Dan Reed is an urban planner and writer sharing today's guest article on strategic investment to uplift low-income neighborhoods. For more stories and resources on small scale development, visit this page.
"Most of Portland is shotgun house, shotgun house, shotgun house," Gill Holland says of his home base.
It’s a riverfront community on the far west side of Louisville, Kentucky that may have the nation's largest collection of these 19th century, one-room-wide houses outside of New Orleans. For over two centuries, the neighborhood — once its own city — was a port of call for Americans traveling west: Lewis and Clark stopped there, as did Abraham Lincoln, Aaron Burr, and Henry Clay. Holland’s office is in a converted Boys and Girls Club where Muhammad Ali used to play.
It was a working-class community, whose residents walked to work at warehouses along the water, but after two catastrophic floods in 1937 and 1945, people and investment sought higher ground. Today, the area has some 1,400 abandoned buildings, many of which are shotgun houses.
So far, Holland's Portland Investment Initiative (Pii) has renovated 18 abandoned shotgun houses, which he’s renting out as affordable housing. He's also working with locally renowned architects to build new shotgun houses nearby.
“I talk a lot about urban acupuncture,” Holland says. “The one strategic investment that takes away the negative effect and adds a positive ripple effect.”
The typical urban redevelopment story goes like this: the city decides it wants to "revitalize" a downtrodden neighborhood; assembles a massive piece of land, sometimes by displacing existing residents or businesses; and invites an equally large user to put something there like a sports stadium, a convention center, or a shopping mall.
But in cities and towns around the United States, investors big and small are taking a different path: one house, one block at a time, in neighborhoods where banks won't venture but residents are willing to put in time and effort to bring these places back. The stakes may seem lower, but the end result is a stronger, more resilient community and local economy.
Holland, a film producer and owner of a record label who moved to Louisville in 2006, already had a reputation in Louisville as the developer who restored The Green Building, a dry goods store-turned-LEED certified office complex. That $13 million project helped transform an area called NuLu from a commuter route to the suburbs to a nationally-renowned retail district, bringing in $150 million in spillover investment.
He turned to Portland when he realized that “NuLu didn’t need an impact developer anymore,” and looked west of Ninth Street, the city’s historic dividing line, to Portland. Other than the shotgun houses, he’s also redeveloping old warehouses into cultural and dining destinations, and helping to support locally-owned businesses in the neighborhood’s existing commercial district.
Six hundred miles away in Rochester, New York, engineer Jim Fraser had been interested in preservation for a long time and wanted to find a place where he could make an impact. "I was looking for a place that had a lot of raw material, a lot of housing that needed me," he said.
After searching across the region, including some rural villages, he selected El Camino, a longtime immigrant enclave on the city's northeast side. It began as an Irish community in the early 19th century, followed by “subsequent waves of Italian, Jewish, Ukranian, and Polish people,” he says, and more recently Latino immigrants. In recent years, the neighborhood has struggled economically, but a new rail trail, also called El Camino, is bringing new interest to the area.
Since he started in 2002, he's rehabbed six houses, working with his investor partner, and rents them out at affordable rates. Both investors pay all cash, as banks won’t lend money to buy or repair these homes.
"I always buy hopeless cases," Fraser says. "We buy the stragglers, the ones slated for demolition." In some cases, he's convinced the City of Rochester to sell houses at auction instead of knocking them down, and he’s been the only bidder on that property. "They just don't bid on ours, that's an indication of how hopeless they are.”
Holland pays $5,000 to $10,000 for each house ("We buy the worst house on the worst block," he says) and puts about $75,000 of work into each one. But in a neighborhood where the average property value is $28,000, banks won’t lend people to buy his houses. So instead, he rents each house for about $650 per month and, after ten years and a 10% return on their initial investment, he'll transfer the title to the tenants.
"One of our tenants was like, 'We'd love to buy this house.' We said, 'We'd love to sell you this house, but we can't take a loss,'" Holland says. (Fortunately, that tenant was able to get a no-down-payment loan from a local nonprofit.)
He also intentionally restores a single house on each city block. Not only does this spread new residents and activity throughout the neighborhood, but it also raises the comparable sales for other houses, allowing other residents to benefit from the rising property values. “We need to bring the property values back up to a more rational amount,” he says. “A lot of people’s equity has dissipated over their lifetimes.”
These efforts have allowed both Fraser and Holland to make a living while enriching their communities, and becoming a part of them.
When Fraser got laid off from his engineering job five years ago, he began working full-time, and the business started breaking even. He now lives in El Camino, having moved from a more established and stable historic neighborhood called Corn Hill. "I can look out the window and see a couple of my houses," he says.
That presence in the community also allows him to build relationships with his tenants, who are predominantly low-income and may have financial challenges that bigger landlords may not be sympathetic to. "If something happens, the car breaks down or their employer doesn't turn in a time card, they've got a problem," he says. "Because they're here, I can deal with them as neighbors. It flows more smoothly, I think."
Fraser also became an integral part of a blogging urbanist community in Rochester, that promotes the city’s culture and history, including its abandoned subway system. Together, they helped build the case for a new project; restoring a former retail building with apartments above. For 10 years, they lobbied the city, which owned the building, to sell it to Fraser; they did research on Claritas, identifying the community’s retail needs. Fraser realized there was an opportunity to provide goods that local residents could buy and take home without a car. "As soon as you get in your car, you're not going to go to some local store, you're going to go to Walmart," he says.
But the city owned the building, and local representatives weren't receptive to Fraser's plans to bring it back to life. The building was demolished in 2017. "We're still fighting a top-down mindset from City Hall today," he says. "The City keeps coming up with stuff it wants to come into our neighborhood and do, and it's not letting us drive it."
Holland thinks that local governments are missing out on a huge opportunity to work with private sector individuals to leverage the huge public investments they've already made. "We own the water company, we own the sewer company, we've already invested tens of millions of dollars to service 8,000 vacant properties," he says. "All these opportunities to use this public infrastructure: More jobs are created, more materials are reused, when you renovate old buildings. There's a link to job training, skills training.”
“There's not enough money in government, and there's not enough money in the non-profit sector,” he adds. “Until you get the big chunk of change in the private sector, it's not going to turn around."
Both Holland and Fraser see themselves as working to help their cities grow in a way that’s both financially and socially sustainable. "It's easier to work on a place when it's your own neighborhood,” says Fraser. “It kind of reinforces the idea that you're benefitting yourself, you're putting that effort in."
“We want to make [Louisville] better and not just bigger, and to include equity for all, so that everybody can share in the looming prosperity,” says Holland. “There's like $9 billion in construction happening in Louisville now, it's off the hook. But we also have 30,000 families on the affordable housing waitlist."
(All photos from Portland Investment Initiative Facebook page)
About the Author
Dan Reed is an urban planner and freelance writer. He writes regularly for the Washingtonian, Greater Greater Washington, and his blog, Just Up the Pike. He's also an agent at Living In Style Real Estate and sits on the board of the Action Committee for Transit. Dan still gets a full night's sleep. He lives in downtown Silver Spring, Maryland.