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CDCs revitalized America's poor neighborhoods. What is their role as a community gentrifies?

After decades of focusing on how to revitalize forlorn neighborhoods, community development corporations are discovering that they now must be more measured and targeted in their approach as the neighborhoods they operate in continue to gentrify. In Philadelphia's Brewerytown neighborhood, residents have recently launched a CDC to respond to recent gentrification.

After witnessing their neighborhood change rapidly, Brewerytown residents are launching a community development corporation to ensure that lower- and middle-income residents do not get pushed out. Darnetta Arce, who will lead the new Brewerytown CDC, is pictured in front of the building where the CDC’s headquarters will be housed.
After witnessing their neighborhood change rapidly, Brewerytown residents are launching a community development corporation to ensure that lower- and middle-income residents do not get pushed out. Darnetta Arce, who will lead the new Brewerytown CDC, is pictured in front of the building where the CDC’s headquarters will be housed.Read moreTRACIE VAN AUKEN

More than 50 years ago, amid a period of nationwide urban decline, U.S. Sens. Robert F. Kennedy and Jacob Javits began to hatch a plan on a stroll through the Bedford-Stuyvesant section of Brooklyn.

The predominantly African American neighborhood had been gripped by riots over a police shooting a few years earlier. Trash littered the streets. Families were living in burned out, boarded up homes, and storefronts sat vacant. The circumstances were so dire that Life Magazine wrote at the time that the neighborhood's roaches were "so bold that they don't run from the light."

The two New York lawmakers, of different political parties, had arrived in the community promising to help. But lip service and community studies would not be enough this time, neighborhood activists such as Elsie Richardson implored. They needed tangible action — urgently, they said.

Kennedy returned to Washington and persuaded lawmakers to pass legislation that would fund development efforts in poor cities, starting with the Bedford-Stuyvesant Restoration Corp., the nation's first community development corporation. Run by and for community members, the organization offered a novel, nongovernmental approach to tackling the neighborhood's woes: joblessness, dilapidated housing, a flagging commercial corridor, and crime.

Today, more than 4,000 community development corporations — known as CDCs — exist nationwide, with an estimated 60 to 65 in Philadelphia. Since the 1960s and '70s, when they spread into deeply impoverished neighborhoods, these CDCs, operating as community-controlled nonprofits, have built hundreds of thousands of affordable housing units, revitalized once-dead corridors, minimized blight, and reduced crime.

One problem with that success: In many neighborhoods where CDCs sprouted, the same residents who ushered in such change are now the ones at risk of being forced to leave.

As many urban areas have experienced unprecedented revival in the last decade, some CDCs have been forced to shift their focus away from sweeping community revitalization and toward targeted, smart growth, instead. After years of working to repair forlorn communities, CDCs suddenly find themselves operating in neighborhoods where their work has opened the flood gates for private investment, leading to rising living costs and super-charged new development — and leaving working longtime, middle-class residents wondering whether they fit in.

In other words, some CDCs are facing challenges just as new and large as they did 50 years ago.

"CDCs were born out of disinvestment and loss and vacancy," said Beth McConnell, policy director for the Philadelphia Association of Community Development Corporations. "And while in some cities, including Philadelphia, many CDCs are still facing those issues, many others are now operating in a period of growth and change that's very different from their original purpose."

"CDCs are now having to respond and react to that change," McConnell continued. "And start thinking about how we're going to grow in an equitable way."

Bedford-Stuyvesant, for example, has evolved from its gritty, 1960s days to a gentrified mecca for hip, high-income residents seeking a reprieve from Manhattan prices. Much of that was kickstarted by Brooklyn-Stuyvesant Restoration Corp.'s work: More than 2,000 units of constructed or renovated housing. Nearly $60 million in mortgage financing for residents. Plus, its work in securing new businesses — a 25,000-square-foot supermarket, restaurants, a post office, and three banks.

In Philadelphia, the same can be said for the Fishtown area, served by the New Kensington CDC. Once a neighborhood plagued by post-industrial decline, Fishtown has become one of Philadelphia's most sought-after neighborhoods. The New Kensington CDC helped initiate that revival by cleaning up the neighborhood's housing stock, as well as turning vacant land into community gardens and other spaces.

In many neighborhoods, observers say, CDCs are the origin of a community's revitalization, sparking eventual investment from the private market. But not always. In Philadelphia's Brewerytown section, for example, which has been undergoing rapid gentrification, the neighborhood has operated without a consistent CDC for the last few years, after the previous organizations — which operated as both the Brewerytown CDC and then the Greater Brewerytown CDC — dissolved amid staff conflicts and other issues.

But that's about to change.

After years of skyrocketing real estate prices — the median price of a home in Brewerytown was $178,995 in the fourth quarter of 2017, according to data from Philadelphia economist Kevin Gillen, a 104 percent increase from the decade before — Brewerytown residents are in the midst of launching a CDC anew. The leaders involved, many of whom have lived in Brewerytown for decades, if not their whole lives,  have watched the neighborhood embrace new development, residents, and businesses — often without much of their input.

Now, these residents say, they want to be a part of it.

"There's a sense in the neighborhood that people should not be forced out of their homes," said Barry Cassidy, a consultant for Brewerytown's new CDC, which will be called the Lower North Philadelphia Community Development Corp. "And what you find in research is that it's mostly your working middle class that gets displaced [as a neighborhood gentrifies] — not the people who are on vouchers or in city-sponsored housing, but instead the middle-class people."

"We want to make sure that these residents are part of the process," Cassidy continued. "… They felt hampered, they wanted to have their voice listened to, rather than being excluded."

The Lower North Philadelphia CDC filed its articles of incorporation in November, Cassidy said, and members are working on an application to become a 501c3 charitable organization. The Lower North Philadelphia CDC's boundaries are expected to stretch from Broad Street to Fairmount Park and from West Montgomery Avenue to Poplar Street.

Though no rules or guidebook exist for how CDCs should operate, observers widely agree that these nonprofit corporations generally can respond better and faster than government agencies or the private market when it comes to a community's needs.

"Unlike government agencies, CDCs are agile and opportunistic in pursuing revitalization," a 2005 study from the Urban Institute reported. "And unlike private developers, CDCs maintain strong links to their communities by involving residents in their governance and development activities."

To accomplish their goals, the Urban Institute report found, CDCs often concentrate in three key areas: building affordable housing, revitalizing commercial corridors, and running employment and other community development programs.

According to Darnetta Arce, who is expected to become the executive director of the Lower North Philadelphia CDC (and who currently is the executive director for the Brewerytown-Sharswood Neighborhood Advisory Committee), the CDC expects to focus its efforts on two main initiatives: converting low- and middle-income Brewerytown renters into homeowners, and working to influence the commercialization of Ridge Avenue.

"What we would like to do is say, we have a housing stock, we have people who are ready to purchase a home, and we want to take them through the process," Arce said. "Instead of giving our [stock of abandoned houses] to developers, we want to give the CDC the opportunity to provide to local residents who fit in between the high- and the low-income bracket."

To accomplish its housing goals, Arce and Cassidy say the CDC plans to develop homes by putting together funding from federal and city tax credits, grants and philanthropy. And, ideally, Cassidy said, "we'll try to go through the [Philadelphia] Land Bank," which the city created in 2013 to streamline the sales of vacant, tax-delinquent land to developers. In addition, Cassidy explained, the CDC plans to create programs to put residents on a path toward homeownership, including initiatives like credit counseling or savings plans.

"We know that we want to maintain the indigenous people," Cassidy said.

As for the CDC's work along Ridge Avenue, Arce said the organization hopes to bring in more businesses that better reflect the community's wants and needs.

"We want a full-service supermarket … a stationary store," Arce said. "We like the same things that everybody else likes: specialty stores, cafes. Places to eat for breakfast and lunch."