How business elites sold the "urban renewal" lie to the Rust Belt

The rich have convinced taxpayers to spend millions to prop up their developments. Here's why it never works

Published December 2, 2019 7:00PM (EST)

Street in Allentown residential district, Pennsylvania, USA (Getty Images/iStock)
Street in Allentown residential district, Pennsylvania, USA (Getty Images/iStock)

I live in Allentown, Pennsylvania, a city that’s become a clichéd symbol for urban decay and rebirth. President Trump and other prominent Presidential candidates lament the decline of manufacturing jobs in rustbelt cities like Allentown and neighboring Bethlehem. He and other political candidates make fanciful claims that they will bring returned prosperity, based on vague promises to “Make America Great Again” and “bring back jobs” to cities in decline.

But other propaganda narratives have also emerged in relation to the rustbelt. One of the most prominent is the claim that enlightened capitalism represents the last, best hope for America’s economically disadvantaged locales. It is, of course, quite an irony that the same business class that is burying the working class in an era of record inequality also depicts itself as the savior for American workers.

I increasingly hear about the centrality and vitality of social entrepreneurs, who claim to offer a path forward in the pursuit of positive, even progressive change. These business leaders are many – Bill Gates, Mark Zuckerberg, Tom Steyer, Andrew Yang, Warren Buffett, and George Soros, to name a few. They fashion themselves as agenda-setters who can solve contemporary problems such as educational decline, poverty, inequality, and environmental degradation. In Allentown, Pennsylvania, these problems stand front-and-center, in a region long defined by deindustrialization and economic decline.

Rising to address these challenges, Allentown officials have partnered with prominent business interests, promising to “revitalize” the city. Words like “revitalization” are vague enough that they imply a shared prosperity for all. The city’s entrepreneurial partners offer a return to mass prominence, selling downtown redevelopment as providing residents and investors an opportunity “to be part of one of the country’s fastest growing cities” and “a vibrant urban core flowing with opportunities.” The allure of this pro-growth agenda has long been central to market-based “trickle down” politics, in which taxpayer resources are invested in business agendas, which we are told will benefit the masses via economic growth that “lifts all boats.”

I hear much adulation in the Lehigh Valley area for Allentown’s City Center Investment Corp’s (CCIC) founder, J.B. Reilly, who won 2019’s “Entrepreneur of the Year Award” for his real estate investments. Local media highlight Reilly’s involvement in “major mixed-use development” project, “City Center Allentown,” a major renewal initiative that “includes more than 1.5 million square feet of office towers, the Renaissance Allentown Hotel, five residential communities, retail and restaurant space, [and] a total investment of $455 million in downtown Allentown.” CCIC boasts on its website about the participation of another dozen business investors and developers in the “center city” redevelopment initiative.

Allentown’s redevelopment initiative was originally authorized under Pennsylvania state law via the establishment of a “Neighborhood Improvement Zone” (NIZ). The NIZ is a special taxation district funded by the city and state, and devoted to redeveloping nearly 130 acres of property in downtown Allentown. The Pennsylvania state initiative is different from previous approaches to urban renewal. It’s been common across American cities over the decades for urban projects to be funded through “tax increment financing” schemes (TIFs), in which public infrastructure projects are undertaken via cities floating municipal bonds, which are paid back with interest over time, through anticipated tax revenues collected within the redevelopment districts. In contrast, Allentown’s NIZ initiative represents a direct subsidy to business interests. Developer and local business initiatives are funded through taxpayer dollars and through the NIZ, as local developers secure investment loans from private banks to build local business spaces, while the local sales taxes from these businesses are collected by the city and state, with revenues set aside to service the original development loan.

With TIF developments, businesses are indirectly courted, as city officials seek to remove urban blight and create more desirable downtowns to attract new business investment. But Pennsylvania’s NIZ financing is a direct subsidy to businesses in the form of hundreds of millions in guaranteed development dollars and subsidized city rents, coordinated through state and local government, and benefitting local developers and newly-established businesses. This is no small subsidy in a time of mass poverty and inequality, and in resource starved cities like Allentown. Local business interests working within the NIZ are wide-ranging, a sign that the business community understands the value of tremendous resources that are being offered by state and city taxpayers. Stakeholders in the redevelopment include retail, private commercial, and hospitality based investments, among other business ventures, with these projects directly overseen by the Allentown Neighborhood Improvement Zone Development Authority (ANIZDA).

Allentown’s NIZ initiative has been instrumental in funding many different business initiatives, including the construction of the city’s “PPL Center,” a 10,000 seat arena that hosts the Philadelphia Flyer’s farm league hockey team; the development of the Butz Corporate Center, a 22,000 square foot office building; the Trifecta Building, a “mixed-use” 40,000 square foot building designated for additional office and restaurant space, and “The Waterfront” development, located along the western bank of the Lehigh River, including 26 acres of “mixed-use” space devoted to retail, luxury living, restaurants, and office space.

There’s been no shortage of boosterism in the local media that the NIZ initiative will revitalize the downtown while raising the living standards of local residents. The Morning Call newspaper attributes ANIZDA and its investors with introducing “a boom in commercial and office space” development “over the last five years,” while celebrating that Allentown’s “skyline has drastically changed in recent years,” with “another $225 million” in projects “under development and $500 million in the planning stages.” The Morning Call uncritically reports the adulation bestowed on Allentown’s redevelopment by the “Urban Land Institute” (ULI), a non-partisan pro-development think tank, which hails the downtown “revitalization” as an “extraordinary development” that has “reversed Allentown’s decline and transformed it into a sought-after destination to live, work and play.” The initiative, ULI explains, is “helping re-position downtown Allentown into a regional center of excellence for business, culture, and metropolitan living.”

Local adulation over the central role of entrepreneurs like J.B. Reilly and his City Center Investment Corp is not surprising considering the rough-go-of-it that Allentown and neighboring Bethlehem have endured in recent decades. The decline of steel production in the Lehigh Valley, alongside the loss of other manufacturing jobs, hit the area hard. Bethlehem Steel shut down its production during the mid-to-late 1990s, and other manufacturing interests similarly fled the valley from the 2000s onward. From 2001 to 2008, the Lehigh Valley saw a 30 percent decline in manufacturing jobs. Similarly, Allentown endured a 27 percent decline in manufacturing jobs from 2007 to 2012 alone.

The promises that have accompanied downtown redevelopment are largely illusory. They obscure the ugly reality lurking under the surface of “urban renewal” schemes that really function as slum clearance and gentrification campaigns. Put another way, Allentown’s “redevelopment” is actively being pursued to the benefit of developers, business investors, and affluent city residents, at the direct expense of the city’s poor and poor people of color. It turns out that the city’s best and the brightest – the problem solving entrepreneurs who have been handed the keys to the development kingdom – are more interested in creating a business climate suitable to investment and profits, than to improving the living standards of the poor, needy, and disadvantaged.

City officials won’t admit they are promoting a class war against the poor. But a close review of available evidence leaves no doubt that the downtown redevelopment campaign is a façade designed to draw attention away from the city’s disinterest in combating poverty and inequality, in its effort to confiscate taxpayer resources to service business interests.

Consider recent inequality and poverty statistics for the city, which reveal an increasingly dire economic situation for Allentown’s most needy. The Lehigh Valley metropolitan area is characterized by extreme inequality. While the valley ranked in the “top five” in the nation in the category of regional economic growth rates, that growth was radically uneven in its distribution, as they valley was also ranked as the 19th highest metropolitan area in the country suffering from “extreme poverty.” The valley is classified as highly “economically segregated” due to its “concentrated poverty” – a designation that researchers apply to regions that have neighborhoods with poverty rates of 40 percent or higher.

A closer look at local poverty statistics reveals that overall poverty rates in Allentown are pronounced, and well above national averages. Whereas the national poverty rate in the 2010s ranged from a low of 12 percent (2017) to a high of 15 percent (2010), U.S. Census data reveals the poverty rate in Allentown ranged from a low of 21.1 percent in 2010 to a high of 23.4 percent by 2017. That poverty rate grew significantly during the era of deindustrialization, considering that the city’s poverty rate stood at 18.5 percent in 1999, according to the Census. The above data suggest that the Allentown of 2010 was even more desperately in need of economic rejuvenation than the city was ten years earlier.

It is within this context of constant-to-growing poverty that promises of urban renewal and shared prosperity via downtown redevelopment ring hollow for the city’s poor. There has been no evidence of any real decline in the city’s poverty throughout the revitalization period, which began in 2011 and is still in full force as of this writing in late 2019. The city’s lowest poverty rate was actually reached in the year before downtown redevelopment began (2010), at 21.1 percent. Two years into the renewal project, in 2013, the poverty rate had reached 23.1 percent, and four years later in 2017, it was even higher, at 23.4 percent. While poverty in the city had fallen to 22.5 percent by 2018, that was still 1.4 percentage points higher than in 2010. In sum, economic poverty in the city was actually worse 7 years into Allentown’s redevelopment than it had been in 2010 – at the height of the post 2008 economic crisis and during a recessionary period immediately following the worst national economic collapse since the Great Depression. These are damning statistics. They are quite troubling at a time when urban boosters celebrate Allentown’s downtown redevelopment as a magic economic elixir that will solve the community’s problems.

It is possible that Allentown’s downtown redevelopment could have produced some benefits for the city’s poor, at least if they remained in the downtown to utilize the improved living space. But available evidence reveals that downtown renewal has been accompanied by rising gentrification, and the relocation of poor city residents and people of color away from the central city and toward the eastern and southern Allentown. This migration away from downtown and toward surrounding neighborhoods has happened through the use of federal housing vouchers that have made possible the large scale relocation of the poor. City-level voucher statistics demonstrate a significant dispersion of people of color via their relocation away from the central city, and with their migration eastward during the 2000s and 2010s. While minority voucher recipients were largely concentrated in central city at the turn of the millennium, this was no longer the case by 2016, at the height of the downtown redevelopment. In other words, downtown “revitalization” was made possible through the process of racial gentrification.

Allentown, like most American cities, suffers from significant geographic segregation along color and class lines. The poor were much more heavily concentrated in the central city area in 2000, but those concentrations had dissipated by the early-to-mid 2010s, with voucher recipients migrating to eastern and southern Allentown [5]. The central city, while long retaining a heavy concentration of poor people of color, is being thoroughly redeveloped and is increasingly appealing to affluent city residents, particularly in the Neighborhood Improvement Zone area. The city’s minority populations are increasingly concentrated in the northern, eastern, and southern parts of the city, while whites are primarily concentrated in western Allentown, and in the suburbs west of the city, including Dorneyville, Wescosville, and Lower Macungie, among other towns and townships.

The racial and economic segregation of Allentown and surrounding suburbs is accompanied by informal dividing lines between communities, with white suburban residents commonly seeking to avoid interactions with poor people of color living within Allentown proper. This geographic segregation reinforces extreme segregation in K-12 educational institutions, which are highly unequal regarding learning outcomes. In largely white, affluent school districts in suburban Allentown, including East Penn, Parkland, Salisbury, and Whitehall, graduation rates are high, averaging 93 to 95 percent for each district. By comparison, Allentown proper’s school district, which is disproportionately poorer and minority-based, has a graduation rate of only 68.7 percent, approximately 25 percentage points lower than the suburban average.

The rise of a “social justice” mindset in American political culture has meant that elites seek to co-opt progressive support for fighting poverty and inequality within a larger political-economic system that reasserts old power dynamics, dividing the upper class on the one hand from the working, middle, and lower classes on the other. But the increasingly popular rhetoric about social entrepreneurs as saviors of the downtrodden represents a tremendous propaganda victory for business interests, because it envisions “solutions” to complex societal problems as depending on the agendas of powerful individual personalities — rather than on collective action and social movements that struggle for social justice.

The social entrepreneurial paradigm presents serious risks when it centers change on the “will power” of a select group of business leaders and philanthropic entrepreneurs, hailing from an upper class which itself is responsible for intensifying environmental calamity, rising poverty and inequality, and societal decay.

By Anthony DiMaggio

Anthony DiMaggio is associate professor of political science at Lehigh University. He is the author of "Rising Fascism in America: It Can Happen Here," just published by Routledge, as well as "Rebellion in America" and "Unequal America." He can be reached at A digital copy of "Rebellion in America" can be read free here.

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