The Ongoing Violence of Redlining

A community examination of how redlining still uphold the cycles of extraction and exploitation today

Redlining refers to practices of racist policies by which communities of color were economically excluded for investment by lending institutions, real-estate industries and all levels of government. These policies were enacted through the National Housing Act of 1934 and the concurrent establishment of the Federal Housing Administration, which helped codify decades of earlier exclusionary zoning into the policy of redlining, and was developed as part of an initiative to develop the first underwriting criteria for mortgages.

 

In 1935, the Federal Home Loan Bank Board (FHLBB) asked the Home Owners' Loan Corporation (HOLC) to create "residential security maps" for 239 cities. Between 1935-38, redlining--the long-standing financial practice of excluding communities of color from public spending and access to capital-- began. Redlining both codified a history of racist disinvestment of money, jobs, and other resources away from Black and Brown communities, and then used this same system of exclusionary zoning to keep historically divested neighborhoods (like ours) as a target of extraction and exploitation. 

 

By the 1930’s, exclusionary zoning was already the guiding principle of urban development from the early 20th century. While redlining began in the racist legality of segregation and exclusion, the legal prohibition of redlining ended with the passage of the Federal Housing Act of 1968, shortly after the assassination of Dr. Martin Luther King Jr.  While it may be true that the Department of Housing and Urban Development states that "The Fair Housing Act makes it unlawful to discriminate in the terms, conditions, or privileges of sale of a dwelling because of race or national origin”, the reality that many face in our community does not match this legal claim. While on paper, redlining and housing discrimination became technically illegal in 1968, investors, developers and real-estate industry responded by turning segregation and exclusion into “predatory inclusion”, described by American academic, writer, and activist Keeanga-Yamahtta Taylor in her 2019 book “Race for Profit. In “Redlining, Predatory Inclusion, and Housing Segregation” by Paige Glotzer, a look at Taylor's "Race for Profit," Glotzer reminds us that predatory inclusion started after redlining ended, and was purposely designed to where:

 

 “(...) Black Americans, low-income renters, and welfare recipients who were long shut out of the conventional housing market gained access to it on bad terms. Beginning with the Federal Housing Administration’s adoption of Section 235 and the subsequent passage of the HUD Act in 1968, the government created a public-private framework that insured unregulated mortgage banks against loss. Operators who profited from volume sales steered potential homeowners toward heavily marked up substandard structures where the buyer took on fee-laden debt. On paper, the new federal programs reversed decades of legal residential segregation by expanding homeownership opportunities. Yet the policies did little to challenge how the real estate and lending industries factored race into property value. As a result, the policies expanded a market already configured for white people to build wealth from homeownership and for low-income Black homeowners to be targeted for wealth extraction.

 

This predatory inclusion set up communities of color for loans with bad terms and further extraction and exploitation. It was this same predatory inclusion that eventually led to the burst of the subprime housing bubble and the resulting foreclosure crisis of 2007-08. Glotzer writes that  “(...) Areas that had been redlined bore the brunt of foreclosures after being flooded with bad credit. In this case exclusion and inclusion was both sequential and concurrent; first redlining starved areas of credit, creating conditions for financiers to reap profits from offering easy subprime credit as the only option. Lenders then steered African American buyers into subprime loans, creating second-class pathways to homeownership even when they qualified for cheaper options.”

 

Although redlining is traditionally understood and discussed as a static phenomenon &/or institutional policies by banks/cities that happened primarily between the 1930s-1960s, the reality is that the violence of redlining never ended. While redlining was “legally” prohibited by the 1960’s, the exclusionary zoning of redlining continues to set the community up for extraction, dispossession and exploitation. The underlying characteristic of racial capitalism is that in order to create value, it must be extracted. So while redlining may have been legally prohibited more than 50 years ago, exclusionary zoning became the underwritten policy of municipalities to keep historically divested neighborhoods in a cycle of devalorization. In today’s market, this means that involuntary displacement of the majority of our neighbors then becomes the market’s logical conclusion for creating greater profit-motives and surplus value for investors, at the cost of our future. When investors and developers seek great profit-motives from opportunities that rise from the lost value that come in the wake of the devalorization cycle, neighbors across the community again bear a disproportionate instability, stress, displacement and trauma by the destabilizing factor of rapidly rising rent gaps created by the seldom named price-shadowing effect of investments and speculation of property values:

 

Since 2013, billions of public funds have poured into the I-70 redevelopment and the National Western Center redevelopment, tearing apart the stability of our neighborhoods. The impact on neighbors in Globeville and Elyria Swansea (GES) has meant shouldering another disproportionate burden of these public and private investments. Between 2008-2018, our neighborhoods saw a 550% increase in property value, and 500% increase in property taxes, nearly three times the city average. The extractive model of development, as it exists today, drives and feeds off of this cycle of exploitation and devalorization. Instead of benefiting our neighbors, these types of investments and developments put current neighbors at odds with this kind of business model, because the price-shadowing effect of putting billions into new investment into redlined communities--  historically divested and exploited neighborhoods-- creates an extreme rise in land value, which is currently threatening to displace nearly 9 out of 10 homes across the neighborhoods today.  These extreme rises in property values and rent gaps are pushing us out of our homes and are traumatizing for our communities.

 

Like redlining, today’s housing and land use policies are facilitated through government, real-estate and banking transactions,  and are often supported through the creation of public subsidies, incentives, and public private partnerships (P3s). It is these state-created incentives that allow investors, property-holding firms, private development businesses and corporations to take advantage of historically divested areas (like our neighborhoods) and take advantage of divested values in order to exploit profit-motives through the devalorization cycle, to then again create new gains in the speculative market.

 

Our communities have learned the hard way that no reformist policies can rehabilitate this violence, and no bandage on the system of extraction can ever suffice, because this system of extraction works phenomenally well. In order to prop up values in areas of the city that the wealthy and upper-middle class inhabit, division, segregation and extraction is absolutely necessary for investor profits to be returned. The suffering of communities of color is not a byproduct, it is an inherent characteristic in this system. 

 

The collectively-experienced problems felt widely across the neighborhoods-- health problems connected to the  pollution from smelters of yesterday and the oil refineries of today; the pollution and disruption to connectivity from the highways and railways; the unfinished city grid including decades of missing sidewalks and street lights; the lack of stable housing; the surplus of neighborhoods housing in disrepair, the loss of neighborhood-serving businesses, the loss of access to fresh food to the rise of food apartheid; the loss of places for community to gather and meet; the loss of opportunities for community determination and organization-- all this harm returns to redlining as the source of  our inquiry when we seek to understand why our neighborhood faces these conditions, and why our neighborhood was designed in this way. The multiple and intersecting ways in which the community experiences the ongoing violence of redlining can barely be grasped, for how deeply them inform all urban investing and development.


Today, redlining shapes what kind of development comes to the neighborhoods, and sets up a long precedent of extraction that sharply defines the devalorization cycle, compounding widespread, racial health inequities across the neighborhoods. As it continues today, the ongoing violence of redlining defines the market logic that supports the maintenance of municipal policies and private investments that bring great profit-motives to a plentiful few-- while continuing to bring communities of color nothing but more extraction, more exploitation, more displacement and more dispossession. 

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The devalorization cycle accomplishes a systematic decrease in the ground rent of a neighborhood. The end product of the cycle is reflected in lower median rent for an area and a relatively low median home value in the selling price for structures in a disinvested area. The rent gap, the primary variable to analyze when disinvestment is occurring over a long period of time, is the percent change in the median value of housing and the median rent over time. When the percent change in the median value of housing falls below or near the percent change in the median rent, an area is said to be ready for reinvestment because this is when the “value gap” or the highest profit can be made by private developers, financial institutions, and real estate brokers. Thus, the rent gap is the maximum difference between the percent change in median rent and median home value. When both the median rent and home value are at their lowest, reinvestment is predicted to begin. City officials, private developers, land speculators, and real estate brokers take full advantage of low-cost land, especially when they’ve been initiated by long-term plans and policies for a specific area. The rent gap is expressed when developers take advantage of the low median value of housing that has fallen below the median rent and purchase at a low-price property for rehabbing and new construction while all along making low mortgage and interest payments with a large return in profits from the sale or rent of the property .”

- Theodoric Manley, from the Revanchist City


Tip for the Collective: Reparations and Redistributive policies


Communities of color are in need of redistributive policies (over time) and reparations (often a one-time deal) to end this cycle of extraction. For example, reappropriating money from the police/defense budget to fund yearly community development and stewardship to overcome the legacy of devaluing of communities of color are examples of redistributive policies.

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Redlining fundamentally shaped Globeville and Elyria-Swansea by economically and racially structuring our neighborhoods into Denver’s municipal zoning

Redlining then became the shape of investment that locked Globeville and Elyria Swansea endless cycles of exclusion and extraction. 

In 1938 Globeville, Elyria and Swansea were all redlined, categorized as D-14, 15 & 16 and designated as “Fourth grade” by the Home Owners Loan Corporation. In order to avoid loaning to communities that were majority immigrant communities, then made up by Eastern European populations such as Russian, Slovenian & Polish, their neighborhoods were given the lowest possible gradings. Additionally, the populations of GES were employed in industrial jobs, especially smelters in the area. As an immigrant & industrial worker population, receiving this low grading was not unusual as it is well documented and acknowledged that redlining was an institutionalized, common practice that made it near impossible to secure good loans for non-white, lower income communities. 

Interestingly, because loans could not be secured by the then eastern-European population of the GES neighborhoods, ethnic communities came together into lodges that gave out loans to their own neighbors as a form of cooperation and mutual aid. These lodges, which were ethnically European, did their own part in giving loans to Hispanic families who otherwise would have been denied a loan for a home to stake their lives in Globeville. From recorded GES oral histories conducted and preserved by the Denver Public Library, we know that, as former resident Mary Lou Egan put it, "The Slovenian Hall was built…most of these fraternals started in saloons. Fraternals were mutual help organizations. There was always the Polish Hall; Saint Jacob’s Croatian Hall. The Russians used the old saw mill, the Church Hall, for their meetings. But in an age before Social Security, Workmans’ Compensation, insurance, disability—if you’re working in a smelter or a foundry and you were hurt, your family was destitute. So, immigrants formed these fraternals. They were like associations in the old country: You paid your dues, and you were a member. And then if something happened to you, they took care of your burial. You had a stone; your family was taken care of."  

Here we can see that redlining influenced how the neighborhood had to react in order to advance as much as possible without the aid of the loans opportunities from banks. It was through these immigrant lodges of eastern European make-up that some of the Hispanic population was able to start eventually securing their own homes, not through the system of mortgages a typical white and middle-upper class family would have the privilege of having. A few families, during the 1950’s of Hispanic origin, were even able to secure loans through some of these neighborhood lodges. It must also be recognized that at this point, the children of these Eastern European immigrants had achieved assimilation into American Society, as WWII allowed them entry into the privileges of being white through the GI Bill with which many were able to finally buy homes in new suburbs. This points to an established historical distancing between GES populations and developers and investors, initially in the form of being barred from home loans due to redlining practice of excluding these families and businesses from lending opportunities.