ULI MEMBER–ONLY CONTENT: The segregation of urban neighborhoods across the United States since the Great Depression was largely created by policies and practices established and enforced by local and federal authorities, Richard Rothstein, a Distinguished Fellow of the Economic Policy Institute and author of The Color of Law, said during a group discussion with ULI members at the ULI Building Healthy Places Forum in October, part of the 2020 ULI Virtual Fall Meeting.

ULI members can access this discussion on demand in Knowledge Finder.

The civil rights movement of the 1960s did little to integrate neighborhoods in metropolitan areas across the country, said Rothstein. Real estate and land use professionals must learn from this history to support and advocate for policies designed to promote desegregation and equitable economic development. This was recently acknowledged by the incoming president of the National Association of Realtors, who described the trade group’s actions in the late 1960s as an “outrage.”

In his book, Rothstein shares specific instances in which local police failed to enforce laws protecting Black homeowners—who purchased homes legally—from retaliation by their White neighbors. But also hundreds of examples exist of federal, state, and local policies that in sum contributed on an explicitly racial basis to creating, sustaining, and perpetuating segregation—policies that, on their face, are racially neutral but in practice reinforce segregation.

Home loans created as part of the New Deal legislation, through programs of the Federal Housing Administration and the Veterans Administration, prohibited Blacks and other minority groups from buying affordable homes in newly constructed suburbs such as Levittown in New York. In order to obtain funding to build these suburbs, developers made explicit commitments to the federal government to never sell a home to a Black person. These suburbs therefore became exclusively White and served to move White, working-class families out of previously integrated urban areas and provide them with the myriad benefits of homeownership and wealth building.

Rothstein noted that developers were even unable to obtain funding for developments located adjacent to majority Black neighborhoods, which created what he calls a “white noose” of segregated suburbs around most metropolitan areas.

The ramifications of these programs and policies are clear: homes built in the suburbs in the mid–20th century sold for about $8,000. Today, those same homes sell for hundreds of thousands of dollars, if not more. The owners, often young families, who bought these starter homes and saw their value appreciate over generations, were able to send their children to college, build emergency savings, save for retirement, and often leave an inheritance for their children or grandchildren.

Through an explicit policy and deed restrictions, Blacks were prohibited from participating in this wealth building. Today, while Black wage earners make 60 percent of what Whites are paid, they possess only 5 percent of the nation’s wealth. This, Rothstein said, is largely attributable to the outcomes of mid-20th-century housing policies that have not been remedied.

A misunderstood federal program that has also contributed to housing segregation, Rothstein said, is public housing, which has the reputation of being built for poor families. In fact, the first public housing was created under President Franklin Roosevelt’s New Deal program for working-class families with stable incomes. The Federal Housing Administration built and frequently segregated public housing, creating patterns that did not previously exist and producing housing for Whites only in previously integrated neighborhoods, forcing out Blacks.

This happened in cities across the country. The first public housing project, the Techwood Homes in Atlanta, was built in 1935 on the site of the Flats, an integrated, working-class neighborhood adjacent to downtown that was demolished to clear land for the project. Nearly one-third of the 1,600 families that had lived in the Flats were Black; the Techwood Homes—only 604 units—were for Whites only. In Cleveland’s racially mixed Central neighborhood, two segregated projects were built—one for Whites and one for Blacks. Though the neighborhood had a precedent of integration, the federal government effectively solidified its policy of segregated housing through its actions in Cleveland.

Understanding this history is important when trying to address and ameliorate issues of residential segregation today, Rothstein said. One misconception is that Blacks and Whites chose organically to live in segregated neighborhoods, rather than the fact that they were forced apart through a series of government-sponsored policies. Rothstein pointed out that already many well-known policy ideas exist to redress segregation: tax subsidies such as the Low Income Housing Tax Credit (LIHTC) and the purchase by the federal government of homes in places like Levittown at market rate and selling them to Black families at deeply discounted prices like they would have paid after World War II. The problem is not policy, he said; it is political will to implement that policy.

Rothstein spoke to ULI members not solely as real estate and land use professionals, but as citizens who have obligations to show public support for changing government processes and policies. He pointed to the recent Black Lives Matter protests as an encouraging sign, but because Black Lives Matter primarily focuses on police reform and minimizing brutality against Black people, Rothstein stated the United States may need a new civil rights movement highlighting the residential segregation that has directly created stark gaps between Black and White America in wealth, health, and educational achievement—as well as political polarization.

“How can we create the national identity that we need to preserve democracy if so many Black and Whites live so far from one another and do not have the ability to understand each other’s life experiences?” he asked.

Real estate and land use professionals have a role to play in overcoming these gaps. Creating safer, healthier, and more equitable communities starts with these professionals understanding and accepting the legacies of developers, planners, investors, and others.

“Never before have so many real estate thought leaders been involved in equitable development discussions or understanding the history of racial segregation used to create the segregated communities we live in today,” said session moderator Leroy Moore, a senior vice president and the chief operating officer of the Tampa Housing Authority. “I am optimistic that the future of real estate development can be more inclusive and equitable. Today, we have more appreciation of how things came to be, thanks in large part to The Color of Law.”

Interested in reading more? ULI has a limited number of complimentary copies of Rothstein’s The Color of Law available. Email us at health@uli.org to request a copy.