Challenge created on the homefront

WASHINGTON — Love, social equity and shelter. With those ideals, the Rev. Jim Dickerson in 1982 founded Manna Inc. to provide housing for people in crime-ravaged, sometimes burned-out neighborhoods of this capital city.

Manna and Dickerson are still on the job, boasting a record of nearly 1,000 housing units under ownership along once-decaying streets.

But the real-estate world Manna operates in has turned upside down. From a city in flight, Washington has turned into one of the world's hottest residential real-estate markets. In earlier years, Manna was a buyer of last resort. Now it has to compete with hot-to-go investors.

Gentrification — a middle- to upper-class remake of the inner city — is gripping multiple Washington neighborhoods. The influx of empty nesters and young professionals with a taste for urban variety and excitement is also impacting cities ranging from Boston to Los Angeles, Atlanta to San Francisco.

The new challenge: to keep affordable housing for low- to middle-income people, ranging from single mothers just off welfare to aspiring teachers, police officers, firefighters and clerks. All are being squeezed by building conversions, escalating rents and property tax hikes in the suddenly chic, newly targeted neighborhoods.

So what's to be done? One answer is inclusionary zoning — a requirement that a certain percent of units in new residential properties be made available at reduced rates to people with limited incomes — especially if government had any hand in the land transfer.

Washington's new mayor, Adrian Fenty, has declared inclusionary zoning a mainstay of his housing approach. And it's gaining popularity in New York, Chicago, Los Angeles, Madison, Wis., and other cities.

Community land trusts, which enable nonprofit organizations to take land off the market and reserve it for construction of units for low-income people, are also starting to emerge. The trusts work especially well if they're begun when land costs are still reasonable — in other words, before serious gentrification hits a neighborhood.

But there's a serious problem. If a low-income person gets reduced-price property in a hot neighborhood, officials fear he (or she) may "flip" it, walking away with a sudden windfall. The unit's price would then rise to a much higher price, "unaffordable" to other buyers.

To prevent that, zoning commissions and housing authorities are limiting the capital gains and resale flexibility of low-income buyers — and far too severely, Dickerson argues.

But, he adds: "Make the restrictions too severe and you lock the low-income person into an economic ghetto, so he can't get a home-equity loan, can't use the asset for tuition, for the wealth-building that's the secret of the American Dream.

Dickerson's position — shared by leading community-development corporations across the country — is that steps beyond mere shelter are critical because, for Americans, homeownership is the bedrock of the savings and wealth creation that let families pass on assets, and a head start on life, from generation to generation.

The issue is especially poignant for many of the families of color that the community development groups serve. Critics note that African-Americans in particular were "frozen out" of the landmark asset-building opportunities of American history starting with the Homestead Acts in the 1860s. Depression-era federal homeowner default protections effectively "redlined" (excluded) high-risk (i.e., poor and black) neighborhoods. Post-World War II low-interest, long-term loans for first-time buyers were channeled overwhelmingly to suburbs and away from city centers and their heavily African-Americans populations.

One result, notes Dalton Conley, chair of New York University's sociology department, is that the typical white family in America today has a net worth 10 times that of its nonwhite counterpart. "This 'equity inequity,' " he notes, "has grown in the decades since the trumpeted civil-rights triumphs of the 1960s."

"Building wealth" — increasing poorer Americans' assets through CDCs, employee stock ownership and similar devices — is America's best hope, argues social activist Gar Alperovitz in a recent Aspen Institute report.

"Today the top 1 percent of Americans own 50 percent of our investment capital — a medieval difference," Alperovitz warns. "Either we find alternatives ... or we're in great trouble."

The irony is that practically no one has ever mentioned — until today's gentrification wave — the possibility of inner-city housing as a seedbed of wealth for Americans who've never had it.

Neal Peirce's column appears alternate Mondays on editorial pages of The Times. His e-mail address is nrp@citistates.com