VII. Discussion

VII. Discussion

1. The First Cycle of Gentrification in West Oakland

“The jury’s still out” on the extent of gentrification in West Oakland, remarked one WOPAC member, and West Oakland is in 2008 still beset with the poverty, violent crime, and other social problems it faced in 1998 (McKinley 2007, Rice 2008, Horiuchi 2008.)   The decade between 1998 and 2008 was one in which a slow process of gentrification began in the neighborhood, and that window is closing as the real estate market and other economic indicators decline throughout the U.S.  Despite the inflation of real estate market values across the Bay Area, the process was spatially uneven within West Oakland, as some areas became sites for new development or home remodeling while others changed very little.  Those parts of the neighborhood still immediately bring to mind the pattern of disinvestment that characterized West Oakland since the postwar era, and hasn’t changed very much since then (Horiuchi 2008, see Figure 12.)  Economic development that did occur left most of the neighborhood unimproved.  Overall, West Oakland became less affordable as the housing market throughout the U.S. inflated, magnified by the tremendous housing pressures of the Bay Area.  Yet in 2008, most of the major development projects planned and approved for construction (and doubtless the vast majority of smaller scale projects) are postponed due to financial uncertainty.

Larry Rice, chair of the WOPAC, and a resident of West Oakland near Macarthur BART for twenty years, noted that in his neighborhood not much had changed, and that it was possibly even more run down in 2008 than in 1998.  He described the dot-com era as one that lifted other boats, but did not have much impact on West Oakland’s population (Rice 2008.)  Another resident from the same area described her neighborhood as “under the radar” and therefore in less danger of being seriously disrupted by development (Horiuchi 2008.)  However, the neighborhood did shift to a more affluent base of residents, and other changes occurred that are clear indicators of gentrification, which leads one to believe that the perception of gentrification is a subjective one as much as it is quantifiable.  While residents who are displaced will obviously feel the consequences of gentrification directly and intensely, their neighbors may deemphasize these experiences and instead look at overall changes to the neighborhood as minimal.  Problems experienced in lower-income neighborhoods may not appear to be offset in any noticeable way by the arrival of some more affluent residents, particularly when the commercial and retail aspects go unchanged.  Conditions for future gentrification were set by these changes, as parts of West Oakland were opened up to new development

projects.  However, the cycle of gentrification that began in 1998 appears to be ending in 2008.  As the housing market collapses, West Oakland is becoming a neighborhood in which the displacement of residents is caused by foreclosures rather than by rising rents.

West Oakland appears as though it will remain one of the last places in the immediate Bay Area for investment capital to settle.  Conversely, it is one of Figure 12. West Oakland Household Median Income Percentage Change 1990-2000 By Census Block Group.

Source: US Census Bureau 1990, 2000.

the first neighborhoods to experience disinvestment.  As one local developer noted, “money dries up first in neighborhoods where lenders were skeptical to begin with” (Getz 2008.)  Under current economic conditions, a trend of degentrification may be a more appropriate characterization of the neighborhood’s trajectory.  As the housing market disappears, investments in the area and home values are declining considerably; rents may soon follow this trend.  Speculation in the housing market will not be as advantageous as land values decline, eliminating the perception of housing as wildly profitable investments.  Job losses reverse the trend of attracting people to the Bay Area, driving demand down further.  Any improvement in affordability, however, will likely go hand in hand with declining wages and lost jobs in the neighborhood.  Foreclosures are disproportionately concentrated in this and other troubled Bay Area neighborhoods, although West Oakland ranks lower than many other East Bay neighborhoods in foreclosures (see Table 5.)

Many respondents spoke of recently cancelled development projects, as the potential for profits becomes less assured and construction costs rise.  Throughout the area, residents and city officials have seen a decline in development proposals to the WOPAC.  Most projects already approved by the Planning Department, with the exception of the Wood Street Train Station developments, have been derailed as financing troubles and home purchases decline, forcing developers to back off from their original plans (Getz 2008, Rice2008, Lederer-Prado 2008, Nadel 2008, Simon 2008.)   Similarly, according

Table 6.  Oakland Foreclosure Rates, Third Economic Quarters of 2007 and 2008.

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Number of Foreclosures

Zip Code        Q3 2007          Q3 2008         Yearly Change(%)      Rate per 1000 Homes

94621              33                    148                  348                                          29.8

94603              52                    180                  246                                         28.3

94601              27                    105                  289                                          17.5

94605              59                    162                  175                                          14.1

94606              14                    34                    143                                          11.0

94607            17                   25                   47                                          7.4

94619              17                     35                    106                                           5.0

94602             11                     35                    218                                            4.6

94612              3                      5                      67                                              4.2

94610              8                      14                    75                                              2.1

94609              4                      6                      50                                            2.0

94618              1                       2                      100                                          0.4

Source: DataQuick Information Systems 2008.

to several respondents there has been a marked reduction in requests for projects in the West Oakland Redevelopment Area in the past year, and West Oakland is now experiencing sales of property to less upscale projects (Nadel 2008, Rice 2008, Simon 2008.)

The departure of investment from West Oakland does not only signal the end of this phase of gentrification and speculation in the neighborhood’s housing market, but potentially as well a return to previous decades of economic neglect and stagnation.  It reveals the ultimate limits of all local factors in market-based urban revitalization too, as global market fluctuations devalue housing and halt the stream of capital to urban neighborhoods, revealing the constraints under which low-income neighborhoods attempt to revitalize.  These neighborhoods are often unable to mitigate against, let alone halt, the effects of gentrification.  Meanwhile, a faltering economy hits hardest in places like West Oakland, a tenuous place for capital to settle even in the best of times.  Already high unemployment levels will undoubtedly be exacerbated there more than in other neighborhoods.

West Oakland’s housing turnover rate was low relative to total housing turnover in Oakland over the ten-year period.  Despite its attractive characteristics, West Oakland was still among the last choices for homebuyers and developers during the dot-com frenzy.  Despite its relative advantages, the factors that may have encouraged more investment, the neighborhood had many qualities that kept investors away, including high crime rates and environmental pollution.  Compounding this was the continued legacy of illegal redlining alluded to by several respondents, where banks are still hesitant to offer loans in West Oakland and some of those who do end up requiring larger down payments on homes in low-income neighborhoods (Horiuchi 2008, Kennedy 2008, Macdonald 2008, Rice 2008, Simon 2008.)  Lenders continue to engage in these practices in 2008 in order to reduce their financial risk, and the more cash put down initially by investors, the greater chance of having a loan backed by investors.  Many of these investors still do not consider West Oakland to be a safe place for investment, limiting the choices of smaller developers in the area, whether they are building market rate or more affordable housing (Getz 2008, McIlveen 2008.)

Economic factors such as the relatively cheap homes and land in West Oakland, although they may promise greater investment returns, may not override these concerns.  Gentrification is driven by many other factors besides a wide rent gap in lower-income neighborhoods; there is no one factor that definitively drives or impedes gentrification in West Oakland.  While urban communities can exert some influence over local development, their vision for the neighborhood is more concerned with the benefits to the community, and not solely with maximized profits for developers.  This conflict does not fall into easy categories of pro- or anti-development; the community members interviewed for this research all explicitly state the need for development that will help correct some of the pressing social problems in West Oakland.  Meanwhile, gentrification ebbs and flows with economic cycles that take place at much greater geographic scales than the neighborhood or city.

Just as a flood of investment alarmed many about gentrification in the late 1990s, renewed disinvestment in West Oakland will present new problems for its residents, as seen in the already high number of foreclosures throughout the neighborhood. Oakland is sixteenth among cities in foreclosures nationally, and lower-income areas like East and West Oakland are disproportionately represented in these numbers (Kennedy 2008, Rooney 2008.)  Likewise, renters are affected by foreclosures as landlords lose their properties to foreclosure (Anthony 2008.)  Regardless of present conditions in the housing market, a number of creative ideas to protect Oakland residents from gentrification are being discussed at present and there appear to be policy shifts underway in Oakland that could influence land use and deter gentrification in West Oakland in the future.

2. Shaping Land Use and Housing Policy for the Future

A number of measures put into place in the city’s housing and land use policies deterred the displacement caused by gentrification, and other measures are proposed by community activists to ensure greater protections in the future.  These measures are aimed at both regulating the excesses of real estate speculation as well as encouraging a development path that improves the well being of current residents and decreases their vulnerability to displacement. Concerned residents want to ensure that these preventative measures and proactive development programs are built into land use policy and housing policies before the next speculative cycle in the Bay Area.   As with the Just Cause eviction ordinance, these policies are often met with resistance by City Council members.

Two policies that have generated conflict in Oakland, despite the relatively small amount of housing affected, are inclusionary zoning and condominium conversion.  Inclusionary zoning (IZ) is one way that cities can ensure affordable housing construction in new development projects by requiring a minimum percentage of affordable units in new projects.  It is a tool used in many Bay Area cities to help minimize economic displacement associated with gentrification.  Oakland is one of the few cities in the region lacking inclusionary zoning, although it has been a central issue for affordable housing advocates since at least the late 1990s (Nadel 2006.)  An IZ proposal brought to the Oakland City Council in 2000 failed to be incorporated into city policy, derided by city officials, including Mayor Brown, as a deterrent to developers building housing of any kind and a potential drag on the local economy (Heredia 2006, Allen-Taylor 2007a, Tate 2006.)  In October 2006 the Oakland City Council was split over a vote to require fifteen to twenty percent of newly built units to be affordable to those in very low to moderate-income levels (Heredia 2006.)  Mayor Brown cast the deciding vote that created a committee to study affordable housing policies instead of instituting an IZ baseline for Oakland.

Equally contentious within Oakland housing politics is the regulation of condominium conversions from older apartments, in which multiple-unit buildings are transferred from sole ownership of an entire building to individually owned properties.  The defeat by the City Council in December 2006 of a measure restricting condominium-conversion measure was seen as a victory for anti-displacement advocates.  In other cities, such measures have led to a rise in evictions and decreased the supply of rental units.  The majority of Oakland’s renters, roughly 88,000 people, cannot afford the sale prices for condominiums; only ten percent of city’s renters are estimated to be in a position to purchase units (Burt 2006a.)

In February 2008, the City Council began considering a set of wide-ranging affordable housing policies put forth by the Mayor’s Housing Task Force, a separate Blue Ribbon Commission established under Jerry Brown’s administration, the Oakland People’s Housing Coalition, and others.  These proposals cover condominium conversions, inclusionary zoning, rent adjustment policies, homeownership programs, homelessness programs, land trust creation, and foreclosure policies.   A letter from the Mayor’s Office to the City Council presenting these proposals suggests that creating an atmosphere of predictable community benefits from developers will ensure ongoing private investment that protects “against displacement of existing residents and ensure[s] that people who currently live in Oakland share in the benefits of new development” (Matrix 2008.)  The City Council failed to bring affordable housing to a vote in February 2008; inclusionary zoning, condo conversions, and other elements of an affordable housing plan for the city remain undecided in 2009.

Frances McIlveen, project manager for the Northern California Land Trust (NCLT), a nonprofit developer in the East Bay with two affordable housing projects in West Oakland, commented that in order to reverse gentrification trends, much deeper subsidies for land trust and other affordable housing developers are needed.  Most subsidies are now available to homebuyers, and developers still find projects financially unfeasible, even with the support of city subsidies.  The ultimate obstacle is the marketability of affordable, high quality, non-rental housing units, as opposed to market rate units that offer far greater investment returns.  Nonprofit developers like the NCLT encounter more difficulty funding their projects, and loan interest rates from banks can be a full point higher to community land trusts (McIlveen 2008.)

Other creative ways have been suggested as avenues to homeownership among West Oakland residents, including allowing Section 8 rental subsidies to be used as mortgage payments, encouraging tenancy in common agreements among low-income homebuyers, and creating city subsidized individual development accounts for low-income residents who would receive matching funds for their savings.  At the same time, the flipping of properties may be regulated through restrictions in the amount of time required between sales turnovers (Macdonald 2008, Nadel 2008.)  But most of these strategies do not address the root causes of chronic poverty in urban neighborhoods like West Oakland that make residents vulnerable to displacement.  Residents are aware of this and those engaged with development policy there wrestle with the limitations of redevelopment and other programs in the context of pervasive joblessness, lack of educational opportunities, and other problems faced by many West Oakland residents.

The question is how to avoid the negative impacts of gentrification and still improve a community like West Oakland, where the cumulative effects of fifty years of disinvestment on residents and the neighborhood itself continues.  It is a dilemma for many urban neighborhoods throughout the US, one that involves a rethinking of economic development.  As the market implodes in 2009, and previously planned development projects unravel, innovative ideas that mobilize community resources will become more important than large inflows of capital. Producing green-collar jobs, and a more locally and regionally self-reliant economy in general, could be the way ahead for West Oakland and other neighborhoods in the Bay Area.  The City Council’s protection of industrial zoned land along Mandela Parkway’s northern half provides an opportunity for the development of production, distribution, and repair based industries that can generate many local jobs.

The drying up of private investment in West Oakland leaves redevelopment as the major engine of development there for now.  The WOPAC is therefore potentially a much more influential actor in West Oakland development politics, and without the unchecked speculation and exorbitant housing development projects breaking ground there, the focus of investment may be more on projects and goals that benefit and ensure the permanence of existing residents, particularly those of lower incomes.  There was no coherent movement to stop gentrification as such in West Oakland (or anywhere in Oakland), as there was in San Francisco, although Oakland voters approved the Just Cause eviction ordinance in 2003, placing far more limits on landlords’ ability to remove tenants.

Yet some neighborhoods in San Francisco gentrified far more than West Oakland because the demand for housing was greater and began earlier there.  Home values took off throughout the Bay Area, but transformations in land uses were uneven.  Oakland did not undergo the same visible change in commercial uses as many neighborhoods in San Francisco.  It was not at the epicenter of gentrification in the Bay Area between 1998 and 2008, and the problems that plague the neighborhood seem to be as entrenched as they were before the Bay Area economy took off.  And the chronic lack of economic opportunities for many West Oakland residents who were not touched by the booms still translate into a neighborhood of whom a large portion of its residents are vulnerable to displacement in the future.  The cycle of gentrification in West Oakland may have come to a close in 2008, but the protections and incentives described above must be in place before the next wave of real estate speculation begins.  The city of Oakland currently allocates a mere $680,000 annually to address poverty for the whole city, and increasingly tight economic conditions may constrain this amount even further (Nadel 2008.)  Thus the question of community influence over gentrification is subsumed by forces beyond the locality in question, often beyond the scale of city programs.

3. Theoretical Implications and Further Research

Recent theories of gentrification waves articulated by Hackworth and others only partially describe the process as it has occurred in West Oakland.  Incipient gentrification of the neighborhood did represent a broadening of the process to include previously overlooked areas within the Bay Area region.  The abundance of investment capital during the dot-com era eventually spilled into West Oakland after other, more attractive places (like San Francisco’ SOMA district) were subject to development restrictions and zoning protections.  Homeowners, speculators, and developers moved into parts of the neighborhood, contributing to striking shifts in the demographics of the area.

Developers in West Oakland were generally not the larger, more consolidated firms that “third-wave” theorists point to, but were almost entirely smaller developers, and many were not even classifiable as developers, but were merely individuals rehabilitating small buildings for resale (Simon 2008.)  The only corporate developer, Pulte Homes, built one of the projects at the Central Station site; one local developer noted that larger, corporate firms are typically slower to move into neighborhoods like West Oakland because they are unaware of the local political climate and therefore less willing to take risks (Getz 2008.)  In contrast, several larger, more consolidated developers built projects in and around downtown (Simon 2008).  The largest project of the 10k Plan is being developed by Forest City Enterprise, a publicly traded real estate conglomerate with assets totaling almost $9 billion (Forest City 2007.)

Local government took a more active role promoting the 10k Plan, as city government took on development strategies dominated by neoliberal market-based principles; West Oakland was made into a redevelopment area at the request of the community.  According to one resident, disinvestment on the part of the local state hasn’t changed (Horiuchi 2008.) West Oakland residents are able to influence the course of development to a greater degree than perhaps at any time in Oakland’s past, due in part to the institutionalization, rather than the weakening, of community activism.  Citywide, Oakland residents have been effective at bringing some community benefits through negotiating with developers, while the success of the Just Cause eviction ordinance indicates a large reservoir of support for tenants’ rights and resistance to gentrification.

The WOPAC is an agency with very limited powers, yet it does have a hand in shaping the redevelopment of West Oakland, providing an outline for economic growth with some protections for current residents.  Housing and land use policy in Oakland is being dramatically remade at present to provide more affordable housing opportunities for typical Oakland residents.  If this cycle of gentrification represented the “third wave” as theorized by Hackworth and others, it pertained more to Brown’s 10k Plan than to what occurred in West Oakland.  The first cycle of gentrification there more closely resembled the earlier post-urban renewal “second wave” gentrification that Hackworth and others have described, in which private capital invests in previously neglected areas of the city primarily without the assistance of local government.  It is not enough to say that third wave gentrification includes the expansion into these once overlooked areas such as West Oakland when the investment sources remain different for different parts of the city.  Gentrification occurring in West Oakland seems to have lagged behind neighboring areas and is therefore not adequately described by third wave criteria.  It is more accurate to say that gentrification continues to be a highly uneven process within cities, that different investment patterns characterize this unevenness, and that local land use policy is an important aspect of these struggles over space.

Kate Shaw’s research into the limiting factors of gentrification is generally supported by the case of West Oakland.  First, the supply of inexpensive and attractive older housing stock in West Oakland may have been influential to some moving into the neighborhood, however people moved into many newer buildings during this period.  Developers were able to build on the vast amounts of vacant land in the neighborhood as well, making existing housing stock less relevant in the real estate market.  Second, although the high proportion of renters left many vulnerable to displacement in the past decade, there are fairly strong community organizations that act on a number of fronts to improve the neighborhood for the benefit of its current residents.  Despite divisions within the community, West Oakland residents are able to insert themselves into political dialogue over housing, redevelopment, and land use issues in ways that directly influence policy.  These policies, and the ongoing involvement of residents shaping them, can become limiting factors to gentrification.

Finally, the political leadership of the WOPAC and city politicians is an important factor in West Oakland, but is severely limited by the City Council.  Nancy Nadel’s work as City Council member expresses a strong political commitment to fighting gentrification while revitalizing West Oakland.  Likewise, Mayor Ron Dellums is promoting a different approach to developing Oakland than Jerry Brown, and his administration’s influence can be witnessed already in its commitment to creating an affordable housing policy for the city.  The potential for an alternative to gentrification in West Oakland exists, and the collapse of the housing market in 2009 may provide the breathing room to make sure protections are in place for current residents to remain there in the future.  The debates persist in Oakland over how much the market should dictate housing needs, and these are at the heart of the struggle for an affordable housing plan.  Without a larger citywide grassroots response to the housing affordability crisis, the political leadership of the WOPAC and of some Council members will have a difficult time keeping the next round of gentrification from displacing more residents.

The question remains whether West Oakland will, despite the vulnerability of many of its residents to displacement, continue to be the place of last resort for investors, an area perpetually “undiscovered” by capital.  To better answer this, further research is necessary into these neighborhoods that lie in the heart of economically vibrant urban regions yet stagnate in a lack of real opportunities for their lower-income residents and a simultaneous wariness on the part of city government and private investors to engineer gentrification.  Are there other places like West Oakland that are identifiable in this way?  What characteristics do they share, and what can this tell us about the limits of gentrification?  Perhaps by looking at other areas neighborhoods that continue to be overlooked by capital, even in the best of economic times, we can find models of community-based development that are better suited for residents of these areas and promote their vision for the city.

The Tenderloin neighborhood in downtown San Francisco provides the closest example in the Bay Area of a low-income neighborhood that eluded gentrification to a large degree during the decade between 1998 and 2008.  Its history of anti-gentrification activism, and the city’s use of the Tenderloin as a neighborhood with large amounts of subsidized housing have kept gentrification from deeply encroaching.  Although their histories diverge, both West Oakland and the Tenderloin have functioned as warehouses for poor residents.  The concentration of subsidized housing in each neighborhood most likely served to keep developer interests at the margins of each neighborhood.  Further research comparing these and other neighborhoods may bring insights regarding the functions of urban spaces and how these historic functions affect the likelihood of their being gentrified.

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