CDBG Hits the Target in Richmond

Monday, September 12, 2005

A study commissioned by the Federal Reserve Bank of Richmond and the Local Initiatives Support Corporation has found that the City of Richmond's 1999 decision to concentrate its Community Development Block and HOME spending in just seven areas of the city has demonstrated that "even relatively uncompetitive, disadvantaged neighborhoods can be revitalized if public and private investments are predictable, sustained and spatially targeted."

[Photo 1: Neighborhood revitalization in Richmond]

The study � conducted by a team from Wayne State University, Virginia Commonwealth University and The Urban Institute � was released on Monday, July 11th, in Richmond and examined the City's Neighborhoods in Bloom program under which it has concentrated some 80 percent of its Federal housing aid as well as private housing subsidies like LISC lines of credit, loans or grants to 7-to-12 square block areas in the target neighborhoods.

As a result of the Neighborhoods in Bloom investment targeted investment strategy, the study found that:

  • Housing prices in targeted Neighborhoods in Bloom areas appreciated almost 10 percent faster than the citywide average.
  • A spill over effect in areas within 5,000 feet of target neighborhoods showed an increase in housing prices at a rate of 5.3 percent faster than the citywide average.
  • The most significant home price impacts occurred at a threshold investment of about $20,000 per housing block when invested annually for five years.
  • Home sales prices in the targeted areas that had "averaged less than half of the citywide average" before Neighborhoods in Bloom began "averaged 70 percent of the citywide price average" four years into the program.
  • Increases in the aggregate value of tax assessments in target areas of between 44 and 63 percent.
  • During the first three years of the program, the crime rates in the targeted areas fell almost three times faster than in the city as a whole.
[Photo 2: Detail of a house being renovated]

The study's "impressive results," commented Dr. Theodore Koebel of the Virginia Center for Housing Research at Virginia Tech, "should prompt community leaders elsewhere to seriously consider this approach to neighborhood improvements."

Copies of the study are available online from the Federal Reserve Bank of Richmond at www.richmondfed.org/
 
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