Homesteading on 149th St.


THE MAYORS OF AMERICA'S cities have nothing to rejoice about this election year. In 1976 they had some hope. Jimmy Carter promised to be the first president to establish a national urban policy. He proposed a "new partnership" in government to redevelop our inner cities and place some of the burden of caring for our urban poor upon the federal government. More of America's resources, Carter promised, would be devoted to lifting urban areas out of economic distress and fiscal crisis.

Today the people who live in our cities have lower real incomes than they did twenty years ago. And as this poverty has spread, President Carter has failed again and again at putting his urban policies into action. Last Friday night the legislative centerpiece of Carter's program--a bill to double the $700 million budget of the Economic Development Administration, and permitting it to perform some of the functions of a "national development bank"--died in a congressional conference. Once again, the Administration couldn't overcome the regional concerns of numerous congressmen to rally support for a national program.

Reagan's program provides big city mayors with an even more depressing alternative. Sunday night's debate showed him unable to understand the problems that confront our cities. When Lee May of The Los Angeles Times asked him what he would do to fight the "emotional and physical" crises of American cities, Reagan responded with one of his fill-in-the-blank answers. "Get the federal government off the back of (blank)." (Choose one:a) business, b) local governments, c) the American family, d) the oil companies, e) all of the above.) Reagan chose letter "b."


The Reagan plan would turn "back tax sources to the state and local governments as well as the responsibility for these program." In other words, cities would pay all the welfare costs of their poorest citizens and cover medicaid, mass transit, educational and numerous other expenses as well. Somehow, this program is supposed to bring America's cities out of fiscal crisis.

OF COURSE REAGAN plans to give cities jurisdiction over new tax sources to help pay for these hefty burdens, but he doesn't realize that cities have limited tax bases, and that to pay for the services needed by the urban poor, municipalities must reach beyond city and regional boundaries. The booming economy of Reagan's Southwest is the other side of the equation of shifting industrialization that has caused decay in the Northeast and upper Midwest.


When confronted with this issue. Reagan only spouts rhetoric. Sunday night, the Republican nominee devised an utterly nonsensical explanation of our government's inability to respond effectively to urban problems. "New York is being taxed for money that will go to Detroit," claimed Reagan, "but Detroit is being taxed for money that, let's say, will go to Chicago, while Chicago is being taxed to help with the problems in Philadelphia." Reagan failed to mention that while these cities are being taxed and then granted federal dollars, the federal government is also collecting revenues from affluent suburbs surrounding them and from relatively well-to-do regions like the Southwest. He overlooked the raison d'etre of a national urban program--to funnel tax revenues from affluent, non-urban communities into poverty-stricken inner cities.

In Sunday's debate, Reagan also outlined his plans for an "urban homesteading" act, a plan to make our inner cities the new "American West." Yet like most of Reagan's proposals, this romantic notion is marked by simplicity rather than substance. The urban homesteading program would let inner city residents buy government-owned, vacant and delapidated buildings for one dollar provided that they rehabilitate them and then move in. This sounds nice but it doesn't work. Put simply, the impoverished homesteaders cannot afford to pay the expensive rehabilitation costs of vacant buildings. Even homesteading programs coupled with generous mortgage subsidies may run into difficulties. In New York City, where such programs exist, homesteading still proceeds at an excrutiatingly slow pace. Of the 50,000 vacant and mostly city-owned housing units in the South Bronx, for example, only a handful are being renovated by homesteaders.

Surprisingly, Reagan has stumbled into one fairly good idea about how to bring businesses back into distressed urban areas. His endorsement of the Kemp-Garcia bill proposes to set up tax free zones in areas like the South Bronx. It represents a move toward a more active use of the tax incentive in urban renewal efforts. Tax incentives can help, but Reagan overestimates just how much. Even Rep. Robert Garcia, who sponsored the legislation, thinks that his bill alone cannot revitalize the South Bronx.

Many incentives to locate businesses in decaying inner cities, such as the abatement of state and local taxes and rock-bottom market values of land already exist in our slums. A factory owner can buy a square foot of industrial loft space in the South Bronx for two dollars per square foot. For the same price, he could only rent this much space for one year in northern New Jersey.

Despite these in-place incentives for the private sector to rush to the aid of the inner cities, industry has not saved areas like the South Bronx. "Where has the private sector been, Governor Reagan, during the years that our cities have been deteriorating" asked John Anderson Sunday night. Companies have stayed out of slum neighborhoods for the same reasons that they moved out in the first place. Businessmen fear for the security of their investment against thieves and vandals. They question their ability to get highly skilled workforce supervisors to work in these areas, and, in the case of companies that have moved totally out of the Northeast or upper Midwest, businessmen shy away from the higher energy and personnel costs that come with operating in the North.

TAX REDUCTIONS ALONE cannot offset all these forces. When combined with cutbacks in federal aid to distressed urban areas, they can only contribute to the long-range fiscal plight of America's cities by sealing off tax revenues for years to come. But when used alongside other governmental efforts such as federal loans, loan guarantees, interest subsidies or direct public sector development, and when used in the right amounts at the proper time in the right neighborhoods, the tax breaks can help turn our cities around. Only John Anderson puts the tax break in this more accurate perspective. Jimmy Carter rejects the idea totally. Ronald Reagan unrealistically views it as a panacea.

The Anderson program calls for combining strong tax incentives in "enterprise zones" with a more traditional national urban policy that focuses on initial public sector investments; the plan aims to convince businessmen of the advantages of locating in city centers. Anderson has discussed establishing urban reinvestment trust funds with $8 billion in federal funds circulating into cities. This sounds very much like the Carter program proposed three years ago. But two special challenges confront John Anderson. The first is to bring his independent candidacy to the White House. The second would be to convince Congress of the need for a strong, national urban policy.