Reparations Are Gaining Momentum Across The Country. Real Estate Is Front-And-Center

Evanston, Illinois, became the first U.S. city to fund reparations earlier this year, part of an effort to make amends for the city's history of racial housing discrimination.

Evanston is at the forefront of a growing grassroots movement of local governments taking action to explicitly move forward on some form of reparations to make up for social and systemic sins against Black Americans. While scholars say only the federal government can truly right the wrongs of slavery and Jim Crow, these municipalities are taking critical first steps, and their focus thus far has largely been centered on real estate.

“The American housing and commercial real estate markets have been really horribly racist for the last couple of hundred years,” University of Minnesota Humphrey School of Public Affairs professor Edward Goetz said. “I think [real estate] presents itself as a logical place to think about reparations.”

Evanston, a city of nearly 74,500, approved a $10M program for Black households, including a $25K grant given to 16 residents for home repairs and costs, paid for by taxes collected from recreational marijuana sales. Evanston is attempting to repair decades of “discriminatory housing policies and practices and inaction by the City,” the city's resolution states.

“The fact that Evanston was willing to step forward and begin to set up a program to begin to tangibly help families in town should be replicated elsewhere,” Evanston Mayor Daniel Biss told Bisnow. “It's a small start. But it's a tangible, concrete start for 16 households that have been victims perpetrated by the city of Evanston and who need help.”

While its effort isn't as far along as Evanston's, the town council of Amherst, Massachusetts, Monday night approved a resolution to direct its finance committee to set up a potential funding plan for its own reparations program. The committee could dedicate a funding system by July and begin funding reparations, in whatever form they take, by next year, MassLive reports.

Matthew Andrews and Michele Miller, White residents of Amherst, pushed the council of the majority-White town to take on the bill. The duo said in an interview the town has had a history of systemic racism, including covenants that prevented Blacks from renting or buying housing.

“I saw way more will than I had expected from the majority of the town council,” Andrews said. "The uncomfortable reality is as White people we need to give money and not be in control of it. That's what reparations is.” 

Last year, Asheville, North Carolina, made headlines by passing a resolution that would look to invest in Black communities as a form of reparation. The Asheville City Council is set to vote on a $1.2M reparations package this summer. 

Larger cities are forming study groups or task forces that are exploring the effects of discrimination and potential reparations, including New York City, Durham and Winston-Salem, North Carolina, and Providence, Rhode Island.

“Cities are now looking at stolen land, stolen lives and stolen labor,” said Leon Andrews, the director of the Race, Equity and Leadership division of the National League of Cities.

While few offer any specifics on potential reparations policies, experts say real estate — particularly the issue of Black homeownership — will be a primary driver in those discussions.

“Housing is one of the major indicators of wealth in American society,” said Ron Daniels, a veteran social and political activist who heads up the National African American Reparations Commission, a group formed in 2015 that is aiming to push reparations in Congress. "Of course, there is a huge wealth gap between Black Americans, African Americans and Whites in this country. And it's become intractable."

Marcus Coleman, a community activist in Atlanta and founder of the nonprofit Save OurSelves, sees real estate as crucial to addressing potential reparations in one of Georgia's largest counties.

Coleman was recently named as a member of a reparations task force being put together by members of the Fulton County Board of Commissioners. While the county, which includes part of Atlanta, still has to make other appointments to the task force, Coleman said he believes real estate policies will very much be part of the conversations once it launches.

“To me, first and foremost, reparations means land. And one has the ability to do what one wants to do with their land,” he said. “You can't get any more of a priority.”

From the beginning, real estate was central to reparations. U.S. Gen. William Tecumseh Sherman codified the idea of 40 acres and a mule in 1865, proposing in his Field Order No. 15 to wrest control of 400,000 acres of former Confederate land along the East Coast from Charleston to the St. John's River in Florida and parcel it out to the 4 million former slaves.

But the order was never realized after President Andrew Johnson overturned it by the fall, a few months after he took the White House in the wake of Abraham Lincoln's assassination.

The effects of slavery are still felt today, largely in the form of a generational gap in wealth building between Black and White families in the U.S. The average wealth of a White family in the U.S. was $919K in 2016, $700K more than the average Black family, a disparity that is greater than it was in 1963, according to a survey of consumer finances from the Urban Institute.

It wasn't just the failure of enforcing Sherman's field order that has kept Black Americans from gaining equity. More than a century of federal housing policy favored Whites with land and homeownership over Blacks, including the New Deal, the G.I. Bill and policies such as banks redlining Black neighborhoods and preventing many Black families from achieving homeownership.

All of these have created an epidemic where Blacks have been left out of the generational wealth creation afforded White families through property and homeownership, experts say. Forty-seven percent of Black households own their home, the lowest rate of any racial demographic in the U.S., according to the U.S. Census Bureau. By comparison, 76% of White Americans own a home and 51.4% of Hispanic Americans own their home.

“In general, we know that when you're looking at the reason for the wealth gap in this country, you have to focus on how biased housing policy and discrimination robbed Black people of wealth building and assets,” Brookings Institution Senior Fellow Andre Perry said. “Redlining practices really inhibited the amount of wealth that Black families could have.”

That lack of homeownership has a ripple effect, said William Darity, the Samuel DuBois Cook Distinguished Professor of Public Policy at Duke University, who has written extensively about reparations. Without the wealth built by real estate ownership, Black families do not fully participate in the political process, do not have a cushion for medical emergencies or legal issues, and struggle to send their children to college without significant loan debt, he said. According to Brookings, Black college graduates owe $7,400 more than their White counterparts.

“It's fundamentally an opportunity and economic security gap,” Darity said.

Experts Bisnow interviewed for the story posited a number of potential policies that could be used by local governments as forms of reparation. Those include financial assistance for housing down payments, tax credits for Black homeowners in communities that have lower valuations than White neighborhoods, and encouraging investments in Black communities. Oregon State University School of Public Policy professor Andrew Valls said federal officials also need to consider tax breaks for renters akin to what homeowners get when it comes to mortgage deductions.

“In essence, homeowners in the United States are on welfare," Valls said. "Their homeownership is subsidized by the government. Renters do not enjoy any similar kinds of advantages."

Other cities have tackled racial wealth disparities through real estate policy but fell short of characterizing them as reparations. Portland, Oregon, instituted a “Right to Return” policy that gave down payment assistance to any resident displaced or whose family member in the past was displaced due to eminent domain and gentrification. Los Angeles County officials gave back beachfront property in Manhattan Beach to the descendants of a Black family whose property was taken from them by eminent domain in the 1920s.

Last year, the mayor of Newark, New Jersey, launched the $100M Newark 40 Acres and a Mule Fund to give money to Black and Latinx businesses as a way to combat racial disparity in the city. And in Minneapolis, city officials did away with single-family zoning codes throughout the city over accusations that it was discriminating against Blacks and low-income households. The net effect of these policies is a form of reparation since they mainly assist Blacks, PolicyLink Senior Associate James Crowder said.

“They all were designed to address historical harms that disproportionately enacted against people of color,” Crowder said. “While they didn't call them reparations, they were enacting reparations.”

But not everyone believes that focusing policies on real estate and housing are the best way to address reparations.

William Emmons, the assistant vice president and economist at the Federal Reserve Bank of St. Louis, said the benefits of investing in people over property have better longer-term ramifications. That includes investments in education and healthcare.

“The evidence points toward the investment in human capital has higher returns over time than any sort of tangible asset,” Emmons said.

Darity also cautioned that focusing on housing alone will not solve the wealth gap, and that only the federal government has the resources to truly tackle the issue. Darity estimates the federal government would need to spend at least $11 trillion, including direct payments to Black households. That is a number that local governments cannot hope to fill. The combined state and local budgets can only address a little more than $3 trillion of that need, Darity said.

“No matter what municipalities like Evanston undertake, there is no way individually or collectively [they] can meet the debt,” he said.

Some members of Congress are pursuing a federal-level commission to study the effects of slavery and discrimination and how that may be addressed in reparations. Congress has voted House Resolution 40 out of committee for the first time since initially being introduced in 1989. If approved, the bill will create a federal commission to study the effects of racial discrimination of Black voters, a move proponents say could pave the way for some form of federal reparations policy.

Biss, who was inaugurated as Evanston's mayor this year after reparations were approved, said he supports the effort and hopes that what the city has done will spark action across the country, even if other cities take a different approach.

“Nobody believes that a town of 75,000 going first is going to have the final word,” Biss said, adding that the city’s efforts prove that reparations can be more than just an “abstract philosophy puzzle."

“By doing that, we can actually make concrete tangible progress,” he said.

Federal policy also will be needed to address all the complexities that have kept Black households out of the residential real estate market, or trapped them in undervalued communities, Brookings' Perry said, including reforms within the tax code, in the appraisal industry — which has admitted to widespread undervaluing of homes owned by Blacks — and in the lending industry.

But the momentum is now there.

“For me, it's more about recognizing it's coming to Congress, and the more that you see these local efforts, the more likely it's going to get to the federal level,” he said. “And that's what I'm encouraged by. It's like these local efforts are going to push the federal government.”