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Land Rush

Inner cities are becoming hot places to live. Does government have any business telling developers to keep out?

From his fifth-floor office, Garnet Coleman can almost see the gleaming new urban lofts lapping at the edge of Houston's Third Ward. Artists began moving into the poor, largely African-American neighborhood about a decade ago, converting historic but run-down shotgun shacks into cutting-edge art spaces. Now, in the next step of an increasingly familiar cycle, blocks of new townhouses are rising over the freeway, front yards turned toward the downtown skyline just a few miles away. Yuppies, empty nesters, childless couples--mainly white and Hispanic people with enough money to drop $250,000--are starting to move in. And Coleman, an intense, chain-smoking power broker who represents the neighborhood in the Texas legislature, isn't happy about it. "You can tell a neighborhood's turning," he says with dismay, "when you see them out at night walking their dogs."

Coleman is determined to stop gentrification in Houston's Third Ward before it gets out of hand. "I understand how this happens," he says. "I understand how to stop it." He's also uniquely situated to do something about it. Coleman is an influential player in Houston's local politics, owing partly to his House seat and partly to his family lineage. Coleman's father, whose name adorns the office building he works in, was a prominent black physician, businessman, philanthropist and Houston civic leader.

Coleman is taking an unconventional and controversial approach to keeping the Third Ward affordable for longtime residents. Quietly, the board of a tax increment financing district that he partially controls has been buying up land in the Third Ward. Not only does Coleman want to keep the land away from developers. He also wants to saddle the property with restrictive deeds and covenants that would ensure that it could be used only for rental housing in perpetuity. "Quite frankly, this is personal," Coleman says with grim determination. "We can give tax abatements out the wazoo for lofts and condominiums. The question is what are our values and whether or not we are willing to spend the same money on people who need a nice, affordable, clean place to live."

Gentrification, a phenomenon normally associated with coastal cities such as New York and San Francisco, is now heading inland, transforming inner-city neighborhoods from Milwaukee to Raleigh-Durham to Albuquerque. It's even come to Houston, the three-beltway city that loves to sprawl. Since 2003, the number of Houston-area suburbanites "very interested" in moving into the city has doubled, according to sociologist Stephen Klineberg, who regularly surveys regional attitudes toward the city. Homebuilders are responding by blanketing neighborhoods close to downtown with three-story town homes and lofts.

Such development is no accident. In the past decade, the public sector has invested upwards of $8 billion in the central area Houstonians call "the Inner Loop," much of it geared toward making the city more enticing to affluent suburbanites. There's an eight-mile light rail line, new football and baseball stadiums, a museum district that's doubled in size, new downtown parks and fresh landscaping. Yet now that suburbanites are moving in, it's not just Garnet Coleman who's sounding the alarm. So are Houston's mayor, Bill White, and many members of the city council--particularly those who represent predominantly African-American and Hispanic districts.


While Coleman pushes his rental strategy in the Third Ward, Mayor White is pursuing a plan focused on homeownership. White's idea is to foreclose on tax-delinquent properties in six poor, close-in neighborhoods. The city will then convert these properties to affordable, owner-occupied housing as part of a larger effort to address other local concerns from crumbling infrastructure to high crime. White calls this "redevelopment that is the opposite of gentrification."

"It's good that there are people who want to live in city limits, but we don't want to destroy the character of a neighborhood," White argues. And, he adds, "Unless we do something aggressive...the market will build in concentric circles around [the downtown] employment center."

What concerns both White and Coleman and most critics of gentrification is the prospect of Third Ward residents getting priced out of their own neighborhood. Recent research, however, suggests that worry is overblown. Studying gentrification's impact in Boston, Duke University economist Jacob Vigdor found that an influx of affluent newcomers had, if anything, merely contributed to Boston's socioeconomic integration. "There is no evidence to suggest that gentrification increases the probability that low-status households exit their housing unit," Vigdor concluded. Columbia University economist Lance Freeman found the same thing last year in a study of New York. In fact, Freeman found that residents of gentrifying neighborhoods were less likely to move than residents of non- gentrifying neighborhoods.

Those studies haven't tempered fears that the Third Ward is on the brink of upheaval and the perception among policy makers that something must be done to tame it. What Houston is discovering, however, is how slippery an issue gentrification can be. The Third Ward today is awash with developers, politicians, neighborhood activists and longtime residents. Each possesses a financial, political or personal stake in what the Third Ward is to become. And each, in distinct ways, is working at cross-purposes. Not only do they disagree on how to solve the Third Ward's gentrification problem; they can't even agree on what the problem is.

Is gentrification, despite what the academics say, really a problem of displacement? Is it a natural and unavoidable consequence of market forces, or does it result from specific policies? Is it a problem of low wages or one of high-priced real estate? Does it require government intervention? That such a debate is playing out in Houston- -a city famous for its lack of zoning and its developer-friendly ethos--is a testament to the passions and confusion that gentrification arouses. What really seems to be at stake is something quite nebulous: the character of a neighborhood. And in Houston, as in many cities, that is inextricably linked to questions of political power and race.


One reason why so many people in Houston are concerned about the Third Ward is because almost no one seems happy with how gentrification turned out in the nearby Fourth Ward. For more than a century, the Fourth Ward was the heart of black Houston--Freedmen's Town, many called it, after the freed slaves who made their homes there following the Civil War. Its shotgun shacks, shared backyards, and narrow streets of hand-fired brick made it one of Houston's most distinctive neighborhoods. Standing in the vestibule of the old Prince Hall masonic lodge, looking at the sepia photographs of the Fourth Ward, it's easy to imagine the community in its heyday: a proud, self- contained neighborhood that served as a refuge for African-Americans during the cruelties of the Jim Crow era.

"This neighborhood had everything it needed," says the Reverend Elmo Johnson, who moved into the neighborhood in 1977 and is now the pastor of the Rose of Sharon Baptist Church. "We were our own little self- contained community."

That Fourth Ward no longer exists. During the 1950s and '60s, freeway construction and other urban renewal projects destroyed much of the neighborhood. By the 1970s, many residents were leaving in large numbers in search of better opportunities elsewhere. Crime, crack and an acrimonious debate over whether to tear down a local housing project contributed further to the atmosphere of crisis. During the mid-1990s, the neighborhood got a glimmer of hope when a former city planning commission member formed a private charity to renew the Fourth Ward. Relying in large part on city and federal funds, Houston Renaissance purchased large swaths of the neighborhood and promised that a range of affordable housing would follow. Instead, the nonprofit defaulted and the land passed into the hands of the Houston Housing Finance Corp.

Rather than put more money in, the city essentially divided the neighborhood in half. The land closest to downtown was sold off to private developers; the proceeds were then used to build subsidized homes, priced around $110,000, in what remained of the Fourth Ward. "We've done some good things, but this is no longer a neighborhood," says Johnson, who also runs a community development corporation that developed much of the affordable housing in the area. Standing in the sanctuary of his church, Johnson is eager to talk about his plans to reach out to the neighborhood's newest residents and to transform the Rose of Sharon into a multi-racial congregation. But he acknowledges that many of his congregants are not.

The sense of division that Johnson is struggling to overcome also is apparent in the area's architecture. The eastern edge of the Fourth Ward--the part sold off to developers--boasts block after block of postmodern town houses. They feature corrugated metal siding in vivid shades of red, blue and "desert sand," and stunning views of downtown. Most of these buildings are inhabited by style-conscious empty nesters and young urban professionals. Crossing over Buckner Street into the zone designated for affordable housing, the architecture shifts to two-story suburban-style houses on postage-stamp lots. Every now and then, the vista is interrupted by a block of soaring, pastel-colored town houses, blocks Johnson sheepishly admits his nonprofit had to sell off to raise funds. The old-fashioned shotguns that once gave the neighborhood its character are almost entirely gone.

For Mayor White, most members of the city council and preservationists, the Fourth Ward's fate represents a signal failure in planning and a cautionary tale for what to avoid in the Third Ward. "It could have been done in a way that retained some of the pluses and had fewer minuses," says White. Members of Houston's black community are even more pointed in their criticisms. "This is about erasing the history of the community," contends Coleman.

Not everyone in Houston agrees.


Bouncing over the old brick streets of the Fourth Ward in his silver Mercedes coupe, Larry Davis, an architect-turned-developer, makes clear his utter disagreement with the prevailing critique of the Fourth Ward. That's hardly surprising, since Davis is the man most responsible for the neighborhood's transformation. After a trip to San Francisco in the early 1990s, Davis realized that loft living was poised to become the next big residential real estate trend. He was eager to bring the idea to Houston. There was just one problem: Houston didn't have many old buildings that could be redeveloped as lofts. So Davis came up with a different idea--loft-style town homes. Five years ago, Davis purchased five acres of mostly vacant land. Today, 150 of his distinctive town homes occupy what was once the western edge of Freedmen's Town.

Davis says he didn't evict a single neighborhood resident. By the time he started building, his property contained only a handful of empty shotguns, the most historic of which Davis donated to a local preservation group. If gentrification did displace anyone in the Fourth Ward, Davis doesn't seem much concerned about it. "When you look at what they were being displaced from, the houses were totally run-down; they should have been torn down," says Davis. He scoffs at the notion that something of great value was lost with the redevelopment of the area: "The only culture displaced was a culture of needles and syringes."

As for the affordable housing, Davis is dismissive. Aesthetically, he dislikes seeing houses fit for a suburban cul-de-sac built downtown. In contrast, he sees his lofts, which typically list for between $160,000 and $200,000--a strikingly affordable price given their proximity to downtown--as the epitome of free-market virtue.

"We're taking incredibly blighted areas and building our product, which is incredibly urban, for young professionals and empty nesters," says Davis. He's eager to replicate his success in other parts of the city. Does that include the Third Ward?

"I'm looking."


Everyone knows that gentrification supposedly starts with artists: They're the urban pioneers who discover rough but charming neighborhoods, fix them up and unintentionally make them safe for developers such as Davis and the yuppies who buy his product. According to artist Rick Lowe, when he first arrived in the Third Ward a decade ago, even residents of the neighborhood didn't understand why he wanted to restore a row of small homes that they thought of as "old slave houses."

The Third Ward isn't Soho. Shotgun shacks, even lovingly restored shotgun shacks, don't exactly appeal to affluent buyers--hence the new town homes. For years, free-market forces had essentially abandoned the Third Ward. Now that developers smell value here again, you can almost feel Adam Smith's invisible hands tugging for control. Signs announcing the imminent construction of new town homes have started popping up on vacant (and occasionally non-vacant) properties throughout the Third Ward. The owner of the corner lot closest to Lowe's bungalows wants $150,000 for it.

Lowe sees the return of market forces in the Third Ward as a problem the city needs to combat. Like most critics of gentrification, he worries most about displacement. Rising land values will inevitably lead to increased rents, he says, which will in turn trigger an exodus from the neighborhood. "It's kind of a gradual process," Lowe explains. "Every time one of these little old houses goes down through fire, or a landlord decides, 'I don't want to do this anymore,' it means there's one less opportunity for someone to ever live in those neighborhoods again."

Lowe is so concerned about displacement that he established a community development corporation to start purchasing land in the Third Ward. His goal is to spruce up the neighborhood's old shotgun shacks and preserve them as affordable housing. The CDC also teamed up with Rice University to build four new duplexes for single mothers, a project that many view as a model of sensitive design. Lowe's group is not thinking small. It's got plans to preserve a 35-block area as a kind of historic urban village. Scratching up funds to do the work is tough, however, and only 13 homes have been fixed up so far.

As an artist whose primary canvas has become the neighborhood itself, Lowe also objects to the architecture of gentrification. Unlike the Third Ward's native shotgun shacks, a typical Houston loft favors cars over front porches. He insists that town houses with double garages on the front and skyline views from the back are not necessarily what people want.

"People do want a variety of things," says Lowe. "I think people generally want to live in a neighborhood. But we don't offer them neighborhoods."


Garnet Coleman shares most of Lowe's concerns about what's happening in the Third Ward. His hands, however, lie closer to the levers of political power, and his stake in the neighborhood is more deeply personal. "Third Ward is my home--it's not for sale," Coleman says. "A hundred years in my family. It's a very different point of view."

The key to Coleman's approach is money--money to buy land and take it out of circulation. To get it, Coleman is utilizing a quasi- governmental authority, deploying tactics that would make the legendary highway and bridge builder Robert Moses proud. If Moses manipulated the back channels of power in New York for the cause of promoting development, however, Coleman is doing the same in Houston in order to impede it.

Coleman's vehicle is an urban investment tool known to most cities that use it as "tax increment financing." In Houston, the arrangement goes by a different name--"tax increment reinvestment zone" or TIRZ. The idea is that as a depressed area redevelops, the resulting increase in property taxes pays for more improvements in the neighborhood. Houston's city council has designated 22 such TIRZs in different neighborhoods, each with its own governing board. Typically, their goal is to spruce up sidewalks, lighting and landscaping, in hopes of attracting even more development.

One TIRZ, in a neighborhood known as Midtown, is acting a little differently. Midtown is a once run-down area of commercial warehouses just east of the Third Ward. It's now transformed into a thriving neighborhood of apartments, shops, restaurants and nightclubs. The board of the Midtown TIRZ is divided between Coleman loyalists and appointees of Mayor White. The board has chosen to use almost all of its revenues--$10 million in the past five years--to purchase and then "bank" land in the Third Ward. "If you look at Midtown, that was all publicly induced--ain't none of it affordable," says Coleman. "Why can't we do the same thing for people who need an affordable place to live?"

It's a decidedly unorthodox arrangement, one whose very existence seems to be something of a secret. Coleman declines to say how much land the Midtown TIRZ has banked in the Third Ward. He'll say only that he wants the land to be used for low-income rental housing, with deeds held by local churches and CDCs that could borrow against the value of the land in order to build more affordable housing. "Low- density rental is the only way for it to be affordable," Coleman argues. "You keep the character of the neighborhood while providing affordable housing."

In order to save the Third Ward, Coleman seems intent on freezing its current character and demographics in place. An essential part of his plan is to attach restrictive deeds to the rental properties to ensure that they are never sold to private developers or converted to condos. But is it really possible for a neighborhood to resist change? Fifty years ago, much of the area that Coleman now sees as his patrimony was a largely Jewish neighborhood. Only in the 1960s did the area become predominantly black. What Coleman is trying to do is keep it that way. He seems to enjoy the challenge. "Everyone said it couldn't be done," he crows, with obvious relish. "I said, 'Watch me.'"


Bob Lanier knows a few things about politics and real estate. As Houston's mayor from 1992 to 1998, Lanier pushed the Inner Loop infrastructure improvements that quite literally paved the way for today's residential boom. Lanier is also a successful developer. Ensconced in the paneled library of his River Oaks mansion, Lanier, who is now 81, hasn't forgotten the modest means from which he came. Behind his desk hangs a picture of his childhood home--a tidy shotgun much like the old houses in the Third Ward.

Lanier believes that integrated, mixed-income neighborhoods are the ideal. And he thinks that the private market's doing a pretty good job of providing racially diverse housing. "Apartments in this city are solidly multiethnic now," he says. "It's mostly a third, a third, a third"--that is, one-third black, one-third white, one-third Hispanic. Lanier also points out that Houston, with its lack of zoning and minimal building regulations, produces the most affordable housing of any city in the United States. "I'd rather see the government not put any restrictions at all and let the market determine what happens," he says.

Yet even Lanier, at his age free to speak his mind, feels conflicted about the market forces rushing into Houston's neighborhoods. It was never his intent, he says, to unleash gentrification with inner-city investments. "I hate to see families, older people that think it's a place to live out their life and then their taxes go up and they can't do it--I hate to see that. I think that is a problem," he says.

Lanier still struggles to square the goal of economic progress with the ideal of neighborhood preservation. The one thing he seems sure of is the misguided nature of typical government responses to the gentrification issue. Coleman's rental-housing plan, Lanier says, would thwart integration rather than promote it. And White's homeownership strategy, Lanier says, is too small to be of much consequence.

Perhaps in the end, the gentrification debate is, as much as anything, about politics. Gentrification not only threatens the character of Garnet Coleman's Third Ward. It also stands to dilute his African-American political base with affluent whites. Likewise, Bill White's plan undoubtedly helped his mayoral campaign in minority neighborhoods last year. In November, he won reelection overwhelmingly. The gentrification debate, Lanier says, "is substantially about political control."

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