C.J. Neely, a 16-year-old resident of South Bend, said Mayor Pete Buttigieg has done little to improve his neighborhood in the city's northwest. Tucker Higgins for CNBC

SOUTH BEND, Ind. – C.J. Neely, a black 16-year-old who has lived here all his life, thinks it's pretty cool that Pete Buttigieg, the mayor of this small city of about 100,000 people, is running for president. "I never heard about anybody from Indiana running for president," Neely said recently outside his childhood home in the city's northwest. Just a few days before, Buttigieg, a rising star of the Democratic Party, officially launched his bid for president at an abandoned Studebaker plant downtown that the city helped convert into a 800,000-square-foot tech hub, a symbol of the city pushing beyond its 20th century roots. Neely, who lives just a few miles away, hadn't heard about the announcement. And, he said, he hasn't seen the progress. "This s--- looks the same, every time I walk through here," Neely assessed somberly. Though he acknowledged that the mayor was "trying," the teenager delivered a blunt conclusion: "He's improved s---." At a time when economic inequality and racial justice are at the nation's political forefront, Buttigieg's candidacy could be hamstrung by the impression that he has not tried hard enough to improve the conditions of South Bend's poor and minority communities.

Even as his national polling numbers rise, the mayor faces criticism about his record on race, including for his handling of a police controversy that continues to be a subject of conversation in the city. His presidential campaign, however, cited South Bend polling data that shows the mayor has made inroads with minority communities. Chris Meagher, Buttigieg's national press secretary, said in a statement that a poll conducted by Buttigieg's "Pete for South Bend" campaign last month showed 86% "of folks, with a heavy African-American sample, said that the city was on the right track." Indeed, Buttigieg was reelected in 2015 with 80% of the vote, winning every part of South Bend against his Republican competitor. Buttigieg also won 77% of the vote against a black Democratic primary challenger. In that primary race, though, the extent of his victory was uneven, picking up one predominantly black district by only 60 votes, or four percentage points, according to the South Bend Tribune. The skepticism has dogged him on the campaign trail, too. Buttigieg has struggled to attract diverse audiences at rallies so far in his campaign. It is an issue Buttigieg has said he is "very intent" on fixing. His performance among poor and minority voters has weighed on him in some early national polls, too, particularly as his economic record in South Bend comes into greater focus. Buttigieg's campaign declined on multiple occasions to make him available for an interview.

An economic holding pattern

South Bend's northwest, pocked by vacant lots, broken curbs and blighted by streets that residents say have gone unpaved for years, is a world away from the sleek, revitalized downtown at the center of Buttigieg's audacious argument for placing himself in the highest office in the land. While everything seems to be new and bustling with energy downtown, in many other neighborhoods, the city's economic life is in a holding pattern. It's a problem that weighs heavily in South Bend, where more than half of the city's residents last year said that their neighborhoods hadn't improved over the previous five, according to survey data reported in the South Bend Tribune. And, on Neely's block, one that sits right at the heart of Buttigieg's most consequential economic initiative, dubbed "1000 Houses," it's hard to find someone who thinks otherwise. In 2013, Buttigieg pledged to knock down or repair virtually all of the city's vacant homes, an ambitious proposal that went beyond what experts at the time thought possible. The program concentrated on the city's lowest-income black and Hispanic neighborhoods, where homes were in disrepair. About 4 in 10 residents of South Bend are black or Hispanic, and those groups are far more likely to be burdened by the cost of housing and to be unemployed, a 2017 report on the city's racial wealth divide found. While many say they are glad the abandoned houses came down, they lament the lack of a plan for what would fill their place. And, they say, the project led to a number of unintended consequences, some involving health scares, that persist to this day and reflect a lack of attention to their impoverished parts of town.

Ain't s--- changed. ... How is he gonna run the whole country if you can't get your city right first? Shawn White South Bend, Indiana, resident

"There has been some constant complaints, especially from the African-American community, about families that were hurt or felt impacted by the vacant and abandoned [properties] task force," said Kathy Schuth, executive director of Near Northwest Neighborhood Inc., a community development corporation in the area. "I do think that the city is aware of the problem. I don't think that anyone has an answer." The city's lingering inequality has remained largely in the background as Buttigieg, a 37-year-old openly gay polylingual Afghanistan War veteran, has ascended in the polls. And, in recent months, the city has stepped up its efforts to develop and repair low-income neighborhoods.

In January, applications opened for the city's "Love Your Block" program, which provides grants for small-scale home repairs. In February, applications opened for a program that enables residents to have their homes evaluated for potential savings on utilities. Applications for major home repair grants are expected to open late this summer. Some have yet to see progress. "Ain't s--- changed," said Shawn White, a black 24-year-old from South Bend's west side. "How is he gonna run the whole country if you can't even get your city right first?" Meagher pointed to "Mayor's Night Out" events that Buttigieg has hosted monthly or bimonthly in neighborhoods across South Bend, and noted recent projects on the city's west side, including the $4 million expansion of a community center and the city's funding of a business resource center tailored to entrepreneurs from minority backgrounds.

1000 Houses, more questions

Buttigieg trumpeted the success of the 1000 Houses project when it was completed in 2015, and the city immediately pointed to preliminary data that it said showed a decrease in crime. As his profile has risen, Buttigieg points to the 1000 Houses initiative when pressed on his record on economic and racial justice. In an interview with NBC's Chuck Todd earlier this month, Buttigieg noted that for many, it felt as though the economic recovery from the 2008 financial crisis never happened. But, he said, "we've got it moving in the right direction." "We made sure that our neighborhoods were improved, because the issue of blight and vacant and abandoned properties was harming neighbors especially in minority neighborhoods," Buttigieg said. "People didn't think it could be done, but we dealt with 1,000 houses in 1,000 days by marshaling resources, concentrating them and working to fix the problem." People who live in the affected neighborhoods tell a more complicated story. They are still wrestling with the program's impact, and are less sold on its successes. One of the first problems to emerge was the clouds of dust, feared to contain lead and asbestos, that spread uncontained from the demolition sites. Soon, wild animals, like raccoons and groundhogs, appeared in people's homes. Vacant lots, where crumbling houses once stood, became dumping sites as tall grass grew. "I think that there just wasn't a clear understanding of the domino effect — the true impact of what the actions were going to be throughout the neighborhood," said Regina Williams-Preston, who represents the city's northwest in its Common Council, a governing body. "We basically traded one problem for another." Years later, much of the grass is cut, but problems remain. The empty lots sit undeveloped, economic opportunity remains minimal and crime rates are up from 2012. Shootings, on the mind of many, have not decreased. James Kelly, a professor at nearby Notre Dame who co-chaired Buttigieg's 1000 Houses task force, said that the group was careful not to promise economic growth beyond what was possible and appropriate. "I think we knew that the idea of dealing with the vacant property issues was to set the stage for new growth, but growth that was appropriate," Kelly said. "It wasn't to promise people that if we did the demolition their communities would look just like they did before Studebaker closed. Rather, this was a necessary step." Despite the warning, some say they wish that the development came quicker. Tim Scott, a member of the task force who is now president of the city's Common Council, said he was "pretty antsy that we get in and work in neighborhoods right away." "But there was a systematic approach from the Buttigieg administration to right size the homes, look at the data and see where we are," he said. "To me, we are really in phase two. After all these years, we are in phase two." Pamela Meyer, South Bend's director of neighborhood development, said that "most of us would safely say that we all would like things to move quicker," but gaining ownership of vacant lots takes time, and developing them takes resources. "We don't get $20 million a year in federal resources, we get about $2 million, so we are talking about a handful of properties that we could work on in an annual basis," she said.

Fears over clouds of dust continue

In March, Buttigieg proclaimed that "the 1,000 days of the 1,000 houses program is behind us." Between 2013 and 2018, he said, the city dealt with nearly 1,500 properties, repairing almost half. But as as demolitions continue, residents say the program is hardly in the rearview mirror. Most worrisome, they say, are the clouds of dust that sometimes return at demolition sites, despite the city's promise of further precautions. The dust clouds are a frightening sight in a city where rates of lead poisoning are among the worst in the nation. Lead-based paints were banned for use on houses in 1978, and nearly 4 in 5 of South Bend's homes were built before 1980, according to the city. In some areas of the city's northwest, more than a quarter of children exhibited elevated levels of lead in their blood over the last decade, a team of researchers at the University of Notre Dame found. "At this moment a house is being demolished," a resident wrote in an email chain on a Near Northwest Neighborhood listserv in late February. "The dust blowing directly at a home with young children. Shame on the City for allowing our community to further be put at risk. This needs to change!" Scott, the council president, responded in an email saying that he asked the head of code enforcement to look into the problem. After his intervention, a city truck arrived and sprayed the demolition site with water, according to the emails. But residents worry about having to urge the city to take such precautions years after it embarked on a project that involved demolitions that at times took down whole blocks at once. "It alarms me that concerned citizens call the city to report a public health violation IN ACTION and not only get a phone runaround, but get no clear assurance that anyone will take appropriate action," a neighbor wrote. In a statement, the city said that inspectors from South Bend met with the contractor who performed the February demolition to make sure that protocol was followed, and that no violations were found. Contractors are "required to follow all federal, state and local requirements when handling and disposing of lead based paint debris," the statement said. Buttigieg said in March that the city secured more than $3 million to remediate homes that were at risk of lead contamination, and that the city had "worked to deliver free lead testing for all primary school students in South Bend Community Schools."

Looking for a different kind of change

White said that he remembers seeing the city's previous mayor, Steve Luecke, around his neighborhood. But Buttigieg, he said, has stayed away. "I ain't ever seen the dude," White said. "Tell him to chill with us for three or four days." The absence stings. But, in neighborhoods away from downtown, so does the lack of investment. Buttigieg has claimed that one of his economic initiatives, a project to make downtown more friendly to pedestrians, has attracted $90 million in private investments in the downtown area. It's a boast that smacks of unfairness in other parts of the city. Read more: Pete Buttigieg says his experience as mayor gives him an advantage in the presidential race "That's the worst thing they've ever done," said Steve Conard, a white man in his 60s who has lived in the northwest for 25 years. "They should have taken that money and paved the road. People come into this neighborhood — they look at the curbs. They look at the streets. Who is going to move in here?"

Buttigieg's campaign said that more than 440,000 feet of curbs and sidewalks were added or replaced between 2012 and 2018. Asked about the biggest economic development he's seen since Buttigieg was elected, White points in the direction of the Four Winds Casino that opened last year several miles to the south. One percent of the revenue from the casino goes to jobs and education programs, according to the South Bend Tribune. "That could have been a mental health facility," chimed in El Bey, a black 37-year-old who moved to South Bend from Chicago two years ago. Bey said that there were charitable services in the area, but said the ones he encountered mostly provided food, when what the area needed was treatment for mental health problems and substance abuse. "I'm not saying he doesn't deserve to have a chance to run for president," Bey clarified. "But he's got to take care of here first."

Steve Conard has lived in South Bend's impoverished northwest for 25 years. Tucker Higgins for CNBC