the right, the CDCs, as well, became more conservative. They became more business and development oriented, just like the for profit sector. The 1994 United States Conference ofMayors ([USCM 1994]) revealed the severity ofthe federal cuts between 1981 and 1993. Funding ofthe community development block grants, Urban Development Action Grants, the Federal Community Services Administration, HUD's Office ofNeighborhood Development, and the various programs of the Economic Development Administration decreased by 66.3% in this period (Eisinger, 1998, Peirce & Steinbach 1987). Federal housing assistance, according to the 1994 USCM, decreased from $26.8 billion in fiscal year 1981 to $8.9 billion in fiscal year 1993, a cut of over 66%. What this essentially meant for impoverished neighborhoods and 30

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their residents is that little to no low-income housing units were produced and few retained for existing tenants in the near future. This fact creates an enormous problem for those financially unable to compete in the housing market. The above figures are bleak for America's low-income neighborhoods. However, President Clinton has not entirely forgotten the cities. Federal funding for municipal programs does still exist. From 1995 to 1997, funding, in some areas, has actually remained steady: housing opportunities for people with AIDS saw no change funding remains at $171.0 million dollars the HOME Investment Partnership remains the same at $1.4 millionthe Community Development Block grant remains constant at $4.6 million (Eisinger, 1998). As of 1996, Public housing operating subsidies remains current at $2.9 million .. In 1996, Congress actually approved funding for 50,000 new section 8 vouchers (Reforms to Project-Based Section 8, p 1-2, 12/3/99). There are two forms of Section 8 subsidy: tenant-based and project-based. The tenant-based program allows for vouchers that give residents the freedom to utilize their subsidies in a wide range of private market housing. The government provides subsidies directly to the owner oftheproperty who then applies those subsidies to the rents they charge low-income tenants. The project-based program provides subsidies to specific properties so that the properties will remain subsidized. Roughly 3 million households are enrolled in the Section 8 program (Reforms to Project-Based Section 8, p 1-2, 12/3/99). 31

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Unfortunately the increase is only a drop in the bucket compared to the actual need of affordable housing. Section 8, in fact, is facing its own crisis. In most communities around the nation, the waiting lists for public housing and Section 8 assistance have been closed, as they are too long.Furthermore, in 1997 Congress passed legislation that establishes a program to acknowledge the thousands of properties privately owned that receive section 8 subsidies and that are facing the end of their government contracts. The high cost of renewing Section 8 contracts has been spinning out of control. The law's original intent was to reduce costs through restructuring of mortgages and weeding out some "bad" owners. However too many owners. are opting out of the program in two ways: First HUD insured, privately owned, Section 8 properties whose rents exceed market value are eligible for restructuring. The Section 8 contract stipulates that if a unit is restructured, then the landlord must agree to lower the rent to below market rates for thirty years. Unfortunately, many property owners are opting to prepay their HUD mortgages and raise their rents to market. HUD indicates that over 50,000 units with rents below market have converted to market rate over the last two years, with an average rent hike of 40 to 49 percent (Reforms to Project-Based Section 8, p. 1, 12/3/1999). Second, as of October 1, .1998, thousands of Section 8 project-based subsidies are naturally expiring. Essentially owners do not have to renew their contracts. They can opt for the restructuring program just mentioned, let their 32

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contracts expire altogether-and rent their units at market rate, or sell their property. Unfortunately, opting out of the HUD contract or selling properties can lead to massive displacement (Reforms to Project-Based Section 8, p. 1, 12/3/1999). Although some programs have remained constant, nothing in the patterns of federal aid in the 1990's suggests that city governments will be able to relax their habits of fiscal self reliance (Eisinger, 1998; Peirce& Steinbach, 1987). From 1995 to 1997 federal funding for specific municipal housing programs saw the following patterns: Homeless Assistance decreased by 26.5% Education for Homeless Children decreased by 13.8% Public Housing Modernization decreased by 13.3% Economic Development Administration decreased by 9.0% (Eisinger, 1998) Funding for the Community Reinvestment Act, which does not actually provide money, but requires lending institutions to invest in their local communities, was dramatically cut back (Eisinger, 1998; Orlebeke, 1997). At the onset of the year 2000, government increased some spending for the Housing and Urban Development (HUD). The Year 2000's Legislation The year 2000 brought changes. The government allowed HUD more funds to meet housing needs. Although HUD's budget was increased, the funds and 33

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programs are not what they have been historically, as with the 30s and 60s. The FY 2000s budget for HUD: "signals a renewed and reinvigorated commitment to meeting the country's housing and community development needs. The bipartisan legislation is going to significantlycontribute to the expansion of affordable housing through innovative economic development initiatives. This HUD budget has been labeled as the smartest and strongest in over 10 years. Several funding increases will put HUD back in the business of providing new affordable housing opportunities" (Back in Business, p. 1-7, 1117 /00). As well, the legislation will allow HUD to presume its role in helping lowincome families, the elderly, and the disabled to the decent, adequate, affordable housing. The legislation aimed at expanding and preserving America's affordable housing is as follows: 60,000 families will receive new section 8 rental assistance vouchers, which are 1 0,000 more vouchers than the previous year An increase in the operating funds to modernize affordable housing from $2.8 billion to $3.1 billion A $45 million increase for HUD's homeless assistance and prevention programs A $7 million dollar increase in the Housing for Persons with AIDS $44 million for Fair Housing Initiatives $575 million for the HOPE VI program, which aims to replace obsolete public housing with attractive, mixed income units $1.6 billion for the HOME program $1 0 million for the HUD Healthy Homes Initiative $25 million for the Office of Rural Housing and Economic Development for affordable housing for rural and Native American tribal areas $2_.9 billion for public housing capital improvements (Back in Business, p. 17, 1/17/00). As well, Secretary Cuomo and members of Congress have joined forces, announcing a bipartisan strategy to preserve the Section 8 housing from "opt-outs." 34

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Secretary Cuomo announced a Emergency Initiative that has cut opt-outs in halfby providing market rents to below market properties that are most likely to opt-out, thus preserving high-quality housing within the Section 8 program. As well the law has provided for many changes in HUD's mortgage programs to ensure that decent properties have comparable incentives as the open market in exchange for continued affordability. The legislation also increases HUD's ability to offer longer-term contracts, which increases the reliability of Section 8 housing. The law provides new resources for recapitalization of properties and incentives to transfer holdings to non-profits that will keep them affordable over a long period. Finally the law allows for "enhanced vouchers" to residents in units that opt-out, which aims to protect them from rent increases and displacement. The FY2000 budget is attempting to enhance the housing needs of the nation's poor: Helping to keep seniors in their own homes with its "Reverse Mortgage" program, which provides income to seniors based on the equity built up in their homes. Building more affordable housing for seniors, which maintains HUD's Section 202 program at $660 million (Back in Business, p. 1-7, 1117/00). The new commitment by Congress and the Administration to provide decent, safe, and affordable housing to all Americans will distinctly put HUD back in the business of housing Americans and creating opportunities for economic development in many of America's neighborhoods. 35

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Still, because of federal devolution and the many cutbacks HUD faced in the 80's and throughout the 90's, the need far exceeds the current progress at the federal level. The fact is, the housing crisis is phenomenal. It takes not only government work, but also community, and the private market to help alleviate the burden. The community development corporation claims to be an innovative force in addressing the housing crisis. 36

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The Effects ofFederal Devolution State and local governments have felt the effects of federal devolution. The federal order ofthe 1990s devolved power from the federal government to the cities (Eisinger, 1998; Stanfield, 1995;). The reduction in federal aid seems to be less of a partisan issue today than in earlier years because "not only is there now broad interest in devolving power through block grants, but the intergovernmental aid reductions put in place in Republican Washington in the 1980s are no longer resisted by deficit-averse Democrats" (Eisinger, p. 308, 1998). The effects of federal devolution have meant that the state and local governments, as well as the non-profit organizations have accepted the disproportionate burden of housing America's poor. The state and local governments can not bear the weight of urban revitalization alone. The fact remains that it was the federal, not state, or local government that dominated affordable housing construction from World War II until at least the 1980s (Goetz, 1993; Keating, Krumholz,& Star, 1996; Stanfield, 1995). However, as a result of federal cutbacks, states, and cities have spent unprecedented amounts of their own money for low-income and public assistance housing. Although the state governments (all 50 combined), between 1980 and 1990, increased expenditures for housing by 350 percent and local governments 37

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between 1982 and 1987 spent an estimated $3 .I billion, neither came near matching the federal withdrawal (Goetz, 1993; Stanfield, 1995). According to Stan:fied (1995), America's 100 largest cities are distressed, with another 22 percent well on the way. According to the Housing for Urban Development statistics, 5.3 million households lived in decrepit and degraded housing units, or paid more than half their income for their residence, or both in 1991 (Stanfield, 1995). Despite the booming economy, in 1998, a record 5.3 million households with low incomes had a desperate need for housing assistance as rents and substandard living conditions are on the increase. (www.hud.gov/presrel/pr98-1/8.num). Goetz ( 1995) indicates that "the significance of the local response to housing, however, is not in expenditure levels ... the innovations at the state and city levels have been more substantive than financial" (p. 4, 1995). The CDC: A Vehicle for Community Revitalization Gittell & Vidal (1998) argue that "the devolution of responsibility to the state and local levels will increase the demands made on the community development field. With the lack of government funding over the last 30 years, the responsibility of neighborhood revitalization has shifted to non-profit community development corporations (Owens, 1997). As mentioned earlier, the CDC had to become more entrepreneurial, technical, and professional as government funding 38

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became more scarce for non-profits. CDCs began to forge.partnerships with local governments and corporations that were seeking to invest more responsible. (Peirce & Steinbach, 1987). Under current federal antipoverty programs, CDCs have fast become the vehicle for community revitalization (Berndt, 1977; Stanfield, 1995; Robinson, 1996). Solutions to neighborhood deterioration through local community-based organizations is gaining widespread acceptance (Glaser, Soskin, and Smith, 1996; Gratz, 1989). However, many scholars argue "private philanthropy carmot pick up in any way, shape or marmer what the federal government does not do. According to A vis Vidal CDCs are not the absolute solutions to neighborhood disinvestment, macro forces in the economy, or the demographics of suburbanization" (Stanfield, 1995). Non-profits do not want to be seen as the answer to housing policy. "(They) are not, (they)are a small part of the whole puzzle, but if nurtured properly, they can be a vibrant part" (Stanfield, 1995, p. 1763). The intent of this paper was to argue the point that not-for-profit community development corporations, specifically West Denver's NEWSED in times of federal devolution, significantly address housing concerns and needs to directly benefit the community by reversing the negative factors that deteriorate and threaten the stability of a neighborhood, while avoiding gentrification.. As seen, historically the federal government had assumed a large role in providing adequate housing during times of instability. Organizations such as CDCs are similar in that they are 39

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dominant forces during times of instability, however as government becomes more conservative with funding, the institution does also. 40

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CHAPTER3 THE CDC IN OPERATION Some scholars argue as to when the CDC actually began. Some trace its beginnings to early American experiences (Peirce & Steinbach, 1987), while most agree that they grew out of the 1960s (Berndt, 1977; Robinson, 1996; Owens, 1997; Goetz, 1993; Orlebeke, 1997; Gittell & Vidal, 1998). The CDC has shifted focus over the generations, evolving into an important player in housing affordability. The CDC faces funding limitations as it tries to produce and maintain affordable housing units. The chapter discusses many challenges the CDC faces and how it strives to overcome these factors. The CDC involves a "complex web of partnerships" (Yin, 1998) made up of three key players, the government, private philanthropy, and the community. As the chapter describes the CDC's evolution, it explains how and why the CDC has grown from a protest movement to a mainstream organization that utilizes a variety of mechanisms to obtain their goals. The chapter is organized as follows: 1. Historical Roots of the CDC 2. The Evolving CDC 3. Facing the Funding Challenges 4. A Complex Web ofPartnerships 5. Social Capital and its effects on neighborhood decline 41

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Historical Roots of the CDC By most accounts not-for-profit community development corporations [according to most scholars] grew out ofthe 1960s War on Poverty, the Ford Foundation's 'grayareas' programs of the same era, and direct funding from the United States' Community Action Agency programs (CAP) (Berndt, Robinson, Owens, Goetz, Orlebeke, Gittell & Vidal, 1998). Other scholars argue that-the federal government and the Ford Foundation were a crucial part ofthe movement in that they provided funds, but they note. that the CDC was no invention of the federal government or the Ford Foundation. Peirce and Steinbach (p. 20, 1987) claim that: Its (CDC) roots can be traced to the earliest American experiences Mayflower pilgrims with their compact of mutual assistance to the cooperatives of the great depression. From the utopian communities ofNew Harmony and Oneida to Booker T. Washington and Marcus Garvey organizing collective business efforts to help former slaves after the civil war. Keating, Krumholz, & Star (p. 145, 1996) further argue: The use of nonprofits as an appropriate vehicle to address community problems is not new. The historical underpinnings of these organizations can be found in the long-standing American tradition ofthe associations or mutual aid society, the rise of the social settlement house movement, & early efforts of non profits to meet the housing needs of low income residents. 42

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The Evolving CDC The earliest CDCs were seen as a way in which poor communities could achieve greater political and economic power to offer better solutions and alternatives than the initiatives put forth by the government and other service delivery agencies (Goetz, 1993; Robinson, 1995; Berndt, 1977). Unfortunately, many urban renewal programs, like Slum Clearance, displaced the poorest populations into increasingly concentrated, segregated, impoverished neighborhoods (Yin, 1998). Thus, the purpose of the federal government's Community Action Agency Program (CAP) was to mobilize, promote, and organize the poor. The basic assumption ofthis self help model was to give back power to the poor and to break the cycle of poverty (Berndt, 1977). The first generation CDCs, which it is estimated there were about 100 (Stoecker, 1997; Peirce & Steinbach; 1990), were deeply committed to organizing the poor via new businesses, housing for lowand moderateincome families (Givel, 1991) and jobs (Givel, 1991; Kelly, 1977). Early CDCs broadened as neighborhood advocates that protested the encroachment, displacement, gentrification, and redlining taking place in the name of progress (Vidal, 1995; Gittell & Vidal, 1998; Orlebeke, 1998; Goetz, 1993; Stoecker, 1997). Unfortunately, the government's revitalization efforts of the time were characterized by high levels of displacement and gentrification of the poor (Palen and London, 1984; Smith and Williams, 1986). While millions of dollars 43

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were spent on creating offices and "playgrounds" (Goetz, 1993) for the upper classes, residential neighborhoods for the poor were being destroyed. In response, Peirce & Steinbach (1987) claim that in the 1970s "community economic development was no longer an alternative way to help poor communities; it was fast becoming the chosen vehicle" (p. 27). Between 500 and 1 ,000 second generation CDCs formed (Peirce & Steinbach, 1990; Stoecker, 1997) to protest such "displacement -based" urban renewal (Stoecker, 1997; Vidal, 1992). During the 1980s, CDCs responded to federal cuts in affordable housing (Vidal, 1996; Gittell & Vidal, 1998). As the government became more conservative with funding, neighborhood organizations, like the CDC became conservative as well. Since then, the primary function of the CDC has been to provide affordable, adequate, long-term housing (Robinson, 1996). According to Vidal (1992), CDCs that arose in the 80s and 90s were more likely than their predecessors to make real estate their primary activity. In fact, over 1,000 CDC's have emerged since 1981 (Peirce & Steinbach, 1987)as "debt weary governments at all levels withdrew from the pressing problem ofurban poverty" (Stoecker, 1997). According to Goetz (1993), in 1989, 95% of cities with populations over 100,000 had one or more CDC's operating in them. The new generation of CDCs receive political and economic support for housing production. In fact over 90% of CDC's primary mission is to create affordable housing (Vidal, 1996; Goetz, 1993; Goetz, 1996; Gittell & Vidal, 1998; 44

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Medoff & Sklar, ). Over the last 10 to 15 years .CDCs have become major players in urban and neighborhood housing revitalization. These CDCs have "matured into a fledgling industry, more and better support has become available to new organizations" (Gitell & Vidal, 1998). From 1960 until 1990, CDCs produced nearly 14 percent of federally subsidized housing (Walker, 1993; Vidal, 1996). During the years of 1986-87, CDCs were producing close to 45,000 units per year, while HUD was producing 38,682 units per year. According to Goetz (1993) the figures "indicate that the CDC sector has developed a production capacity roughly equal to the federal government's low-income housing output" (p.l18). In 1993, according to the National Congress for Community Development, CDCs produced around some 400,000 units (Vidal, 1992; Vidal, 1996). Gittell & Vidal (1998) explain the two types of community organizing; conflictual (traditional) and consensus. Conflictual organizing is the most basic form and historically the first type of community organizing. Protest movements, marches, demonstrations, sit-ins, are typical types of conflictual organizing. Consensus organizing differs from traditional organizing in two ways. First consensual organizing deals with non controversial issues, such as housing improvement and redevelopment. Second, consensual organization believes there is potential for low-income individuals to strengthen their power and influence without overturning or changing the existing system. 45

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CDCs, originally, may have been conflict organizations, but they have most certainly grown into established, mature, and consensual organizations. Gittell & Vidal ( 1998) state that they (CDCs) have "matured into a fledgling industry, more and better support has become available to new organizations" (p. 34). The organization has evolved from protest politics to professional development corporations. Institutions that engage in street and political unrest, risk the potential of alienating potential outside funders. Since funding is the biggest concern for CDCs, it is important not to alienate its limited sources of funding. Without outside funding it is impossible for the CDC to bear the costs of development alone. Facing the Funding Challenges Funding remains the biggest obstacle for CDCs and has been described as creative and complex (Keating, Krumholz, & Star, 1996; Goetz, 1993). Since its primary mission is to create affordable housing for low-income residents, the cash profit from most CDC projects is minimal at best. Thus CDCs are in constant search of funding for their administrative and staff costs. As well, CDCs are in need of "predevelopment funding," (Goetz, p. 120, 1993) which covers costs before actual production begins. The CDC does not have a ready. reserve of cash flow on hand to cover such predevelopment fees. However, the dilemma of funding does not end there. After the predevelopment needs are satisfied, it is then necessary to 46

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.finance the "hard costs" (Goetz, p. 120, 1993) of production. Such financing includes property acquisition, development, and construction costs. Since CDCs operates in low income marginal neighborhoods that and other for profit spectators tend to avoid, the agency must "scramble for subsidies from several different sources to patch together a financing package that works" (Orlebeke, 1997). This indicates the reason the CDC has had to moderate and professionalize its behavior. With limited funding, as mentioned earlier, it is not wise to upset possible contributors. Since funding is limited in scope, CDCs have had to come up with some creative strategies, which has involved a complex web of partnerships to fund their projects. A Complex Web of Partnerships Yin (1998) mentions "over the last three decades, the story ofCDCs has progressed from that of the single organization making good in its community to that of participation in a complex web of partnerships" (p. 138). Keating, Krumholz, & Star (1996) describe the CDCs as "organization of public/private partnerships that provide services within neighborhoods that are no longer attractive to the private market" (p. 145). The community acts as the force behind community sensitive revitalization efforts (Robinson, 1996; Berndt, 1977). The assumption is that the community 47

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knows what is best for its particular neighborhood. Thus the planning, developing, and production should come from within (Peirce & Steinbach, p.30). Although community development corporations are private [self help groups with public boards and many community meetings], they still rely heavily on federal funding and regulations (Stanfield, 1995; Berndt, 1977; Robinson, 1996; Keating, 1996) since they "operate in neighborhoods where the free market failed in the first instance"(Peirce & Steinbach, p. 58, 1987). Even with the devastating budget cuts, the federal government is still a major funder for the CDC. Four federal programs are crucial for the operation of not for profits: (1) federal low-income-housing tax credits, which provide tax credits to corporations investing in low-income housing; (2) Community Development Block Grants (CDBG), which are allocated locally and provide partial grants for housing rehabilitation, primarily for owner-occupied housing; (3) the HOME Investment Partnerships, which provides housing grants to localities and states. These grants are used primarily for constructing and rehabilitating rental housing for low income people; however the funds can also be used for loans, interest rate subsidies, and tenant-based rental assistance to landlords (Stone, 1991). And (4) the Community Reinvestment Act (CRA), which is aimed at reducing redlining practices of banking and lending institutions. (Stanfield, 1995). CRA has become a constructive legal and organizing tool for community groups, as they have been successful at pressuring lenders and inducing 48

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"commitments for concessionary lending when banks seek favorable regulatory decisions on mergers, branch closings, and new branches" (Stone, 1993). According to the NCCED (1995) one third ofCDCs reported utilizing Home's resources (Stanfielq, 1995). Stanfield (1995) notes "CDBGs are vital to the operations of nearly four-fifths of the community development corporations" (p. 1765). Without funding from the CDBG, most CDCs would have to look entirely to the private sector for its funds. It is tmclear just how much state and local governments are "incorporating CDCs into housing policy implementation or whether they are providing the assistance necessary for CDCs to operate effectively" (Goetz, 1993). The methods in which CDCs and local governments connect varies. According to a national study, 53 percent of CDCs are receiving state funds and 42 percent are receiving local funds (Goetz, 1993). Foundation money is critical for nonprofits. National community development intermediaries are also essential for CDCs operating in destitute and degraded neighborhoods (Keyes et. al, 1996; Gittell & Vidal, 1998). According to Orlebeke ( 1998, p.188) an intermediary is a "nonprofit organization fmancially backed by corporate investors and private philanthropy." Intermediaries function at all levels of government: local, state, and national. The intermediaries provide the necessary financial, technical, political, and moral support to enable local CDCs to 49

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create a practical low-income housing industry (Keyes et. al., 1996; Gittell & Vidal, 1998; Berndt, 1977; Robinson, 1996). Three significant national intermediaries exist today. In 1979 the Local Initiatives Support Corporation (LISC), which was founded by the Ford Corporation and seven other corporations, began with $10 million in capital (Orlebeke, 1998; Peirce & Steinbach, 1987). Since that time, LISC has raised more than $2.4 billion from 1,600 sources, and has assisted CDCs in creating over 73,000 units of affordable housing (Orlebeke, 1998). Another intermediary is the Enterprise Foundation, which was founded in 1982. The Enterprise foundation to date has assisted more than 550 CDCs, "with $1.8 billion from private capital for grants, loans, and equity investments" (Orlebeke, 1998). CDCs have produced over 60,000 in units with the help of the Enterprise foundation (Orlebeke, 1998). Finally, the Neighborhood Reinvestment Corporation (NRC) is a 1978 non-profit, congressionally chartered intermediary. The NRC receives most funding from a congressional appropriation, which in 1997 was near $49.9 million. Although most funding comes from a congressional appropriation, they also receive revenue from banks, corporations, and foundations. Housing production is of a technical nature, thus specialists in the legal, design, architectural, engineering, and construction fields are critical to CDCs. The costs of housing production and technical expertise is burdensome for non-profits, 50

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thus the intermediaries provide a large portion of the funding and the technical assistance necessary for the CDC to operate effectively. The CDC combines the aforementioned resources to develop innovative funding strategies: tax foreclosures, linked deposits (which allow banks to lend at reduced interest rates), investments from foundations; existing government programs, and successful lobbying efforts (which created the 1986 Low Income Housing Tax Credit). Such efforts provide direct impacts on neighborhoods, as well as give the organizations and residents a significant stake in the projects and community (Keating, Krumholz, & Star, 1996). CDCs vary in size and scope, but they basically share common goals and visions by operating in marginal neighborhoods stricken by poverty, disinvestment, and abandonment. The neighborhoods that CDCs commonly represent are those with fully depreciated structures, low income homeowners who are unable to afford maintenance, high levels of absentee ownership rates, slumlords, and landlords unable to upkeep their properties because they are unable to raise rents to recapture reinvestment (Margulis, 1998) .. The key to maintaining a viable neighborhood amongst so many negative factors, according to Keating and Smith (1996) is "neighborhood organization" (p. 37). As Fisher (1996) indicates, neighborhood organization is important in three ways: (1) it has strong historical roots and ties, (2) it cuts across the political spectrum [appeals to mainstream society], (3) efforts at organization can expand and 51

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transcend across borders. Vidal (1996) credits the neighborhood CDC with "doing the difficult job of providing service and leadership in communities that need help and that other agencies cannot or will not serve" (p. 153). As neighbors unite with one another, they become a strong voice to the city. An organization that is based and dedicated to a neighborhood is capable of further advocating the goals of the residents, via grants, private philanthropy, business plans, etc.-, known as social capital. Social Capital and Its Effects on Neighborhood Decline Historically, poverty-fighting legislation has to include community organization and involvement in the decision making process. In response, urban theorists are now calling for the development of "social capital" in urban neighborhoods, as they believe it is necessary for economic growth, neighborhood stability, and, most important, the ability to engage neighborhood residents to connect with one another and act collectively for the better of themselves and their community. (Temkin & Rohe, 1998; Putman, 1993, 1995). The 1995 Committee for Economic Development called for CDCs to emphasize the creation of social capital (Temkin & Rohe, 1998). Social capital, according to Coleman, is "an intangible resource that exists in the relations among persons" (Temkin & Rohe, 1998). According to Saegert & Winkel (1998) "social capital is a term much invoked recentlyto describe the benefits of voluntary associations, which some 52

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-writers believe are necessary for a democratic society and for economic prosperity" (p. 20). Robert Putnam (1994), who actually popularized the concept, defines social capital as "the features of social organization such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit (p. 6). Putnam divides social capital into two component: civic engagement and trust. Civic engagement is the level at which citizens participate in the political process. "Trust" is the level at which citizens trust one another, which encompasses talking about neighborhood problems and solutions, helping one another, spending recreational time locally, etc. If citizens actively participate in the political process and trust one another, ari.d speak out more frequently, they are likely to come together and enthusiastically address their communities concerns via the political process. As mentioned earlier, CDCs were once at the center of grassroots organizing. This allowed for neighborhood residents to come together, discuss issues, and mobilize to fight for their rights, an initial form of social capital. Ultimately the CDC and residents had to trust one another to fully develop a sense of social capital in their neighborhood. Gittell & Vidal (1998) argue that; "community development in social capital and networking terms facilitates an understanding of the role of community organizing in community development understood broadly as the restructuring of political, economic, and social relationships to permit disinvested neighborhoods to produce a higher quality of life for residents" (p. 51). The consensual model operates under the notion that 53

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neighborhood residents should have some say in the development agenda in their community, while establishing strong relations with other development actors in the larger metropolitan area (Gittell & Vidal, 1998). In doing this, they establish positive linkages to other private, public, and nonprofit institutions. "The blending of and bridging social capital is thus at the core of consensus organizing" (Gittell & Vidal, 1998, p. 53). According to Temkin & Rohe, (1998) neighborhoods with a strong sense of social capital experience less problems with crime and experience a healthy social environment, which "should be capitalized into the value of housing within the neighborhood (p. 65, 1998). According to some scholars, social capital has affected conditions in public & affordable housing (Spence, 1993; Keyes et al., 1996). As neighborhoods enjoy higher levels of social capital, it is less apt to experience decline. Consensus organizing aims to build new organizations that can cut across existing networks and develop new leadership (CDCs), which becomes the communities' institutional infrastructure. In doing this, the community is most likely to support development and other agenda items set forth by the institutional infrastructures since many projects are defined and prioritized within the community for the betterment of the neighborhood. Social capital, which is at the core of consensus organizing, strives to build bridges that strengthen the institutional infrastructure that work on behalf of low54

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income communities. The more social capital that exists within a neighborhood, the better the chances of interaction at all levels, locally, as well as city wide. Essentially, consensus organizing has participant's actively pursuing resolution through existing channels and taking advantage of the institutional infrastructure. For social capital to exist within a neighborhood Gittell & Vidal (1998) claim the CDC should be governed by leaders from the neighborhood and a "variety of other well-regarded citizens from the public and private sectors who can contribute to the neighborhood revitalization process by virtue of their positions, experience, or perspectives (p. 41). If the CDC does not get input from the community on its projects, than the CDC is merely serving its own interest. 55

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CHAPTER4 CRITICISMS OF THE MOVEMENT The CDC is not without its share of critics. In fact many dismiss the success stories many CDCs have enjoyed. At times critics paint an accUr-ate portrait of the CDC. While this chapter acknowledges the validity of the opponent's argwnent, it also recognizes some of the accomplishments of the CDC. CDCs are not trying to solve the housing crisis or other dynamics of neighborhood declination, but rather they are a small piece of the puzzle working to offer more housing opportunities in its communities. The chapter is organized ihto three sections: I. Low Productivity Rates 2. CDCs Sell Out 3. CDCs do not Accurately Mirror its Neighborhoods Low Productivity Rates Opponents argue that the productivity rates of CDCs are just "a drop in an ocean of need" (Twelvetrees, 1989, p. 155). Since the CDC lacks adequate funding, it comes nowhere near providing (Twelvetrees, 1989; Stoecker, 1998) or saving any notable amount of affordable housing (McAfee, 1986; Twelvetrees, 1989, Stoecker, 1998). Stoecker (1998) describes the CDC as "a single small initiative in a sea of decay" (p. 7). 56

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The above critique, unfortunately is accurate. CDCs operate in weak markets, so naturally their productivity rates are not tremendous. In fact, Robinson (I 996) mentions that the non-profit ownership rate in the United States is less than 1 percent of all rental housing. The critique is valid, but if the CDC were not developing in these deteriorated neighborhoods or working on behalf of the poor, in the midst of Currently, the CDC is the major producer of low income housing, matching current federal affordable housing productivity (Robinson, 1996; Goetz, 1993; Vidal, 1996). Furthermore, Robinson (1996} indicates that to criticize the CDC for its minimal units produced is to miss the point regarding their holistic agenda: CDCs commonly engage in other community improvement activities (Robinson, 1996; Gittell & Vidal, 1998; Vidal, 1996). In fact, 75% of CDCs provide weatherization assistance, resident services, including counseling for both tenants and homeowners, and aid for the homeless. (Gittell & Vidal, 1998). At least 70% contribute to community empowerment initiatives, 60% furnish residents with hwnan services, such as job placement, drug, alcohol, and pregnancy counseling, child care, etc., and finally roughly 25% engage in small scale commercial and industrial development (Gittell & Vidal, 1998). Walker (1993) indicates that CDCs have evolved from issue oriented community groups that were historically established to challenge lending practices, demand improved city services, and fight off gentrification into mature professional industries. Although the CDC may not 57

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be producing housing in large amounts, it is providing a social services to communities. Although the CDC does not produce tremendous numbers of units, they are still matching rates of production under federal programs at about 13 percent. The CDC is not solely a housing producer either, it has evolved from its original roots to become. an established organization that works for the betterment of its neighborhoods via community improvement initiatives. CDCs Sell Out Since the CDC is constantly scrambling for funding, many opponents argue that the CDC has given up its innovative, protest driven grassroots movement that gave most a start. Such theorists argue that CDCs, because they are less willing to alienate potential funders (Piven & Cloward, 1979), will delegitimize protest or organizational movements by dismissing their actions as militant and extreme (Stoecker, 1998; Taub, 1990). Furthermore opponents claim that the CDC actually diverts attention and efforts away from mass-based, protest driven actions (Lenz, ; Piven & Cloward, 1979; Stoecker, 1998). In fact many argue that protest movements have more influence and have more lasting effects than formalized organizations that "(arise) on the crest of protest movements" (Piven & Cloward, 1979). McAfee (1986) notes her frustration with CDCs in that they do not talk about a revolutionary protest movement to replace the existing capitalist system that 58

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allows there to be a housing crisis in the first place. According to Berndt (1977) "CDCs have accepted the rationale of the corporation within capitalist society" (p. 126). For the most part it is true that CDCs are willingly operating within the capitalist society and most do not promote active protest movements against capitalism (Stoecker, 1998). They do, however promote commimity sensitive programs and initiatives, such as housing. According to Robinson: there is an imperative for successful low-income communities to move beyond defiant resistance and to tum the forces of government and business towards proactive, community-sensitive pursuits (1996, p. 1649). Many believe in order for community sensitive development to exist, the CDC must be a necessary and integral part of the process. The CDC reacts to the lack offederal dollars flowing into urban neighborhood for adequate housing, but does not stop there, it reacts by utilizing methods and strategies aimed at alleviating problems urban neighborhoods face. Because cpcs are accepted by mainstream society, the CDC is able to bring in more dollars to assist with community initiatives, which can be quite costly. Without adequate funding, it would be extremely hard for any organization to tackle such social ills. CDCs are advocates for gentler change within its neighborhoods. CDCs are becoming powerful vehicles in producing low-income housing because of its increased professionalisation within the capitalist society (Robinson, 1996). Since the CDC has evolvd-into a mature professional organization, it is better able to 59

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obtain federal grants and other types of funds. As the CDC's popularity increases so does its production and activity rates (Vidal, 1997; Robinson 1996). As well, Robinson (1996) has also noted that CDCs provide the avenues for "bottom-up citizen participation in politics; providing quality, flagship, neighborhood projects which can act as emotional anchors for community aspirations to enhancement and empowerment" (p. 1662). Most CDCs still engage in some form of community organizing. According to Walker (1993), nearly two thirds ofCDCs conduct community organizing activities and about 40 percent try to organize and mobilize community residents. At present, the purpose of CDCs is to establish habitable and affordable living environment for its residents, not to change the existing system. The point can be argued that the moderate approaches of CDCs have had such success is because they operate simultaneously with oppositional movements that exhort and pressure government and business. In times of federal devolution, it seems that the only the CDC must maintain a conservative agenda to ensure limited federal funds. CDCs Do Not Accurately Mirror Their Neighborhoods Another common criticism is that CDCs are not truly representative of the neighborhoods it represents (Berndt, 1977; Stoecker, 1998; Lenz, 1988; Kelly, 1974; Giloth, et al., 1992 Stoecker). Some scholars believe that the true power and control is not in the hands of the residents, but in a few powerful elites. As 60

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mentioned earlier, CDCs scramble for funding and are entwined in a complex web of partnerships between community, government, and the private sector. It is this complex organizational structure that many claim devolves control from neighborhood residents to the professional staff, who often live outside of, and whose interests are not vested within, the community (Stoecker, 1998; Kelly, 1974; Berndt, 1977; Giloth, et al., 1992). Furthermore, many believe that to solicit funding from outside the.community via private and government sources, often includes stipulations and conditions that pose a threat to community autonomy (Glaser, Soskin, & Smith, 1996; Sharp, 1990). The national intermediaries that fund CDCs, at the local levels, are controlled by elites "who often view redevelopment from an exchange value perspective rather than a use value perspective" (Stoecker, p. 8, 1998). It is argued that the technical assistance and professional staff are always found outside of the community. Further, boards are made up of businesses and professional individuals who are not actually poor residents, thus the CDC is not an accurate advocate for the neighborhood (Stoecker, 1998). Primarily CDCs are interested in having its board members ethnically and racially mirror its given neighborhoods even if they are not primarily made up of neighborhood residents (Gittell & Vidal, 1998). In fact, the CDC boards that share similar characteristics with its residents is important and viewed as credible (Gittell & Vidal, 1998). Since CDCs are in competition for funding; it is of the utmost 61

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important to possess the best credentials. However, the dilemma does exist. With the lack of adequate public funding, CDCs must strive to maintain community control, while relying on private dollars. Advocates do not dismiss this problem, as Bratt (p. 25, 1998) notes the plausibility of Stoecker's ( 1998) argument, "there seems little way to escape (his) argument: How to support redevelopment that allows for community control while needing to look to outside funders to write down the cost ofthat development to make it affordable." Instead of wasting energy on such limitations, Bratt (1998) concludes the effort should go toward educating the funders of potential hazards to the community when there are stipulations and conditions attached. Since most CDCs are organizations working on behalfofthe poor, most do not want to operate against community interests anyway. CDCs are not without its share of critics and in fact, most of the arguments are valid. It is true that the CDC has given up the protest driven movements that gave many a start. While the protest driven movements are working to change the system, the CDC is working to better its community as long as the system exists. CDCs cannot always mirror their neighborhood racially and ethnically, although most try. If the CDC is comprised of some neighborhood residents and members that share similar ethnic traits, there tends to be more trust and communication between the agency and residents. With a constant scramble for funding the CDC strives to maintain harmonious relations with the neighborhood as well as potential 62

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funders. If a funder determines that the CDC is not working on behalf of the neighborhood or if there is a lot of conflict between the organization and the community as a whole, then funding may not be given to the organization. Finally, it is true that CDCs operate in weak markets, and do not produce at tremendous rates,. but it is producing at the rate of federally funded programs. Obviously, CDCs are not the answer to the housing dilemma, but with the units produced along with other assistance and service, CDCs attempt to help residents exist within the current system. Peirce & Steinbach (p. 12, 1987) pose the question: "What manner of organization tackles the toughest societal problems, plays charity and capitalist and community organizer at the same time, and can manage to bring government, corporate, philanthropic, religious America all on board?" The answer is the non-profit Community Development Corporation. 63

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CHAPTERS A CASE STUDY OF NEWSED This thesis includes a case study of a major Community Development Corporation, NEWSED, located in the heart of West Denver. The Westside is delineated by Colfax to the north, Speer Boulevard and Broadway to the East, Alameda to the south, and the railroad tracks to the west. La Alma/Lincoln Park is the area immediately bounded by West Colfax Avenue, Speer Boulevard, West Sixth A venue, and the South Platte River. The Baker neighborhood is that area surrounded by West sixth Avenue, Broadway, West Mississippi Avenue, and the South Platte River. The Westside area, of which the La Alma /Lincoln Park and Baker neighborhoods are a part, is an urban underclass community located in the heart of West Denver. The neighborhood has experienced decline, disinvestment, and also reinvestment over the last 50 years. NEWSED is primarily responsible for the neighborhood experiencing economic revival once again. As well, NEWSED claims to be deepiy committed to providing affordable and adequate housing for its residents. The chapter will provide a history of the neighborhood and describe how the neighborhood witnessed severe abandonment during the 50s and 60s. The chapter discusses how and why NEWSED came into existence and current programs that 64

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are in for the two neighborhoods: The chapter is organized into nine sections. 1. History of the La Alma/Lincoln Park and Baker Neighborhoods 2. Current Disadvantages the Neighborhoods Face 3. The Rise andSuccess of the For-Profit, NEWSED 4. The Beginnings of a Not-for-Profit, NEWSED 5. NEWSED Gets Labeled an Urban Comeback Success Story 6. NEWSED Tackles the Housing Crisis 7. NEWSED Promotes Cultural Pride and Unity 8. NEWSED and Social Capital 9. The Decrease in Crime in the Neighborhood History of the La Alma/Lincoln Park and Baker Neighborhoods The Westside neighborhood is a neighborhood with considerable cultural heritage and pride. Spanish surnamed individuals comprise well over 50% of the total population. Latest census statistics (1994) had the total population in the two neighborhoods at 11,802. The total population in La Alma/ Lincoln Park is 6,534 individuals constituting 2,767 households. The Latino population is at 64%. The Baker neighborhoods total population is 5,268 individuals comprising 2,235 households. The Latino population is 55.5% (NEWSED Business Plan, 1998). The Denver Westside is rich in history. La Alma Lincoln Park and Baker are two of Denver's oldest neighborhoods, dating back to the 1880s an the settlement ofthe Auraria City (Research Division of the Urban Land Institute, 1980; Westside Neighborhood Plan, 1981). Once a booming industrial site along the South Platte River, the Westside peighborhood was established adjacent to the 65

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Denver and Rio Grande railroad lines. The city of Denver actually began in this neighborhood in the 1850s. Groups of gold seekers from Auraria County, Georgia came to the area and settled cin the west side of Cherry Creek, which is now the site for the Auraria Higher Education Campus (NEWSED Business Plan, 1998). La Alma I Lincoln Park, originally known only as Lincoln Park, was annexed to Auraria city under the Territorial Session Laws of 1874 and 1883 (Westside Neighborhood Plan, 1981). Only recently has Lincoln Park become known as La Alma/Lincoln Park. In Spanish, La Alma means spirit or soul. The neighborhood prefers the area to be known as La Alma/Lincoln Park. In fact La Alma Park was the site for many neighborhood protests and organizations back in the 60s (Westside Neighborhood Plan, 1981). In La Alma/Lincoln Park, 93% ofthe residential structures in the neighborhood were built prior to 1900, with the remaining 7% developed during the years of 1900-"1914. The average year of residential construction is 1893 (Westside Neighborhood Plan, 1981 ). The Baker neighborhood was annexed to the city under the Territorial Session Laws of 1883 (Westside Neighborhood Plan, 1981). By 1900, 82% of the residential structures had been built. The remaining 18% of residential structures were built between the years of 1900 and 1915 (Westside Neighborhood Plan, 1981). In his Colorado Epic, James Michener described Santa Fe Drive as the "heart of Denver's Mexican community in the 1880s" (The Denver Post, 1974). Santa Fe 66

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Drive, the Westside neighborhood's main corridor, was significant to the early Denver economy, as settlers exchanged goods, services, and commerce along this main strip. Santa Fe Drive was also used as a wagon trail for travelers headed from the east and south to the "Great West" (NEWSED Business Plan, 1998). During the 1930s, decline set in. The neighborhoods fell victiin to those same pressures of suburbanization that plagued many other urban commercial streets and districts across the nation: disinvestment, abandonment, and decay. Mexican-American fanners and miners moved into the Denver area, settlingin both the Northeast part of Denver and the Westside of the city. Those two neighborhoods had the largest influx of Mexican Americans, which is still the case today. In fact, today, the Westside neighborhood has become the largest Mexican American neighborhood in the city (George, 1999). During the 1950s and 1960s, many upper and middle class residents were leaving the America's for the suburbs, and La Alma and Baker were no exceptions. Veronica Barela, the Executive Director ofNEWSED and a native to the neighborhood, indicated that prior to the mass exodus to the suburbs, the ethnic diversity of the neighborhood was "amazing; it was like the U.N." (Interview of Veronica Barela by Tony Robinson, September, 1999). The economy during those years shifted from the manufacturing, rail and warehousing industry to a more professional service industry (NEWSED Business Plan, 1998). Denver inner-city working class neighborhoods such as La Alma and Baker began to deteriorate; 67

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poverty and unemployment rates increased, capital disinvestment accelerated, neighborhood businesses went bankrupt, crime intensified, and property depreciated. At one time Santa Fe Drive was truly the heart of the community. It had a supermarket, hardware store, bakery, and a meat packing plant. Once the supermarket left the neighborhood, the other businesses soon followed. The Westside neighborhood in the 60s experienced mass mobilizations to protest police brutality, inadequate services, local and national discrimination, and injustices against Chicanos. George (1999) indicates that West Denver became the "hub of radical organizing." A neighborhood organization created, Los Voluntarios. Los Voluntarios launched voter registrations to increase neighborhood empowerment in the political process. After time, it was realized that the Democratic Party was not going to address the multiple issues that troubled low income neighborhoods. At this time, the neighborhood began to divide into two groups: those who would support the mainstream electoral process and those who would support radical movements, namely the Crusade for Justice, led by Rodolfo "Corky" Gonzales (Vigil, 1999). The Crusade for Justice had its start in the neighborhood and led many successful liberation movements. According to Vigil (1998), for fifteen years the Crusade for Justice was the most powerful, energetic and effective organization to fight for Chicano rights in the state of Colorado. The Crusade for Justice, as Vigil ( 1998) explains, "was a catalyst for uncompromising political activism on behalf of 68

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people of Mexican descent at a time when our population was growing and becoming urbanized" (p. ix). Gonzales wanted the Crusade for Justice to be a national model for urban Chicanos to organize in order to achieve self detennination, as well as resolve social ills that plagued their communities. Gonzales was very critical of the electoral system and American society, often claiming that the "system (was) built upon racism and imperialism" (Vigil, 1998, p. 3). Gonzales did not support mainstream politics, as he believed that the balances of power needed to be shifted from the ruling elites to the community, a notion that made many uncomfortable. Gonzales was appointed by Lyndon B. Johnson to head Denver's anti-poverty programs. It was after this appointment that Gonzales felt disgusted by mainstream politics. His ideas were not unwarranted as he had once operated within the realms of mainstream politics. Those that did not support the Crusade for Justice and worked within the existing political system were known as the "agency group," from which NEWSED evolved (George, 1999). The agency group consisted of individuals that worked for established Westside agencies such as: the Westside Action Council, the Denver Inner City Parish, Brothers Redevelopment, Inc., the Mennonite Urban Ministry, and the Westside Improvement Association (George, 1998). Basically the agency group supported social services via counseling, housing, crisis intervention and assistance, etc. (George, 1998) 69

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As the 60s came to an end and the protest movements of the time slowly faded. The government headed into a more conservative position and funding for local organization al movements became more mainstream. Without the presence of a strong advocate to voice demands and concerns for the community, the neighborhoods became to decline. By 1970, the neighborhoods had some of the highest crime, poverty, dropout, absentee owner, and rental rates in the city. The construction of the Auraria Higher Education Center, in the 1970's, intensified the downward spiral of the neighborhood, as many poor local residents were displaced. As well, it accelerated middle class flight and led to an 85% rental rate neighborhood. To assist America's declining cities the government developed the Urban Development Action Grants. The purpose of the Urban Development Action Grants were to revitalize distressed core City neighborhoods by stimulating economic development. UDAG funding, as mentioned previously, was dispersed locally to those organizations that could maximize the use of the grant, e.g. economic development, redevelopment, rehabilitation, etc, rather than political organizations who were critical ofthe existing system. It was around this theme and philosophy, which NEWSED grew to be discussed. The agency group and the Crusade for Justice had different agendas, which split the community for many years. The Crusade for Justice engaged in events such as: led marches that manifested "Chicano Power", supported active resistance 70

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against the police, and built autonomous Chicano institutions, e.g. La Escuela Tlatleco, a school with a Chicano-centric curriculum. The agency group lobbied for the Democratic Party and was generally opposed to radical marches and protests. The agency group supported a civilian review for police actions as opposed to resisting the police entirely. They also advocated for bilingual education within the existing school system. Both movements were needed in Denver. As police brutality and prejudice against Chicanos was rampant in Denver, a protest movement was much needed to demand social justice for Chicanos. The only way to get respect and equitable treatment was to demand it, which the Crusade for Justice did. They organization did not play a submissive role and try to work within society to change the social injustices it faced. Rather many took to the streets and demanded change. The Agency Group's agenda was to promote and bring back new capital into the neighborhood, which was needed in order to save the neighborhood from the destruction of disinvestment and abandonment. Today, both groups are still in operation. The Crusade for Justice is still in existence and focuses is mostly on its school, Escuela de Tlateloco and have had tremendous impact on school board and city council elections. The agency group has evolved into NEWSED. 71

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Current Disadvantages the Neighborhoods Face Because both neighborhoods (La Alma and Baker) were developed in Denver's history, the neighborhoods share similar traits associated with other iimer city neighborhoods nationwide: deterioration, disinvestment, abandonment, and destruction. I focus on these two Westside neighborhoods specifically, as both were designated, in 1972, as "blighted" by the Denver Community Renewal Program. As previously mentioned, the neighborhoods experienced a lack of revenue for revitalization, lack of employment opportunities for neighborhood residents, little or no neighborhood or minority owned businesses, absentee ownership, and deteriorating housing stocks. Both La Alma I Lincoln Park and Baker experience poverty rates around 64% (NEWSED Business Plan, 1998). Since that time, NEWSED has implemented efforts aimed at neighborhood revitalization. NEWSED has claimed fame for the economic redevelopment along the Santa Fe corridor and for promoting a strong sense of cultural pride in the community. In 1995, NEWSED was recognized for its impressive record of accomplishment for the economic redevelopment along Santa Fe Drive and for its effectiveness in leveraging social, economic, and political change in the neighborhood. NEWSED was awarded $500,000 a year to fund a multi-year "Rebuilding Communities Initiative" by the Annie E. Casey Foundation. However, currently, this award has not been renewed because of allegations that NEWSED 72

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has not adequately shared those initial resources with other community agencies, which will be discussed later. The Rise and Success of the For-Profit NEWSED NEWSED grew out-ofthe 1960s Westside Action Council. The 60s, as mentioned earlier, were a time of mass protests and grassroots organizing in response to brutality, intimidation, terror, harassment, killings, and raids by city police, as well as federal and state departments (George, 1999). In response, many commtUiity organizations sprouted. The Westside Action Council was no exception. By the late 60s, the Westside Action Council had established a neighborhood co-operative grocery store hoping to pave the way for future community owned businesses. The endeavor was unsuccessful. In 1975 the Westside Action Council, along with the Mennonite Urban Ministries, the Auraria Community Center, and the Denver Inner City Parish formed NEWSED (George, 1999). They formed NEWSED to gain, rehabilitate, and develop real estate in the neighborhood, an agency that could effectively meet the needs of the neighborhood (George, 1999). NEWSED began as a for profit entity to revitalize the Santa Fe commercial corridor. The thought was if the Santa Fe corridor was revitalized into a flourishing economic center then the neighborhood in general would flourish. NEWS ED's primary reason for revitalizing the corridor was due to the alleged impact the 73

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Auraria Higher Education Center would have on the neighborhood. The Auraria Higher Education project initially destroyed the core of the community, with dozens of residential blocks being destroyed. NEWS ED feared further encroachment and displacement of existing homeowners, thus it developed the Zocalo shopping to place a boundary between the campus and the neighborhood. By 1979, NEWSED realized that the neighborhood has other needs as well, which will be discussed in the next chapter. At the onset of the Reagan administration, the Community Action Councils were defunded, as predicted by activists of the Westside Action Council, who had already distributed NEWSED's share among the four other original organizations. The four shareholders combined all shares to allow for a not-for-profit agency, NEWSED. The Beginnings ofa Not-for-Profit NEWSED In 1983, NEWSED changed its identity to that of a not-for-profit community development corporation characterized by an IRS 501 ( c )(3) status. From the beginning, NEWSED had a dream that "community folks would own the businesses within the community ... it was always the vision that community folks would be empowered" (George, 1999, p. 62). NEWSED was initially committed in helping Mexican business owners apply for loans and create opportunities that had not previously existed Also, there other pressing issues to focus on; such as: creating jobs for community residents, obtaining and managing resources for the 74

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revitalization of the Westside neighborhood, providing employment and training skills to encourage self sufficiency, developing much needed shopping services, boosting minority and community owned businesses, hosting cultural events, and increasing homeownership rates (NEWSED Housing Development Plan, 1994; NEWSED Request for Funding, 1997; NEWSED Business Plan, 1998). NEWSED quickly changed its mission statement to include "raising the income, educational and political levels of West Denver residents," which remains today. NEWSED attempts to empower community residents via the PODER project, which will be discussed later. Many ofNEWSED's programs are defined by neighborhood residents. The Board of Directors is comprised of 54% neighborhood residents, although I have not been able to get a current list of the Board of Directors. The Executive. Director was born and raised in the La Alma neighborhood. NEWSED claims that prior to the implementation of the PODER program, neighborhood residents were surveyed and interviewed to determine their primary concerns. Of course residents can not be involved in every facet of the organization, but they can be given reports and accountability of funding that comes into the neighborhood. There is a controversial instance, to be discussed later, where NEWSED refused to provide residents who were inquiring about grant funds information as to how the funds were spent. I focus on these two Westside neighborhoods specifically, as both were designated, in 1972, as "blighted" by the Denver Community Renewal Program. 75

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The problem that I have faced is that most documents are produced and written by NEWS ED staff, thus it is difficult to determine if the projects are truly indicative ofthe neighborhood's wants. However according to George's (1999) subjects, many in the neighborhood are often discredited by NEWS ED if their beliefs do not reflect the organizations, which will be discussed a bit later in the paper. NEWSED's PODER project, which is funded by the Annie E. Casey Fotmdation's Rebuilding Committees Initiative, requires active neighborhood involvement. NEWSED named the project PODER, power in Spanish, because the ultimate goal is to empower neighborhood residents and equip them with the skills to determine their own destiny. The PODER Advisory Council is comprised of33 members, of which 17 are neighborhood residents (NEWS ED Business Plan, 1998). By walking the neighborhood and interviewing the residents, NEWSED designed Priority Area Committees identified by neighborhood residents (NEWSED History and Accomplishments, 1997 George ( 1991) argues that NEWS ED's board, which is not elected by the community, is at the top of the decision-making process. Often the board's decisions are reflective of the Executive Director and her beliefs. Among the many respondents interviewed by George (1999), those not closely connected with NEWSED or its staff, tended to be alienated by the organization. One of George's (1999) respondents said the agency is "being capable of autocratic tendencies" (p. 76

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76). Some residents have elevated their feelings to one ofNEWSED's major funders, the Annie E. Casey foundation. The Annie E. Casey Foundation, which originally awarded the grant has refused to meet with NEWS ED to consider renewal or additional funding because of speculation from the community that the organization mishandled the funds from the beginning. Since the foundation money was for a community initiative, neighborhood residents felt that through questions and answer sessions the community at large would come up with ideas for the betterment of their neighborhood. As some residents were becoming concerned about the disbursement of the funds, they demanded to see the budget to obtain a better understanding of the projects. This is where the conflict began. According to one of George's (1999) respondents, "the community members asking for accounting of fund disbursement were discredited byNEWSED staff and were clearly advised that they were not welcome" (p. 80). Since NEWSED did not provide direct answers about the funding, those who were inquiring were forced to go directly to the Casey Foundation staff. Unfortunately, at the time, the staff did not demand accountability of the funds from NEWSED. Quite a few of George's (1999) respondents said that Casey funds provided NEWSED "an opportunity for building its own capacity and empowering itself economically and politically as an organization" (p. 80). 77

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George (1999) states NEWSED views themselves as apolitical, as well as "technical experts." NEWSED has never claimed to be a social movement, but rather a community based real estate developer working for the betterment of residents via housing opportunities. However, I believe that in order to truly help your community and neighborhood residents it is necessary to not alienate them. NEWSED, since many candidates are nominated from existing staff. Santa Fe Drive: A Comeback Story In 1979, NEWSED created the Santa Fe Drive Neighborhood Business Revitalization Area Program and the Santa Fe Drive Redevelopment Corporation (SFDRC) merchants associations to promote economic development along the Santa Fe corridor. Under the guidance ofNEWSED, SFDRC has developed and owns 14,00 square feet of parking for area business, a 2,000 square foot service building, a local bank,. NEWSED and SFDRC have captivated $5.5 million in public support, as well as $1.4 million in private sector reinvestment. The organizations have had a lasting impact on the economy of the Westside neighborhood. In 1978 they submitted a paper to the City of Denver to develop a $13.5 million Urban Development Action Grant, that ultimately produced 958 units of middle income housing, 100 units of elderly housing, a King Soopers grocery store, and an eleven story office complex (Research Division of the Urban Land Institute, 1980). The purpose of the housing units was to bring back the buying 78

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power of the 30% middle class residents displaced by the development of the Auraria Higher Education Center (Research Division of the Urban Land Institute, 1980). Since 1980, NEWSED has built two more shopping centers, an automobile service center, and a retail complex. Unfortunately, the residents that live in the units have isolated themselves entirely from the community. The strip of Santa Fe Drive between 6th and 13th, known as "Old Town Santa Fe," can be labeled as a comeback story. Graffiti, litter, vagrants, vacant stores, and crime are becoming a mere memory of what once was along this corridor. Not so long ago, Santa Fe Drive had a rough reputation. Many were afraid to walk the streets as crime was rampant, storefronts were boarded up and abandoned by investors, vagrants plagued the streets, and litter and graffiti were plentiful. Nearly 10 years ago, things began to change for this once booming corridor. The Mayor's Office of Economic Development began supporting the few businesses along Santa Fe, as well as promoting and encouraging new growth, through the federally funded Neighborhood Business Revitalization Program. For over 25 years, NEWSED and SFRDC have successfully collaborated in efforts to bring economic prosperity to the neighborhood. Nearly $5.9 million in small business, real-estate financing has been available through the Mayor's Office for Santa Fe Drive, with an additional $13 million in federal funds for private investment over the last ten years. City financed 79

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streetscaping has also attributed to Santa Fe's success story by getting business and people back to the streets. Over the last 13 years, NEWSED claims that 180 new businesses have made Santa Fe Drive their home Santa Fe Drive is so attractive because it is close in proximity to downtown. It is estimated that $3.9 million in private investment has been made over the last couple of years along the corridor. When NEWSED originally started, the original vision was that community residents would own the storefronts along Santa Fe Drive. Its goal was to assist Mexican business owners, even if they could speak little or no English. For example the Pandetia (Bakery) owners spoke hardly any English, but with their business plan they were able to open along Santa Fe Drive. Nevertheless, the focus, today, is definitely not on aiding Mexican Business owners. Nearly all businesses, and to date there are about 180 new businesses, are not owned by community residents. Those businesses that have located along Santa Fe Drive, have not done so for a love of the neighborhood. What has attracted business owners to Santa Fe Drive is the fact that rents were still affordable, the close proximity to downtown, and parking is less of a hassle for customers. NEWSED helped revitalize Santa Fe Drive. The numbers are indicative of extensive growth and investment along the corridor. The businesses that have either relocated or started up along Santa Fe Drive are not necessarily characteristic of the neighborhoods needs. Along the corridor, there exists pricey art galleries, architectural firms, photography shops, antique emporiums, and computer stores. 80

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Except for a few exceptions, most of the shops are not owned by neighborhood residents. The staff at NEWS ED brag that the businesses along the corridor have created job opportunities for neighborhood residents. It does not appear as if this is necessarily true. Most of the jobs are professional in nature, not intended for the unskilled worker. The few jobs that are relevant to the unskilled worker don't pay much more than minimwn wage, for example cashier, receptionist, janitorial, etc. Minimum wage is not a sufficient amount to keep a family above poverty level, especially with the rising cost of homes in the La Alma/Lincoln Park and Baker neighborhoods. NEWSED has been successful in revitalizing the once abandoned corridor of Santa Fe, but has not been successful in its original intent, which was that businesses would be owned and ran by neighborhood residents. NEWSED and the Housing Crisis In 1995, NEWSED developed a neighborhood housing master plan, as a result of surveying neighborhood residents, to increase housing opportunities within the neighborhood. The plan identified three priority areas to for the plan: increase home ownership for neighborhood residents; stem neighborhood and housing deterioration; and reduce neighborhood crime (NEWSED Request for Funding; Submission to the Southwest Initiative ofthe National Council ofLa Raza, 1997). The three priority areas are necessary to achieve neighborhood vitality and stability. As mentioned earlier, many scholars have argued that increasing 81

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homeownership rates within a community is the key to neighborhood stability (Temkin & Rohe, 1996; Owens, 1997). NEWSED has recognized this as well, as indicated in the Request for Funding ( 1997) "increasing the ownership rate is. paramount to ensuring the overall long-term vitality of the neighborhood. The effects would result in a more stable resident population while upgrading the overall maintenance and conditions of existing housing stock (p. 74)" NEWSED is attempting to achieve its goal of increasing home ownership opportunities within the neighborhood. Mr. Lemos, the Director of the PODER Project, indicated that while the goal of the program is to increase home ownership, it is not necessarily worried about gentrification, as the average income for neighborhood residents is well below the average income for the city of Denver (interview Leroy Lemos, October, 1999). However, his point seems a bit out of touch since the selling price of the average home is increasing rapidly. Gentrification happens in neighborhoods where the existing residents can not afford the increase in rents and property values, thus they become displaced. Because the neighborhood resident's income is well below the average income for the city of Denver, this makes the neighborhood prime for gentrification. Gentrification is definitely a problem that NEWSED is faced with, whether they admit it or not. NEWSED has begun some low-income housing production. El Palacio Inca is a multi-unit housing development project located at 838-862 Inca Street, which is 82

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the Southeast quadrant of the neighborhood. The three-block area the project encompasses have experienced some of the most severe decline and deterioration. El Palacio Inca has been termed a low-income, multi-family, residential apartment complex. El Palacio Inca is comprised of 12 units; 8 three and four bedroom apartments and 4 two bedroom apartments. The residents that were chosen are allowed to stay in the apartments for below market value rents. Essentially, their leases never expire, they can remain tenants as long as they need (interview Leroy Lemos, October, 1999). NEWSED is negotiating to acquire a vacant 12,500 square foot property at 780 Elati Street. The intent is to develop the property into four to six residential town homes, which will be sold at market value. Unfortunately, the low income neighborhood residents will be unable to afford them. The organization is exploring the plausibility of redeveloping its existing property at 1029 Santa Fe. The potential plan would possibly result in 50 60 multifamily residential units, as well as some retail use. Another plan under negotiations is to acquire the property located at 1214 Santa Fe Drive. NEWSED's plan for the property is a mixed-use residential/retail project. NEWSED, under the Department of Justice Asset Forfeiture Project, intends to obtain "nuisance properties" and rehabilitates them into rental and sale units (NEWSED Business Plan, 1998). Many low-income Mexicanos were displaced in order to acquire the property at 1214 Santa Fe Drive. As well, according to George 83

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(1999), the upscale art gallery that located along Santa Fe Drive, previously consisted of four apartment units. The residents were ultimately displaced. Only two of the residents were provided housing in the Palace Inca unit. The Barrio Aztlan Home Ownership Program is another NEWSED initiative created to increase home ownership opportunities for neighborhood residents. The project is in collaboration with the National Council of La Raza, the Mile High United Way, NORWEST, Wells Fargo Banks, the Denver Community Development Agency, and two other established non-profit housing organizations (Request for Funding: Submission to the Southwest Initiative oftheNational Council of La Raza, 1997). The purpose ofthe initiative is to provide down payment and subsidy assistance to future neighborhood home 15uyers. NEWSED conducts outreach programs in this area, provides pre-qualifying analysis, credit counseling, and offers loan origination and referrals to other lenders. Since 1998, through the Barrio Aztlan Home Ownership Initiative, NEWSED has provided home buyer education and individual counseling to 135 neighborhood families (NEWSED Business Plan, 1998), but does not require that homes be purchased in the neighborhood. Ten families have closed on properties; 8 clients received down payment assistance; 14 clients received individual home ownership and credit counseling; 43 clients closed on properties in 1998. However, those that have benefited from the Barrio Aztlan Home Ownership Initiative are not necessarily neighborhood 84

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residents. Those that benefit are those that can afford the current housing prices in the neighborhood. NEWSED is committed to fair housing activities. Currently a trained staff exists in mortgage lending and rental discrimination testing methods. The staff is dedicated to identifying redlining patterns that exist within the neighborhoods. The staff also participates in outreach programs to organize landlord and tenants rights and responsibilities through workshops. NEWSED at one time focused on the restoration and rehabilitation of existing housing stock, through its Anciano and Neighborhood Home Restoration Program. This initiative is implemented by the NEWSED's PODER housing committee, which identifies elderly, low income homeowners. The purpose of the program is to provide both interior and exterior repairs to those homeowners mentioned above, as most are unable to maintain the upkeep on their homes. Ten homes were rehabilitated through the program. NEWSED staff, PODER Housing Committee members, neighborhood residents, and other volunteers; painted, replaced a floor and a wall, cleaned yards, improved landscaping, and repaired some basic electrical problems. The primary objective ofthe program is to reduce housing deterioration to help promote a safer and healthier living environment for elderly members of the community (NEWS ED Business Plan, 1998). So has NEWSED been successful at increasing affordable housing options in their neighborhood? NEWSED has not significantly helped neighborhood 85

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residents by creating affordable housing units. When I realized that NEWSED hasn't significantly increased the home ownership rates nor produced many more affordable housing units within the community, I figured it was only because they hadn't been in the housing business long enough to have a profound and lasting effect, which doesn't appear to be the case. It seems as though the economic success of Santa Fe Drive has greatly increased the housing costs in the neighborhoods. As explained previously, housing costs in the La Alma and Baker neighborhoods have risen faster than in any of the surrounding metro area cities. Rehabilitating older homes and collecting "windfall equity" (George, 1999) is a form of gentrification, which the two neighborhoods are experiencing. Today, the neighborhood still faces the same problems as twenty years ago e.g.,. homeownership rates are at an all time low. In the La Alma and Baker neighborhoods, home ownership has decreased from 60% in the late 1970's to the current 19% (NEWSED Request for Funding, 1997). Today owner occupancy rates in La Alma Lincoln Park is 15.7% and 35.2% in the Baker area. NEWSED, through the programs mentionedpreviously, has tried to increase homeownership rates, however homes in the neighborhood are now too costly for the residents. Homes have increased in price rapidly, e.g. in La Alma and Baker homes have witness over a 200% increase over the last few years. In fact, according to Denver's 1998 neighborhood level housing data, La Alma and Baker have experienced the fastest rising housing costs in the city. La 86

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Alma/Lincoln Park has seen an increase in housing costs from $30,844 o $95,887, a 211% increase. The Baker neighborhood has experienced increases from $42,076 to $132,061, an increase by 214% (Neighborhood level housing data, 1998) .. Purchasing and remodeling older homes is becoming popular in neighborhoods with architecturally significant structures. Santa Fe Drives has become popular with artists, businesses, and prospective owners. In fact Olde Santa Fe Drive, from 3rd to 13th avenues, was voted the Best Ten-Block Strip of Denver in Westword's Best of Denver, June 28, 1998. The article stated that: smart new facades are popping up on this stretch of Santa Fe every time someone sneezes, and with them come new businesses that mesh comfortably with the old ones in an honest attempt at preserving and enhancing the neighborhood's character. We like what we see: a friendly cohabitation of computer stores and taquerias, graphics studios and panaderieas, art galleries and antique emporiums, public libraries and brewpubs. Make no mistake about it-this is still the heart of the barrio, and its distinctly Hispanic character shines through beautifully (author unknown). The neighborhood is being referred by some as "SODO," which stands for South Downtown. The name sparked from lower downtown's LODO, which was once an abandoned, deserted neighborhood that had its share of vagrants, graffiti, litter, crime and economic disinvestment. Today, however, the neighborhood has been completely transformed from "the old warehouse, manufacturing, railroad district into a theme city entertainment complex to service the upwardly mobile, white-collar workers of a new, global Denver" (Robinson, 1998). LoDo has 87

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experienced the trend of converting old warehouses into pricey upscale lofts, art galleries, fashionable boutiques, coffeehouses, microbreweries, pubs, and nightclubs. The LoDo area has been totally gentrified displacing the lower income sector of the population. Walt Weinburg, owner of the Santa Fe Pottery feared thatrents along Santa Fe Drive would go up as more and more new businesses moved in, forcing out business owners who don't own their own buildings. Weinburg, explained that Santa Fe Drive is "one of the last frontiers ofDenver" (Washington Park Profile, November, 1997). It is a familiar story, many large vacant areas become prime for urban renewal, which essentially attract artists as tenants. Basically, the area becomes "discovered" by the artists willing to "brave the frontier." The artists are the first wave of gentrifiers as they are tolerant of diversity, both ethnically and economically (George, 1999). Thus, the neighborhood begins building a strong customer base, setting the mood for the second wave of gentrifiers. The second wave of gentrifiers are those that are exchange-value oriented. Furthermore, they have ready access to loans and insurance from banks to build. The public sector, improves and increases services, and offers grants to rehabilitate, rebuild, and revitalize the neighborhood. Property owners further contribute to the problem as they raise rents or sell their structures at high costs. Ultimately, as this happens, the 88

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artists and lower income residents are forced to move out, as they are no longer able to afford the high cost.ofliving in the given neighborhood. According to George ( 1999), gentrification becomes a reality when any or most of the following occur: 1. housing prices in the suburbs discourage potential rtew homebuyers 2. the costs of commuting and congestion on arteries mount 3. when there are older homes with architecturally notable features in old core city neighborhoods 4. when central business district employment patterns change towards administrative and business services, information processing and fire zones 5. when the fear of crime, urban unrest, and poverty decreases Most the staff at NEWSED, are not worried about gentrification taking place in the neighborhood. Veronica Barela has indicated that they would not allow gentrification to take place and that by redeveloping Santa Fe Drive NEWSED has prevented the strip being tom down and high rises being built there" (George, 1999). When asked in an interview ifNEWSED was worried about the forces of gentrification in their neighborhood, Leroy Lemos responded that they were not worried (interview by Debra Sanchez, October, 1999). Brian Marschack, however, has acknowledged that gentrification seems possible in the Westside neighborhood. NEWSED's position is to buy as many homes as possible, rehabilitate them and sell them to first time home buyers (George, 1999). Unfortunately NEWSED is having to sell their homes from $120,000$140,000 because they are having to purchase them at high rates to begin with (Robinson). NEWSED's home counseling program 89

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attempts to connect potential homebuyers with homeowners within the neighborhood selling their property. The purpose. of the program is to keep existing inthe neighborhood, while increasing homeownership rates. The reality is that existing residents, whose average income is well below the average for Denver can not afford the cost of homes in the neighborhood, which are now selling from $96,000 to $132,000. In 1998, the median household income of Lincoln Park was $15,223 compared to $35,397 as a whole for Denver. Over half of the total residents in Lincoln Park are living in poverty. Since many of the residents' income is at the poverty level, apparently they are not the ones purchasing the homes. The majority of the residents are renters, it can easily be assumed that once landlords and tenants realize the value of their properties they may sell, which would result in displacement of existing residents. Ms. Veronica Barela in an interview with George (1999) indicated that individuals and families with economic resources wouldn't necessarily want to move in or settle into the neighborhood because of the two public housing projects, as well as a park that has been deemed "dangerous" by some. Apparently, however, somebody does not mind living in a neighborhood with two public housing projects and a "dangerous" park because housing costs in the neighborhood have greatly increased. 90

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George ( 1999) specifically cites an example of where the presence of a public housing project has not been a factor or a guarantee against stopping gentrification from taking place. Curtis Park (a neighborhood to the east of downtown Denver) has fallen victim to the forces of gentrification. The Curtis Park neighborhood is a perfect example of middle income gentrifiers coming .in buying and rehabilitating the existing housing stock, increasing the value of the homes significantly. These new gentrifiers take over neighborhood associations and utilize zoning code violations to get after their "less affluent" neighbors (George, 1999). The Curtis Park neighborhood has lost the battle because of a lack of community participation to oppose the process .. The employees at NEWSED explain that their mission is to avoid gentrification, while preserving the ethnic and cultural flavor of the neighborhood. George (1999) explains that-preserving "ethnic diversity" is not always synonymous with affordable housing. The possibility exists that a neighborhood can preserve middle and upper class ethnic diversity, while driving out the lower class residents. NEWSED Promotes Cultural Pride NEWSED strives to keep Santa Fe Drive in tune with the neighborhood's Hispanic flavor and roots. Veronica Barela, in collaboration with neighborhood residents and merchants, envision all buildings occupied and employing neighborhood residents, which obviously has not and probably won't happen. 91

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Marie Addelman, Coordinator for Economic Development for NEWSED, has stated that NEWSED wants topreserve the Latino culture and history of the neighborhood (George, 1999). This is very important to the staff at NEWSED as they aim to bring back businesses along Santa Fe Drive. In fact when Secretary of State, Madeline Albright visited Denver for the Summit of the Eight, she dined at the landmark El Noa Noa restaurant, shopped at the Santa Fe Pottery store, and visited the Chicano Humanities & Arts Council, all located along Santa Fe Drive. There exists a strong sense of pride among, what has been called, the most culturally condensed 7 blocks in the city (Speike, source and date unknown). Santa Fe Drive currently houses many artist's studios, galleries, design studios, theaters, museum, and a library. NEWSED, along with its spin off, the Santa Fe Drive Redevelopment Corporation (SFDRG), have been the driving forces for revitalization along Santa Fe Drive. They envision Santa Fe Drive becoming a premier Latino arts district in Denver. Many Latino artists are making their home Santa Fe Drive, including many famous local artists (Miguel Camarena and Daniel Luna). The Chicano Humanities and Arts Council (CHAC) has chosen Santa Fe Drive to house its organization. Many established art galleries and studios are located along the corridor, as well. Many theatres, such as the Phoenix Theatre, Aztlan Theatre, and The Arts Center ofthe West are located along Santa Fe Drive. The only Latino museum in the State of Colorado, Museo de las Americas, is housed along Santa Fe Drive. According to one journalist, John Rebchook, of the 92

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Rocky Mountain News, indicates that "Santa Fe Drive is an eclectic melting pot of incomes and ethnic groups" (not dated). NEWSED's desire is to have Santa Fe Drive designated as an arts district, such as LODO or Cherry Creek. Unfortunately having a neighborhood designated as an arts district does not stop the onset of gentrification, rather it contributes to it. An arts district doesn't house people, it doesn't keep property values low, it doesn't force absentee landlords to keep up with their properties. What it does do is create a trendy place for chic galleries, shops, firms, and offices to locate, which aren't indicative ofthe neighborhoods needs. As these avant-garde type businesses move in it also brings in a different class of people with money. NEWSED attempts to preserve the Hispanic flavor of the community. NEWSED sponsors and coordinates many special and cultural events. NEWSED hosts one of the largest Cinco de Mayo celebrations in the country. Each year, roughly 500,000 show up to the Cinco De Mayo celebrations that are put on by NEWSED and the Santa Fe Drive Redevelopment Corporation. In fact, the celebration has become so successful and huge that it outgrown its original home along the Santa Fe Drive in favor of Downtown's Civic Center. NEWSED also continues to sponsor the "El Grito" festival for the Mexican Independence Day celebration held in September, which usually draws over 1 00,000 event goers each year .. 93

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NEWSED, in collaboration with El Centro Su Teatro, MSCD, El Scenario, The Denver Post, and a few other organizations also continue the tradition of the Miracle at Tepeyac. The Miracle at Tepeyac is a Mexican folkdrama that is "a thought provoking and uplifting tribute to the strength of community" (Miracle at Tepeyac playbill). The yearly production consists of Aztec dancers Grupo Tlaloc and the Su Teatro performers .. The production is part of the St. Cajetans Reunification Project, which attempts to reconnect the displaced Westside community with what was once an important institution in the community. As the Miracle at Tepeyac playbill indicates of the Westside neighborhood "A long time ago, in a far away land called the Westside, there lived a brown-skinned race of people whose lives were closely tied to the earth as had been the history of their ancestors. Their heart was stolen in the name of progress." NEWSED, on the first Friday night of every month, hosts an event known as "First Fridays on Santa Fe Drive." Participants take self-guided tours along Santa Fe Drive. The art galleries along the strip stay open extended hours, while many can opt to take a ride on a double-decker bus, which makes a loop around Santa Fe Drive and Kalamath stopping at various pubs and breweries along the way. This event allows for the neighborhood to show off the Hispanic flavor along Santa Fe Drive. Again the events aren't targeted at the existing residents, who are unable to afford the chic art galleries and the pricey breweries. Rather the event proves just 94

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how avant-garde and trendy the neighborhood can be. NEWSED, however claims the First Friday's purpose is to clearly define the neighborhoods culture and reconnect the community back to its heritage and roots. NEWSED's hope is that a neighborhood with a clearly defined sense of unity will hopefully work together to preserve its ethnic flavor and status. How chic art galleries, law and architectural firms, and trendy breweries preserve the neighborhood's Hispanic flavor is a question that I am unable to answer. It doesn't preserve the flavor, if anything it is driving out the existing residents who are predominately Hispanic. NEWSED and Social Capital NEWSED hasn't had much success in developing social capital, which is defined by the Committee for Economic Development (CED) as "the glue that holds society together through relationships among individuals, families, and organizations" (Stanfield, 1995). According to Bratt ( 1997) with recent government policy changes, neighborhood community development corporations are in the best position to develop such social capital. Those neighborhoods that are able to achieve social capital are also able to remain relatively stable in changing times. According to Temkin and Robe (1998), neighborhoods that experience high levels of loyalty and attachment have higher levels of social capital. NEWS ED has been successful in creating an arts district along Santa Fe Drive, sponsoring and coordinating well attended cultural festivals, 95

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the designation, by the city, as a "Cultura de Zona," and the renaming of Lincoln Park to La Alma, but they have not always brought together the community. Temkin and Robe (1998) note that neighborhoods with specified boundaries are more susceptible to developing social capital. The La Alma and Baker neighborhoods have clearly defined boundaries, as discussed earlier. However, the largest American Indian population resides in the Westside neighborhood and NEWSED has not promoting events and activities to preserve the ethnic flavor of the American Indian. NEWSED, as well doesn't have trust by all in the community. Many believe that NEWSED operates in its own interests and that of the Executive . Director's interests. Many feel alienated and unwelcome by NEWS ED if they do not support their beliefs. Some residents feel a sense of distrust for NEWSED, as mentioned earlier. Social capital is important if a community is to remain viable and habitable for its residents. First the presence of social capital strengthens the institutional infrastructures put forth to serve the needs of low-income communities and lays the foundation for generating increased activity in the future (Gittell & Vidal, 1998). NEWSED has not been able to create a strong sense of social capital in its neighborhood, rather they seem to have divided the neighborhood. 96

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The Decrease of Crime in the Neighborhood The La Alma/Lincoln Park neighborhood has seen a steady decrease in violent and burglaries reported. Since 1990, on average, there has been a 2% to 15% overall decrease in burglary crimes reported each year. To break it down, 50 burglary crimes per 1000 people/households are reported each year. As of 1993, violent crimes, each year, has seen a steady decrease. for example 10 persons per 1000 were victims of violent crimes in the La Alma/Lincoln Park neighborhoods. According to the 1998 La Alma/Lincoln Park Public Safety & Crime Analysis, the type and number of crimes reported in Lincoln Park were as follows: Total crimes: 153.4 Homicides: 0.2 Sexual Assault of females: 3.0 Robbery: 3.2 Aggravated Assault: 4.9 Burglary: 47.6 Larceny: 44.4 Auto Theft: 18.7 All other offenses: 59.7 Arson: 1.1 There is no evidence to suggest that NEWSED is responsible for the decrease in overall crime in the neighborhood. Crime and the aforementioned figures have decreased nationally, which would lead one to believe that they can be attributed to large macro-structural changes. What the figures do suggest is that 97

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with crime down and trendy businesses moving in, the neighborhood is on its way to gentrification. NEWSED in Relation to Two Other Denver CDCs Apparently gentrification is becoming a problem for Denver's La Alma and Baker neighborhoods. Shawn Weston, Deputy Director of the Inner City Community Development Corporation, which services the Cole, Clayton and Whittier neighborhoods in Northeast Denver doesn't believe that a CDC should promote gentrification. Her agency along with the neighborhood residents choose which businesses are developed along York Street. Ms. Weston indicated that the businesses along York street are indicative ofthe neighborhoods needs, such as an alternative high school, a child care center, and a health care facility. The jobs that are produced along York street are not geared towards young professionals, but rather are industrial in nature (telephone interview conducted by Debra Sanchez, of Shawn Weston, Oct 20, 2000). It appears that the Inner City Community Development Corporation only brings in business that benefits its residents along 381h & York. However in the Cole neighborhood, housing prices from 1991 1998 have increased by 216%, which is more than La Alma and Baker. La Alma's rose by 211% and Baker's rose by 214%. The Clayton neighborhood's housing has increased by 102% and Whittier by 131 %. In Denver, however, housing prices have soared altogether. 98

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Affordable housing in the city of Denver is becoming less available. A CDC should therefore not further promote gentrification in their cities as it is hard enough to keep housing prices low enough for lower income families. Marvin Kelly, Executive Director of the Del Norte Community Development Corporation, which services the Highland Denver neighborhood believes that his neighborhood is experiencing a bit of gentrification, which he believes is a loaded term anyway (telephone interview conducted by Debra Sanchez, ofMarvin Kelly, October 24, 2000). From 1991 to 1998 housing prices in Highland have increased by 153%. Mr. Kelly doesn't believe bringing the middle classes to a neighborhood is a bad thing, as it promotes a healthy community and stabilizes declining neighborhoods. I agree that if the middle classes can reside with the lower classes and property values not soar, than yes it is healthy to have middle class homeowners amongst lower class homeowners and renters. However, as is the case with NEWSED the types of businesses moving into the neighborhood has the potential of bringing a new type of class altogether. Mr. Kelly made the point that his neighborhood is different from NEWS ED's in that they do not house a retail strip. I believe it is the Santa Fe corridor that will lead to La Alma ending up like another LODO. LODO houses an economic strip of trendy galleries, boutiques, pubs, nightclubs, etc. There is no affordable housing in LODO. The lofts are very 99

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pricey to purchase and the rents are costly as well. The Santa Fe corridor only appears to be a few years away from where LODO is now. 100

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CHAPTER6 CONCLUSION OF CASE STUDY Many critics argue that, while CDC' improve economic development and achieve revitalization, they do not improve systemic social injustices (e.g. education, poverty, adequate housing, access to better jobs, and healthcare). NEWSED, as mentioned earlier, in 1995, began to focus its shift from economic redevelopment towards the housing crisis partly to address the gaps due to federal devolution. It seems as if history may be repeating itself. NEWS ED was responsible for the production of the Parkway Place apartments and town homes. The purpose behind the Parkway complex was to bring the middle class back into the community to mix the economic classes. The northern section (where the Parkway Place complex is located) has remained segregated from the rest of the community. Leroy Lemos explained that there hasn't been a lot of interaction between the community/NEWSED and the residents at Parkway. Mr. Lemos admitted that NEWSED hasn't done a lot in the way of campaigning, outreach, and organizing to involve the Parkway residents with community issues. At the same time, however, the residents at Parkway haven't exactly expressed any interest or concern for their southern part of the neighborhood. It is a two way street explained Mr. Lemos (interview, by Debra Sanchez, Oct. 1999). 101

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As mentioned earlier, in 1995, NEWSED shifted its focus to concentrate on the lack of affordable housing and ownership rates within the neighborhood. So .has NEWSED been able to create affordable housing options and increase the homeownership rates within the neighborhood? It looks as if the answer has to be no. It was my prior opinion that although NEWSED hasn't increased affordable housing in any great numbers, it was only because they hadn't been in the business long enough to have any profound effect on the availability of affordable housing. Their intent is to provide adequate affordable housing to the neighborhood residents, but it seems as though the economic success of Santa Fe Drive has had some harsh effects on the battle of maintaining affordable housing. It sounds quite possibly that the neighborhood is headed towards gentrification. As mentioned earlier when certain conditions exist, neighborhoods succumb to the forces of gentrification. The first phase of gentrification has made an appearance, as artists have settled in the neighborhood. The revitalization efforts have attracted many new business owners to the area. The business owners are not neighborhood residents that are given opportunities; rather they are the already established business owners that have access to loans and funds through the many lending institutions. Within the neighborhood exists a housing stock with architecturally significant features, which have been rising in cost. Finally, as the 1998 Public Safety & Crime Analysis, the La Alma/Lincoln Park neighborhood has seen a steady decrease in violent and burglary crimes reported. It sounds like the Westside is prime for gentrification. 102

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My original thought was that NEWSED was stabilizing the neighborhood from further declination and decline, all the while avoiding gentrification. NEWSED is primarily responsible for economic development along the Santa Fe corridor and further development is on the rise. Crime has decreased and the neighborhood is viewed as an arts district. In achieving such success, however, it appears as ifNEWSED has quite possibly been a key player for gentrification forces in the neighborhood. It is obvious that existing residents can no longer afford homes in the neighborhood, no matter how many programs NEWSED puts fourth. Perhaps the critics were right; without solving or alleviating a community of social injustices than you really aren't accomplishing anything. How can an organization like the CDC even begin to solve or alleviate the structural problems that exist, since it operates within the government and private markets that are the causes of social injustices to begin with? The organization is heavily influenced by private philanthropy and goveriunent dollars so until the political economic condition changes, the CDC will remain a mainstream organization that doesn't demand change. 103

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