ONE OF the motivations for then-Mayor John Street's Neighborhood Transformation Initiative (NTI) was that blight removal would increase the value of land in struggling neighborhoods and spur new investment. While this may have been the case, recent evidence shows that providing increased local-school quality can play an even greater role in the process of neighborhood revitalization.
Philadelphia floated a $300 million dollar bond to pay for NTI, convinced that the benefit of blight removal in the form of new real-estate values and tax revenues would outweigh the costs of the bond. Although no one actually did the comparison, belief among planners and the media is that the benefits of the program were marginal at best. Research I conducted in West Philly, however, showed that the real-estate benefits of the Penn Alexander School outweighed the costs by a factor of 3 to 1.
An evaluation of this Penn-financed public school showed that, on average, home buyers in the school catchment were willing to spend nearly $140,000 more then those who bought homes just outside the catchment. At the same time, however, there was a dramatic shift in the demographic character of the neighborhood. The lesson? There is an unmistakable connection between school improvement, home-value appreciation and neighborhood change.
Might it be possible to finance a similar intervention without floating a massive bond and without the help of an institution like Penn? Furthermore, can we do so without displacing current neighborhood residents? The Improvement District framework, such as the Center City District, for example, may provide the key. The idea is that neighborhood residents vote to increase their own taxes, and the incremental increase is put toward local school improvement.
Democracy is a key feature of "School Improvement Districts." Putting the provision of public services directly in the hands of local residents ensures that only those who stand to benefit from the improvements will have to pay for them. These schools would remain neighborhood schools, not charters, and would funnel new money either to physical improvements or increased teaching capacity.
In the face of rising home values, School Improvement Districts can be planned with a broad focus on equity. For one, District boundaries can be drawn to encompass both high- and low-valued homes. This would ensure that the Improvement District tax is progressive in nature; that a wide variety of Philadelphians can access the improvements; and that, at least initially, there will be a large supply of in-district affordable housing. In addition, local nonprofits can leverage these districts when competing for state-issued affordable-housing tax credits.
If you can be convinced that school quality can play a major role in the revitalization of neighborhoods then you will also realize that our city's current education crisis may have equally transformative effects - albeit negative ones. School Improvement Districts may offer an innovative school-financing mechanism with a good return on investment, but the greater motivation is that if we do not provide education opportunity for our students today, there may be no one left to live in these neighborhoods tomorrow.