At the gracious invitation of Reed Weinberg of PRG Investments (with whom I have discussed architectural preservation in the past), I attended a symposium last Wednesday featuring local developers Steve Poe and Gill Holland. The conversation touched on many local economic issues, but much of the focus was on the West End, specifically Holland’s efforts to spark a renaissance in Portland.
Holland’s enthusiasm for Portland is infectious. He now works there and approaches the topic from the perspective he gained successfully restoring properties along the East Market corridor. But there are important differences between NuLu and Portland that I think often get lost in the hype.
East Market, as Holland pointed out, is a major, direct transit route between downtown and wealthy areas like Crescent Hill and the Highlands. Thousands of people with significant disposable income pass through the NuLu area every single day.
To the west, however, the only direct, out-of-downtown thoroughfare is West Main, Portland’s southern border. Portland Avenue is an offshoot of Main, not a direct route, and Bank Street runs one way in the other direction. On West Main and Portland there is traffic, but less than on East Market, and the people who travel between downtown and anywhere in the West End, in the aggregate, have less money to spend on kitschy knick-knacks or expensive coffee.
Likely because of this difference, Holland’s pitch for Portland is less about traffic and more about low overhead. “New ideas need old buildings” he said, because young companies face fewer hurdles when their rent is low. There is no doubt about that, and it’s a good way to promote architectural preservation, too. He also encouraged the crowd of professionals in attendance to actually move there because decent houses are cheap, too.
But successful investors need more than a low bar to entry. They also need reliable returns. Housing prices are impacted by numerous factors such as geography, crime, racism, classism, and historical trends. Renovation costs are not. The forces that work to stifle housing value in Portland are also the forces that make extensive renovations simply not worth the effort. Why spend tons of money to fix up a house if the resale value barely budges?
This financial barrier to outside investment is felt more severely by people who already live there. Wealth begets wealth, after all. It is easy to find financing for expensive improvements when the value of your home is $200,000 or more and a return on resale is likely. But if your home is valued at $35,000, you might as well not bother, and most people already living in areas like Portland don’t. It’s not because they’re lazy or suffer from some kind of social pathology. It’s because the math just doesn’t work.
Part of Holland’s pitch illustrated this vicious cycle. He noted that in Portland, home to roughly 12,000 people, there is not one sit-down restaurant. He didn’t explain why he thinks that is, but I doubt it’s for lack of local creative thinking. It can’t be because nobody in Portland ever thought to start one.
How many Portland residents have walked into a bank seeking a business loan but were rejected? How many wanted to start a restaurant or other company but never could because they simply lacked the equity, savings, or some other safety net? The forces that stifle incomes and home values in Portland and the rest of the West End also stifle demand, which prevents new local businesses from being launched for lack of founder resources and a vibrant customer base.
Holland’s call for a migration of people with means to Portland also raises the specter of displacement that accompanies all gentrification efforts. What happens to people who already live in Portland when hundreds of people from wealthier neighborhoods move in? In cities like D.C., the accompanied rise in demand (and therefore rent) in central neighborhoods has forced poor, longtime residents out.
Shuffling people with resources from one neighborhood to another is not a viable economic revitalization strategy for the city as a whole. There aren’t any real net gains. You haven’t raised anyone in Portland out of poverty – you’ve simply made them move somewhere else while outsiders who already had financial resources get richer. And the displaced won’t be filling in the gaps their new neighbors left in the Highlands or Crescent Hill, either. They can’t afford to move to places like that.
We need only to look at NuLu’s narrow success for a preview of Portland’s gentrified future. East Market’s rebirth as a commercial corridor was due much to the displacement of its poor tenants. Clarksdale was demolished and Wayside Christian Mission was bought out. The neighborhood is now thriving without most of its traditional residents enjoying any of the benefits. In other words, the resulting success of NuLu is not a sign that Louisvillians, as a whole, are better off now than they were before.
Poe, to his credit, acknowledged some of the structural problems holding Portland and other West End neighborhoods back. Industrial abandonment, urban renewal, redlining, prejudice, and other factors keep the thousands of people already living in those places from improving their own economic situation.
And Holland made a good point about how we can break these barriers: Government is happy to spend a lot of money on big projects like the Omni Hotel, but hundreds of smaller investments spread out would do more to help the city as a whole.
If Portland and the rest of the West End are to enjoy a true renaissance, it must be sparked by the empowerment of existing residents. It can’t be imposed by a few outsiders buying up cheap lots and flipping them, displacing locals in the process. It requires a collective effort with government leadership. Speculators can invest and enjoy returns, but if the city is to improve as a whole, everyone must reap the benefits of neighborhood revitalization.