clock menu more-arrow no yes

Filed under:

Investment patterns show Chicago’s inequities persist: report

The Urban Institute study shows white, affluent neighborhoods attract investments at a higher rate than black and Latino communities.

Justice Department Accuses 4 “Sanctuary Cities” Of Violating Federal Laws
Affluent white-majority neighborhoods in Chicago disproportionately attract more private investment than poverty-inflicted neighborhoods.
Photo by Scott Olson/Getty Images

A new report shows racial and socioeconomic inequities persist in Chicago despite a growing job market and declining poverty rates.

The report — produced by the Urban Institute with funding from JPMorgan Chase — analyzed investment patterns in Chicago. In the past two years, the group has conducted similar studies in Baltimore, Detroit, Minneapolis and Saint Paul.

Neighborhood Disparities in Investment Flows in Chicago,” was released Tuesday. It examines both private and public investment through loans, sales, construction and rehab activities for four types of real estate: single-family, multifamily, commercial and industrial.

“Capital has flowed inequitably to communities across the United States for decades,” the report reads. “The study of investment flows in Chicago is particularly important as the city seeks to address social inequality across neighborhoods even as it recovers steadily from the Great Recession.”

According to the report, white-majority neighborhoods received 4.6 times as much private investment per household than majority-black neighborhoods from 2011 to 2017, and 2.6 times as much investment than majority-Latino neighborhoods.

Although private investment tends to flow toward more affluent, white-majority neighborhoods, high-poverty communities have attracted some investment.

Public and “mission-driven” actors invested 10 times more per household in high-poverty neighborhoods than they have in low-poverty neighborhoods.

“That’s a good thing and it shows how city leaders are deploying resources to areas in need,” said Brett Theodos, lead author of the report. “But public-sector investments are much smaller than what the private sector is contributing.”

Private investment throughout the city accounted for $67 billion of lending capital compared to only $4 billion public and mission-driven investments.

After all investments were taken into account, majority-white neighborhoods still received 2.9 times as much investment per household than majority-black neighborhoods, and low-poverty neighborhoods receive 2.6 times the investment than high-poverty neighborhoods.

A prime reason why inequity exists in Chicago, Theodos said, is because it remains heavily segregated.

“Chicago remains racially segregated. Segregation goes hand in hand with neighborhood distress,” the report reads. “Populations of color are much more likely to live in areas of high poverty and unemployment ... Perhaps because of these conditions, Chicago has seen a significant loss of its black population.”

Theodos said Chicago’s longstanding troubles to integrate communities stems from where affordable housing is funded.

“The median white neighborhood gets zero affordable housing investment, and in one hand, we want pubic-sector money going to poorer neighborhoods,” Theodos said. “But affordable housing is different,” and funding affordable housing only in communities of color “reinforces racial and economic segregation.”

More interestingly in the report is how investment is occurring in gentrifying neighborhoods.

Neighborhoods experiencing significant economic and demographic shifts attracted more private investment than stable white, low-poverty neighborhoods. More telling is gentrifying neighborhoods received more private investment than stable communities of color regardless of its poverty status.

Public and mission-driven investment also was invested disproportionately in gentrifying communities — about 6.2 times the investment dollars go to these areas instead of stable, communities of color with low poverty rates.

“It is worth acknowledging the city is only one actor in this ecosystem, and it can’t fix it all by itself,” Theodos said. “Instead it has to be a collaborative effort, through help from philanthropy, the state and even the federal government.”

Theodos said the only way to develop disinvested communities of color is through a comprehensive and targeted approach that leverages neighborhoods’ unique market strengths.

He points to city efforts like the Neighborhood Opportunity Fund that specifically targets commercial corridors in South and West Side neighborhoods like Austin and Woodlawn. Or the philanthropic-backed Benefit Chicago that helps individuals, businesses and institutions secure capital for investments that they might otherwise struggle to obtain.

Manny Ramos is a corps member in Report for America, a not-for-profit journalism program that aims to bolster Sun-Times coverage of Chicago’s South and West sides.