The History of
Community Design
and Development
in America
Community Development Archive
The History of Community Design and Development in America

Arson in the City and the New Funders

In the Eighties, Reaganomics and law-and-order rhetoric caused an immense shift in how federal money made it into the hands of Americans, with the advent of community-based finance institutions, CDBGs, LIHTC, and public-private partnerships.

1980

The Social Impact of Reagan

Ronald Reagan and Nancy Reagan campaigning in South Carolina. 1980.
Image: Ronald Reagan Library via WikiCommons
A photograph of Linda Taylor, also referred to as ‘welfare queen’ by Ronald Reagan. 1980s.
Image: The Bettman Archive

During stump speeches for his first, unsuccessful bid for the presidency in the Seventies, Ronald Reagan stigmatized single, black mothers as welfare queens to illustrate his criticism of social programs. When he eventually got elected in 1981, it was no surprise that he promised to follow a central mandate to reduce federal spending: a promise more accurately described as increasing spending for the defense industry and the military at the expense of America’s social programs for the working class. Corruption scandals erupted within Housing and Urban Development (HUD), which offered housing subsidies to politically connected developers. A deregulated savings and loan market enabled real estate speculation, causing displacement. The burden of responsibility fell on community development corporations, tenants, and organizers to bridge the gap caused by the reductions in federal spending.

The New Wave of Community Development and Funding

The Poor People’s March in Washington D.C. 1968.
Image: Warren K. Leffler via the Library of Congress

“If a man doesn’t have a job or an income, he has neither life nor liberty nor the possibility for the pursuit of happiness. He merely exists.” This quote from Martin Luther King Jr. explains the inextricable relationship between financial security and freedom in America. Similarly, when there is economic insecurity and precarity undergirding a neighborhood suffering from poverty, then action must be taken to address those issues and provide stability and strength for those communities who call that place home. The Community Development Financial Institution (CDFI) is the manifestation of solutions Dr. King called for during the Poor People’s Campaign.1

Even as the Community Development Block Grants (CDBGs) of the 1970s were used to invest in community design and development, it was not until Congressional reauthorization of CDBGs in 1978 and its subsequent redeployment in the 1980s when Congress offered a new formula on how federal money was spent. Community demographics and socioeconomics would determine allocation of funds in a city or neighborhood. The federal government also required that projects receiving this funding must include citizen participation, particularly those who live in the areas that applied for CDBG funds.

1980
Byte magazine announces in an editorial that “the era of off-the-shelf personal computers has arrived”

1982

LISC and Enterprise Community Partners

Franklin A. Thomas. 1970s.
Image: Bedford-Stuyvesant Restoration Corporation

Franklin A. Thomas, former president of the Bedford-Stuyvesant Restoration Corporation and president of the Ford Foundation, and Mitchel Sviridoff, Ford Foundation’s vice president, brainstormed how best to invest money in declining cities. Sviridoff offered the idea of identifying the city’s local leaders and providing them with the funds and support to actualize their visions, leading to the formation of Local Initiatives Support Corporation (LISC) with Thomas as the first African-American president of a philanthropic organization. Capitalized by a host of banks and corporations in the early 1980s, the LISC raised over $100 million and supported projects in over 200 cities across the country. Similarly, real estate developers James and Myrtle Rouse founded Enterprise Community Partners after assisting a church in the Adams Morgan neighborhood of Washington D.C. with creating low-income housing. The experience made them realize the value of creating partnerships with community leaders and offering both funding and technical assistance in addressing their housing and social service needs.

LISC and Enterprise Community Partners are commonly known examples of CDFI’s, although that terminology was not formally introduced until Congressional legislation in 1991. These institutions use the investment of private dollars as part of their efforts to change underserved areas. There are now over 1,000 CDFIs in operation and they have handled over $3.6 billion dollars in loans and investments.2 3

Franklin Thomas in an exchange with local neighbors. 1980s.
Image: The Ford Foundation

Koch’s Housing Plan and Rise of Public Private Partnerships

Arson continued to be a problem in New York until the mid-eighties as landlords kept letting buildings fall into disrepair and sometimes going as far as starting fires to collect insurance payouts. Fires spread to other buildings on the blocks, leading to a loss of housing capacity. This was particularly prevalent in formerly redlined communities like the Bronx.

Part of Mayor Ed Koch’s proposed housing plan in response to the housing crisis was financed by the Battery Park City Authority (BPCA). The BPCA had long been one of the most successful public benefit corporations, which frequently utilized public-private partnerships (PPPs) by hiring private companies to finance and manage the real estate development, infrastructure, and public services in Battery Park City. Symbolic of the era’s economic liberalization, PPPs harnessed the resources of both public and private realms and offered a collaborative approach that leveraged the strengths of each partner.

Ed Koch and Bess Myerson holding up the New York Daily News after his victory in the contentious 1977 New York City Mayoral primary. 1977.
Image: Tom Monaster via the New York Daily News

Housing activists saw through the veil. Bonnie Brewer, then-executive director of ANHD, argued the plan did not meet the needs of lower-income populations, “If they want to build middle-income and upper middle-income housing, let them at least call it by its right name, and let us deal with it on its merits.” Koch’s housing plan did not want to construct high density developments because it did not want the maintenance responsibility. Instead, it wanted to build lower-density developments where it was easier to defer maintenance to individual owners.4

Ideologically, the PPP was the ideal vehicle of privatization touted by figures like Ronald Reagan and Margaret Thatcher. They believed in economic policies that emphasized individual liberties and restricted the government’s involvement. The PPP model promoted risk-sharing with local entities and leveraged the resources of the private sector. On the other hand, critics saw the model as one that offered public resources to produce private profit.

1986

Arson and Community Development Corporation as Ally to the City

A northeasterly view from Charlotte Street and Boston Road in the Bronx featuring the immense destruction of abandonment and arson on the borough’s urban landscape. 1984.
Image: Camilo J. Vergara via the Library of Congress

Created by the Housing Reform Act of 1986 and advocated for by Enterprise and LISC, the Low-Income Housing Tax Credit (LIHTC) radically changed the ecosystem of community development. Previously, developers needed to engage with the communities they were building in. With LIHTC, developers were incentivized to build singular projects for a tax credit, leaving the community out of the process and focusing on short-term gains. Presently, LIHTC is the most widely-utilized resource for the development of affordable housing in the country.

Urban challenges continued with abandonment and arson plaguing the city core. For the following decade, Housing Commissioner Roger Starr’s ‘benign neglect’ or planned shrinkage was in effect. These policies reduced city services in areas the municipal government considered net losses from a taxation perspective, which happened to be the same minority communities that were historically redlined. Community development was deployed as a strategy to address these gaps in service, offering a comprehensive approach that combined public safety measures, property rehabilitation, and community engagement to combat blight and promote revitalization. For example, the Northwest Bronx Community and Clergy Coalition (NWBCCC) responded to the loss in housing from the urban crisis by using the nonprofit community housing corporation model.5

1989
The Berlin Wall falls during the Die Wende – “the Turning Point”

Specialization of Community Design

Community design centers faced diminishing funding and could not rely on government or private grants to operate. Instead, they needed to move into fee for service delivery of research, design, development, education, and training. The days of direct political action were over and design centers looked at providing specialized services to the communities they were operating in. Community development corporations encountered this trend in a similar way, feeling pressure to narrow or reduce their mission with the goal of becoming more fiscally responsible. Seldom were grantors willing to go out on a limb in the 1980s for broad-based objectives or plans with limited funding opportunities.6 7

Footnotes

  1. Bill Bynum, CDFIs: Bridging the Poverty Gap (2015) ↩︎
  2. Mitchell Sviridoff, The Seeds of Urban Revival (1994) ↩︎
  3. Themis Chronopoulous, The Rebuilding of the South Bronx after the Fiscal Crisis (2017) ↩︎
  4. Jonathan Soffer, Creating Affordable Housing: How Koch Did It (2010) ↩︎
  5. Ron Shiffman, The Right to Housing: A Holistic Perspective. From Concept to Advocacy, Policy, and Practice (2022) ↩︎
  6. Anna Gloria Goodman, A History of Community Design/Build in the United States in Four Moments (2021) ↩︎
  7. Donovan Finn & Jason Brody, The State of Community Design (2014) ↩︎