Although, the Fair Housing Act has prohibited discrimination in housing markets since 1968, the effects of past discriminatory Federal and local housing policies are seen and felt today in cities across the nation. In the American Heartland, for example, Peoria, IL is by race the sixth most residentially segregated metropolitan area in the country. In many ways, Peoria is typical of many small to mid-sized industrial cities beset by the lingering effects of decades of discriminatory housing policies.
It is a familiar narrative. Throughout the late 19th and early 20th centuries, Peoria’s population swelled with workers seeking employment in the City’s heavy industry base. Many of these workers were black southern migrants who, like their many white counterparts, settled into segregated communities in and around the City’s urban core. Racially segregating neighborhoods were not a new phenomenon, but they were further codified and enforced in the 1930’s through redlining and other discriminatory policies, which prevented black residents from moving into white neighborhoods.
Around the mid-20th century, as the City’s manufacturing and heavy industries cooled, both black and white families began to move out of Peoria’s urban core. Black families, still limited by discriminatory housing policies which prevented access to mortgages for purchasing and improving homes, settled into the City’s Southside communities, while white families increasingly moved into outlying neighborhoods.
From around the time of the Great Depression until 1970, the population of the Southside continued to rise. But after decades of strict limitation of black families’ ability to access credit, many homes in Southside neighborhoods tumbled into disrepair. In time, as redlining was eliminated and black families began to access credit markets, the Southside’s population began to decline as middle-class families moved away. Southside communities were left fractured as a result and poverty became widespread in neighborhoods south of Martin Luther King Junior Drive. Unsurprisingly, an approximately fifty-year pattern of disinvestment followed, in which the Southside received comparatively little public and private investment in commercial and residential development.
Today, both the commercial and residential building blocks of many Southside neighborhoods remain deteriorated. Due, in part, to the poor condition of homes, very little market demand exists within these historic Southside neighborhoods. In these neighborhoods, the typical single-family home sells for less than $20,000, making new construction impossible without deep subsidies. Additionally, downward pricing pressures make the renovation of older existing housing financially infeasible prompting many Southside homeowners and landlords to simply abandon their properties. With so many Southside homes lost to structural deterioration and abandonment, the affordability and availability of the community’s remaining housing stock has been negatively affected.
As a result, the City of Peoria has taken ownership of hundreds of such vacant Southside properties through demolition or donation. As the City’s ownership of vacant land has increased, City leaders began to consider ways in which the City would divest itself of vacant property ownership while facilitating a more equitable share of residential development within the Southside neighborhoods.
In response, Peoria’s Community Development Department established a vacant land plan for the disposition of City owned land. The plan emphasized the disposition of land using one of three main strategies – land banking, development, and side lot transfer.
In accordance with the vacant land plan, City owned properties were earmarked for a disposition strategy based upon an assessment of the respective strength of local real estate markets, and the density of the City’s ownership of land within targeted neighborhoods.
Market strength was assessed by determining whether, or not newly constructed homes could sell for at least the cost of construction. Neighborhoods where newly built homes would sell for the cost of construction or more were deemed to be strong local real estate markets. Neighborhoods where newly built homes would sell for less than the cost of construction were deemed to be weak.
To assess high or low density of City land ownership, City officials considered the number and dispersion of city owned parcels within neighborhoods, along with property tax delinquency records to gauge the likelihood of further abandonment.
City owned parcels of land in neighborhoods characterized by a weak real estate market and a high density of City land ownership were placed into the City’s land banking program. Under the land banking strategy, local funds along with federal Blight Reduction Program funds were used to demolish abandoned structures on city owned land. The vacant lots were then greened and assembled into larger tracts of land to make Southside neighborhoods more attractive for future private development.
Some other transitional neighborhoods with a lower density of city owned property garnered actual interest from developers. Where developers could demonstrate verifiable development plans, financing, and a good knowledge of the development process, City owned parcels were made available for development. In most cases, development was facilitated using subsidies, tax credits, or in-kind donations from partners such as Habitat for Humanity.
Lastly, vacant land parcels meeting certain criteria were placed into the City’s Side Lot Program. Parcels that made the best Side Lot Program candidates had limited development potential and were adjacent to property owners with limited or no history of code violation or delinquency. Vacant lots meeting these requirements would, upon application, be transferred to an adjacent property owner for the cost of recording the deed, with the expectation that the property owner would combine their existing property and any adjacent side lots granted into a single larger parcel of land.
 Governing, “Residential Segregation Data for U.S. Metro Areas” https://www.governing.com/gov-data/residential-racial-segregation-metro-areas.html, (2019).