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New Life in Newark

Father Linder has built a small empire that offers services government has been unable to provide.


Alan Ehrenhalt

Alan is a Governing senior editor.

Forty years ago this month, police in Newark beat up a black cab driver in a traffic dispute, touching off one of the worst urban riots in American history. When it ended, after five days, 23 people had been killed, 725 had been injured, and much of the city's Central Ward was in ruins.

A few months later, Father William Linder created the New Community Corporation, a nonprofit entity aimed at restoring inner-city Newark through social services, grassroots entrepreneurship, and a commitment to personal and spiritual renewal. Father Linder was 32 years old at that time, a street-smart New Jersey idealist steeped in the civil rights movement, the community organizing theories of the 1960s, and the social liberalism that was beginning to permeate the American Catholic church. His organization was one of dozens of similarly structured Community Development Corporations (CDCs) that sprouted quickly in troubled cities all around the country.

Even in his most expansive moments, it's unlikely that Father Linder could have envisioned what New Community eventually became. Today, at 71, he presides over an organization that employs 1,800 people, runs more than 3,000 units of housing, two charter schools and a nursing home, operates training programs for cooks, auto mechanics and practical nurses, and owns property whose market value is probably more than half a billion dollars.

"There's no city in the United States where a community development corporation has had a more profound influence," says Richard Roper, a Newark urban policy consultant and longtime student of CDCs. "Father Linder has built a small empire that offers services government has been unable to provide."

More than this, Newark as a whole is showing signs of life. Commercial buildings are going up downtown, chain stores are reviving the long-dead shopping district, and there is more residential construction in the Central Ward right now than anywhere else in the city.

There is, however, another side to the story. In the 40 years since New Community launched its operations, the statistics on poor people in Newark have barely budged at all. The poverty rate is 27 percent, unemployment hovers around 13 percent and per capita income is stuck near the bottom among major American cities. If the goal of New Community was to transform the life of the inner city through grassroots economic development -- and in large part, it was -- that effort has failed.

That sobering reality applies to nearly all of the roughly 4,000 community development corporations throughout the country, big ones such as NCC and small ones that exist in every urban area. They have become experts at delivering social services to the poor, often as providers of last resort. What they have not done is lift many community residents out of poverty.

This is more than just an abstract issue. CDCs depend on foundations and other private sources -- as well as government grants, loans and tax credits -- to keep them going financially. In the past five years, the funders have begun to lose some of their earlier enthusiasm about what CDCs might accomplish. The Ford Foundation, which single-handedly financed many of the early efforts in the 1960s and '70s, has cut back dramatically. Even the Local Initiatives Support Corporation, spun off by Ford in the 1980s expressly for the purpose of backing CDCs, has grown much more selective. These and other foundations have become interested in "microlending" -- the small, direct loans to individual entrepreneurs that have produced widely publicized success stories in Asia and Africa. Some of them regard CDCs as middlemen they would rather bypass.

One stark result of this was the abrupt closing last year of the National Congress for Community Economic Development, the umbrella organization that promoted the interests of CDCs in Washington and around the country. Faced with declining philanthropic interest, the NCCED simply ran out of money.

The big CDCs, at least, are not going to disappear. New Community Corporation is the largest nonprofit housing provider in the state of New Jersey and one of the largest employers in the city of Newark. The interesting question is whether it can move beyond its historic role of social service provider in a demoralized city into a new position as a partner to private interests in a city that has begun to recover.

NCC, despite its size and influence, has suffered from many of the difficulties that have plagued CDCs elsewhere. A fair number of its 3,000 housing units, built as long ago as the early 1970s, are in serious disrepair. Their maintenance problems have been exacerbated by the organization's insistence on accepting even the most dysfunctional city residents as tenants. Overall, the housing program is struggling with a current operating shortfall of about $300,000. "We've had about five bad years in a row," Father Linder says.

Even in the best years, NCC doesn't make a profit, won't make a profit, and, in the opinion of its founder, shouldn't make a profit. Father Linder believes one of the unfortunate illusions in the early days of the movement was that a successful CDC could generate enough economic development to pay for its operations on a continuing basis. "All the community groups began to think they could make money," Father Linder says. "They thought CDCs might be a gold mine." More than three decades later, they have been stripped of that illusion.

NCC, however, has advantages unavailable to most organizations of its kind. Its properties in the Central Ward are worth a fortune. In the 1970s, Father Linder was buying up 50x100-foot lots for $500. Virtually any of those lots can now be sold for more than $100,000, most of them for considerably more. When cash flow becomes a serious problem, NCC can simply dispose of some of its holdings. There is little doubt that the organization could survive for years, and continue to provide the social safety net Father Linder still cherishes, simply by managing its real estate assets.

But that points to what may be the fundamental dilemma about NCC and its future: how to operate in an urban environment dramatically different from the one that prevailed a generation ago.

Many of NCC's problems are directly related to the improving economics of the city in which it is located. One reason the workforce development program has trouble finding promising cooks and auto mechanics is that the best candidates often can get paying jobs. NCC is left trying to coach the more problematic recruits, those with serious criminal or substance-abuse histories.

Nor is NCC likely to remain the housing giant it became in the 1990s. As properties close or are sold off, there is virtually nothing available in the Central Ward to replace them. "The private sector is pushing them aside," says Dennis Gale, an urban affairs specialist at the downtown Newark campus of Rutgers University. "Most of the available lots have been developed or are being held by speculators for appreciation."

Given where the city was even a decade ago, few would decry these changes. But they point to a slimmed down and reconfigured New Community Corporation, and in fact that is already happening. At the start of this decade, NCC had annual revenues of about $200 million. Now, it is closer to $120 million.

Father Linder doesn't plan to get out of real estate development altogether, but he acknowledges that the future for NCC lies in partnerships with private developers, helping to plan the affordable component of projects whose other units will sell or rent at high-priced market rates.

A lot of this is feasible because NCC is on speaking terms with local government again. During the last few years of Mayor Sharpe James' 20-year administration, Father Linder was not welcome at City Hall, and any project that required city approval was simply a non-starter. "Our growth in size was a problem," Father Linder admits. "We were a threat." Cory Booker, the mayor who succeeded James last year, considers the organization to be a friend.

So New Community Corporation has a future -- even as it seems haunted by the realization that much of what it hoped for in the early days never came to pass. Newark isn't reviving because inner-city residents created an entrepreneurial juggernaut; it's reviving thanks to investors and affluent new residents coming in from the outside. Father Linder's constituency in the Central Ward was poor in 1970; it's poor now. The real success stories are people who straightened themselves out, got good jobs and moved away.

In the end, perhaps the most important legacy of Father William Linder and the New Community Corporation will be that they provided a modicum of peace and stability to a place that was in serious danger of becoming an urban wasteland. They didn't generate economic renewal; they didn't attract the investors from Manhattan; but it may have been due to them that when the investors showed up, there was a city to invest in.

It's entirely possible, of course, that Newark would be showing signs of life now even if Father Linder hadn't chosen to take a stand in 1967. But it may be just as well that that scenario was never put to the test.The New Community Corporation didn't save Newark. But it may have kept it alive.

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