I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Wednesday, June 26, 2013

TFA: The New Gentrifiers

Yesterday, I reported on how Teach For America is turning into a pipeline to bring young, college-educated professionals into urban areas ripe for gentrification. In Newark, for example, developer Ron Beit, the financial muscle behind Teachers Village, also happens to serve on the advisory board of TFA-Newark.

It's the perfect scheme: Beit and his private investors get tens of millions of dollars in tax credits to finance the development. He then turns around and rents his commercial units to charter schools, which drain tax revenues away from the neighboring public schools (which could sorely use the money to shore up their crumbling infrastructures). Those schools then pay their young teachers, recruited from TFA, who then turn around and pay rent to Beit.

So Beit's managed to develop three revenue streams - tax credits, charter school rents, and teacher residence rents - all made possible by the proliferation of charters and TFA.

And here's the real beauty part: if the neighborhood gets gentrified and property values rise, the increases accrue to the property owners - like Beit - but not the people who actually live in the neighborhood. Think about it: if these teachers were buying brownstones and condos, the rising property values would accrue to them. But, because they're renters, and not owners, they don't see any of the increase. Their presence will raise the value of the neighborhood's properties, but they'll get none of the reward (assuming everything goes according to plan).

You can see why TFAers, with their very short careers in education (an average of around 3 years according to Gary Rubinstein), are the perfect gentrifiers for urban property developers: they're renters, not owners, and they're at a point in their lives where they're out socializing, creating a climate conducive to retail businesses. They'll make a neighborhood "hip" without actually owning any property and, consequently, reaping the rewards.

I mentioned yesterday that a version of this model is already in use in Baltimore. And - just like Newark - the lead developer there served on the board of TFA:
Developer Donald Manekin's original idea was born out of an observation.
"Having been on the board of Teach for America, you know they bring in 100 new corps members a year and we'd sit at the end of these board meetings and say wouldn't it be great if there was a great place to live for teachers new to the city," said Manekin.
So with his company, Seawall Development, he set out to create a great place for teachers to live.
Manekin says living in a community of educators helps them celebrate after good days. When teachers have a challenging day they have 75 other teachers to lean on and discuss new approaches. [emphasis mine]
The funny thing is that this news story is actually about another new project going up in Philadelphia:
A Philadelphia developer wants to house dozens of young, energized teachers in the same building in Kensington. Despite how it sounds, it's not a new reality TV show. It's part of a plan to try to draw new teachers to the city and get them to stay.
Oxford Mills isn't much to look at right now. The old brick walls are full of the sounds of construction workers cutting, drilling and fixing brick work.
Gabe Canuso, Oxford Mills' Philadelphia developer says in about a year he hopes the old buildings will be full of teachers. He says there will be about 114 apartments and 60 percent of the units will be reserved for teachers. That includes Philadelphia educators from all types of schools public, private, parochial and charter.
I don't see how there's going to be much demand for new housing for public school staff in Philly, seeing as how 4,000 of them are losing their jobs. What Oxford Mills really needs is what Newark's Teachers Village and Baltimore's Miller's Court need: a regular supply of yuppie larvae, ready to move in and begin "transforming" the neighborhood.

So it shouldn't surprise anyone that, once again, the developer has ties to TFA:
Beyond a break on rent, D3 hopes to create a community where young teachers can find support. The developers are partnering with Teach for America, which will move its regional headquarters into office space at Oxford Mills. Hill envisions brown-bag lectures for teachers in the common room. The developers have even carved out space on each residential floor for copy machines, so teachers don't have to run out late at night to copy lessons.
Philadelphia's D3 is an unlikely outfit to undertake this experiment. Its founders, Hill and Gabe Canuso, were formerly with the high-end developer Brown/Hill, and spent most of their career turning out beautifully designed luxury buildings, like the Ayer condominiums on Washington Square and a proposed tower in Old City, 205 Race.
But after struggling to keep their business afloat during the recession, they had an epiphany and decided to focus exclusively on socially conscious projects. The switch didn't come out of left field; they had always volunteered to help nonprofits with building projects. Their goal now, Hill says, is to do it full-time.
"The condos - that's my past life," Hill told me. "It's a lot more satisfying on a personal level to work on projects that are mission-driven." [emphasis mine]
Funny how these guys got "socially conscious" just as the market was tanking and tax credits became available for stuff like this, isn't it?

And before anyone thinks I'm pushing a conspiracy theory here (I'm looking at you, Tom Moran), keep in mind that Manekin and Caruso are completely upfront about using their TFA connections to create a new market for their developments:

The Centers concept can and should be explored in every major urban center in the country. With public school systems hiring hundreds of new teachers each year, a significant portion of them recruited nationally, there is a built-in demand for workforce housing for new teachers. This school year alone, Teach for America has more than 8,200 first- and second-year corps members working in 40 regions and touching the lives of 500,000 students in low-income communities. Last year, more than 40,000 applicants applied for 4,500 Teach for America positions across the country.

TFA recognizes the value of the Centers concept and has entered into a Memorandum of Understanding with Seawall Development Company to replicate the Centers for Educational Excellence model across the country. Philadelphia, along with Washington, D.C. and New Orleans, is a TFA-identified growth area, and TFA has committed to being the lead commercial tenant in these developments, with their corps members making up the majority of residential tenants. [emphasis mine]
What do Philadelphia, Washington, New Orleans, and Newark have in common? The proliferation of charter schools. That's the key: because charters skim the cream, the jobs are more palatable to TFAers - newly-minted college graduates with little training or experience in teaching. As Stephanie Simon has reported, TFA sends one-third of its recruits to charters; expect that number to rise.

Also: as Bruce Baker has pointed out, the salary schedules at "successful" charters often skew toward paying younger teachers more (even as they work in schools with smaller class sizes). That gives the TFAers more disposable income, helping the retail climate of the neighborhoods where they live.

And again: this is all subsidized by your tax dollars. TFA is poised to become one of the biggest players in urban real estate development, simply because it can funnel hundreds of young college grads to wherever the housing market needs them.

Gentrifying America One Charter School at a Time!

h/t phila.ken in the comments.

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