A movement to focus public improvement efforts on neighborhoods with the greatest potential to spread the benefits is gaining adherents. Former Federal Reserve Board vice chairman Alice Rivlin discusses her recent research into targeting.Community development

Alice M. Rivlin

English

Research Papers in Economics

Senior Fellow
Brookings Institution
Alice M. Rivlin
Economist Alice M. Rivlin has had many significant roles in
Washington. She was vice chairman of the Federal Reserve Board, the
director of the White House Office of Management and Budget, and the
founding director of the Congressional Budget Office. Currently, she is
a visiting professor at Georgetown University and a senior fellow in 
economic studies at the Brookings Institution, where one of her key 
concerns is urban revitalization. 
Targeting Urban 
Revitalization
Winter  2007 12
first personRivlin was born in Philadelphia and raised
in Indiana. She earned a bachelor’s in eco-
nomics from Bryn Mawr College and a
Ph.D. from Radcliffe. A winner of a
MacArthur Foundation Prize Fellowship,
she has published numerous articles and
books. In 2003, she wrote “Revitalizing
Washington’s Neighborhoods: A Vision
Takes Shape” about targeting specific
neighborhoods for public improvement
efforts. Targeting, which is meant to make
a splash that will ripple outward, is being
tested in various forms around the coun-
try. In 2005, for example, the Federal
Reserve Bank of Richmond measured the
impact of a successful local targeting ini-
tiative called Neighborhoods in Bloom.
Because of a growing interest in this
concept, Communities & Banking decid-
ed to ask Rivlin about the Washington
experience and how it might apply to
New England. 
How did you get involved in 
efforts to revitalize Washington
neighborhoods?
AR: From 1998 to 2001 I chaired the
financial control board that the federal
government created to help the city pull
out of financial crisis. That assignment
got me heavily involved in Washington’s
financial condition and its economic
development.
What challenges faced the city as
it recovered?
AR: A big challenge related to the fact
that the city had lost more than a third
of its population and much of its middle
class. Washington had lost far more peo-
ple than jobs. The loss of residents was
especially crucial to Washington because
the city is prohibited by Congress from
taxing people who work in the District
but live outside it. That is a serious pro-
hibition. All states with income taxes tax
nonresident income. In Washington,
two-thirds of income is earned by non-
residents. Increasing the number of resi-
dent taxpayers is essential to the city’s
fiscal future. Hence, we needed a focus
on reviving neighborhoods and rebuild-
ing a middle class. 
You have written that improving
schools is critical.
AR: It’s the classic chicken and egg
problem. People with children avoid the
city because the schools aren’t good, and
the schools aren’t good because the mid-
dle class population with children
moved out. So the question is, How do
you break this cycle? One answer is: 
try to do a lot of things at once in neigh-
borhoods where the collective effort is
likely to be successful. Public funds are 
limited, so if you can concentrate 
them in neighborhoods that have poten-
tial, maybe you can leverage those 
funds. Brookings and the D.C. planning
office worked together to choose 
target neighborhoods that were neither
the worst nor the best but had develop-
ment potential.
What criteria did you use to 
identify suitable neighborhoods 
for targeting?
AR: The city identified “emerging”
neighborhoods with generally positive
characteristics (relatively stable popula-
tion, few abandoned buildings, relatively
low crime) that had not had much new
investment yet and “transitional” neigh-
borhoods that were already showing 
evidence of rising property values. The
target neighborhoods were of both kinds,
but they required different investment
strategies. In retrospect, there were prob-
ably too many target neighborhoods.
How did people react to your 
recommendations?
AR: The first thing to recognize about
targeting is that it has political risks.
People who live outside the targeted
neighborhood wonder why you aren’t
targeting them. There is pressure to
broaden the area. After the planning
office and Brookings selected neighbor-
hoods, the mayor officially endorsed the
policy. However, the city’s implementa-
tion was uneven and not sustained.
Some neighborhoods received consider-
able attention from city agencies.
Money flowed in, and the strategy
worked. Elsewhere, targeting worked
less well, either because of community
opposition or because the city didn’t 
follow through.
Why would there be community
opposition?
AR: Mostly because of fear of change
and gentrification. Long-time low-
income residents fear being pushed out
by newcomers and rising housing costs.
In recent years, the Washington housing
market has taken off. There has been a
lot of building and a disproportionate
rise in both home-purchase prices and
rent. The rate of growth in housing
prices has tapered off in Washington’s 
http://planning.dc
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v
& Banking Communities 13Winter  2007 14
more affluent sections but is still rising
in the lower-priced areas. The bottom
line is that although Washington has
put a good deal of money into creating
and preserving affordable housing, it is
disappearing. 
It’s hard to tell how much of the
recent economic growth results from
targeting and other public efforts. In a
strong market city, such as Washington
right now, much development would
have happened anyway. Possibly, tar-
geting is more necessary for weaker
market cities.
Has the economic development
succeeded in adding middle-
class residents?
AR: We haven’t had a census since
2000, but the decline in population
appears to have been arrested, and the
number of households is growing.
However, the decline in household size
continues. That adds up to more hous-
ing units, but not necessarily more
people or more children in the schools.
The more that
people looked at
high-crime areas,
the more they 
realized that the
problem was not
just lack of law
enforcement.
“The importance of educational institutions to the economy of cities cannot be overstated,” says Rivlin.
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Did the city follow your recom-
mendations closely?
AR: Actually, Washington shifted tar-
geting strategies in midstream. The
impetus for the original targeting strate-
gy was to jumpstart economic develop-
ment. The impetus for the current strat-
egy is reducing crime. But the two
strategies are not really far apart. The
more that people looked at high-crime
areas, the more they realized that the
problem was not just lack of law
enforcement. It was neighborhood dete-
rioration, lack of employment opportu-
nity, poor schools—everything that goes
with really bad neighborhoods. Out of
that understanding came the New
Communities Program, which focuses
on high-crime neighborhoods that have
revitalization potential.
Are there revitalization 
lessons that we could apply in
New England?
AR: First, a city with a strong housing
market can lose a lot of affordable hous-
ing quite quickly, and only a major pub-
lic effort can counteract that. For exam-
ple, a Washington task force that I
recently co-chaired recommended dou-
bling current efforts on low- and mod-
erate-income housing.
Second, a targeting strategy is com-
plex to implement. You can’t just
announce the targeted neighborhoods.
You need a strong hand directing public
spending to those neighborhoods and
working hard to form public-
private partnerships. Public money can
only go so far, and you need the support
of neighboring institutions, such as 
universities. It’s quite hard to pull off.
Does Washington have a strong
leader for New Communities?
AR: The city administrator, Robert
Bobb, pushed it very hard. The first
project is a major effort in an area with
a badly deteriorating public housing
project, Sursum Corda. The initiative is
best described as a local version of
HOPE 6. HOPE 6 is a federal program
that has been used successfully in
Washington to transform deteriorating
public housing to mixed-income com-
munities. New Communities uses local
money instead of federal to preserve
subsidized housing while adding mar-
ket-rate housing and big improvements
in public services.
You mention partnerships.
In Boston, the Federal Reserve
Bank partners with a local 
high school to offer city youth 
mentoring and internships.What
kinds of institutions do you 
think should help communities?
AR: The importance of educational 
institutions to the economy of cities—
especially in New England—cannot 
be overstated. When I visited Worcester, I
was impressed with Clark University’s
community partnering, and Trinity
College has built strong partnerships in
Hartford. In Washington, Howard
University worked with Fannie Mae to
help revitalize the neighborhood around
the university and aid local home-buyers.
George Washington University aided and
mentored a high school. Since public 
dollars are usually focused on affordable
housing, schools, and street improve-
ments, other partners have to help in
order to finance market-rate housing 
and retail. 
Describe a targeted revitaliza-
tion that is working.
AR: The Anacostia River waterfront in
Washington is an exciting example of an
major project that involves numerous
public and private partners with the com-
munity itself. Federal agencies are moving
their offices to the waterfront, and there
will be mixed-income housing and mixed
development, including a baseball 
stadium. Success breeds success. If a tar-
geted area makes visible changes, the
progress will spread.
Are there any downsides?
AR: First, economic development puts
pressure on housing prices and rents,
hurting low-income renters the most.
And in Washington, which is segregated
historically, the conflicts are seen as racial.
As economic development moves from
the west to the east, blacks fear that the
city will become too white.  Secondly,
targeting is difficult politically. It’s
always easier to spread the money in a
broader area, but then the impact is
diluted. Right now we are pinning big
hopes on the Anacostia waterfront,
and it seems to be going well. As long
as nothing occurs to disrupt the
regional economy, Washington should
continue to become a more attractive
and livable city for a diverse popula-
tion. An important goal is to grow,
attract, and retain more middle-
income families—and, with them, bet-
ter schools and more prosperous
neighborhoods. Attaining this goal
involves both opening opportunities
for low-income people to move into
the middle class and stay in the city,
and attracting more middle-income
families with children. What we don’t
want to become is a city of upper-
income families with few children.
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Targeting urban revitalization

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Targeting urban revitalization

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