Guess Who Saved the South Bronx? Big Government.

The silent partner in "community development"

ON DEC. 10, 1997, PRESIDENT Clinton made a surprise appearance in the South Bronx. After a brief stroll through the once-blighted neighborhood of Charlotte Street, Clinton credited local community development groups with transforming the nation's worst slum into a livable place over the past 15 years. "Look at where the Bronx was when [president] Carter came here in despair," he told the crowd at the Madison Square Boys and Girls Club. "Look at where the Bronx was when President Reagan came here and compared it to London in the Blitz. And look at the Bronx today. If you can do it, everybody can." The story he told was already becoming a familiar one: A group of local people band together to fight off the pimps and pushers and rebuild their neighborhood. "The citizens of the South Bronx set an example that can serve a hundred other slums around the country," Ted Koppel declared in a 1996 Nightline segment.

It's certainly true that the South Bronx has undergone a miraculous transformation. Japanese tourists who come by bus to see "Fort Apache, the Bronx" find themselves staring out at suburban-style homes with glossy lawns and picket fences instead. Most of the charred hulks that made the area seem like a wasteland are gone, and it's hard to walk a few blocks without hearing the buzz and hammer of construction crews. In the 42nd Precinct, which includes the worst areas of the "Fort Apache" days, the number of shootings has dropped by over two-thirds in the past five years, the number of robberies and assaults by over half.

But there's something missing from the usual story about how it happened. Yes, the local Community Development Corporations (CDCs) have made an enormous difference. But they've been around for decades. In fact, they were there when the Bronx was burning in the '70s, and if they had been the only heroes in the story, there might not be anything left in the Bronx to celebrate. The truth is that the South Bronx has come back because the government intervened. Starting in the mid-'80s, New York City started pouring some $500 million a year into affordable housing--more than the next 50 largest U.S. cities combined. Much of that money went into the South Bronx. Equally important, city officials used the money effectively, avoiding the terrible mistakes of old-style top-down "urban renewal" They provided both funding and expertise for the nonprofits and CDCs who have received most of the credit for the boroughs revival. These groups also got help from two federal government programs, the Community Reinvestment Act and the Low-Income Housing Tax Credit, which brought banks and private companies into an area they had previously shunned.

It's understandable that government should get less than its share of the glory. "In a way, that's our role, to work behind the scenes and let local people pick it up from there," says Bronx Borough President Fernando Ferrer. But failing to acknowledge government's role can also be dangerous. It encourages the myth that government's role in cities is still a matter of evil bureaucracies decreeing "slum clearance" and building nightmarish housing projects that exacerbate crime and decay. Above all, it perpetuates the irrational bias against the public sector that persists among today's political elites, and it risks missing the lessons that government has learned in places like the South Bronx--lessons that should be at the heart of any future effort to revive broken communities.

Malign Neglect

If the idea of government saving the South Bronx sounds unlikely, perhaps that's because most people know government helped ruin the borough in the first place. The building of the Cross Bronx Expressway, which Robert Moses oversaw during the 1950s, has become Exhibit A in the failure of large-scale urban planning policies. "The path of the great road lay across 113 streets, avenues, and boulevards; sewer and water and utility mains numbering in the hundreds; one subway and three railroads, five elevated rapid transit lines, and seven other expressways or parkways, some of which were being built by Moses simultaneously," wrote Robert Caro in his 1974 indictment of Moses, The Power Broker. Moses blasted through it all, displacing tens of thousands of middle-class people and creating an instant slum.

Moses wasn't the only villain. In the '50s and '60s, as new waves of poor Puerto Ricans and southern blacks came to New York, the city welfare department "dumped" the poorest of them into the South Bronx by offering landlords above-market rents for taking welfare clients. In retrospect, this policy seems like a recipe for disaster, creating concentrations of extreme poverty that were bound to prove toxic. But it was the easiest route for the city, since there was no longer any local organization to protest. The borough's once-formidable Democratic political machine had fallen apart as the older Jewish, Irish, and Italian immigrants who supported it moved away.

The tenements where these newer immigrants lived, most of which were built before 1915, were rapidly wearing out. But the landlords couldn't afford to renovate them, thanks to another bad policy--rent control. By the 1960s, the inability to raise rents was making it increasingly difficult for landlords to make a profit, much less maintain their aging buildings.

The city also helped to destroy the job market in the South Bronx. There were other reasons for the decline of the boroughs manufacturing base, but the city made things worse by imposing new corporate income taxes on top of federal and state taxes, and boosting permit and inspection fees. In 1959 the area had 2,000 manufacturers; by 1974 there were only 1,350, and the number of jobs they supplied dropped by a third, according to a 1975 article in Fortune magazine. The welfare rolls rose correspondingly. In the Hunts Point neighborhood alone, there were 11,000 welfare recipients in 1962, and 53,000 a decade later. As the areas social fabric frayed, crime exploded: Reported assaults quadrupled between 1960 and 1969.

Still, the South Bronx might have been saved--according to many people who still lived there--if not for what former Congressman and Borough President Herman Badillo calls "the worst mistake of all." In 1968 the state sponsored the construction of Coop city, a $413 million, 15,400-unit apartment complex. It was the best new housing in the borough, and if it had been integrated into existing neighborhoods it might well have had a stabilizing effect, propping up local businesses and strengthening the areas political constituency. Instead, the planners put it all by itself in the northeast corner of the Bronx, on the site of an old amusement park. Within a year it sucked out what remained of the South Bronx's middle class, leaving those who remained in a virtual ghost town. By 1970 locals were calling the once-opulent Grand Concourse a "movie set"--a facade of grandeur surrounded on all sides by decay.

At the same time, federal money was pouring into the South Bronx as never before. Hoping to stem the areas disintegration, the federal government spent hundreds of millions in urban improvement programs, all to no avail. In 1967 the area became part of the Johnson administration's Model Cities program, drawing more than $300 million. The result was more failed projects, some of which were memorialized with the term "planner's blight"--vast areas of vacant land from which communities were ousted for new projects that never materialized.

Despite these efforts, and in part because of them, the Bronx began to burn in about 1970. Some of the fires were accidents, the inevitable result of decaying electrical systems. Many were set by landlords who would then collect the insurance money. Often they would sell the building--whether it was still inhabited or not--to "finishers" who would strip out the electrical wiring, plumbing fixtures, and anything else that could be sold for a profit before torching it. "Sometimes there'd be a note delivered telling you the place would burn that night," one man who lived through the period told me. "Sometimes not" People got used to sleeping with their shoes on, so that they could escape if the building began to burn.

Some of the remaining tenants burned their own buildings, thanks to yet another bad city policy. Welfare recipients living in decaying city-owned buildings naturally wanted to find a better alternative, but regulations forbade payment of moving expenses to anyone who had not lived in same place for at least two years. There was one exception to this rule, and it was posted in large type in neighborhood welfare offices. Any tenant burned out of his or her building automatically became eligible for a grant--usually about $1,000 but sometimes as much as $3,500--to cover the cost of new clothing, furniture, and moving. Also, burned-out families went to the top of the waiting list for public housing projects.

During the mid-'70s, the South Bronx averaged 12,000 fires a year. The area lost some 40 percent of its housing stock, and 300,000 people fled. In the burned-out zone that remained, police fought a losing battle against junkies and murderous teenage gangs. In 1977, Jimmy Carter paid a fleeting visit to the rubble-strewn Charlotte Street, promising to revitalize the area. The New York Times commented that the South Bronx was "as crucial to an understanding of American urban life as Auschwitz is crucial to an understanding of Nazism" But nothing came of Carter's high-sounding words. The city was in the throes of a fiscal crisis, and the feds were sick of watching their money fall into a burial ground of failed urban policies. By 1981 the Los Angeles Times could declare that the South Bronx was "both a place and a scare-word"

Love Among the Ruins 

In a sense, what happened in the South Bronx bore out the warnings Jane Jacobs had issued in her 1961 classic The Death and Life of Great American Cities. In the name of urban renewal, she wrote, "[w]hole communities are torn apart and sown to the winds, with a reaping of cynicism, resentment and despair that must be seen and heard to be believed" These disasters flowed from the planners' failure to recognize that neighborhoods are living things that cannot simply be uprooted and replanted from afar. Instead, planners need to listen to the strengths of a community and build on them. They must maintain the diversity--of housing stock, of activities, of incomes--that keeps an area culturally vibrant and economically viable. They must pay attention to what makes residents want to rebuild and maintain their own neighborhoods, rather than burn them down.

As it happened, the South Bronx had its own little laboratory of Jacobs-style revival during the 1970s. Even as the area was burning, a few small neighborhood groups began to scratch out pockets of order amidst the ruins. "Don't Move, Improve," became the motto of a tiny group calling itself Banana Kelly, after the gentle curve of Kelly Street, where the members lived. "Even though it was a terrible time, there was a vacuum, and an opportunity to build," says Harry DiRienzo, one of the group's founders. Like 19th century homesteaders, they would buy a building from the city for a nominal sum and try to get a below-market loan for its renovation. Sometimes the workers would move in as taxpaying cooperative owners, with the partly-unpaid labor of the group keeping rents affordable. Another pioneer was Father Louis Gigante (brother of the famed mobster Vincent "the Chin" Gigante), who founded the Southeast Bronx Community Organization and successfully organized his Hunts Point constituents to rebuild dozens of abandoned buildings for low-income local people.

Yet for all their heroism, the CDCs were too small and too poor to turn the tide in the South Bronx. The city helped keep them alive, but a financial crisis lasting through the '70s prevented it from doing more. Housing had traditionally been a federal responsibility, but the Carter administration was reluctant to pour money into such a notorious sinkhole. After Reagan was elected the federal government made a full-scale retreat, slashing the overall budget for affordable housing by two thirds. Even small efforts failed. In the wake of Jimmy Carter's celebrated visit to the rubble of Charlotte Gardens in 1977, Mayor Ed Koch tried to put up new housing on the site, but the city's Board of Estimate voted him down.

It took three things to turn the city's head back towards the Bronx. First, the financial crisis ended and the city got back into the bond market in the early '80s, freeing it to spend money. Second, by the mid-'80s homeless men and women were living in cardboard boxes on Fifth Avenue, prompting an outbreak of civic concern and putting political pressure on Koch to build more affordable housing. Still, a third element was required: political commitment. Koch could have ignored the Bronx after his re-election in 1985, but he chose to follow through on an unprecedented "Ten Year Plan" for affordable housing. The plan called for $4.1 billion in reconstruction--later upped to $5.1 billion. Although the plan was citywide, the rebuilding of the Bronx was a high priority. "The goal was to rebuild the entire South Bronx, to take every vacant building and make it into a viable housing unit," says Abe Biderman, Koch's housing commissioner during the late '80s. According to the city's department of Housing, Preservation and Development (HPD), some $1.3 billion of city funds went into the South Bronx alone.

In this respect, the Bronx also benefited from the skill and honesty of its own borough president, Fernando Ferrer, a former city planner. "In Harlem all the civic and political leaders were interested in was the contracts, and who would be given the job of rehabilitation and who would decide who would work on what," says Koch. "Ferrer never did that. All he did was to say let me give you my advice on what to do first, and we listened to him" This may sound like common sense, but it was worlds away from the practice of Stanley Simon, Ferrer's predecessor. "The first time I met Stanley," says Kathryn Wylde, the director of the New York City Housing Partnership, "he took me aside and bragged that he personally gave every builder the [permit] for their home, and that he would be telling me who the builders were for each of our projects"

Still, honesty and buckets of money were not enough. The Ten Year Plan consisted of a bewildering variety of programs, but its success can be boiled down to a few basic principles, all of which represent a real advance over the redevelopment efforts of the past.

Use what 5 there. For years, city officials had argued that the South Bronx was "beyond tinkering, rebuilding and restoring," as Robert Moses put it in 1973. Three years later Roger Starr, the city's housing administrator, suggested a goal of "planned shrinkage"--razing the worst areas, relocating the residents, and closing down subway stations, police and firehouses, hospitals and schools. The Koch administration reversed this draconian logic, recognizing that it would be foolish not to make use of the city's countless abandoned buildings. "We made a conscious decision that we could make scarce resources go farther if we did rehabilitation," says Paul Crotty, Koch's housing commissioner from '86 to '88. In part, this decision grew out of a desire to maintain whatever sense of community was left, as the CDCs had been doing for years. But it also made economic sense. The cost of a "gut rehab," in which everything but the building's outer walls is removed and replaced, turned out to be $65,000 per apartment, versus $135,000 if you built from scratch.

Maintain a mix of incomes. The classic mistake of the past had been to create "low-income" or welfare enclaves, which rapidly degenerated into havens of crime. In fact, the city was so eager to house the homeless in the 80s that it repeated this mistake with its Special Initiative Project (SIP), filling entire buildings and even clusters of buildings with homeless people. The CDC community had seen this movie before, and they reacted at once. One night David Bayez, development director for Banana Kelly, persuaded a city councilman to drive up and take a walk with him along Southern Boulevard, where the new homeless, projects were crawling with pushers, fights, and unattended children. Soon afterward, the city began spreading the homeless out into the other buildings it renovated.

The city also tried to encourage home ownership, on the premise that homeowners would have a stake in the neighborhood and provide an anchor against decay, even in harder economic times. So far, it appears to have worked; the homes have sold easily, and their effect on neighborhoods is easy to see. Driving past the bodegas and vacant lots of Brook Avenue in the Melrose neighborhood, you suddenly come upon a solid block of immaculate light blue houses with gates and welcome mats. Keep driving and you'll see them appear again and again, in different shapes and sizes, like flashes of suburbia amidst the older tenements. Most of them were built by the New York City Partnership and are designed for families with an income of about $50,000--"typically, say, a nurse and a corrections worker," says borough president Fernando Ferrer. The most famous of these homeowner developments is Charlotte Gardens, which is invariably featured in TV and newspaper stories about the revival of the South Bronx, and which Clinton chose for his 1997 pit stop. It's true that Charlotte Gardens is a shocking symbol of the change that has come to the South Bronx: Where there was little more than rubble, there are now 89 one story ranch-style houses, with picket fences, satellite dishes, immaculate lawns, and tree-lined streets. Yet for all its symbolic importance, Charlotte Gardens is a poor model, because it lacks the density the Bronx needs to maintain diverse neighborhoods and revive its retail culture.

Use Third Parties. For all the good will and experience of the CDC's, handing them the money and asking them to fix the South Bronx would have been a disaster. Like any local group, they weren't used to dealing with large quantities of money, and their construction experience was often narrow. In most of its renovations the city relied on a nonprofit intermediary such as the Local Initiatives Support Corporation (LISC) or the Enterprise Foundation to help out. In many cases, the city would sell the building for a dollar to the owner, usually a local nonprofit. The city would then contribute some portion of the money necessary for the rehab--depending on the income level of the prospective tenants. The rest would come in part from the owner, and in part through a loan arranged by the intermediary, or even by a bank. Tile city would often eliminate real estate taxes on these buildings for a specified period, so that the owner could charge lower rents for low-income residents.

The result was a process that protected the city from swindlers--as previous construction efforts had not--by exposing the owner to the risks of a private loan. "We spent almost $5.1 billion and there was never a hint of scandal," says Paul Crotty, the former housing commissioner. Equally important, the city's plan allowed small local owners to finance a rehab without the tremendous risk and red tape of financing it themselves. "The key thing was that we created a system where small owners could work with a complex program," says Michael Lappin, president of the Community Preservation Corporation, which arranged loans for many of the rehabs. "All they had to do was get the job done. That allowed the city to engage the energy and resources of small businesses as they never had before"

Two federal programs also helped to bring banks and private money back to the area. The Community Reinvestment Act, which was passed in 1977 and strengthened in 1995, rates banks based on their willingness to meet the "convenience and needs" of low-income communities, and that rating is used to judge their applications for mergers and branch openings. The result, according to all the CDC officials I spoke with, has been a dramatic return of bank lending into an area that helped to popularize the term "disinvestment" back in the '70s. "There's a market here now, because there's a working-class community," sys Ralph Porter, president of the MBD Housing Development Corp. "But I'm not sure the banks would be back if not for CRA." The Low Income Housing Tax Credit, which offers breaks to private investors who become involved in poor areas, has had a similar effect since it was passed in '86. According to the National Association of Homebuilders, low-income housing credits are involved in well over 90 percent of all affordable rental housing produced in the United States. "It's brought private-sector discipline to the production of low-income housing," says LISC's Buzz Roberts. "In places like the South Bronx, it's been indispensable."

Invest in neighborhoods, not just housing. "Nobody cared what we wanted when they built this place," one resident of an East Harlem project told Jane Jacobs in 1960. "They threw our houses down and pushed us here and pushed our friends somewhere else. We don't have a place around here to get a cup of coffee or a newspaper even, or borrow fifty cents. Nobody cared what we need." In the Bronx, the city made a conscious effort to avoid this kind of callous disregard. They subsidized retailers to move in and live over their premises, on the principle that people with a stake in the neighborhood take better care of it. They rebuilt dozens of parks and branch libraries, and they worked with the CDC's to provide new residents with child care, job referrals, and other services. The investment appears to be paying off: Several large private retail chains have moved into the area in the past few years, including Rite Aid, CVS, Toys R Us, Old Navy, Home Depot, and J.C. Penny. The Bruckner boulevard, where Tom Wolfe's protagonist Sherman McCoy got lost and terrified in The Bonfire of the Vanities, is now lined with antique stores. Not far away is a new ABC Carpet and Home outlet, along with a beer bottling plant, a fish farm, and a computer company; the New York Post is also building a color printing plant.

The city also relied on the CDCs to maintain the buildings it renovated day to day, rather than managing them from a distance. This may sound like mere common sense, but from the perspective of urban planning it was a quantum leap. If you've ever walked through a low-income housing project, you've probably been struck by the impression that no one seems to be taking care of the place--the graffiti, the litter, the broken windows, the suggestion of crime on top of poverty. That's partly because the city officials responsible for it are too far away, or simply don't care what happens in the building; after all, they don't live here.

In the Bronx, the CDCs were always right around the corner--or even down the hall--and they kept an iron hand on the buildings they managed. All of them screen applicants for their buildings, usually with home visits as well as credit checks. They also monitor their tenants after they've moved in. MBD, for instance, employs "service coordinators" who check up on everyone in the building. "MBD wants to maintain a certain quality of life in the building," one MBD tenant told me. "If any tenant creates a problem, drugs, or whatever, they are told that we won't stand for it." There is plenty of graffiti in the South Bronx, but not on buildings owned or managed by CDC's. "It's not that it doesn't happen, it's that we sand-blast it off as soon as it does," says Ralph Porter, MBD's director.

Don't put too much faith in "economic development." For 30 years, federal anti-poverty policy was based on the idea that the way to revive ghettos was by bringing in businesses through tax breaks and creating a local job base. Enterprise Zones and Empowerment Zones are the most recent incarnations of that faith. The South Bronx experience suggests that when it comes to restoring the social fabric of the inner cities, economic development is less important than physically rebuilding an area.

That's not to say that new jobs aren't desirable. The South Bronx still has the highest rates of unemployment and public assistance of any area in the city, and its public schools remain among the worst. But there's no reason to believe that local employment is the answer to these problems. It's a 15-minute subway ride to midtown Manhattan, and that link is far more important to the area's future than the retailers who have come back to the area. "Neighborhood economies are fine," says Frank Bruconi of the Citizens Housing and Planning Council, which conducted the one major study to date of the Bronx revival, "but the jobs have to be reconnected to the broader metropolitan market. Without that, you're not going to have the infusion of income you need to get people off public support."

The Bronx is Up ...

The South Bronx may always be a poor area. It's not easy to draw the middle class into a place whose name is still synonymous with urban crime. There are other problems, too: Thanks to Robert Moses, the area is crisscrossed with expressways, and it has more than its share of bus depots and medical waste transfer stations. As a result, the air quality is worse than any other boroughs.

But the fact that the South Bronx will never be mistaken for Scarsdale shouldn't detract from the city's accomplishment. Perhaps the best measure of that effort has been the peaceful repopulation of the area. Despite all the talk about Giuliani's new policing policies, police in the South Bronx tend to attribute much of the dramatic drop in crime to the city's rebuilding efforts. "When people have a stake in the community, they're less likely to put up with crime," says Captain Thomas King of the 42nd precinct, which includes much of what was the "Fort Apache" territory in the 70s.

Another good sign is that many people who fled the area in the 70s are moving back. Casual observers often assume that only immigrants would be foolish enough to raise families in the South Bronx. It's true that other blighted areas of New York, such as Washington Heights and parts of south Brooklyn, have received massive waves of Dominican and African immigration in the past decade. The Bronx has had less, according to local housing groups and city agencies. Three quarters of the New York City Partnership's family homes in the South Bronx were bought by people already living in the borough. And many of the renters in the city's new buildings appear to be returned refugees. "A lot of people who moved away are now coming back," says James Anthony, a 52-year old man who moved away in 1969 when his wife put her foot down. Now they're back, living in a freshly renovated five-story building on 173rd street, just a few blocks from where they lived when the place began to burn. "I talk to people who grew up here, and they can't believe it when they see how nice it is."

There's no question that the South Bronx would not have revived if a core of resilient people hadn't stayed and proved that the place was worth saving. But it's important to remember that they couldn't have done the job without everybody's favorite whipping boy--Big Government. "I don't think [the city] has gotten its share of the credit," says Genevieve Brooks, who helped to found the CDC movement in the 70s. "No other city has made that kind of effort. They really did a fantastic job."