I don't think that displacement alone is a reason to avoid an action necessarily. I say this because while it may not be increasing their income, even if they were displaced they would get more money for being displaced (when selling the property). I'd also argue that the status quo of letting the area languish is hardly a better alternative for your stated goal (increasing the affluence of it's residents). It seems to be a dichotomy, but I don't think it's a decision between displace everyone or do nothing and displace nobody. Given the tools that a municipality actually has to increase the affluence of it's residents, I think making their living area nicer probably has the best shot at doing so because it might attract better opportunities than might normally frequent the area.

Last thought, what do you think these municipalities should do instead of minor QoL improvements that might modestly increase average property value (as stated in the article)?