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The terms community conservation, neighborhood preservation, and incumbent upgrading refer to the same phenomenon: efforts to improve the physical conditions of inner-city areas with the existing population remaining in place. Interest in incumbent upgrading dates back to the 1970s when growing numbers of community activists, scholars, and policymakers advocated the conservation of the urban housing stock and the preservation of urban neighborhoods. The interest grew out of recognition of the economic value of central city housing stock, an awareness of the need to maintain the viability of the central city, and the recognition of the psychological attachments of existing residents to older areas.

It is important to distinguish incumbent upgrading from gentrification, a second type of neighborhood revitalization. Gentrification is a form of neighborhood improvement associated with the replacement of a low-income population by a more affluent one. Gentrifying and incumbent-upgrading communities are usually easy to distinguish from one another. Gentrifying neighborhoods are more likely to be located close to downtown and tend to be located closer to museums, parks, and other marketable amenities. In contrast, incumbent-upgrading neighborhoods tend to be located some distance from downtown and lack architecturally distinctive housing and other amenities. Local government plays a far more significant role in incumbent upgrading of neighborhoods.

Background

Urban renewal was the federal government's main response to urban problems from the end of World War II through the early 1960s. During the 1960s, federally assisted code enforcement programs were a major force in shifting the urban renewal program toward the conservation and rehabilitation of neighborhoods. This paved the way for the Community Development Block Grant (CDBG) program of the 1974 Community Development Act under which local communities received federal grants to carry out community development activities.

During the 1970s, incumbent upgrading programs such as Neighborhood Housing Services (NHS) and Urban Homesteading Demonstration (both national efforts) broadened their scope to deal with neighborhood problems as well as with substandard housing conditions. Key components of NHS include (a) a high degree of resident involvement in the operation of the program, (b) local government participation through capital improvements and code enforcement programs, (c) the agreement of financial institutions to reinvest in the community by making market rate loans to qualified buyers and through contributions to the NHS to support operating costs, and (d) a high-risk loan fund to families who cannot meet credit risk standards.

Spillover Effects and Program Impact

For incumbent upgrading efforts to be successful within a limited time period, they must produce neighborhood spillover effects; that is, visible housing improvements (resulting from governmental loans and grants to program participants) should make nonparticipating neighbors more confident about the future of the area, thereby making them more likely to stay and invest in housing improvements. Stimulating spillover effects and promoting greater confidence are no easy matters. The assumption by many economists that the aging of the housing stock is the key factor in explaining the neighborhood decline is clearly unrealistic and has led to an overemphasis on cosmetic housing improvements as the main thrust for neighborhood upgrading efforts. Some neighborhoods have experienced more rapid physical and social decline—measured by housing abandonment, property value declines, and increases in crime—than would be expected in terms of the age of the housing alone. In many of these areas, decline has racial and economic aspects. To be successful, neighborhood upgrading efforts must also account for demographic change.

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