Many East German cities are being shaped significantly by population loss and aging as well as drastic changes in the local economy. These phenomena are consequences of the political and economic transformation that has occurred in Central and Eastern European countries since 1989. In many places, this process has created a new type of post-industrial cityscape: the aged, shrunken, and fragmented city. In the field of urban geography, there has been a shift from the classic orthodoxy of topdown planning towards a grassroots urban development at the community-level. The empowerment and increased involvement of semi-regulated and private participants have also been characterized as a shift from government to governance - a concept which needs to be linked to the internationalization of local economies and the reshaping of state apparatuses according to neoliberal concepts. Nevertheless, this shift also seems to accord with community-oriented conceptions of society such as civil society or even communitarism. In the context of shrinking and aging cities, this shift creates various dilemmas which are counterproductive to the success of participatory communities sharing the respon- sibility for various endogenous revitalization processes. First of all, local initiatives for community management depend heavily on funding from superordinate agencies such as the EU, or the federal government resulting in an actual power transfer from a city’s urban planning commissions to the treasury. In addition, research on governance in East Germany detects a persisting top-down-conception of how to revitalize neighborhoods among planners and politicians. As a consequence, additional funding sources might not be tapped sufficiently. Secondly, the scope and influence of community organizations are limited and also depend on their grade of institutionalization. Therefore the professionalism of the involved citizens determines their interplay with different actors at higher levels, endowed with various accesses and means to different forms of power. Thirdly, empowering local residents is difficult because the neighborhoods in question tend to become more and more demographically and socio-economically homogenous, with residents who are rich in human capital moving out of the neighborhood. On the one hand, it is important to note that consensus is more likely to be achieved in homogenous communities. On the other hand, heterogeneity is conceived as crucial for the resilience of neighborhoods and their social fabric. In the case of Chemnitz, there is an inner-city neighborhood called “Reitbahnviertel”. Newcomers to the area include students and individuals who might be considered “pioneers of gentrification” – a constellation which should be welcomed by the city’s officials. So far, however, the city has not fully acknowledged this new group as a viable partner in revitalizing the neighborhood. Furthermore, long-time residents (often senior citizens) have not gained the support and instruction needed from professionals in order to become involved in neighborhood planning. As a consequence, conflicts may increasingly arise between the involved stakeholders in the future. Focusing on the topic of shrinking and aging cities, the paper discusses exemplarily the recent redevelopment of the inner-city neighborhood “Reitbahnviertel” and its effects on the constructed as well as the social environment that shapes the social fabric of a neighborhood despite its age or income structure etc. Drawing upon the conflicting logics of planning and the dilemmas outlined above, the main purpose of research is to search for institutional constellations and planning methods that foster participation and equity in neighborhoods most affected by negative aspects of demographic change. Qualitative interviews, secondary statistical analysis and active involvement in community organizing activities at the “Reitbahnviertel” will be conducted in this problem-driven research. One of the guiding assumptions is that new growth or economic revitalization should not be the initial impetus of the dialogic planning methods suggested. To the contrary, the main question is how participatory or community planning represent adequate means to build capacities that make neighborhoods more resilient to further decline. The findings of the paper are part of a dissertation that focuses on community planning in shrinking city regions in Germany and the USA.