How *Not* To Do Economic Development

Posted by Alan Mallach on September 29, 2016

Camden is one of the most distressed cities in the United States, and if any city needs state help to build its economy, it’s Camden. While, in its way, the state of New Jersey has responded, the way it has done so adds up to one of the most egregious examples of misuse of economic development incentives in recent memory. At the same time, it offers some useful lessons for thinking about urban economic development, especially about a concept that people working in this field don’t think about enough—opportunity costs.

New Jersey has created what it calls the Grow NJ program, a suite of incentives to encourage corporations to move into or stay in the state. It targets certain areas, with the most generous incentives offered for companies to stay in or move to the state’s four poorest major cities: Camden, Trenton, Paterson and Passaic. So far so good.

Since late 2013, the state of New Jersey has given out $1.1 billion in tax incentives under this program to 16 companies in the city of Camden. Five account for $900 million of this total, as shown in the table. All are major, well-heeled corporations. With the exception of EMR, which is a scrap metal facility already located in Camden, all of them were already operating in nearby suburbs. They are being paid on average nearly $400,000 per job to move their operations five or ten miles into new buildings in the city of Camden, along with creating a few additional jobs once they relocate.

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A New Perspective on Housing Tenure

Posted by Jake Wegmann, Alex Schafran and Deirdre Pfeiffer on September 27, 2016

Those of us who work in housing and housing policy know how complicated housing tenure, which describes the legal status under which people have the right to occupy their accommodation, can be. The most common forms of tenure are home-ownership (both owned outright and mortgaged) and renting (which includes public and private rented housing). Even something as seemingly straightforward as owning a house is not that simple. Depending on your mortgage, the local and state laws, your cultural norms, whether your property is governed by a Homeowners Association, the type of structure it is, the basic legal, economic, and even emotional nature of the relationship between a household and its house can be very different.

These subtle differences in housing tenure for homeowners become even bigger when one considers renting, condominiums, residential hotels, community land trusts (CLTs), etc. Despite its image as a “home owning” nation, the United States has an exceptionally diverse array of tenures, so we took a deeper look at the issue to estimate how many Americans live in different types of tenure, what existing housing tenures are supported and protected and which are risky, and what all this means for policy and politics.

The first step for us was moving beyond a one-dimensional view of tenure, which sees renting on one end, owning on the other end, and various hybrids in the middle. Not only does this view exacerbate tensions between housing advocates, it also misunderstands tenure. Instead of this one-dimensional view, we argue that tenure should be thought of along two dimensions: wealth-building and degree of control. Think of these as the financial and political aspects of living in a housing unit, respectively: how much wealth you could gain or lose as a result of living there, and the extent to which you get to decide whether and how to renovate, refinance, sublet, sell, move out, or make major decisions about how and if you live in your home.

One-dimensional views assume wealth building and degree of control go together, and sometimes they do. An apartment renter will lack certain controls over how the building is run, and will certainly not benefit from it financially over the long term. By contrast, a single-family homeowner, especially one that is not part of a homeowners’ association (HOA), will have broad latitude over most decisions and in turn accepts the risks and benefits of the home’s changing value.

But in other cases, wealth building and degree of control are decoupled rather than linked: for instance, the owner of a manufactured home in a typical manufactured housing community will have control over their home but will likely not benefit a great deal from it financially because they don’t own the land it rests on. Many nonprofit and alternative housing tenure facilitators offer what we call the “third way” (mutual housing associations, limited-equity co-ops, community land trusts), which present different mixes of control and wealth-building potential. Different legal arrangements in different cities and states—like rent-control and anti-eviction rules—change this mix.

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No Going Back to Segregation After Landmark Texas Fair Housing Case

Posted by John Henneberger on September 26, 2016

As a Texas Houser and fair housing advocate, I have been an anxious and interested outside observer of the long-running fair housing lawsuit in my state.

The U.S. Supreme Court’s decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. (TDHCA v. ICP) was a major victory for fair housing—perhaps the greatest since the passage of the Fair Housing Act in 1968. The Justices affirmed the use of “disparate impact” claims to challenge housing policies. These are cases in which a defendant is sued for actions that negatively affect people of color and others protected under the Fair Housing Act without requiring a plaintiff to show a defendant’s discriminatory intent.

The Supreme Court’s ruling sent ICP’s original complaint against TDHCA back to the U.S. District Court for further review. Last month, Judge Sidney Fitzwater dismissed the underlying ICP complaint, holding that it did not meet the prima facie burden of rigorous proof in identifying the specific TDHCA policy that caused racial disparities in the location of tax credit housing in the Dallas area.

Some who have not followed the case closely have claimed that Judge Fitzwater’s decision dealt fair housing a hard blow, while others have said the district court ruling means that the extensive segregation of Low Income Housing Tax Credit apartments in Dallas has been declared “legal.” But this is nonsense.

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Tweaks to CRA Q&A Document Miss the Larger Picture

Posted by Josh Silver on September 23, 2016

During the dog days of summer this July, the federal bank agencies decided to quietly bunt instead of swing for the fences when it came to the Community Reinvestment Act (CRA). The agencies made changes to an interagency Question and Answer (Q&A) document that were intended to address various unresolved issues such as the importance of bank branches and how to assess bank delivery of basic services. While the agencies provided some useful answers, they once again fell short of making long-needed reforms to CRA.

Three federal agencies–the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency–collaborate on developing and refining the interagency Q&A document. The Q&A document interprets the CRA regulation and explains to the public, banks, and CRA examiners how various aspects of the regulation are supposed to be implemented. By its very nature as an implementation document, the Q&A is useful but cannot be a tool used for far-ranging reforms to CRA. For example, it can explain the relative importance of various criteria of the service test of the CRA exam but it cannot change the criteria of the service test. Only changes to the regulation itself can change the criteria.

The service test for large banks assesses the quantity and quality of branches, deposit accounts, and other basic banking services offered to low- and moderate-income borrowers and communities. Two important criteria on the service test are the distribution of branches by income level of census tract and the availability and effectiveness of alternative systems for delivering services, such as ATMs and mobile banking. Two years ago, the agencies proposed changes to the Q&A that addressed the importance of these two criteria. After an outpouring of community group comments, the agencies reiterated that they will place primary importance on the number and percentage of bank branches in low- and moderate-income areas. The agencies correctly recognized that branches remain the basic means by which low- and moderate-income customers open accounts and obtain various loans such as home purchase and small business loans.

Regarding alternative delivery systems, the agencies adopted a new Q&A describing new measures evaluating the effectiveness of these systems. The measures include ease of access (particularly for physically challenged customers), the ease of use, and the rate of adoption and use. This suggests that more quantitative measures such as how many low- and moderate-income customers actually use the alternative systems and branches will be adopted in exams. However, the proof will be in the proverbial pudding to see how CRA examiners actually implement this new Q&A. The instructions to examiners allow too much discretion by saying that examiners will consider any information a bank provides, such as data on customer usage. This is a suggestion, not a mandate to either banks or examiners.

Likewise, another Q&A provides more detail about effective retail banking services. The Q&A provides a list of services such as low-cost deposit accounts, low-cost check cashing services, and reasonably priced remittance services. The emphasis on cost is important because banks need to be held accountable for offering affordable services so that they move away from abusive overdraft and other fees. Yet, the same question remains regarding the extent to which examiners will require banks to provide data on the number and cost of retail services offered to low- and moderate-income customers. Often, the service test on CRA exams will mention the existence of basic banking accounts but will have little data on the usage of the accounts or their affordability. This contributes to CRA grade inflation.

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“Your Lease Should Be Next to Your Bible,” #RentersDayofAction

Posted by Keli A. Tianga on September 22, 2016

This Tuesday, advocates took to the microphone on the steps of Newark City Hall, speaking passionately about the city they love and their right to live there without threat of displacement. People pass by and look up at signs calling out city council members by name and demanding them to take action. Some walk up to the organizers in black or army green t-shirts to ask if housing is available, or if someone has a housing list they can get on. They mention homelessness, tenuous living arrangements, or substandard living conditions.

This picture is indicative of housing conditions in Newark and other cities around the country—ones that don’t want to go the way of Brooklyn, San Francisco, and Jersey City, where housing costs for longstanding residents have become untenable. Nationally, Right to the City Alliance and locally, groups gathered here like Tenants Together, Housing 4 Newark, People’s Organization for Progress, and Greater Newark HUD Tenants Coalition have been rallying, demonstrating, and speaking out all week leading up to today’s National Renters Day of Action. This demonstration will last 36-hours, and community members are calling for city leadership to act on their constituents behalf against gentrification and displacement.

Real estate investors and developers who knew these boom days were coming are poised to cash in on Newark. The finishing touches are being put on a Whole Foods market downtown, a new hotel, and market-rate apartment buildings are growing in number, including 1 bedroom units in one that Drew Curtis, director of Community Development and Environmental Justice at Ironbound Community Corporation says will go for upwards of $2,000 per month, just blocks from City Hall.

In poor and historially disinvested cities like Newark, new development is rarely for existing residents. Although Newark has some of the region’s largest cultural and academic institutions, such as Rutgers University's Newark campus, the NJ Performing Arts Center, and Seton Hall Law School, it is no exception. The major issues for residents here are affordability, stability, and housing quality and safety. One organizer pointed out another who hasn’t had pest control visit his building in the 16 months he’s lived there, and is now being forced to contact Code Enforcement. Felicia Alston-Singleton, a tenant advocate with Greater Newark HUD Tenants Coalition, says that in her estimation, only about 15 percent of the city’s renters know their rights as tenants. “Your lease should be next to your bible—that’s how important it is,” she says. Alston-Singleton began advocating for herself and representing herself in court over three years ago when she was a victim of an unscrupulous landlord, and began studying the NJ Tenants Rights handbook. As people walk up looking for help, she lets them know that they are there to “educate, empower, and strengthen the community.”

Curtis of Ironbound CC says their effort is multi-pronged, because the fabric of Newark is being threatened for all residents, from many angles. “We’re protecting five or six units at a time, they’re demolishing dozens at a time,” he says. This coalition is made up of tenant organizations in big buildings and public housing developments, subsidized housing residents, public housing residents, private housing residents, and homeowners. They have been working with the mayor, Ras Baraka, on preserving Newark’s already strong rent control ordinance, maintaining Newark’s dwindling public and private federally subsidized housing, and creating a strong inclusionary zoning ordinance. The latter two are increasingly connected, because as subsidized housing stock decreases in Newark, inclusionary housing becomes a larger tool in the creation of affordable housing. Advocates want to lower the minimum number of total units to 20 from 30 for new buildings to have inclusionary housing requirements. They also want to remove the exclusion of “substantial rehab” from the inclusionary policy, which enables existing structures undergoing a gut rehab to be exempt.

When faced with the question of inclusionary zoning dis-incentivizing some development, Curtis is confident that the market is already here, and in fact, he fears a rush on new development permits and construction before an ordinance is passed in order to avoid the new requirements.

Renters make up 73 percent of the city’s population, and they are feeling a looming pressure. John Goldstein, a Newark resident and founder of Coalitions, Campaigns, and Community Benefits, lives only blocks away in a rent controlled apartment in the city’s Ironbound section. He fears his landlord will sell the 16-unit building he lives in, at which time his rent control protection, which doesn’t transfer to a property’s new owner, will end. “The neighborhood works the way a neighborhood should: there are small businesses owned by people who live in the neighborhood, so money is recycled within the community, there are parks and pick up soccer games. That’s being lost.”

The National Renters Day of Action demands:

  • A national rent freeze, a national livable rent and livable wage for all
  • A freeze on all unjust evictions
  • Community control over land and housing
  • The right of all tenants to organize and bargain collectively with landlords without fear of discrimination, retaliation, or eviction

Photo credit: K. Tianga for Shelterforce

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The Politics of Dis-Belonging

Posted by Joyce Fernandes on September 21, 2016

The field of creative placemaking has been challenged for its aversion to addressing the politics of social space as well as its dismissal of the feeling or idea of “belonging” as a critical ingredient of place. In Chicago, arts-based community development organization archi-treasures is known for its community engagement practices, and La Casita de Don Pedro was an early example of a placemaking strategy that directly confronted the politics of social space, or, as described by Roberto Bedoya, “the politics of belonging and dis-belonging.” 

In 1997 after decades of displacement, Chicago’s Puerto Rican community staked their claim to an eight block stretch of Division Street between Western and California avenues. In the mid-1990s, two issues coalesced to stir a community movement. The first was the refusal of the Chicago Park District to allow a statue of Don Pedro Albizu Campos to be placed within Humboldt Park, which is part of Chicago’s historic boulevard system. The second was the desire and savvy knowledge of local activists to stake a neighborhood claim by both owning property and creating culturally specific visual signifiers. At the time, this stretch of Division Street was dotted with vacant lots, one of which was purchased by the Puerto Rican Cultural Center and developed as a community cultural space with the help of archi-treasures.

The refusal of the Chicago Park District to support the installation of a statue honoring Albizu Campos clearly demonstrates a politics of dis-belonging. Like many urban neighborhoods, Humboldt Park has a layered history where different ethnic groups have gained, given up, and lost control of the space. These transitions are memorialized in the park itself with a diverse selection of public art, most of which are statues that were purchased and placed by cultural groups. The Norwegian community supported a statue of Leif Erikson, and the German community erected statues of Alexander von Humboldt and Fritz Reuter. But when the Puerto Rican community sought to insert Albizu Campos into this mix, they were met with resistance. The unacceptable politics of Puerto Rico’s independence movement overrode the city’s tradition of allowing ethnically specific representations in the park.

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California Transit Agencies Bring Affordable Housing to Scale

Posted by Geeta Rao, Abby Thorne-Lyman, and Ron Golem on September 15, 2016

In a recent Shelterforce blog post, we discussed the catalysts for the adoption of equity and sustainability as core principles in a new development paradigm for the Los Angeles County Metropolitan Transportation Authority (Metro), the Bay Area Rapid Transit (BART), and the Valley Transportation Authority (VTA) in the San Francisco Bay Area. With our recently adopted affordable housing policies, we are taking bold, proactive steps to address both climate and affordability challenges that high-cost regions face in California. LA Metro discussed its plan in the previous post, here we follow up with BART and VTA.

BART: Affordability is Critical to a Bold Vision
The San Francisco Bay Area’s Sustainable Communities Strategy (SCS), Plan Bay Area (PBA) sets a bold vision to end automobile-dependent sprawl and direct the future population growth (2 million people by 2040) into already existing communities. PBA has been called the most progressive SCS in California because it meets the mandated greenhouse gas (GHG) reduction target by accommodating 100 percent of new growth (1.1 million new jobs and 660,000 new homes) within urban boundaries. PBA directs 95 percent of the region’s growth toward 5 percent of the Bay Area’s land, and two-thirds of the region’s housing production will be accommodated by only 15 Bay Area cities.

The Great Communities Collaborative, or GCC, is a multi-sector collaboration that addresses the challenges of climate change and equity by influencing local and regional policies, practices, and investments. It was founded on the idea that shaping local TOD plans and securing private and public funding to catalyze sustainable and equitable development would transform the region from auto-dependent sprawl to one made up of thriving and affordable neighborhoods linked to economic opportunities by a premier transit network. GCC realized that catalyzing BART’s and VTA’s land for more intensive development with rigorous affordable housing outcomes could significantly help accommodate the region’s growth and meet equity and sustainability goals.

GCC funded BART’s advocacy campaign, spearheaded by TransForm, an advocacy organization that promotes walkable communities with transportation choices to connect people of all incomes to opportunity, and East Bay Housing Organizations (EBHO), a nonprofit organization that aims to preserve, protect, and expand affordable housing opportunities. For over two years, TransForm and EBHO engaged BART board members and agency staff to craft policy parameters and garner support among other advocates. GCC also convened the TOD Implementation Table, a neutral space to engage with transit agency staff, other public agencies, and advocates to further their regional equity and sustainability goals and align philanthropic and public resources. Through GCC’s advocacy efforts, in 2015, BART’s Board of Directors initiated the creation of an Affordable Housing Policy.

In January 2016, the board adopted a policy requiring a minimum of 20 percent of units built on BART-owned property to be affordable. The policy requires each station area to cumulatively achieve a minimum 20 percent requirement, but leaves flexibility as to how the units are achieved so that projects can be phased in a way that makes financial sense. The affordable housing policy also includes direction to BART staff to develop a development solicitation process that favors quantity and depth of affordability, with a preference for housing units serving low- and very-low income households. Affordability is one of many requirements placed on the development of BART property. Other requirements vary by site, but universally include prevailing wage requirements and project stabilization agreements. 

In addition to affordable housing policy, BART has worked over the last several months to update its decade-old TOD policy, which offers a more comprehensive policy statement. The new TOD policy, which was adopted on June 9, 2016, addresses three critical updates:

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Cleveland–East Cleveland Merger Plan Overlooks Main Issue

Posted by Miriam Axel-Lute on September 13, 2016

East Cleveland, a struggling suburb of Cleveland, has ended up in so much fiscal distress that it is considering allowing Cleveland to annex it as a desperation move. A fascinating article up yesterday on NextCity describes how it got to this point and the various tensions on each side about the merger idea.

On East Cleveland's side there is a proud community loathe to give up autonomy and control (not to mention a mostly-black community, some of whom told NextCity they are afraid of being subject to Cleveland's police force, which is currently under DOJ-mandated retraining as a result of its pattern of excessive use of force). And on Cleveland's side, a none-too-flush city is wondering why it (rather than the state) should bear the financial burden of helping its even more fiscally strapped neighbor, even if it would be nice not to have those issues right outside its borders.

It will be interesting to see where the idea ends up, but the proposal is striking in two ways: first, we may need to rethink our decades of assuming that home rule in the Northeast and Midwest is just too strong to allow us to overcome our fragmented tiny political bodies in favor of regional coordination. Ever since Myron Orfield and David Rusk started beating the "regional" drum, this has been the pushback. "That's great for the West, but here in the Northeast it'll never work." Never say never?

That's the optimistic angle. But Cleveland's hesitation about the annexation points to the other side of the coin:

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Let’s Get Rid of the Words “Property” and “Manager”

Posted by Frankie Blackburn on September 12, 2016

One of my first jobs as a young housing professional in the 1980s at a local public housing authority was to support site staff, both property managers and social workers, in improving their performance and increasing positive outcomes for residents. I quickly learned that the property managers were the levers for change. As the people who were responsible for daily operations of their complex, they knew the residents on a more intimate level than anyone else in the agency. They also tended to have life experiences more similar to the residents and were able to generate new ideas from a place of greater authenticity and accuracy. 

As I continued on with my career as a nonprofit housing developer and a community builder, I actively sought to work closely with property managers of all types. I have encountered really amazing people working hard to straddle all the inherent tensions built into the role of property managers. I have also met some folks who fell into the work with little intention, operating from a place of fear or inertia, and leaving a trail of unintended negative consequences. 

Most would agree that people like teachers, nurses, librarians, policemen, social workers, and small business owners are vital to a healthy, functioning community. However, residential property managers never make this list. By and large, these hardworking people are underresourced, underpaid, underappreciated, over stressed, and not supported or trained to perform this vital role well in our diverse and culturally isolated society. We could be more connected, mutually supportive, and successful if we invested greater resources into the role of residential property managers, especially for the multitude of affordable housing complexes across the United States.

This investment need not be costly, and it could likely bring a much bigger return than many elaborate and expensive social programs. However, it would require a significant shift in thinking by both those who lead the development of affordable housing and those who own the property management companies. It would also require a different approach to recruiting, educating, and retaining the kind of people who can succeed in these crucial frontline roles.

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At the Table…and Being Heard

Posted by Michael L. Chambers on September 8, 2016

In the fall of 2015, members of the 11th Street Bridge Park project and Washington Performing Arts invited me to participate in an Arts Task Force.

The task force was created to seek input from community leaders to drive and determine programs that will make the biggest impact in neighborhoods east of the Anacostia River (Wards 7 and 8). It consists of individuals who represent the constituency east of the river, as well as the larger D.C. arts community, and will provide direction about how the community can inform and inspire cultural programming.

At our first meeting last October, Bridge Park leaders spoke, shared design renderings, and announced that the park would be open by 2019. The excitement ushered in grand and inspiring ideas around what could happen in the park—a beach, hammock grove, and a mobile performance space were just a few of the imaginative ideas from task force members. In response, one member of the task force, artist and activist Tendani Mpulubusi El said, “Ward 8 residents really need jobs. How will this project provide employment?”

Tendani’s question tempered the exhilaration, giving pause to the possibilities and grounding the committee in the reality of the challenges Ward 8 residents face daily. While employment was outside of the direct scope of the Arts Task Force, it was a necessary jolt to be reminded of this reality. Tendani was one of the few people at the table with a dual perspective when it came to this project; that of an artist and a resident, and that perspective challenged not only the committee members, but also the Bridge Park staff. As a result, we thought about it for some time and an interesting concept emerged:

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