How Might Transforming Highways Impact Community Wealth?

Economic development in a community involves investments in growing the economy and enhancing the quality of life and prosperity of residents. Infrastructure (e.g., the system of roads) is one such investment. In particular, federal, state and local governments have devoted significant funds to establishing and maintaining the interstate highway system in communities across the U.S.

Today, the highway system can be viewed as a double-edged sword. On one hand, highways have led to economic activity that likely would not have occurred otherwise. This development has been associated, in some cities, with increased homeowner wealth from higher house values. At the same time, highways were not located at random; the interests of influential residents likely played a role—a phenomenon colloquially known as NIMBYism (“not in my backyard”). In the end, some residents were displaced—many of whom identified as Black or Latino—and elevated highways in some cities are eyesores that have divided communities.

As the highway system ages and requires a significant reinvestment, communities are taking this opportunity to reimagine what it might look like. Specifically, should sections of highway be removed or redesigned? How might this impact the wealth of residents within communities that opt to make these modifications? Changes in wealth could be from changes in home equity (the difference between the value of a home and any debt secured by it) among residents near the highway. Alternatively, changes in wealth could stem from more affordable housing being built in the highway’s former location and lower housing costs for potential homeowners and/or renters. First, some history may offer context for these questions and demonstrate the importance of racial equity when considering them.

Redlining Practices Set the Foundation for Lasting Inequities in Economic Development

In the late 1930s, shortly before highway planning began, many U.S. cities and the federal government developed “redlining” maps, on which desirable and “safe” (from a lending perspective) neighborhoods were distinguished from less secure neighborhoods using a color scheme. Red-labeled neighborhoods were the least secure (i.e., they were where more minority residents lived), and green-labeled ones were the most secure (i.e., they were where more white residents lived), with several other color codes in between. Neighborhoods deemed risky suffered substantial disinvestment and a lack of economic development that lasted for decades. There isn’t a clear causal relationship between the locations of redlined neighborhoods and the placement of interstate highways. However, a careful look at these maps points to some possible correlations.

Planning for the U.S. interstate highway system began in the 1940s and 1950s, after General (and later President) Dwight Eisenhower personally observed how easily Germany moved troops and military equipment during World War II via its highway system. The idea was attractive during a period in which the U.S. sought postwar economic development.

The Arrival of the Interstate Highway System Brought Benefits, but to Whom?

It took 20 years from the beginning of the interstate highway system’s construction to when most highways were completed in the late 1970s. These highways tracked very near or through the homes of over 1 million Americans who were forced to relocate, many of whom were residents of color. Residents were often promised better access to job opportunities, but such benefits were not necessarily universally realized. Noise and air pollution pervaded areas nearest to the highways, while the economic benefits of access primarily went to residents who were close (e.g., within one mile) but not too close (e.g., within a quarter-mile) to the highways.

For homeowners who remained nearby a highway but not “too close,” wealth accumulated through higher house values over time. But these housing wealth gains accrued inequitably, mainly to white residents rather than Black residents. For instance, one study shows that in 1940, less than 0.5% of homeowners near I-84 in Hartford, Conn., were Black (the history of redlining is relevant here, as is the displacement mentioned above). As highways generated wealth for the homeowners in majority-white neighborhoods, Black residents in Hartford missed out on these opportunities to achieve housing wealth gains.

“Freeways Without Futures”: A Growing Trend toward Highway Removal and Redesign

Some U.S. cities—including several in the Eighth Federal Reserve District—have been considering the benefits of removing and/or relocating some highways.The Eighth Federal Reserve District contains parts of six states—Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee—and all of Arkansas. While many such plans are in the proposal stages and may not be actualized, collectively they represent a growing trend toward “freeways without futures.” Efforts in other cities to transform certain freeways—such as moving an elevated highway underground in Boston—have been successful in creating green space, reducing pollution and noise, and possibly also raising housing wealth among residents. Another example is the removal of the I-81 overpass in Syracuse, N.Y., where the city is developing an “equitable” plan for reconstruction. Some Eighth District cities with current or past highway removal plans include:

• Little Rock, Ark.: The state transportation agency is removing several elevated ramps to I-30 in the downtown area, and a citizen group is sourcing ideas for what might take shape on the 20 acres of space on which they sit.
• St. Louis: Officials considered removing an elevated portion of I-70 in the downtown area near the Gateway Arch in 2012 as a possible approach to connect the Arch grounds with the rest of the city center that was bisected by the highway. Although a pedestrian park over a depressed section of the highway was completed soon thereafter, this proposed boulevard project ultimately did not move forward.
• Louisville, Ky.: Advocacy groups have called for the demolition of the elevated I-64 highway downtown, possibly to be replaced by a pedestrian-friendly street to connect with the waterfront.

While some of these Eighth District highway removal projects potentially sound attractive, three key questions remain unanswered.

• First, how will these projects impact residential or commercial real estate values?
• Second, if highway modifications are accompanied by additional affordable housing nearby, how might this impact the financial well-being of renters who often miss out on the housing wealth that many homeowners gain?
• Third, how might these effects differ for Black, Latino and white residents?

Clearly, further research is warranted to address these questions and further our understanding of the potential effects on equity of proposed highway removal and redesign projects across U.S. communities.

The authors would like to thank Samantha Evans for her helpful comments.

Notes and References

1. The Eighth Federal Reserve District contains parts of six states—Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee—and all of Arkansas.