© 2011 Pearson Education, Inc. H4/26/12 Urban Challenges (Ch – pp )

© 2011 Pearson Education, Inc. I. Inner-city Physical Issues A. Deterioration –Most significant problem is deteriorating housing –Old housing, often built before 1940 (pre-war) 1. Filtering – subdividing of houses into smaller apts. –Little incentive for absentee landlord to maintain –Often leads to rapid de-population 2. Redlining – banks refused to give loans to certain areas –Illegal under Community Reinvestment Act

© 2011 Pearson Education, Inc. I. Inner-city Physical Issues B. Urban Renewal cities identify blighted areas, demolished buildings and rebuilt Often given to private developers Often ruins continuity of neighborhoods –More prevalent in 1960s & 1970s –Sometimes referred to “Negro Removal” b/c of removal of African-Americans from poorer neighborhoods –1. Public Housing (“projects” or “PJs”) Reserved for low-income households –Only ~1% of housing in U.S., higher in Europe Partially subsidized by federal gov’t –Often high-rises which became quite dangerous & run-down –Many demolished recently & replaced w/ smaller housing

© 2011 Pearson Education, Inc. I. Inner-city Physical Issues –2. Renovated Housing (gentrification) Alternative to demolishing housing Often costly but funded by nonprofits Often attracts m-c –Sometimes cheaper than suburbs –Often older w/ unique traits & “good bones” Most renovations occurred recently Located near recreational activities Impacting ethnic patterns –White population increasing recently Cities encourage through low-cost loans & tax breaks –Eventually increases tax base –Must pay part of fees for forced removals

© 2011 Pearson Education, Inc. Racial & Ethnic Change in Chicago

© 2011 Pearson Education, Inc. II. Inner-city Social Issues –A. Underclass Permanent group of poor people An unending cycle of social and economic issues –Often attend deteriorated schools –Often lack marketable skills Homelessness account for part of underclass –May be due to simple poverty –In other cases, due to personal or family problems –B. Culture of Poverty Disproportionate # of single mothers Often poor health service –Little financial incentive to marry by gov’t Drugs & violence

© 2011 Pearson Education, Inc.

III. Inner-city Economic Issues –A. Eroding Tax Base Not enough tax revenue to continue services –Cities can either reduce services or raise taxes Helped in mid-20 th C. by federal funds –Have decreased since 1980s

© 2011 Pearson Education, Inc. III. Inner-city Economic Issues –B. Impact of the “Great Recession” Triggered in part by housing market collapse High-risk mortgages to low-income home buyers –Often given to buyers w/ poor credit history –aka “subprime mortgages” Many financial institutions invested in subprime loans –Deemed less risky than other investments Led to great number of foreclosures (bank takes over mortgage when unable to pay) Housing prices decreased (hit peak in 2006)

© 2011 Pearson Education, Inc. Foreclosures in Baltimore