City Aims To Preserve Downtown Diversity
By Anthony DellaFlora
Journal Staff Writer
Monday, June 2, 2003
A plan going before the City Council this summer would use millions of dollars in public and private money to help pay for affordable housing and commercial spaces for artists and others Downtown.
The proposal is being touted by backers as a possible solution to the problems of "gentrification" that have bedeviled redevelopment projects in cities across the country.
But at least one city councilor has concerns.
"I can't say I would put planning and putting together taxpayer money to avoid gentrification a top priority," said Councilor Hess Yntema, who added there were better uses for that money.
Most successful urban redevelopment projects lead to gentrification — a process in which property values rise and those who can't afford the increase are forced to move.
Development of the proposal is being funded by the Enterprise Foundation — one of the nation's largest financiers of affordable housing — and being co-funded by the McCune Charitable and Ford foundations.
The Enterprise Foundation is proposing creation of a nonprofit trust, the Downtown Albuquerque Civic Trust. It would use public and private money to purchase Downtown property for use by arts groups and small businesses and for affordable housing before prices increase. Eventually, $12 million to $15 million in city money would be used in the effort.
Artists who move to poorer areas of town for affordable housing and studio space are often among the first forced out by gentrification.
As areas are redeveloped, wealthier people and bigger businesses move in and the diversity that makes the area appealing disappears, says Chris Leinberger, a veteran of downtown redevelopment projects from San Diego to St. Petersburg, Russia.
"As we've seen the Denvers and Chattanoogas and the Baltimores and the San Diegos come back, we've now learned that there is an unintended consequence," said Leinberger, who is also managing partner of the Historic District Improvement Co.
HDIC is the private for-profit company the City Council selected in 1999 to spearhead Downtown redevelopment.
In that agreement, HDIC agreed to return a percentage of its profits on its Downtown projects to the city, to pay off the approximately $12 million the city has already contributed in land, a parking structure, tax abatement and infrastructure for the area.
The payments run from 2006 to 2021.
The agreement obligated the city to reinvest that income Downtown. That money would fund the Civic Trust plan.
The Civic Trust, the brainchild of Leinberger, would be the nonprofit mechanism for buying property and buildings now, when prices are lower.
By lending at low rates, the trust would allow such purchasers as arts groups to build equity in a property.
Those groups could lease some of their space at affordable prices to artists or organizations not ready to buy.
For individual artists and residents, the trust could subsidize the purchase or construction of affordable housing.
The Enterprise Foundation has enlisted business and civic leaders, Downtown neighborhood representatives, for-profit and nonprofit housing developers, city officials, public school officials and others to help formulate the plan.
If the plan is adopted, the trust would incorporate and seek immediate capitalization from Ford and other foundations so it can begin buying properties as soon as possible. The foundations' investments would then be repaid over time from the city's revenue stream created by HDIC.
"This is the first time this particular model has been used, to my knowledge, to capture some of the economic energy of gentrification, and dedicate it to what are usually the victims of gentrification," said Leigh Ferguson, hired by the Enterprise Foundation to put together the Civic Trust business plan.
He said HDIC and the trust recognize the value of having a diverse socioeconomic population Downtown.
Councilor Yntema said that while he sees some pluses in the proposal, he said it appears to artificially subsidize property values, and he's not sure it's a high priority.
"In some areas of my part of town (his district straddles Central from Girard to Eubank), we face kind of the reverse of gentrification. The Downtown revitalization, from my perspective, hit the regular constituents really hard in the pocket book," Yntema said.
He didn't dispute that gentrification could be a problem some day in Albuquerque. But he felt the HDIC payback might be better used to upgrade infrastructure, pay off the debt on city parking garages, or even pay for police protection Downtown.
Councilor Eric Griego, whose district includes Downtown, supports the plan and believes affordable housing and support of arts organizations are worthy goals.
Griego said he accepts the "creative class" concepts of author Richard Florida, whose research shows that quality of place and a thriving arts community are two keys to stimulating economic development.
Griego admits that the Civic Trust plan could be risky, but given the limited financial resources locally, it's a risk worth taking.
"I think we have to be open to creative approaches to try to fund some things."
The HDIC estimates that the city of Albuquerque will reap about $30 million in new property taxes and gross receipts from the Downtown redevelopment.
HDIC intends to invest more than $100 million Downtown in the next five years; it has already spent $25 million on the Century 14 theater block and plans to spend $10 million this year on high-end lofts.
With the revitalization of Albuquerque's Downtown in full swing, gentrification has already begun, Leinberger says.
The theater block is making a profit of $600,000 a year, with the most expensive commercial leases in the city. In 2006, one-quarter of the profits will go back to the city. The payment to the city increases to 50 percent in 2012.
HDIC's Gold Street Lofts project, which will get under way in about six weeks, will be the most expensive housing in the city.
"The more money, the more rich people we bring Downtown means more money to do affordable housing," Leinberger said.
Leinberger and Ferguson said the plan would not artificially depress the real estate market, as has happened in New York City with rent control.
Ferguson said the business plan should be finished by the end of June. It will then be presented to Mayor Martin Chávez, the City Council and the Ford Foundation.
Under the current draft, about 10 percent would be invested in spaces for arts organizations and about 70 percent in affordable housing projects. Affordable is defined as ranging from housing for formerly homeless persons to those making 120 percent of the median income.
The rest would be used for public spaces and subsidizing other commercial space.
Ferguson said there is a lot of interest on the national level from foundations hoping to find a long-term solution to gentrification.
The key will be cooperation.
"The city has to be in the game, the for-profit folks have to be in the game, the arts community is a vital ingredient, and then, honestly, the folks that are going to live Downtown," Ferguson said. "Everybody has to be in it together."