Partners (Number 1, 2007)

Vol. 17, No. 1, 2007


Innovative Approaches Help Solve N.O.'s Housing Woes

Achieving the American Dream: Are We There Yet?

Courting the Creative Class: New Strategies for Urban Revival

GO Zone Tax Credits and Incentives

The Subprime Mortgage Market

Case Making: Building a Pathway to Implementation

Spotlight on the District—Florida



Courting the Creative Class: New Strategies for Urban Revival

upscale urban scene Inspired by recent research, city planners have begun to think strategically about attracting a demographic that by its very nature promises to revitalize urban life—the creative class.

What is the "creative class" and how important is this sector of society in fostering urban vitality? In his book The Rise of the Creative Class, George Mason University Professor Richard Florida describes a group of young, educated, highly mobile workers who are employed in information technology, health care, finance, science, the arts and other knowledge-based fields. According to Florida, they represent the future of the U.S. economy.

City planners have typically focused on investment in physical infrastructure, commercial real estate and new housing construction to revitalize communities. But now they are considering new approaches.

Redevelopment initiatives have thus far tended to target traditional families as cities contended with the suburbs for growth in this demographic group. Urban economic development programs usually emphasize job recruitment, workforce development and tax incentives to large corporations.

In the past five years, however, some cities have started to evaluate their unique appeal to nontraditional demographic groups. Creative class workers are likely to choose a location before they choose a job, and they seek out certain cities because of the cultural and other lifestyle amenities offered. The creative class also values inclusion of gays, immigrants and other nontraditional groups.

Creative class values diversity
Florida argues that workers in the creative class want diversity in their communities and value acceptance of alternative lifestyles. His research has shown that many cities attractive to creative workers also have a high concentration of gays. Florida's explanation for this finding is that a concentration of gays is a proxy for tolerance—one of the factors important in the location choice of the creative class.

Because gay- and lesbian-friendly communities appear to be a harbinger of urban vitality, some cities are considering strategies to attract gays and lesbians to communities in need of new investment. The city of Baltimore, where city officials have actively developed marketing strategies to attract gays and lesbians to neighborhoods ripe for revitalization, is the example most often cited.

This strategy has raised significant questions about why cities would want to focus on attracting gays as well as why gays might have a preference for living in certain urban communities. It also raises a larger question about the connection between gays and demographic diversity in cities that appeal to creative class workers. New studies suggest that this diversity provides not only social benefits, but brings economic benefits as well.

Bringing back distressed neighborhoods
The size of the gay population in a community is not typically measured, so it is difficult to quantify their economic impact on urban revitalization efforts. However, Gary Gates, a research fellow at the UCLA School of Law, has attempted to analyze the role of gays and lesbians in neighborhood development. His research shows that neighborhoods with a high number of gay households have higher housing values than comparable neighborhoods composed primarily of traditional couples. The study indicates that the revitalization efforts of gay and lesbian homeowners have over time made neighborhoods more attractive to all types of households, including those with traditional family structures.

While there is a lack of quantitative data, extensive anecdotal evidence exists to show that investment by the gay population has led to the rehabilitation of housing stock and new business opportunities in many communities across the country. Gays and lesbians have a long-standing reputation for moving into distressed neighborhoods and revitalizing homes and businesses.

Some of the most well-known examples include San Francisco's Castro District, Dupont Circle in Washington, D.C., South Beach in Miami and Florida's Key West. Lesser-known examples include the East Nashville neighborhood in Tennessee, Midtown Atlanta and the Historic Kenwood area in St. Peterbsurg, Fla. All of these neighborhoods are recognized for their cultural amenities, diverse housing stock and vibrant commercial centers. These areas pride themselves on being tolerant and open to diversity, and as a result have become centers not only for gay and lesbian populations, but also for the creative class generally.


Creative Class Group.

Dewan, Shaila. "Cities Compete In Hipness Battle To Attract Young," New York Times, November 25, 2006.

Florida, Richard. "The Rise of the Creative Class: Why cities without gays and rock bands are losing the economic development race," Washington Monthly, May 2002.

Gates, Gary.

Moss, Mitchell. "Reinventing the Central City as a Place to Live and Work," Housing Policy Debate, Vol. 8, Issue 2, The Fannie Mae Foundation, New York, 1997.

Swope, Christopher. "Chasing the Rainbow: Is a gay population an engine of urban revival? Cities are beginning to think so," Governing, August 2003.

The Urban Institute. "The Demographics of Diversity: Why Cities Are Courting the Gay and Lesbian Community," June 3, 2003.

Why gays, lesbians and the creative class revive neighborhoods
Nationwide, the gay population has been more willing than traditional households to move into run-down, racially and ethnically diverse neighborhoods that may have higher crime rates than more stable neighborhoods. This observation might extend to include members of the creative class who are young, adventurous and in need of affordable housing. The neighborhoods they select often have more affordable but architecturally unique homes ripe for renovation and investment. Investment by gays and lesbians has helped transform neighborhoods, and realtors tout the presence of gays as a sign of an up-and-coming neighborhood.

Gates has done extensive research to determine why gays and lesbians are more likely to locate in distressed communities. One of the key factors he cites is that gay households are not as likely to have children as traditional households. As a result, gays may be less concerned with school quality and less worried about higher crime rates. In addition, gay and lesbian households may have more disposable income available to put towards renovation of their homes because they do not have the expenses that come with children. This same reasoning could be applied to members of the creative class as a whole, who may also be single or childless and more tolerant of diversity.

Real estate agents and word-of-mouth referrals have been the primary tools used for attracting gays to certain neighborhoods. However, some cities have started to recognize that the gay population is a significant resource for urban revitalization. Encouraging gays to lead revitalization efforts can be a cost effective strategy for cities. The city will not only receive higher tax revenues from the improved properties, but, because gay households are less likely to have kids, they will not place an additional burden on schools.

Pros and cons of wooing the creative class
While clear evidence exists about the impact of gays and lesbians and the creative classes generally on the revitalization of distressed neighborhoods, there is a broader argument about the significance of this group for the economic competitiveness of cities and regions.

According to Florida, a large gay population is an indicator of how open the community is to new and nontraditional ideas, and it is this type of creativity that is needed to generate economic growth. However, a strategy focused entirely on recruiting gays and creative workers to live in a city will not necessarily improve the economic vitality in a community, nor will it lead to revitalization of all inner city neighborhoods. Planners must seek a broader strategy that looks at all of the attributes that make a community desirable.

While the creative class may bring needed capital into depressed communities, it is important to recognize several potential downsides of this investment. First, some existing residents may not be willing to embrace new demographic groups moving into their neighborhoods, especially if the result is a significant change in the socioeconomic composition of the neighborhood. Secondly, as neighborhoods improve and become more attractive to a wider population, housing prices will increase, making it more difficult for existing residents, even the first "urban pioneers" who moved into the community, to maintain their homes. This can lead to a shift in the character of the community, as over time it becomes less of an alternative enclave and more of a neighborhood for wealthy households.

Some also question whether cities are becoming too concerned with marketing themselves to nontraditional demographics. Critics of the creative class argument claim that cities are starting to compete with each other to draw the creative class and are being distracted from fulfilling their core functions. Instead of focusing on affordable housing, recruiting new businesses and investing in schools, cities are emphasizing cultural amenities, the arts and coffee shops. Opponents argue that this strategy really only benefits the wealthy and increases the disparity between the haves and the have-nots. From this perspective, cities might risk becoming havens for wealthy, young, alternative populations while ignoring adequate opportunities and services for traditional middle-class families.

Cities are always looking for new strategies to revitalize communities, attract businesses and encourage economic growth. Traditional programs that increase affordable housing, encourage economic development, promote education and improve public safety will always be needed. However, cities that are able to leverage the strength and creativity of all of their residents and that are inclusive and tolerant of different populations will have a stronger foundation for accomplishing these goals.

This article was written by Jessica LeVeen Farr, regional community development manager in the Atlanta Fed's Nashville Branch.