ECONOMICS UNIQUENESS

132 ■ THE ECONOMICS OF UNIQUENESS
So the positive outcomes of “gentrifi cation” read like the outcomes of any successful
economic development initiative—new investment, new businesses, new
jobs, increased tax revenues, higher levels of owner occupancy, and reduction of
vacancy. But while these results are positive, they can still have a negative social
impact, namely on the poor households that have been the primary occupants of
the targeted heritage area.
Gentrifi cation: The Negative Aspects
Th e following are the negative consequences of “gentrifi cation”:
• Rising rents. As noted above, rising rents are a strong indicator of an improving
economic environment, and are a necessary precursor to sustained private
investment. But for the payers of those rents, this is obviously a negative
aspect, particularly when there is little or no opportunity for increased income
to off set the increased rent. In older city centers in much of the developing
world, it is not unusual to have many tenants occupying space for which no
rent is being paid. Any rent at all is, therefore, an increase, and may be beyond
the occupants’ fi nancial capacity to pay.
• Rising taxes. In many parts of the world a major source of revenue is property
taxes. Usually property tax is an ad valorum tax, which is a levy based on the
market value of the property. If a consequence of gentrifi cation is increased
property values (and it usually is), then that means an increase in the property
taxes on the appreciating asset. While new owners and investors have likely
built rising taxes into their purchase assumptions, existing owners, particularly
those of modest means, probably have not. While rising rents are a problem
for low-income tenants, rising property taxes are a problem for low-income
owners.
• Potential change of community character. Neighborhoods and city centers are
not just defi ned by their buildings; more importantly they are defi ned by the
people who live there. As new groups move in, and particularly when the inmigration
of one group is accompanied by an out-migration of another group,
the community character of the area may change. Th is change will most certainly
be seen in diff erences in economic status of the new residents and probably
in their educational and occupational status as well. In some instances the
incoming group may also be from a diff erent ethnic group, religion, race, or
even language group. (See box 5.5.)
• Loss of power and sense of ownership by the local resident groups. In an area
inhabited almost exclusively by low-income households, there might not be
much actual power or ownership, but there may be a sense of power and
ownership. Long-term residents may share a sense of community, bonded by