Planned shrinkage

Municipal disinvestment is a term in the United States which describes an urban planning process in which that a city or town or other municipal entity decides to abandon or neglect an unproductive zone. It can happen when a municipality is in a period of economic prosperity, and it seeks to improve its communities and infrastructure, and sees that its poorest and most blighted communities are both the cheapest targets for revitalization as well as the areas with the greatest potential for improvement. When a city is facing urban decay, and has to compromise in allocating its resources, the poorest communities are the least profitable and investing in them seems unwise from a long term perspective, and so these communities are neglected as a matter of choice. Disenfranchised neighborhoods are slated for demolition, relocation, and eventual replacement. According to one view, disinvestment in urban and suburban communities tends to fall strongly along racial and class lines, and intensifies and perpetuates the cycle of poverty exerted upon the space, since more affluent individuals with social mobility can leave the disenfranchised areas. According to one view, municipal disinvestment is a direct consequence of local, state, and federal urban planning and urban renewal projects.

Out of the New Deal came the Public Works Administration, funding the construction of thousands of low-rent homes and infrastructure development. Meanwhile the Homeowners Refinancing Act, as well as the Wagner-Steagall Housing Act three years later, provided generous incentives and reimbursements aimed at Americans recovering from the Great Depression who could not yet afford to invest in equity. In the postwar era, returning veterans were seeking homes to start families. There was a period of intense residential expansion surrounding major US cities, and banks were gratuitously providing loans in order for families to afford moving there. It is in this new economic landscape where redlining, exclusionary zoning, and predatory lending flourished.

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