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The Myth of Fair Share/Equal Share Bond Projects


Nic John Ramos (@NicJohnRamos) is an Assistant Professor of History at Drexel University.

We interrupt our regularly scheduled August hiatus to begin a symposium on Destin Jenkins’s The Bonds of Inequality, being run in collaboration with our comrades at Just Money. Expect new posts in this series to appear on Thursdays throughout the late summer and early fall.

Destin Jenkins’s focus on municipal bond financing in The Bonds of Inequality contributes to a growing field of literature demonstrating how monetary and financial policy play a significant role in reinforcing racial inequality. Jenkins shows that municipal over-reliance on bonds produced two limits. First, he shows how politicians, allied with the bond industry, limited the federal government’s role in lending money to cities so that the private bond market became the only suitable tool for politicians to address urban crisis. Second, he highlights how politicians largely limited bond projects to benefit white neighborhoods and middle class and affluent interests. Jenkins suggests these limits eventually not only led city leaders to develop an addiction to the bond market but that their dependency also drove them to invest deeper into whiteness despite the fact that most cities were now populated with larger numbers of people of color.

This short essay extends Jenkins’s arguments to cities where Black municipal leadership played a major role in city politics by the 1960s and where city leaders raised bond money for projects with the explicit mission to give Black residents the benefit of infrastructure built elsewhere. San Francisco, the main object of Jenkins’s study, did not have a Black mayor until the 1990s and consistently passed up bonded projects meant to furnish Black residents the benefit of infrastructure built elsewhere. I thus offer a brief study of San Francisco’s southern neighbor, Los Angeles, in hopes of demonstrating how Black political leaders were also susceptible to governing under the logics of what Jenkins calls “bondholder supremacy.” An investigation of Los Angeles also affords a moment to assess a bonded project that sought to match the quality of healthcare and hospitals in white neighborhoods by building a Black-led public hospital attached to a private medical school, called King-Drew Medical Center (King-Drew), constructed as a response to the 1965 Watts Uprisings. Although officials managed to theoretically match some of the critical health resources found in white neighborhoods in a Black neighborhood through King-Drew, I will show how the hospital’s purpose ended up servicing whiteness and white real estate outside of Black districts in similar ways to the bonded projects in Jenkins’s study.

Extending Jenkins’s analysis to include Black political leaders and Black bonded projects compels us to re-think the wisdom that political representation and the appearance of institutions and practices associated with whiteness and privilege, such as homeownership and hospital access, in Black communities makes Black and white neighborhoods equal. In fact, as Keeanga-Yamahtta Taylor argues, although post-1965 home loans for Black homeowners in the inner-city achieved a semblance of white homeownership in urban neighborhoods, that semblance was superficial.  According to Taylor, extractive and exploitative outcomes hidden in new predatory financial terms and objectives often undermined real racial equity.

Indeed, the separate-but-equal doctrine of Jim Crow’s revival through post 1960s financial and monetary policy did not create equality but simply turned the racially-differentiated spatial containment of laborers Du Bois once referred to as the “real estate” nature of U.S. race and capitalist relations into profit and development elsewhere. If, as Nathan Connolly argues, that real estate is just “land turned into property for the sake of further capital investment,” then the real estate nature of Jim Crow segregation has consistently, “served as one of the chief vehicles for the development and continuance of anti-Black racism.” Here, the persistence of racial inequality in spite of a semblance of bond equality underlines how a possessive investment in whiteness structures the phenomena of bond supremacy detailed in Jenkins’ study.

According to Jenkins, municipal leaders across the United States from the 1890s to 1966 found it relatively easy to borrow and pay back loans to build infrastructure to facilitate both population and economic growth based on low interest rates and generous repayment terms. Naming this era as a period of “infrastructural investment in whiteness,” Jenkins argues that municipal officials used the power of the referendum to improve infrastructure and services in already existing white neighborhoods or invested in new areas to make land suitable for white settlement. Such bonds also tended to be voter approved, suggesting voters passed bonds with the idea that public subsidies would secure the territorialization of whiteness in ever larger cities and suburbs to benefit white citizens and lubricate free market relations in them. For example, public hospital bond campaigns before 1966 in Los Angeles rallied voters to support referenda based on the idea that each measure would care for “pioneer” white migrants, quarantine contagious “aliens,” secure higher white birth rates, and train and educate white doctors who would eventually care for white patients in profitable suburban hospitals. This unidirectional flow of capital accounts for the neglect and deterioration of infrastructure, lack of stable and sustainable employment, and eventual dependency on welfare programs seen in segregated real estate associated with people of color.

The compulsory nature of bonded debt eventually drew city leaders and voters to navigate bond decisions not on the merits of desire, will, and needs of urban residents alone but on the interests of mostly white male bondholders who often lived elsewhere. The absence of financing public projects through other means, coupled with diminished tax bases, anti-tax movements, and inner-city rioting/rebellion, pushed political leaders deeper into the hands of bondholders who took advantage of higher interest rates through short-term repayment plans and through their refusal to buy bonds that expanded welfare and improved infrastructure and services in neighborhoods of color. Despite such unfavorable terms, Jenkins highlights how bond addiction led city leaders to increasingly exploit legal loopholes to fund bonded projects not approved by voters. Their bond dependency also led leaders to green-light only plans that met the investment preferences of bondholders in order to improve their chances of bondholder purchase.

Driven by fear of meeting the same fate as Detroit and St. Louis, San Francisco’s leaders borrowed at rates and terms so high and short that public projects designed to avoid urban crisis, like public housing, ended up costing taxpayers more money than projects of similar scope and purpose a generation before. Concern over the prospect of a bankruptcy like New York’s additionally drove municipalities to invest mostly in projects that claimed to pay for themselves. Not only did municipalities like San Francisco end up dedicating a higher portion share of so-called public housing units to market rate housing to service debt more quickly but they also began limiting projects to “user fee” and purportedly “revenue generating” projects such as stadiums, toll bridges, toll highways, and parking garages that ultimately serviced the leisure and comfort needs of middle class and affluent white citizens. The combined effect illustrates how white supremacy in the form of “bond supremacy” worked to build cities that consistently put the wants and needs of the white population, including wealthy male bondholders, first. In essence, bonded projects built amenities for white real estate before 1966 and continued to service white citizens through projects that kept the city as a destination for affluent and middle class leisure while aiding their return to cities as gentrifiers and easing their commutes to and from suburbs after 1966.

The 1965 Watts Uprising marks a watershed moment for Jenkins’s study because it signaled the turn from one form of infrastructural investment in whiteness to another. A closer look at the 1965 Watts Uprising, however, shows that it produced a bonded project outside of the normative boundaries outlined by Jenkins. Just ten months after the riots, the Los Angeles County Supervisors and Black civic and medical leaders attempted to float a bond measure to build a public hospital in Watts in order to fulfill one of several McCone Commission riot remediation recommendations. When the referendum failed to pass, the Supervisors created a Joint Powers Authority (JPA) with the City of Los Angeles that raised bond money without voter approval. The product of that JPA agreement between the City and the County was King-Drew, planned and constructed after 1966 and eventually opened in 1972.

That the hospital bonds were pushed by municipal leaders and successfully sold to bondholders shows that some public projects firmly associated with welfare dependency today held a different meaning in the years immediately following the Civil Rights Act (1963) and President Johnson’s signature antipoverty and healthcare legislations in 1965. In the nineteenth century, bonds to build a public hospital system helped further secure the theft of Indigenous land for white settlement; in the twentieth century, those bonds helped transition white Midwestern and Southern migrants unaccustomed to healthcare services to regular hospital care. By the 1960s, Los Angeles’s public hospitals and the racially unequal distribution of New Deal, GI, and Hill-Burton programs helped lift white citizens into the middle class and augured their transition to free market healthcare as they migrated to suburbs. Many Black newcomers to Los Angeles, however, found themselves in crowded districts with neither public hospitals nor sufficient private hospitals. In fact, a post-riot report by the California Hospital Association found that Watts had 0 out of 735 hospital beds deemed appropriate for a hospital district of similar size.

The role that Los Angeles’s public hospitals played in developing the region’s profitable hospital industry inspired civic and medical leaders to consider how President Johnson’s Great Society, anti-poverty, and Medicare/Medicaid laws could extend the benefits of New Deal liberalism to the Black community. In the case of King-Drew, public officials argued the hospital could be used as an economic engine to change the neighborhood’s character from a welfare dependent neighborhood to a self-sustaining community. Medicare and Medicaid provided hospitals in poor neighborhoods with overnight cashflow and opened public hospitals to the possibility of billing paying patients. As part of a “community action program” aligned with the objectives of the Office of Equal Opportunity, King-Drew’s leaders hoped training and employment opportunities via the hospital’s plant, medical school, and allied health education programs would change the patient mix such that it would eventually produce an “independent” community hospital that would be public in name only.

In this way, the hospital’s original “master plan” was not to purvey healthcare per se but to help the Black community achieve universal wage labor participation and health coverage via the free market. As strange as it may seem now, this original plan intended the hospital to function similarly to other “revenue-generating” bonded construction projects traced in Jenkins’s book. According to local Black physician, Dr. Hubert Hemsley, the hospital was “one of the grandest schemes in medicine.” Its program managed to maintain support by both President Johnson’s and Nixon’s administrations, particularly when the latter heavily rhetorically invested in “black capitalism.” Although federal officials held great interest in the project, the irony of all anti-poverty era programs, as Jenkins points out, is that they required municipalities to go into deeper debt by turning to the bond market to raise the local portion of funds demanded by federal law.

Despite the hospital’s bold ambition, the undeniable weight of deindustrialization and widespread emergence of working poverty via worklessness, underemployment, and increased undocumented immigration in Watts caused the City and County of Los Angeles to reconsider King-Drew’s mission when it finally opened in 1972. By 1973, even its staunchest supporters, such as Black council member-turned-mayor Tom Bradley, no longer believed King-Drew’s economic activity and job growth could absorb the scale of poverty unfolding in Watts. As Ruth Wilson Gilmore argues, however, governments stuck with infrastructure built to function within older labor-capital arrangements found themselves either eliminating “surplus state capacity” or re-purposing it to fit the needs of new emerging labor-capital arrangements.

Intimately knowledgeable about King-Drew’s shortcomings and not wanting to shut it down barely after opening, Bradley sought to re-absorb the hospital into a new comprehensive urban re-vitalization plan to globalize Los Angeles’s economy by expanding office space in a new financial district downtown and reviving a nearby garment, toy, light manufacturing and warehousing district that mimicked the labor conditions found in Mexico, India, and China. Instead of making the city’s Black and Brown districts “self-sufficient,” Bradley took advantage of the presence of King-Drew and Los Angeles County General Hospital in nearby South and East Los Angeles to make the economic health of these districts dependent on the region’s new labor-capital relationships being mounted downtown. The success of a revitalized downtown, made possible by the flexibility of labor in Black and Brown neighborhoods, would, in Bradley’s opinion, keep the entire city and its white neighborhoods from deterioration.

Thus, while the County’s public hospitals could not furnish jobs at the scale leaders originally intended, Bradley understood they could furnish healthcare for the City’s working poor in ways that allowed emerging financial interests to benefit. The proximity of public healthcare to downtown allowed Bradley to advertise the region’s nearby cheap labor pool as an asset to a finite set of finance, insurance, and real estate firms searching to cut “overhead” office costs. As many scholars point out, new janitorial firms in Bradley’s financial district took full advantage of the region’s welfare and social service programs by offering office tenants subcontracted cleaning services staffed by lower-paid workers reliant on County healthcare. These services were once provided by in-house unionized janitors with healthcare benefits.

Low wage work in the financial district and garment district also favored the employment of mostly Black and undocumented female workers. To maximize this labor pool, the County worked with the City to construct huge public clinics close to downtown to serve women on welfare according to new federal standards that aimed to transition them off public assistance through a new welfare policy of working motherhood that differed from the widowed mothers welfare policy of the early twentieth century. This antagonistic relationship helped feed Black, Latinx, and undocumented women into the janitorial, garment, and service sector jobs in a “revitalized” downtown.

More than feeding the needs of downtown office building and the garment industry interests, Los Angeles’s bonded hospital infrastructure also serviced the needs of profitable private hospitals elsewhere in the region. Shortly after opening King-Drew, the County “regionalized” its public health infrastructure into “catchment” districts aimed at evenly dividing and assigning equal sums of non-paying patients to each of its County hospitals. Such a plan tacitly encouraged for-profit and nominally non-profit hospitals in outlying neighborhoods to “dump” poor patients into the County system in ways that protected their profitability.

In this way, although Los Angeles’s public hospitals did not appear to directly service the comfort, taste, and needs of bondholders and white affluent and middle class citizens in the same ways that bonded stadiums, parking garages, and toll bridges did, they supported whiteness and bondholder interests by helping to drive down wages and benefits for low wage workers already in distress. As some of my other research has shown, municipal leaders knew its re-zoning plans and recalibration of health and human service aims would lead to deeper forms of suffering, states of neglect, and even more dehumanizing living and health conditions. Knowing this explains why deeper investments in policing and prisons were believed necessary as accompaniments to these plans. If this is the case, the 1992 Uprisings were as much of an anticipated feature of Los Angeles’s labor-capital restructuring as its hosting of the 1984 Olympics.

Taken in sum, whether we consider bonds in the hands of white politicians and bondholders or bonds in the hands of Black politicians ostensibly for use in Black neighborhoods, the seemingly intractable quality of anti-Black racism in private bond financing suggests that it is an inherently flawed system: the United States’s structures of domination created a fundamental bind between anti-blackness and finance. That connection cannot be reformed by diversifying its stakeholders or portfolio of projects if its profit motive tends to favor the reproduction and enforcement of segregated real estate. If, then, an addiction to bond financing only leads to more dire forms of crisis, then Jenkins’s scholarship prompts us to re-consider the limits of federal intervention and segregated space outlined in the opening of this essay. We must redefine the federal government’s role in building local infrastructure and urban space to consider the diffusion of racially-differentiated and concentrated poverty through programs that affirmatively move society to racial integration at the neighborhood level.