Ralph Martyr | Old American Policies Helped Create the Blight of Today’s Neighborhoods | Columns
It should come as no surprise to anyone that vacant and derelict properties, which are located in all parts of the state, are a major economic and societal problem. After all, nothing good happens on an abandoned property. Too often, vacant and derelict structures become centers of crime. They also reduce the value of adjacent properties and make it extremely difficult to reverse long-term cycles of concentrated poverty in communities that have historically suffered from economic hardship.
What may surprise the general public is how official US government policy over 80 years ago contributed to the plague of vacant properties that the nation in general – and the Greater Chicagoland area in particular – knows today. But that reality was laid bare in a recent report released by Cook County Treasurer Maria Pappas, titled “Maps of Inequality: From Redlining to Urban Decay and the Black Exodus.” According to this report, the discriminatory federal housing and mortgage policies of the 1940s had a number of lasting consequences.
For example, they played a fundamental role in the segregation of African Americans into economically disadvantaged and/or environmentally dangerous communities. They also dissuaded banks from providing market-based mortgages to middle- and upper-income African Americans. These openly racist policies then combined to create the economic conditions that have resulted in the vast majority of Cook County properties – which are currently subject to the biennial treasure sale for delinquent taxes overseen by Pappas’ office – being become vacant or abandoned in the first place.
What’s really sad is that it should already be common knowledge that federal, state, and local housing policies are responsible for all of this economic inequality and deprivation. For an introduction to how it happened, look no further than Richard Rothstein’s book, “The Color of the Law,” which should be required reading in all high schools. In it, Rothstein details how the Federal Housing Administration, established in 1934, included a “whites only” requirement for mortgage underwriting, making racial segregation and discrimination the official law of the land.
One of the vehicles the FHA created to ensure that federal housing assistance would not go to African Americans in general, or desegregated developments in particular, was the Home Owner’s Loan Corporation or “HOLC”. Among other things, the HOLC has created a series of color-coded maps that are supposed to delineate the creditworthiness of communities in each metropolitan area in the United States.
Communities ranked as having the safest credit risk by the HOLC were designated as green; blue areas were deemed desirable; yellow areas were judged to be in decline and of questionable credit value; red areas were definitely labeled as poor and undesirable credit risks.
The HOLC called a community red and therefore an adverse credit risk if it was inhabited primarily by African Americans, even if they were solidly middle class. Rothstein cites an example from St. Louis, when the HOLC classified the middle-class white suburb of Ladue as green because it had “not a single foreigner or nigger,” but classified the similar-class suburb average African-American Lincoln Terrace as red “due to the colored element controlling the neighborhood”.
This racist approach to housing policy has been followed in every corner of America. Over time, this has not only made it difficult for African Americans to obtain home loans and therefore begin to build property and generational wealth, but has also deterred businesses from settling or investing in demarcated areas, creating a downward economic spiral. This downward spiral has been exacerbated by state and local policies that have effected exclusionary zoning, and not only permitted but enforced race-based covenants in private home sales for generations.
Fast forward to today. Pappas’ study found that of the 27,000 odd distressed properties listed for sale in Cook County, 97% were located in communities classified as red or yellow by the HOLC in the 1940s.
In other words, communities targeted by official US policy for both racial discrimination and economic divestment.
Knowing all of this, it becomes clear that it is incumbent on the public sector – at each of the federal, state and local levels – to implement policies designed to repair the economic and social damage perpetrated by previous law.
Ralph Martire is executive director of the Center for Tax and Budget Accountability, a bipartisan fiscal policy think tank, and Arthur Rubloff Professor of Public Policy at Roosevelt University.