One of the core problems I often hear about community development, economic development or real estate in general, is the over-reliance on increasing the underlying market value of property to attract capital to disinvested communities. Researchers like Andre Perry have made important strides over the past few years showing that real estate in Black communities tends to be undervalued because the people living nearby are mostly Black. Financial regulators are finally starting to grapple with that as an unacceptable reality that needs to change. Land should not be worth less simply because Black people live on it or near it. But that’s a separate question from reexamining the traditional economic development mechanism of buying a property, finding the most valuable use for it from a market perspective and extracting profits as a “reward” for redeveloping that property. There are other ways to attract capital for economic development. Maybe they could be easier, but I think it’s worth pointing out examples like this one where the developer has “exited” without extracting a financial profit after doing what the community asked them to do.
What do you think? Do cities depend too much on developer profits for economic development? I’d love to hear from you at oscar@nextcity.org.
— Oscar Perry Abello
Senior Economics Correspondent, Next City
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