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All That Glitters; 45 Years of Block Grants

By Lynn Sanchez.

Omaha, the 1970s.

Moviegoers thrilled to “Jaws.” Eyebrow grooming was not yet “a thing.” Cell phones were the stuff of sci fi, “Pong” constituted cutting edge gaming technology and the city fathers were worried because downtown had been steadily losing its mojo as the city’s business center.

Fifty years ago, neighborhood development was not yet “a thing” in Omaha either.

They received a relatively small amount of federal funding used for things like code enforcement and housing rehabilitation from HUD’s categorical programs (so-called because they fit within eight different categories of development.) Nationwide, planning trends were moving away from subsidized public housing and towards urban renewal. Part of the Housing Act of 1954, urban renewal was commercially-friendly. It worked by acquiring privately owned properties, purchasing or seizing them through eminent domain, then razing and re-conveying them to selected developers who devoted them to other uses. Preferential treatment was given to families who agreed to relocation for slum eradication or revitalization.

According to a masters thesis on “The Urban Renewal Movement in Omaha, 1954-1970” by UNO history department student Donald Louis Stevens Jr., local businessmen, labor groups, and politicians pushed long and hard for the creation of a local urban renewal agency similar to OHA. They hoped to target blighted neighborhoods in east Omaha to both the north and the south for development. Omahans decisively voted it down three times between the ’50s and ’70s. Not surprisingly, opposition was strongest from those in urban renewal’s crosshairs, while White suburban voters tended to support it. Ultimately, urban renewal’s avid promotion by Omaha’s wealthy businessmen smelled of selfish self-interest, casting suspicion on the claim for “community good” since the advocates were also most likely to profit.

Downtown revitalization swung into full gear when Omaha received a hefty grant from a categorical “Federal Open Space” program. Here at last was the opportunity to create the Central Park Mall, a massive refresh of the heavy industry and lead-polluted land that had always existed between downtown and the Missouri River. The open air park and lagoon replaced several city blocks of uninviting brick buildings with nature and family-friendly features. In 1975 the city demolished the first building, the Omaha Typesetting Company at 11th and Douglas, to make way for this new project. A 2017 Omaha World Herald story on the history of the Mall sums it up tidily: “The city sued 104 property owners in the mall site and began condemnation proceedings. All parties eventually reached financial agreements, and the mall was built.”

Into this already fractious environment HUD’s Community Development Block Grants (CDBGs) debuted in 1974. Notably, CDBGs subsumed the categorical grants which were funding the Mall revitalization.

Marty Shukert is in a unique position to offer insight into what happened next. He was just beginning his career in the Omaha Planning Department around this time, and would go on to serve as Planning and Community Development Director, Omaha Planning Director in 1983 and Director of the Mayor’s Office of Economic & Policy Development. He is now a principal at RDG Planning and Design.

He explains, “Cities that had grants under one of these previous categorical programs could complete that work but those programs were discontinued and ‘folded in’ to the CDBG program. So the city, which had gotten this grant to do the mall, was effectively given permission to use Block Grant funds to continue that project. An obligation (had been) entered into before, but the program no longer existed. This was a subject of huge conflict in the community. When people in North Omaha or in other neighborhoods said, You’re using all that money on the mall! Well…yes! But that was the deal.”

Omaha was now one of the cities with a population over 50,000 that would now receive Block Grant money from HUD. They did not have to apply for the money, but did have to file paperwork and monitor the funds to ensure they were being used to meet one of three elements:

  • Removal of slums and blight
  • Principle benefit to low and moderate income populations
  • Meeting some urgent community development need (e.g. recovery from a catastrophic storm.)

Any given city’s particular entitlement was calculated by a number of different factors including population size, poverty, blight, etc. “Despite the fact that I worked with the program for years, I honestly have no idea what the components of the formula are,” admits Shukert.

Although they now had more money in the budget, Omaha was “starting from scratch” in the realm of neighborhood redevelopment, Shukert says. “The city really had no organizational infrastructure internally and no neighborhood infrastructure externally to do a very good job administering those funds or even figuring out what to use them for.”

As Omaha waded into the CDBG waters, three major plans for North Omaha emerged:
  • Kellom Heights
  • The Conestoga Place subdivision
  • Redevelopment of 24th and Lake Streets.

Kellom Heights was an area that was arguably the most dis-invested part in North Omaha in terms of vacant ground,” says Shukert. The developer for Kellom was the newly-formed Omaha Economic Development Corporation (OEDC), a spinoff of Wesley House. 

Kellom was OEDC’s first project, says former president Al Goodwin. Their group had undergone a year-long process of laying the groundwork for economic development in North Omaha. This included competing for grants from the U.S. Health and Human Services department, developing a plan and creating a board for OEDC.

We looked at the area we wanted to work with, from Cumings over to Ames, from 16th to 30th Street,” says Goodwin. “The plan was to draw upon the expanding economic development to the east and south and transport that over to the north by jobs and housing and community development. (Kellom) was 132 units of multifamily housing, which was about a six million dollar project.”

The second plan was for a residential subdivision called Conestoga Place Neighborhoods, located south of the Conestoga School. That project was done by a housing development corporation called the Greater Omaha Community Development and Housing Corporation, spun off from the Omaha Chamber of Commerce, Shukert says. The development was built in the ’90s on the site of Logan Fontenelle housing project.

Bertha Calloway

The third initiative was 24th and Lake Streets. During the planning stages, Shukert says, “(North Omaha activist and historian) Bertha Calloway did a little seminar for the people in the city about a project in Sioux City.” In contrast to the mass demolition going on to created Omaha’s new mall, Calloway explained how Sioux City had “reused one of the old buildings in the stockyards area for a new kind of neighborhood based commercial property,” he says. “And I thought that seemed like a good idea.”

Calloway’s presentation was the catalyst for eventually redeveloping the Lion Products building into the Blue Lion Center. The name was “a contraction of McGill’s Blue Room at 24th and Lake and Lion Products, which was the building south of it. Both buildings were tremendously deteriorated,” says Shukert. That project was eventually owned and administered by North Omaha Community Development (NOCD), an umbrella group of neighborhood associations. The intent was to run a shopping center in the building.

With benefit of hindsight, Shukert say this falls into the category of good ideas that got off to a rough start. “The concept of Blue Lion Center, namely a neighborhood-run commercial project, didn’t work. On the other hand, the fact that those buildings were preserved began to establish some kind of an economy. It eventually paved the way for something else, which was the Union (for Contemporary Art), which is terrific.”

By this time, the city had also realized the limitations of housing rehabilitation.

“Rehabilitation is fine,” Shukert says, “but unless you start filling those vacant lots with something it’s a lost cause, because you have nothing that’s sustaining rehabilitation…The typical single family rehabilitation program got more and more expensive, and strategically less effective. We thought it was important to try to produce new housing in North Omaha.”

Shukert and another member of the planning department, Bob Peters put together Block Grant and private loan funds to create affordable housing packages for owner/occupants. “Ultimately the goal was to buy or clear land, largely through community development corporations like OEDC or Holy Name Housing Corporation, which has always been the way the Omaha, and build the infrastructure and the subdivisions.” he says. “The program that got established in the 1980s was a blended program of CDBG funds or HOME funds and private funds that were tailored to be affordable to the individual family,” Shukert says. “All the single family housing in North Omaha built during that period and then into the ’90s and even into the century involved an expansion of that kind of a program.”

Omaha, 2020

Omahans are now on equal footing with the coasts in terms of many fashion, cultural and social trends which formerly took years to reach the midwest. Eyebrows are now appropriately groomed, outfits on point. Millennials, seemingly born with an iPhone in their hands can Google “Jaws,” a movie that preceded their birth by about 10 years.

The downtown Mall is once again subject to a massive transformation, expected to cost up to $290 million by completion.

Rendering of the Riverfront Revitalization Project

The Missouri Riverfront Revitalization Project will eventually extend well beyond the footprint of the original mall to Heartland of America Park, Lewis & Clark Landing and across the river to Council Bluffs’ riverfront. The project is co-chaired by Ken Stinson (Peter Kiewit Sons) and Mogens Bay (Valmont), titans of Omaha business and board members of Heritage Services. The same group has raised nearly a half billion dollars in donations for public-use buildings over the past 25 years including CHI Health Center (formerly CenturyLink Center) and TD Ameritrade Park.

Unlike the original ’70s Mall which had federal funds as its impetus, the current Riverfront project is largely privately financed. The project’s official website reads, “The Downtown Riverfront Trust (DRT) will contribute approximately $230 million in private donations for construction of the parks. The City and the DRT will each contribute $3 million annually for ten years to a fund managed by the Metropolitan Entertainment & Convention Authority for operation, maintenance and activation costs.”

Why are so many resources being funneled into Mall 2.0? A clue may be found in an Omaha Master Plan prepared about a decade ago, during the administration of Mayor Mike Fahey (2001-2009). Regarding “Land Use” it reads, “… the city lacks a clear and positive national image. (emphasis added) This lack of image hinders Omaha’s ability to define a national and regional role and in turn has an adverse effect on business recruitment.”

Omaha’s city center is ripe for development because of cheaper land and aging buildings that can often be razed or rehabilitated without significant interference or political fallout. Dollars flow in and improvements are made, property taxes and rents creep up, which is lucrative for developers and the City. But family incomes are lower in North and South Omaha. Many residents are preoccupied by the struggle to pay for basic necessities. The push-pull of revitalization is a double-edged sword that cuts low to moderate income renters especially deeply.

A bald truth: there is little financial motivation to protect low income people.

Protecting human rights such as the right to affordable, safe, clean housing falls to social services, nonprofits, activists and City leaders who embrace civic responsibility, a meaningless concept unless backed up by action. The 2009 City Master Plan proclaims, “Omaha must be a community committed to promoting and maintaining a high quality of life for all of its people.” On the 2019 Will Brown Day of Remembrance, the Omaha World Herald quoted Mayor Jean Stothert’s public remarks. Omaha’s governing class needs to look unflinchingly at this horrific crime, she said, “to recognize that enormous racial tension and suffering were part of our past, and that affects our feelings and our beliefs to this day.”

Against this backdrop, the final vestiges of Spencer Homes are due to be replaced with updated housing, funded in part by a HUD “Choice Neighborhoods Implementation Grant.” Much of Spencer Homes was destroyed in 1981 to make room for the North Freeway, a controversial move that displaced 56 families and numerous businesses in a move Marty Shukert calls, “one of the worst planning decisions the city of Omaha ever made.”

According to the Omaha Planning Department’s Project Overview for the grant, “Leveraging significant private philanthropy, the housing strategy will transform Spencer Homes into a mixed-income community (known as Kennedy Square) with access to educational amenities, as well as complete the Highlander mixed-use development.”

Seventy Five North’s Highlander development has made a splash at 30th and Parker, formerly the site of Pleasant View Homes. Once complete, Highlander plans a total of 280 units of mixed-income housing for sale or rent, including apartments, townhomes, and single-family homes. There are currently 101 rental units finished, and a senior housing complex of 60 units is under construction. Sixty percent of the housing is dedicated to low and moderate income residents, and 40 percent to market rate. The blueprint for Highlander is the Purpose Built Community model created, in the once crime-ridden East Lake neighborhood of Atlanta.

Pictured: The boundaries of the Omaha Choice Neighborhood.

Mixed income housing plus child-centric and health-conscious programming sets the Highlander apart as a development with a mission to retain and champion low income residents who have lived in the area for years.

Yet there have been murmurs of suspicion about the Highlander in part because the majority of the funding originates outside of North Omaha. The Purpose Built Communities organization was founded by Atlanta-based developer Tom Cousins along with billionaires Warren Buffett and Julian Robertson. The Highlander ‘s philanthropic partners include the Sherwood Foundation, the William and Ruth Scott Foundation, the Lozier Foundation, the Suzanne and Walter Scott Foundation, the Peter Kiewit Foundation and the Daugherty Foundation.

Rendering of Phase One Highlander construction

Like the Mall, a project of this magnitude arguably could not have gone forward without a mix of business, federal and philanthropic support. Although Michael Maroney of Omaha Economic Development Corporation is not directly involved in building the project, he observes housing development will probably continue on this path away from federal funds such as HOME and CDBGs.

“All federal dollars aren’t necessarily gold.” Maroney says with a slightly pained chuckle. “My father used to say when I was growing up, all that glitters is not gold just because it shines. Don’t get me wrong; federal dollars are important and they’re necessary to move. But they come with a lot of restrictions.” Even a small percentage of federal funds attach regulations to the entire project, including environmental assessments, wage requirements from the Department of Labor, and years of ongoing monitoring of affordability. All these add to overall costs, making them less attractive to most developers.

“The reality is,” Maroney says, “if there’s not an integrated economic base (in North Omaha) then it’s going to be harder to attract businesses or to sustain businesses that are there.” Senator Justin Wayne, speaking at a December 9th meeting with business owners from the 24th Street Corridor put it more bluntly: “People need to do business with Black folks.” 80 to 90 percent of the issues in North Omaha would disappear with economic development, Wayne says. His “Innovate Nebraska 3.0” plan provides a detailed map for that development. Wayne writes, “While the implementation will be challenging, the philosophy is simple: local jobs, build great communities, which generate income, that strengthens our state.”

 

CDBG – How Much?

Is there a list of all CDBG projects that have been built in North Omaha since the program started in 1974?

Probably. However, at the time of publication, The Star was unable to locate it.

When pressed to estimate this number, former City Planning Director Marty Shukert answered with the caveat, “It would probably be wrong, but I would say that if you included everything since 1980, that includes Conestoga, Concord Square, infill projects, Horizon Townhomes, Kellom Heights, it’s probably over 1,000 to 1,500 units of new housing.”

The city is required to track CDBG and all other federally funded projects through the “Consolidated Plan.” Detailed documents are compiled every five years by the planning department. The 2013 – 2018 plan, publicly available on the website, contains almost 400 pages of charts, tables, statistics and project data. You can find a copy at https://planninghcd.cityofomaha.org/plans.

The University of Nebraska at Omaha compiled the overall numbers statewide, for all communities over those 21 years.

Nebraska averaged:

  • 77 Block Grants per year ($13,610,912)
  • 16 for Economic Development ($4,828,416)
  • 25 for Community Development ($5,133,071)
  • 12 for Housing ($2,943,447)
  • 21 for Planning ($390,207)
  • 2 for Tourism ($315,771)

These stories originally ran in three issues of The Star, November 15th, November 29th and December 13, 2019.