Tag Archives: employment

Housing Policy and Economic Mobility

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Pamela Blumenthal

Pamela Blumenthal

John McGinty

John McGinty

 

 

 

 

 

 

 

 

Pamela Blumenthal and John McGinty of the Urban Institute have written an interesting research report, Housing Policy Levers to Promote Economic Mobility. I generally believe that housing policy should be designed to assist low- and moderate-income households live in safe, decent and affordable housing, but I rarely consider how housing policy can actually help low- and moderate-income households become upwardly mobile. This report does just that and concludes,

At a time of growing income and wealth inequality, economic mobility provides a frame through which to consider the potential of housing policy to change the trajectories of individuals and communities. Economic mobility is about the opportunities individuals have to improve their economic well-being and requires education and other skill acquisition, available jobs, transportation networks, and other resources. Stable housing with access to those components gives low-income and minority individuals and families a chance to climb out of poverty. The current structures too often constrain individual choice because families cannot find affordable housing near a good school or in a safe neighborhood.

National policies that enforce fair housing, more fairly distribute tax benefits, and invest in people and places that have long suffered from disinvestment can begin to change the trajectory. State policies that fund affordable housing production and preservation in location-efficient areas and create requirements or incentives for local jurisdictions to integrate affordable housing throughout the community can also help.

To truly move the needle in promoting upward mobility, however, housing policy may need to adopt a lens through which programs are adopted, implemented, and evaluated based on their ability to promote upward mobility. Just as initial concerns about housing quality in the 1930s gave way to a focus on affordability in federal housing policy, another transition may be occurring. This goes beyond recognizing that a stable, safe, affordable home is critical to healthy development and well-being, to addressing the important role that neighborhood context plays—particularly for children. The importance of enabling all families to live in neighborhoods where they have access to jobs, good schools, parks, and other community resources and are free from violence, toxins, noise, and other harmful environments may become future federal housing policy. (41)

I don’t think that there is anything earth-shattering in this report, but it does focus attention on housing policy in a fruitful way.

Promoting Opportunity with Development

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"ArlingtonTODimage3" by This image was altered by Thesmothete with additional graphical elements to indicate the location of transit stations and the extent of development around them. - Derivative of :Image:ArlingtonRb aerial.jpg. Licensed under Public Domain via Commons - https://commons.wikimedia.org/wiki/File:ArlingtonTODimage3.jpg#/media/File:ArlingtonTODimage3.jpg

Enterprise Community Partners have posted Promoting Opportunity Through Equitable Transit-Oriented Development (eTOD): Barriers to Success and Best Practices for Implementation. It opens,

Development patterns directly relate to a community’s strength. Individual families, the local economy, municipal governments and the environment all benefit when well-located housing, jobs and other necessary resources are connected by efficient transportation and infrastructure networks. Equitable transit-oriented development (eTOD) is an important approach to facilitating these connections. This paper defines eTOD as compact, often mixed-use development with multi-modal access to jobs, neighborhood-serving stores and other amenities that also serves the needs of low- and moderate-income people. The preservation and creation of dedicated affordable housing is a primary approach to eTOD, which can ensure that high-opportunity neighborhoods are open to people from all walks of life. eTOD supports the achievement of multiple cross-sector goals, including regional economic growth, enhanced mobility and access, efficient municipal and transportation network operations, improved public health, and decreased cost of living.

Yet it is sometimes difficult for planning agencies, local governments, transit agencies, housing organizations, private developers, and other institutions that influence development to act in concert to overcome barriers to eTOD. Each stakeholder has a unique mission with disparate goals and compliance burdens and must comply with complex and sometimes contradictory rules and regulations. However, improving coordination between these sectors can shift a potentially adversarial relationship into a symbiotic partnership. As the public resources that support transportation and infrastructure networks and housing affordability remain threatened, such efficient coordination is an especially important goal. (5, references omitted)

eTOD has a lot going for it: it’s environmentally responsible, it’s socially responsible, it can promote nice development. It is a shame that it is so hard to pull off. It would be great if HUD could take the lead in promoting eTOD, perhaps in tandem with its recent fair housing initiatives.

Wednesday’s Academic Roundup

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Friday’s Government Reports Roundup

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  • According to the Family Outcomes Study conducted by HUD, Housing Choice Vouchers are critical in families maintaining housing. Children from homeless families that receive vouchers “are less likely to miss school, and they experience lower rates of hunger and domestic violence.”
  • The Office of the Inspector General for HUD released report, “Overincome Families Residing in Public Housing”, which finds that 1.1 million families currently living in public housing units have incomes that exceed the threshold, showing extreme examples.
  • The Census Bureau released an edition of “Facts for Features” comparing the New Orleans area prior to Hurricane Katrina and now, including number of housing units, business establishments, employment, etc.

The State of Predatory Lending

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By U.S. Treasury Department (CFPB Conference on the Credit Card Act, 02/22/2011) [Public domain], via Wikimedia Commons

The Center for Responsible Lending has posted the final chapter of The State of Lending in America: The Cumulative Costs of Predatory Practices. This chapter’s findings include,

  • Loans with problematic terms or practices result in higher rates of default and foreclosure/ repossession. For example, dealer-brokered auto loans, which often contain abusive provisions, are twice as likely to result in repossession as bank- or credit union-financed auto loans.
  • The consequences of default, repossession, bankruptcy, and foreclosure are long-term. For example, one in seven job-seekers with blemished credit has been passed over for employment after a credit check, and borrowers who experience default pay much more for subsequent credit.
  • The opportunity costs of abusive loans are significant. For example, during the same period that subprime loans peaked and millions of families unnecessarily lost their homes, families with similar credit characteristics who sustained homeownership experienced on average an $18,000 increase in wealth per family.
  • Abusive loans have an impact on the economy as a whole. The foreclosure crisis depleted overall housing wealth and led to millions of job losses; predatory practices have been shown to diminish public trust and confidence in the financial system; and there is evidence that student debt is preventing economic growth, especially for young families.
  • Across many financial products, low-income borrowers and borrowers of color are disproportionately affected by abusive loan terms and practices. Families with annual incomes below $25,000– $35,000 are much more likely to receive an abusive loan product. And in most cases, borrowers of color are two to three times more likely to receive an abusive loan compared with a white counterpart. The discriminatory effects of abusive lending clearly contribute to the widening wealth gap between families of color and white families.
  • Loans with problematic terms are repeatedly concentrated in neighborhoods of color. Subprime mortgages and payday loans are two examples. Such concentration leads to a net drain of community wealth and value that could have been spent on productive economic activity and meeting vital community needs.
  • Debt plays a profound role in the financial lives of most American households, with about three-quarters of households having at least one form of debt and many having multiple forms of debt. Indeed, most consumers are not simply mortgage holders, credit card users, payday loan borrowers, or car-title borrowers; they are likely to participate in more than one of these markets, often at the same time.
  • Regulation and enforcement is an effective means for ending lending abuses while preserving access to credit. For example, the Credit Card Accountability and Disclosure Act of 2009 (Credit CARD Act) has continued to give people access to credit cards, while eliminating more than $4 billion in abusive fees and overall saving consumers $12.6 billion annually. (6-7)

The Center for Responsible Lending is a very effective advocate for consumer protection in the financial services industry. That being said, I found it interesting that they were very circumspect in their section on Future Areas of Regulation. (33) They referenced the existing Credit CARD Act, Dodd-Frank Act, state payday lending laws and federal payday lending regulations, but they did not identify any aspects of the consumer financial services market that need additional regulation. Hard to imagine it, but it seems that CRL believes that we have reached regulatory Nirvana, at least in theory.

Reiss on EB-5 Green Card Reform

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USA-NYC-Ellis_Island_crop

Ellis Island

GlobeSt.com quoted me in Congress Moves to Revamp EB-5. It reads in part,

Last week Senate Judiciary Committee Chairman Chuck Grassley and ranking member Senator Patrick Leahy introduced bipartisan legislation to reauthorize and reform the EB-5 Regional Center program.

This did not come as a surprise to the commercial real estate industry, which has been watching the approaching Sept. 30, 2015 deadline with a mixture of dread and anticipation.

Simply put, the program has become an increasingly popular funding source for projects, David Cohen, a shareholder at Brownstein Hyatt Farber Schreck in Washington DC, tells GlobeSt.com.

“As the popularity of the EB-5 program has grown in the last few years, so too has the scope of the deals its being used to fund,” he says. “There is far more money at stake than there was even a few years ago.”

The changes proposed in the bill — officially called the American Job Creation and Investment Promotion Reform Act — touched upon some of the more controversial parts of the program. It proposes strengthening oversight by Department of Homeland Security and Securities and Exchange Commission oversight and putting in place measures that would discourage fraud. Overall, national security would have a greater focus this time around.

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The EB-5 program “has a very interesting mix of policy goals, including immigration, community development and employment ones,” says David Reiss, a law professor at Brooklyn Law School and research director of the Center for Urban Business Entrepreneurship (CUBE).

It also has a great deal of flexibility – and many say too much flexibility, he continues. “For instance, companies have been able to characterize hot locations in Brooklyn and Manhattan as areas of high unemployment by defining the targeted employment area expansively,” he tells GlobeSt.com.

“For instance, the biggest real estate project in Brooklyn, Pacific Park — formerly known as Atlantic Yards –used nearby neighborhoods with high unemployment for an EB-5 investment located in a relatively low unemployment area,” he says.

In short, “there is a lot of talk of reform of the program that comes from all different directions – raise the minimum investment amount! – ensure that the targeted employment area is more narrowly drawn! – establish national standards!” Reiss says.

“But it is too early to tell which reforms might stick.”

Equitable Transit-Oriented Development

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Forest Hills RR Station

Enterprise Community Partners has issued a white paper, Promoting Opportunity Through Equitable Transit-Oriented Development (eTOD): Making the Case. The Executive Summary opens,

Investments in transportation infrastructure can catalyze regional growth and improve mobility. Given limited public funds, public officials and transportation planners have increasingly recognized the benefit of coordinating transportation investments with land use, housing and economic development investments and policies. In particular, there has been a specific emphasis on facilitating transit-oriented development (TOD) – a growth model characterized by compact development, a mix of land uses, and multi-modal transportation connectivity. When properly planned, such development can support transit ridership and revenues, boost property values and enhance economic competitiveness.

While TOD can take many forms, for a variety of reasons there has been increased demand for transit-oriented neighborhoods with a critical mass of population, neighborhood-serving retail establishments, employment opportunities and/or economic activity. Some prefer these transit-oriented, amenity-rich neighborhoods based on lifestyle preferences. However, for others – particularly people with lower incomes or for whom driving is difficult or impossible – the accessibility that TOD offers is crucial to reaching jobs and life’s other necessities in an efficient and economical manner.

Unfortunately, a number of factors – most notably the prevalence of zoning codes that separate residential from commercial and retail uses – have limited the number of compact, mixed-use, multi-modal neighborhoods. To the extent that demand for housing in such neighborhoods – as a result of either choice and/or necessity – remains strong, scarcity of housing in these neighborhoods can increase property values. Significant price increases can lead to additional cost burdens, potential displacement and/or barriers to entry for low- and moderateincome households. If these households are displaced it can also reduce likely riders’ access to transit and limit employees’ and customers’ access to businesses.

One solution to these challenges is equitable TOD (eTOD), which is well-planned and implemented development near transit that accounts for the needs of low and moderate-income people, largely through the preservation and creation of affordable housing. eTOD can expand mobility options, lower commuting expenses and enhance access to employment, child care, schools, stores and critical services. This development model also conveys ancillary benefits to the broader community, the economy, the environment and the transportation system. (5-6)

This is all to the good, but the report does not struggle with a fundamental problem: local governments do not want to build housing for low- and moderate-income households because they tend to be a net drain on municipal budgets a opposed to the typical household living in a single-family home. Even local politicians who are sympathetic to eTOD will face many roadblocks from their constituents if they try to make it happen. Enterprise promises a second report that will address barriers to eTOD. Hopefully, it will address this issue head on.