Few private or philanthropic dollars are committed to improving Memphis’ neighborhoods, and the investment that does exist largely flows to the whitest parts of the city, according to an Urban Institute study released Thursday.
Between 2005 and 2018, Memphis ranked 96th of the nation’s 100 largest cities in per-person access to loans, grants and other forms of capital, researchers found. Memphis saw a little more than $5,000 per household during those years, while most cities saw more than $10,000 and 10 saw at least $20,000.
This investment was more segregated by race than by poverty level: While the median low-poverty neighborhood received 5.2 times as much investment as the average high-poverty neighborhood, the median majority-white neighborhood received 5.8 times as much as the median majority-Black neighborhood.
“Capital flows in Memphis are deeply segregated — much like the city itself,” the study says. “The city lacks the quantity, but especially the quality, of investment capital and projects needed to exert meaningful impact in underserved communities.”
Fast facts
- Not much money is being invested in Memphis. Between 2005 and 2018, researchers found Memphis was 96th of the nation’s 100 largest cities, in per-person access to loans, grants and other forms of capital.
- The cash that does come flows to East Memphis, downtown, and white residential neighborhoods. The median majority-white neighborhood received 5.8 times as much as the median majority-black neighborhood.
- With few dollars being invested, it’s unlikely Memphis’ Black neighborhoods will improve, according to Roshun Austin, who leads one of the city’s most-respected community development organizations.
- Despite much talk about economic momentum prior to the pandemic, neither real estate nor overall private investment in the city reached the levels many other cities were seeing in the years leading up to 2020.
- While the city has a reputation for charity, the researchers found a weak philanthropic community development ecosystem compared to other cities.
Downtown and East Memphis saw the most investment during the years studied. With little cash flowing into the city’s poorest and Blackest neighborhoods, neither the neighborhoods nor their issues with crime will improve significantly, according to Roshun Austin, who leads one of the city’s leading community development organizations, The Works.
“We’re caught in ‘Groundhog Day’,” said Austin, whose nonprofit works primarily in South Memphis.
While a lack of capital can feel abstract, it allows for the construction of new grocery stores, quality housing, and many other neighborhood assets, according to Urban Institute senior fellow Brett Theodos, who co-authored the study.
“(Capital) is not the end. But, it is the means to most ends,” Theodos said.
As far as profit-driven investment, Theodos and his co-authors wrote that Memphis could struggle to attract investors due to its stagnant population and economic growth. Since the end of the 2001 recession, Memphis’ gross domestic product — a measure of total economic output — has only grown by 65%, while Louisville’s and Little Rock’s have grown by 80% and Nashville’s has grown by 152%. The city is overly reliant on low-wage industries, incredibly geographically sprawled, and has rental rates so low that it’s hard to develop real estate profitably, their research found.
Private real estate investment was on the upswing prior to the pandemic, particularly in downtown Memphis; during his swearing-in for his second term, Memphis Mayor Jim Strickland hailed $19 billion in “recent, current, or future development in the region.” However, even with this momentum, neither real estate nor overall private investment in the city reached the levels many other cities saw in the years leading up to 2020. Strickland’s office did not immediately respond to a request for comment.
“I think there are some green shoots and it’s good to be optimistic,” Theodos said. “(But) the fact you’re 96th shows … downtown and even wealthy neighborhoods (were) not accessing as much capital as other parts of the country.”
While the city has a reputation for charitable giving, the researchers also found a weak philanthropic community development ecosystem compared to other cities. While there are many nonprofits working to improve different neighborhoods, “only a few have the capacity to drive complex and impactful community development projects.” The authors contrasted this with Cleveland and Detroit, where “commitment, coordination, and capacity” have led to major neighborhood revitalizations.
The researchers conducted 12 in-depth interviews with local nonprofit leaders while conducting the study. Said a representative of a local community development entity: “One of the first things we learned is that there is no [community development] system. … It’s a bunch of chaos. There is an aspirational willpower, but no real money going into community development.”
Austin agreed, calling the local community development scene “infantile” compared with other cities. Many local organizations that call themselves community development corporations do little actual development and focus the development work they do conduct on single-family homes, as opposed to more comprehensive neighborhood redevelopments, she said.
The fact that few Memphis organizations have the capacity to complete complex redevelopment projects hurts the city’s ability to attract national philanthropic dollars, Austin said.
As far as local donors, the study said the Hyde Family Foundation has been the leader in community development work. Austin concurred but said the Pyramid Peak Foundation is increasing its commitment to the sector and will surpass Hyde.
Austin is also cautiously optimistic about upcoming investments via the City of Memphis’ Accelerate Memphis program — which is poised to spend $200 million on infrastructure, parks, and development projects throughout the city by the end of Strickland’s second term as mayor. The effort can be successful if it strategically focuses on a limited number of expensive infrastructure projects, as opposed to cheaper projects meant to appease people in every neighborhood, she said.
“We have to say yes to some things and no to a lot of other things or everyone just gets a sprinkle,” she said.
Below are the authors’ six recommendations to boost equitable neighborhood investment:
- Grow and strengthen the local ecosystem of lending and intermediaries. Technical assistance will be key to increasing these groups’ capacity to participate in more complex deals that mix tax credits, other subsidies, and other types of capital.
- Support CDCs to increase their capacity for sponsoring and cultivating community development projects. Because CDCs are place-based, they are key to driving more capital to projects in neighborhoods other than downtown and East Memphis.
- Revise local and state tax structures so multifamily housing is not at a disadvantage against single-family housing. This is challenging and would include changes at the state level.
- Consider tax abatements and other incentives for community development projects that fit the priorities of the city and the county, particularly in historically under-resourced tracts, pushing development beyond its traditional nodes. When applicable, the public and private sectors can explore ways to strategically use these incentives in tandem with Opportunity Zones to advance priority projects.
- Deepen corporate, traditional, and family philanthropy into community development finance. Flexible and low-cost capital can help reduce the risks of potential investment opportunities in small and midsize cities. Support planning and technical assistance will be needed as well.
- Increase metropolitan coordination. Our interviewees agreed that a lack of coordination between the three states that contain the Memphis MSA and the redundancies between the City of Memphis and Shelby County were barriers to attracting capital.
Jacob Steimer is a corps member with Report for America, a national service program that places journalists in local newsrooms. Email him at Jacob.Steimer@mlk50.com
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