The American dream

14/11/2008

It was a momentous experience: 10 days spent campaigning for Barack Obama in his triumphant bid to become 44th President of the United States.

Our bout of canvassing and meeting with election officials in Baltimore, Maryland and Toledo offered a detailed insight into the housing problems faced by Americans. But we also saw solutions – could some of them work in the UK?

Most of our election work took place in poor African American or white neighbourhoods. They share some common features, particularly in Baltimore. The city has a long history of jazz, with Louis Armstrong and Billie Holiday among those starting their careers there. The TV series Homicide – Life on the Streets and The Wire feature accurately some of the tough areas of a city of contrasts. Its downtown harbour neighbourhoods have been developed or regenerated for the benefit of tourists, yachting enthusiasts and up-market flat-dwellers.

But just a short distance away the environment is very different – boarded- up and abandoned homes, drug- related crime, fortified corner shops and chronic unemployment. There are high rates of infant mortality and teenage pregnancy.

In Baltimore the white population has moved out of the inner-city areas to the suburbs. Other groups have followed – Jewish people, Poles and Germans occupy their own distinct areas.

African Americans have moved into the areas vacated by white people. As a result of the high levels of drug dependency – there are an estimated 60,000 heroin addicts in the city – and HIV and AIDS, an ‘underclass’ has been created where residents feel a degree of hopelessness and antipathy towards society. This underclass, with black and white communities in different areas, is living under a type of apartheid.

But suburban neighbourhoods also feature boarded-up homes, the result of bank repossessions following subprime mortgage defaults. In Toledo we saw two garage sales from families selling their possessions before foreclosure.

Some of the approaches adopted in the US to tackle inner-city deprivation are striking. For example, community- based organisations take a holistic approach, combining regeneration (or ‘beautification’) with job creation, community initiatives and voter registration.

The US system allows the local authority automatically to acquire abandoned and derelict properties under ‘imminent domain’, a cross between compulsory purchase orders and other rules which allow the state to acquire abandoned property in England and Wales.

The abandoned home or vacant land is then sold for $1 to either private individuals or not-for-profit organisations on condition that it is refurbished or redeveloped for low-cost rental or homeownership.

Meanwhile, as has happened in the UK, high-rise affordable rented housing is being demolished and redeveloped in an attempt to stifle social problems.

Developers and philanthropists are building new affordable housing for rent, with the not-for-profit sector managing them. This sector can access public funding via corporate bonds issued by the local authority at rates which replicate the London capital markets in normal times.

There is no equivalent tax to VAT on renovation costs – indeed there are tax breaks, including some for construction up to the equivalent of £75,000. Finally, repossessions have spawned a string of unsavoury TV adverts for abandoned properties costing no more than £500, giving buyers the opportunity of very high profits when the market recovers.

Transatlantic learning

Interestingly, the wealth of one of the UK social housing movement’s founding fathers, George Peabody, was created largely in mid-19th century Baltimore and his philanthropy there solely benefited the arts. Fortunately, England benefited through his housing vehicle, the eponymous Peabody Trust.

Barack Obama’s election as president has created high expectations, among them changing the aspirations of the urban underclass – both black and white – a demographic only too apparent in Baltimore and Toledo. The President-elect’s rise has strengthened the role of community leadership and structures in America, exemplified by several leaders we met who were committed to a whole range of holistic local initiatives, despite lack of adequate public funds.

For example, Baltimore and Toledo host bond-financed industrial and commercial regeneration schemes to create jobs. In Fells Point and Canton – Baltimore’s former tinning area – there are small industrial and commercial units for young entrepreneurs, particularly in the high and bio-tech fields, as well as family centres offering a range of services for residents.

Churches also play a strong role. Many stand on street corners and encourage small-scale regeneration, levering in a range of funding. This pays for low-cost homeownership through reduced loan interest rates for low and middle income families, as well as drug treatment programmes. US city economies depend on the creation of richer neighbourhoods, to increase essential income from property taxes.

So will the 44th President bring change for the better? Some of the privately owned housing in Baltimore is reminiscent of the UK’s slum clearance programmes of the 1970s and 1980s, but here there are no firm plans for redevelopment. Yet there is evidence of ‘beautification’ by not-for-profit organisations, coupled with the creation of grassroots community self-help groups.

Perhaps more importantly for these areas, Obama’s election encouraged massive voter registration – not compulsory in the US – among African Americans and young people, who have been energised by his call for change. There are expectations that he will legislate to stem foreclosures, provide increased funding for run-down inner-city areas and give hope to severely deprived areas.