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PUBLISHED QUARTERLY

BY THE COMMUNITY

DEVELOPMENT

DEPARTMENT OF

THE FEDERAL RESERVE

BANK OF ST. LOUIS

L I N K I N G L E N D E R S A N D C O M M U N I T I E S FALL 2012

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3 5Taking FinancialEducation to theNext Level

Why Did Young House-holds Lose so MuchWealth During the Crash? 7

Coming Together To Preserve Affordable Housingprogram designed to meet thisneed, providing a dollar-or-dol-lar credit against tax liability toencourage the private develop-ment o aordable housing. Theprogram has helped nance

more than 52,000 aordableunits in Missouri since it began,and has brought considerableeconomic activity and jobopportunities to the state and

the region. Today, however,many o these aordable unitsace uncertain utures.

The LIHTC program requiresan original compliance periodo 15 years, ater which inves-

tors in properties are reeto exit partnerships. Thoseproperty owners who wishto continue oering rents ataordable rates ace tough

challenges as propertiesapproach Year 15, including:

restructuring ownershipwhen limited partners exit,

nding capital or repairs

and rehabilitation,renancing and

restructuring debt,

continued on Page 2

1,090

826

545

1,024

1,326

1,1641,308

1,419

1,775

1,313

1,751

2,000

1,500

1,000

500

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Year Units Arrive at Year 15

NumberofLow-IncomeUnits TOTAL: 13,541 units

FIGURE 1

Number o Low-Income Units Approaching Year 15 in the St. Louis MSA

SOURCE: LIHTC Database, United States Department of Housing and Urban Development. Retrieved from http://lihtc.huduser.org/.

By Ross Clarke

According to data rom the2010 American Com-

munity Survey, morethan hal o all rental units

in the St. Louis region areoccupied by people who paymore than 30 percent o theirincome toward rent. Manyare working amilies whosewages dont stretch ar enoughbeyond rent payments toallow or savings, or to pur-chase health insurance or

transportation. A signicantnumber o these householdsare considered to be extremelylow-income, paying more than50 percent o their earningstoward housing costs. Recenttrends also indicate heighteneddemand in the rental marketand, in some areas, increases

in rent prices. There is a clearneed or aordable rental hous-ing in the region today.

The Low Income Hous-ing Tax Credit (LIHTC) is a

Local and RegionalEconomic Developmentin Rural West Tennessee

IN

D

EX

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Affordable Housingcontinued rom Page 1

ater Year 15, especially inweaker housing markets, suchas many parts o the Midwest.Nevertheless, the Year 15 pro-cess is lengthy and challenging,and requires a great deal opreparation.

Between 2012 and 2022,more than 13,000 properties inthe St. Louis region will arriveat Year 15. (See Figure 1 onpage 1.) Recognizing the chal-lenges at hand, the CommunityDevelopment department othe Federal Reserve Bank o

St. Louis convened a meeting orepresentatives o state and cityagencies, and local organiza-tions with extensive experiencein the LIHTC eld. The goalswere to clariy the issues relatedto Year 15 in the region; allowthose involved to share success-ul strategies to negotiate this

process; generate ideas or new,creative strategies; and plannext steps, both short- and long-term. Some o the most press-ing issues were ound to be:

the reluctance o banks torenance debt on properties;

the capacity and stability

o some nonprot propertyowners;

county-by-county vari-ability regarding propertyassessment and the result-ing property taxes imposedi properties are valued atmarket rate;

declining external neighbor-

hood conditions;

a need or a city-wide planor the spatial developmento LIHTC properties; and

a need or improved com-munication at state, city andindividual property levels.

Several attendees remarkedthat this was the rst time allparties had gathered to addressthese issues, and the willingnessto engage in constructive discus-sion about the challenges andpossible moves toward actionwas evident. Perhaps mostencouraging was the desire omany o the participants to orma LIHTC working group to begin

to address these challenges col-laboratively; the group held itsrst meeting in September.

Similar working groups havehad considerable success inother cities. In Portland, Ore., agroup was ormed comprised osta rom state and city housingdepartments, local and national

nonprots, and other LIHTCproperty stakeholders. Thegroup was tasked with assess-ing the risk o loss o aordableunits approaching Year 15 anddeveloping recommendations toavoid this loss. The results othe groups meetings impactedthe city o Portlands Preserva-

tion Agenda and the statesQualied Allocation Plan.

Another successul LIHTCworking group is led byNovogradac & Company, aSan Francisco-based account-ing and consulting rm with awealth o LIHTC experience.They hold monthly coner-

ence calls and meet annu-ally to discuss best practicesor the LIHTC industry and

ongoing issues with physicaland asset management

o properties,high expenses and low

levels o revenue and cashfow, especial ly or smallerproperties, and

a general lack o prepared-ness or Year 15.

Another signicant chal-

lenge or LIHTC partnerships iscompetition rom newer aord-able housing developmentsthat open in close proximity toexisting properties. Tenantswith mobile Section 8 vouch-ers may leave older units andmove to these newer accom-modations, which can impact

the nancial viability o olderLIHTC developments.

I these issues cannot beresolved, property owners maybe let with little option butto look or a way out. ThoughLIHTC requires properties tocontinue operating at aord-able rates or a urther 15 years,

owners can request that thestate housing nance agencysearch or a new buyer throughtheir qualied contract processat any time ater the 14thyear o the original compli-ance period. I one cannotbe ound, owners are releasedrom all restrictions and are

ree to sell properties to anywilling buyers, who are onlybound to keep rents aordableor a urther three years. Mostproperties do remain aordable continued on Page 4

LIHTC BASICS

Introduced as part o the Tax Reorm Act o

1986, LIHTC has helped fnance more than

2 million privately developed aordable

housing units.

Developers o LIHTC properties are awarded

ederal credits, distributed by states in accor-

dance with the rules laid out in their Qualifed

Allocation Plan. Developers then sell credits

to investors to receive capital up ront or

development costs.

There are two types o LIHTC credit: A com-

petitive 9 percent credit that awards credits

equal to 70 percent o qualifed construction

costs; and a noncompetitive 4 percent creditor projects fnanced with tax-exempt bonds

and various other gap subsidies that provides

credits equal to 30 percent o qualifed costs.

A minimum o 20 percent o all units must be

rented by tenants with incomes at or below

50 percent o the area median income (AMI).

Alternatively, owners can opt to rent at least

40 percent o units to tenants with incomes

at or below 60 percent o the AMI. In many

cases, 100 percent o available rental unitsare aordable, especially in properties oper-

ated by nonproft organizations.

YEAR 15

LIHTC requires properties to comply

with restrictions or 15 years.

Legislation passed in 1989 introduced a

urther 15-year required extended-use period.

Limited partners (investors) are not

bound by extended-use restrictions

and are ree to exit in Year 15.

In some cases, general par tners (owners)

exit; but to do so, they must allow the

state housing fnance agency to attempt

to fnd a qualifed buyer through their

qualifed contract process.

I a qualifed buyer cannot be ound,

general partners are then ree to sell

to any willing buyer.

Certain nonprofts are given the right

o frst reusal to purchase properties.

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Why Did Young Households Lose soMuch Wealth During the Crash?The Role of Homeownership

As detailed in our recentarticle,2 the Survey o Con-sumer Finances reported thatthe wealth o the median U.S.household in 2010 was 39percent lower than the medianhouseholds wealth in 2007,

adjusted or infation. The am-ily headed by someone under40 (henceorth, young house-holds) in the middle o the 2010wealth distribution likewisehad much less wealth than thecorresponding median youngamily in 2007. (See Figure 1.)

The decline in the wealth o

a young household measured atthe median o the distributionin 2007 and 2010, respectively,was 38 percent. The declinewas 20 percent among young

By William Emmonsand Bryan Noeth

Recently released surveydata related to house-hold nancial conditions

reveal large wealth losses in

virtually every segment o theU.S. population between 2007and 2010, the most recent yearsin which the Federal Reserveconducted its triennial Survey oConsumer Finances.1 Since thedeepest economic recession inmany decades occurred betweenDecember 2007 and June 2009,

the 2007 and 2010 surveyseectively represent beore andater snapshots o U.S. house-holds balance sheets or a cross-section o American amilies.

households that were memberso a historically disadvantagedminority, which we dene tobe Arican-Americans andHispanics, who may be o anyrace. The median wealth oyoung households that were

not members o a historicallydisadvantaged minority (includ-ing non-Hispanic whites, Asiansand other non-historically dis-advantaged minorities) was 42percent lower in 2010 than themedian wealth in 2007.

The very large loss o wealthamong many young house-

holds is notable or at least tworeasons. First, many younghouseholds are nanciallyragile. A serious nancialsetback early in lie can have

lasting eects on amily mem-bers, including young children.

According to the surveys, thehomeownership rate (denedto include primary residences,vacation homes and time-shares) among young amilies

declined about our percent-age points between 2007 and2010 (rom 50 to 46 percent).This almost certainly was due,in large part, to oreclosuresand other distressed exitsrom homeownership. Thehomeownership rate declinedby only two percentage points

among amilies headed bysomeone at least 40 years oldbut less than 62 (rom 77 to

continued on Page 4

1989 1992 1995 2001 2004 2007 2010

$50,000

$40,000

$30,000

$20,000

$10,000

FIGURE 1

Median Net Worth o Families Headed bySomeone Under 40

1989 1992 1995 2001 2004 2007 2010

60%

50%

40%

30%

20%

FIGURE 2

Homeownership Rate o Families Headedby Someone Under 40

1989 1992 1995 2001 2004 2007 2010

100%

90%

80%

70%

60%

FIGURE 3

Share o Homeowners with Mortgages AmongFamilies Headed by Someone Under 40

Families headed by someone who is under 40 but

is NOT a member o a historically disadvantaged

minority group (Arican-American or Hispanic origin)KEY

All amilies headed by someone under 40

Families headed by someone who is under 40 and

is ALSO a member o a historically disadvantaged

minority group (Arican-American or Hispanic origin)

SOURCE: Federal Reserve Survey of Consumer Finance

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75 percent), while the home-ownership rate among amiliesheaded by someone 62 orolder actually increased by onepercentage point (rom 83 to84 percent). Thus, the housingand mortgage crisis appearedto hit young amilies especiallyhard and may have long-lastingimpacts on their nancial posi-tions or in other dimensions.

The second noteworthy

aspect o the large wealthdeclines among young house-holds is that amilies whowere not members o a histori-cally disadvantaged minor-ity experienced much largerwealth lossesin act, twiceas large when comparing theirrespective mediansthan did

Arican-Americans and His-panics. This is unusual in thesurvey data; in virtually everyother age and education groupthat we examined, historicallydisadvantaged minority ami-lies suered larger percentagewealth losses at the median.

What was dierent about

young amilies?It appears the source o this

unusual pattern is related tohomeownership and mortgageborrowing. In a nutshell,young amilies rom histori-cally disadvantaged minoritieshad lower homeownershiprates and less mortgage debt

immediately beore the down-turn in 2007. As the economyand housing markets deterio-rated, amilies whose balancesheets were relatively more

concentrated in housing andthose who had borrowed moreto nance homeownershipboth more typical o non-minority amiliessueredgreater wealth losses.3

Figure 2 shows homeowner-ship rates or amilies under40. In 2007, the overallyoung-household homeowner-ship rate was 50 percent. Therate or historically disadvan-taged minority amilies was36 percent, while the rate ornon-minority amilies was 56

percent. In 2010, the home-ownership rate among all youngamilies was 46 percent, withminority and non-minorityhomeownership rates alling to32 and 53 percent, respectively.

Figure 3 shows that the wayhomeownership was nancedplayed an ampliying role in

the loss o wealth or non-minority amilies. In 2007,90 percent o all young home-owners had mortgage debtoutstanding. Among histori-cally disadvantaged minorityamilies, only 85 percent hadmortgage debt, while 92 per-cent o non-minority amilies

had mortgage debt. Becausethe value o mortgage debtdoes not decline when houseprices do, the nancial eect omortgage debt is to magniy thepercentage loss o wealth su-ered by the homeowner. Thisphenomenon is called lever-age. Just as a physical lever

transorms a given amount oorce applied at one end into agreater orce at the other end,nancial leverage transorms agiven percentage house-price

decline into a larger percentageloss o homeowners equity.

In sum, young non-minorityhouseholds typically sueredlarger percentage declines inwealth between 2007 and 2010than did young historically dis-advantaged minority amilies.This was due to the relativelygreater concentration o non-minority households balancesheets in housing as well asgreater nancial leverage inthe orm o mortgage debt.

A higher homeownership rate

and greater use o mortgagedebt among young non-minor-ity amilies thereore turnedout to have negative nancialconsequences during the severerecession and housing-marketdecline o recent years.

William Emmons is chie econo-

mist or the Household FinancialStability initiative and assistantvice president o Executive SpecialProjects at the Federal ReserveBank o St. Louis. Bryan Noeth isa policy analyst or the HouseholdFinancial Stability initiative at theFederal Reserve Bank o St. Louis.

REFERENCES1. Bricker, Jesse; Kennickell, Arthur;

Moore, Kevin; and Sabelhaus, John.Changes in U.S. Family Finances rom2007 to 2010: Evidence rom the Surveyo Consumer Finances, Federal ReserveBulletin, 2012, Vol. 98, pp. 1-80.

2. Emmons, William; and Noeth, Bryan.Household Financial Stability: WhoSuered the Most rom the Crisis? Fed-eral Reserve Bank o St. Louis RegionalEconomist, 2012, Vol. 20, pp. 11-17.

3. Emmons, William; and Noeth, Bryan.Why Did Young Families Lose SoMuch Wealth During the Crisis? TheRole o Homeownership, FederalReserve Bank o St. Louis Review, 2013,

Vol. 95, No. 1, orthcoming.

Young Householdscontinued rom Page 3

Affordable Housingcontinued rom Page 2

address policy and technicalissues related to the program.The group regularly providescomments to state and ederalgovernment agencies on issuesthat impact the LIHTC eld,including recent commentsregarding the implementa-tion o the Volcker rule o theDodd-Frank Act.

Communication and sharedknowledge are crucial in

addressing the many issuesthat arise in the complicated,messy LIHTC eld. The clearerthe issues become, the betterthe strategies that can be cre-ated to resolve them. Partner-ing and sharing resources toovercome common obstacleswill only make the eld stron-

ger and ensure that the regionsneeds or aordable housingpreservation are addressed. Bydeveloping its own workinggroup, the St. Louis region hastaken a step closer to overcom-ing the challenges it aces. Formore inormation about theworking group, please contact

Stephen Acree (Regional Hous-ing and Community Develop-ment Alliance) at stephen@rhcda.com.

Ross Clarke is a graduate studentin the George Warren BrownSchool o Social Work at Washing-ton University in St. Louis and a

practicum student in the Com-munity Development Ofce o theFederal Reserve Bank o St. Louis.

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The U.S. GovernmentAccountability Oce similarlyconcluded in a 2011 report thatno consistent approach, deliverymechanism or technology stoodout as a best practice in nan-cial education.1 Individuals andamilies in need o such services

had little guidance when seek-ing them, which increasedtheir vulnerability to preda-tory, costly and oten harm-ul actors. Most establishedmodels o nancial educationocused on long-term wealthcreation, whereas amilies withlow incomes typically wrestled

with a number o immediatecrises and underlying insta-bility concerns that must beaddressed rst. Increasinglycomplex nancial instrumentsor banking, borrowing andsaving made sae and aordablechoices, when available, dicultto identiy and access.

DCAs Oce o FinancialEmpowerment (OFE), thereore,began developing and deliveringrigorous and proessional stan-dards or counselor training,

service delivery quality control,and impact measurement andevaluation. This article exam-ines OFEs delivery model, thecollateral impacts we experi-enced as we integrated theseprograms into other services,and the repercussions or

national replication.

Proessional Financial

Counseling in New York City

Mindul o vast need andstandards o public account-ability, OFE developed anddeployed best practices in con-tent, delivery and evaluation to

achieve proessional quality inthis eld, employing a three-pronged approach:

1. OFE standardized anoutcome-driven service-delivery model, implementedthrough the citys now publiclyunded Financial Empower-ment Centers, which oer ree,

proessional, one-on-one nan-cial counseling services. Thecornerstone o this approachis a comprehensive nancialhealth assessment completed

with all clients at intake and asubsequent 30-milestone andoutcome evaluation tool. TheCenters strive to understandthe ull nancial picture otheir clients regardless o themotivation or the visit. Subse-quent one-on-one counselingsessions include:

Budget counseling

Credit building and repair ocredit reports and scores

Debt management strategies

Connection to sae andaordable banking productsnegotiated by OFE

Guidance on appropriate andviable savings and asset-building opportunities

Strategic reerrals to legalservices, ree or low-costtax preparation, benets

counseling and other socialservices, as appropriate

Longer-term nancial coach-ing geared toward asset-building goals

2. To ensure the quality andconsistency o services oered tothe public at the citys Financial

Empowerment Centers, OFEdeveloped a ormal training pro-gram with the City Universityo New York (CUNY) in 2009.This course is now availableas a ull-semester, three-creditundergraduate course oered byCUNYs School o ProessionalStudies through a Financial

Studies Certicate Program. AllFinancial Empowerment Centercounselors must take and pass

continued on Page 6

By Mitchell Kent andI-Hsing Sun

In 2006, New York CityMayor Michael R. Bloom-berg charged the Depart-

ment o Consumer Aairs(DCA) with bringing nancial

empowerment services to thosewith low incomes as part ohis broad antipoverty strategy.DCA ormed the countrys rstOce o Financial Empower-ment to take on the challenge.

It quickly became clear that,while some existing nancialeducation services were being

done well, the eld did notpossess the level o proession-alized delivery, outcome-drivenmetrics and rigorous evaluationrequired or public programs.

And one-on-one counseling,the gold standard o the eld,was largely unavailable. Eventhe best program providers

lamented this lack o standardsand accordingly suered romundependable resources tosupport their work.

Taking Financial Educationto the Next Level201

2iStockphoto.com/RBFried

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the course. It is also open toservice providers across all eldsand all CUNY students. Ensur-ing quality service providers isessential to make the case orpublic unding o the FinancialEmpowerment Centers and,most important, to enable thecity and its partners to steer con-sumers into the hands o verycapable nancial educators.

OFE also has partnered with

the Columbia University Schoolo Social Work (CUSSW) to inte-grate nancial counseling intothe eld o social work throughthe graduate-level course, Per-sonal Financial Management andFinancial Counseling Skills. Thiscourse is now a prerequisite toa eld placement in nancial

empowerment and counseling.3. Finally, OFE standardized

processes and protocols acrossits Financial EmpowermentCenters to ensure consistentlyhigh quality, regardless othe provider, and to meet theimpact measurement demandso its initially private and now

public unders. OFE custom-ized an integrated databasesystem used as both a casemanagement tool to track clientprogress against our distinctservice plans (banking, credit,debt and savings) and or ongo-ing perormance evaluation.

The Supervitamin Eect

With the advent and trackrecord o quality metrics, New

Yorks nancial counselingeld experienced a demand

or nancial counseling thatextended beyond counselingclients to include programproviders in other antipovertyeorts. Because nancial insta-bility is a common underlyingcircumstance, other programclients were nding it dicultto make improvements. Proes-sional nancial counseling,integrated into the deliverystream o other programs,began producing strong evi-dence o a supervitamin eect,helping those programs work

aster and more eectively. Thisexciting development is studiedin detail in OFEs multi-reportseries, Municipal FinancialEmpowerment: A Supervitaminor Public Programs. The rstsupervitamin report, releasedin December 2011, ocused onStrategy #1: Integrating Proes-

sional Financial Counseling(www.nyc.gov/html/dca/downloads/pd/SupervitaminReport.pd). Thesecond supervitamin report,Strategy #2: Proessionalizingthe Field o Financial Educationand Counseling (www.nyc.gov/html/dca/downloads/pd/

SupervitaminReport2.pd), doc-uments the exciting approachesdescribed in this article. Thethird report ocused on Strategy#3: Integrating Sae and Aord-able Bank Accounts (www.nyc.gov/html/dca/downloads/pd/SupervitaminReport3.pd),and uture reports will ocus

on integrating targeted con-sumer nancial protections, andintegrating asset-building andincome-boosting strategies.

Replicating Success

Other city governments inthe national Cities or Finan-cial Empowerment Coalition,ounded and co-chaired by New

York City and San Francisco,implemented citywide networkso nancial education providers,like San Franciscos Smart MoneyNetwork and Seattles FinancialEducation Providers Network.Emphasizing the kind o qual-ity control required by publicaccountability, other opportuni-ties or integrated delivery arose,

and the supervitamin approachbegan taking hold across thecountry. With the promise oquality, scale and public systemschange came urther excitement.

Through an initiative o theCities or Financial Empower-ment Fund (CFE Fund), a projecto Living Cities, other cities soon

will replicate the rigorous, stan-dardized and integrated versiono nancial education and one-on-one counseling pioneeredby New York Citys FinancialEmpowerment Centers. As ameasure o demand and interest,more than 48 cities, representing30 million residents in 29 states

and one U.S. Commonwealth,applied to oerand publiclyintegratethe proessionalnancial counseling model withthe CFE Fund.

Finally, steps in the directiono greater ederal involvementare emerging. The ederalFinancial Literacy and Edu-

cation Commission, whichconvenes regularly at the U.S.Department o the Treasury,revised its National Strategy orFinancial Capability in 2011,

including a set o core com-petencies that should becomepart o general public nan-cial knowledge. And the newConsumer Financial ProtectionBureau has a dedicated Divi-sion o Consumer Educationand Engagement, with separate

Oces o Financial Educationand Financial Empowerment.

The eld o nancial counsel-ing and education is clearly ripeor the public investment atten-dant to proessional delivery.

And the public need is arguablygreater than it has ever been.

Mitchell Kent is director o legisla-tive policy and special counsel atthe New York City Department oConsumer Aairs (DCA). I-HsingSun is assistant commissioner orfnancial empowerment programsat DCA.

ENDNOTE

1 United States Government Account-ability Oce: Report to CongressionalCommittees; Financial Literacy: AFederal Certication Process or Pro-viders Would Pose Challenges. June2011. Executive Summary.

Financial Educationcontinued rom Page 5

THREE YEARS

OF FINANCIAL

EMPOWERMENT CENTER

ACHIEVEMENTSJune 30, 2012

Total clients served:

17,160Total counsel ing sessions:

32,042Total amount o savings:

$870,296.72Total amount o debt reduced:

$7,048,703.93

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Local and Regional EconomicDevelopment in Rural West TennesseeBy Andrew A. Pack

Between Memphis andNashville along theMusic Highway (Inter-

state 40) rests the historic cityo Jackson, Tenn. Like manylarger towns between twomajor cities, Jackson serves as

a regional hub or many o thesmaller surrounding com-munities. The city is also theheadquarters o the SouthwestTennessee Development Dis-trict (SWTDD). Joe Barker isthe director o the SWTDD andhas been working on the issuesacing rural areas throughout

his career as a community andeconomic developer.

Rural America is acing manychallenges in the changingeconomy, and many o thosechallenges are present in WestTennessee. Creating regionalcollaboration to work on issuessuch as population declines,

low educational attainment andthe shrinking o manuacturing

jobs is no easy task. Barker hasplayed various roles through-out his career as a communityand economic developermayor o a small town, countymayor, state-level communityand economic developer, andregional economic developer.Each role has its own chal-lenges and opportunities, buteach has also given Barker aunique perspective. I sat down

with him to discuss how heviews his role in economicdevelopment.

Economic Development

as an Elected Ofcial

As mayor o the small com-munity o Savannah, Tenn.,Barker conesses that while

elected ocials may have a loto enthusiasm or their commu-nities, this passion isnt alwaysenough when trying to increasean areas economic opportuni-ties. Not every person or poten-tial company shares that samepassion. Inrastructure needs,proximity to other markets,

available workorce and cost oproperty are just some o theactors a prospective companymay be ocused on. Electedocials must work beyond theirsense o community pride.

Barker believes that educat-ing mayors in many aspects oeconomic development is cr iti-

cal, but the mayor should notbe the sole leader in this area.Resources in small towns maybe limited, but it is importantto have a proessional economicdeveloper who is ocused onthe long-term impact o com-munity and economic develop-ment. Mayors are an essentialpart o the team, but as electedocials they work in our-yearcycles. Barker says that pro-grams such as the University oTennessees County Technical

Assistance Service (CTAS) andMunicipal Technical AssistanceService (MTAS), along withthe states economic develop-ment basic course (throughthe International EconomicDevelopment Council) werevery helpul in increasing hisand other mayors knowledge

o economic development.

Community Assets

Oten Get Overlooked

Another issue that Barker saidtook a bit o time to realize ishow to really identiy and ocuson a communitys assets. Thishelped him to shit some o the

economic development ocusrom manuacturing recruit-ment in Savannah and HardinCounty to a plan that was abetter t with their local assets(e.g., tourism). According toBarker, local elected ocialsoten do not ully realize theircommunitys assets and oppor-

tunities because many commu-nities also overlook them.

In the report, Small Towns,Big Ideas, the University oNorth Carolina ound thatsmall towns with the mostdramatic outcomes tend to beproactive and uture-oriented;they embrace change andassume risk. Barker agreeswith this statement becausehe believes it is imperative

CDAC Member Spotlight

continued on Page 8

JO E BA RK ER is executive director

o the Southwest Tennessee Devel-

opment District (SWTDD), a regional

planning and economic develop-

ment organization that serves

eight Tennessee counties. Barker

has also served as a mayor and

the assistant commissioner o the

Tennessee Department o Economic

and Community Development. He

represented the governor on the

Appalachian Regional Commis-

sion, Delta Regional Authority and

Tennessee-Tombigbee Waterway

Authority. Barker is also a member

o the Community Development

Advisory Council (CDAC) or theFederal Reserve Bank o St. Louis.

CDAC members are exper ts in

community and economic develop-

ment and fnancial education.

They complement the inormation

developed through outreach by

the District s Community Devel-

opment sta and suggest ways

that the Bank might support local

eort s. A list o current members

is available at www.stlouised.org/

community_development.

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TOP 10 THINGS ELECTED

OFFICIALS SHOULD

KNOW ABOUT ECONOMIC

DEVELOPMENT

1. Your local economicstrengths and weaknesses.

2. Your communitys place

in the broader regional

economy.

3. Your communitys

economic developmentvision and goals.

4. Your communitys strategy

to attain its goals.

5. Connections between

economic development and

other city policies.

6. Your regulatory environment.

7. Your local economic

development stakeholders

and partners.

8. The needs o your localbusiness community.

9. Your communitys economicdevelopment message.

10. Your economic

development sta.

SOURCE

McFarland, C. and Seeger, K.: TheRole o Local Elected Ofcials In

Economic Development: 10 ThingsYou Should Know, InternationalEconomic Development Council/National League o Cities/Centeror Research & In novation, http://iedconline.org/Downloads/NLC_IEDC_EconDevelop10things.pd

that small towns think aboutcreative economic develop-ment opportunities that maybe dierent than past strate-gies, which may require somedegree o risk. Once Barkerully realized how big o anasset tourism was to Savan-nahs economy, he did some-thing dierent than manypeople would do. He took arisk and called the National

Association o IntercollegiateAthletics (NAIA) to pitchbringing their championshipootball game to the city.

Savannah was successulin hosting the NAIA ootballchampionship or 12 years, andthe city was mentioned on theront cover oSports Illustrated.

Hosting this game not only hadan immediate impact on Savan-nah, but it was also a perectt with the small towns othertourism assets, including theTennessee River, Lake Pick-wick and the nearby historicbattleeld o Shiloh. Barkersays, Its much more than a

ootball game and national TVexposure. Its about economic-development tourism and theexperiences players and othershave at the game. Outsiderswho have a positive experiencein Savannah may one day be ina position to bring jobs to thecity or the surrounding region.Their positive experiences maylead to uture economic oppor-tunities. Elected ocials canbe helpul when they are inte-grated appropriately into the

economic development processand work with proessionalsto help develop the commu-nitys assets.

Regional Economic Development

Economic development chal-lenges at the regional level mayoten be dierent than those inindividual communities, such asgetting local and elected ocialsrom various communities tocooperate. Each communityhas its own characteristics andlocal pride that may create a

dicult climate or regional col-laboration. Barker says regionaleconomic development can bevery challenging, but collabora-tion is especially critical in ruralcommunities because they arestronger working together as awhole. In most cases, more eco-nomic opportunities or rural

areas exist at a regional levelthan at the local level.

The SWTDD works onregional collaboration by pro-moting education and work-orce development, technologyand online jobs that t intorural areas, capacity buildingto build leadership through-

out the region and workingto promote entrepreneurship.Barker says that regional devel-opment works best when eachcommunity is willing to investnancially in the collaborativeeort. There are a lot o enti-ties recruiting manuacturingin West Tennessee, so Barkerand the SWTDD have devel-oped other types o economicdevelopment programs, suchas digital actories that prepareworkers or online jobs, college

career coaches or high schoolstudents and entrepreneurshipprograms. They are currentlyworking to create a businessincubator.

Barker acknowledged thatthere is no template or ruraland regional economic devel-opment because every area isdierent. But there are goodexamples o economic opportu-nities created in rural America(e.g., North Carolina andother areas ocused on by the

Appalachian Regional Com-

mission). Barker believes thereare three advantages that ruralcommunities share. They have:1) a sense o place, 2) peoplewith a strong work ethic, and3) strong social ties that couldhelp to create more jobs in theuture. To create more oppor-tunities, Barker believes that

rural communities need tobetter understand their assetsand liabilities, direct resourcesto these strengths, and takeadvantage o regional economicdevelopment opportunities.

Andrew A. Pack is a communitydevelopment specialist at the

Little Rock Branch o the FederalReserve Bank o St. Louis.

REFERENCES

The University o Tennessee Instituteor Public Service (oers educationaltraining or elected ocials), ww w.ips.tennessee.edu/

Lambe, W.: Small Towns, Big Ideas:Case Studies in Small Town Commu-nity Economic Development, School

o Government, University o NorthCarolina at Chapel Hill, 2008, w ww.sog.unc.edu/programs/cednc/stbi/pds/stbi_nal.pd

Economic Developmentcontinued rom Page 7

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A Matter of DegreesIncreasing College AttainmentWorkforce Development Strategy #1

By Kathy Moore Cowan

Early in 2012, in an eortto develop a deeperunderstanding o the

complex actors creating long-term unemployment conditionsand identiy promising work-

orce development solutions,the Federal Reserve held 29roundtables across the country,including our in the EighthDistrict. One common themeheard during these meetingswas that the American work-orce lacks the skills needed bypresent and uture employers.

It is estimated that 68 percento all jobs created between 2010and 2018 will require a col-lege degree. However, only 40percent o Americas currentadult population (age 25 andolder) are college graduates.

America ranks 10th in the worldin college attainment, trail-

ing countries such as Canada(56 percent), South Korea (56percent) and Japan (54 percent).The Tennessee Higher Educa-tion productivity team predictsthat by 2018 more than hal oall jobs in Tennessee will requiresome orm o postsecondarycredentials. Only 29.9 percento Tennessees adult populationholds an associates degree orhigher, compared to the nationalaverage o 37.2 percent. Whilethere is some debate about

whether a our-year collegedegree is worth the cost, manypeople believe that the uture o

American prosperity relies on abetter-educated workorce.

It is not surprising, then, thatthe president has set a goal orthe U.S. to reclaim the lead in

college graduation rates by 2020.Tennessees governor aims todouble the number o the statesresidents with a college degreeor certication by 2025. Andthe Memphis metropolitan areaintends to raise the college com-pletion rate by 1 percent (8,002)by September 2014. Here is how

the Memphis metropolitan areais working to reach this goal.

Metropolitan Memphis, Tenn.

In 2008, CEOs or Citiesintroduced extensive researchthat outlined three vital areastalent, poverty and the envi-ronmentthat could have a

tremendous economic impacton every city in America. Theresearch showed that educa-tional attainment is the biggestpredictor o success or citiesand metropolitan areas today.Specically, it showed that 58percent o a citys success, asmeasured by per-capita income,is attributable to the percentageo the adult population with acollege degree.

Rankings o 51 metropolitancities placed Memphis at #48

in college attainment, with only23.7 percent o the adult popula-tion earning a college degree.Recognizing the challengeandthe opportunityor the metroarea, Leadership Memphislaunched the Memphis TalentDividend (MTD), a collaborative

o more than 100 stakeholdersrom the eight-county regionwho are working together toincrease the percentage o collegeattainment in the area by 1 per-cent. I this goal is met, CEOsor Cities estimates a $1 billioneconomic impact or the region.

MTD is ocusing on three

strategic areas: 1) helpingstudents prepare or and suc-cessully enroll in college; 2)helping students stay in collegeand complete their studies; and3) helping workers return to col-lege to earn a degree. The grouphas organized six specializedcollaborativesyouth organiza-

tion, community, aith, business,media and higher educationthat are open to anyone whowants to work toward reachingthe goal. Each collaborative hasan individual ocus and is work-ing to increase ve key areas:1) high school graduation rate,2) college enrollment rate, 3) col-lege continuation rate, 4) collegecompletion rate, and 5) collegegraduate retention rate.

David Williams, president/CEO o Leadership Memphis, continued on Page 10

said, When you look at the top51 largest metro areas, Memphisis ranked #1 in poverty and#48 in college attainment. Thecorrelation is obvious. Over200,000 people in the Memphismetro area started but never

nished college. LeadershipMemphis and our 100 Mem-phis Talent Dividend partnersknow we can make a dierenceby helping them nish theirpostsecondary education andimprove our workorce at thesame time.

Thats where GraduateMemphis comes in. Housed inMemphis Benjamin Hooks Cen-tral Library, Graduate Memphis

CEOs or Cities

www.ceosorcities.org

Leadership Memphis

www.leadershipmemphis.org

Memphis Talent Dividend

www.memphistalentdividend.com

Graduate Memphis

graduatememphis.org/about

Kresge Foundation

www.kresge.org/programs/education

Lumina Foundation

www.luminaoundation.org

TNAchieves and

Memphis/Shelby Achieves

www.tnachieves.org

FOR MORE INFORMATION

O N T H E I N T E R N E T A T W W W . S T L O U I S F E D . O R G#9

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SPANNING THE REGIONThe region served by the Federal Reserve Bank of

St. Louis encompasses all of Arkansas and parts of Illinois,

Indiana, Kentucky, Mississippi, Missouri and Tennessee.

Fall Results oCommunity Out-

look SurveyComing Soon

The all 2012 edition o thesemiannual Community OutlookSurvey o low- and moderate-income (LMI) communitiesacross the states that comprisethe Eighth Federal ReserveDistrict will soon be releasedon the St. Louis Feds web site:www.stlouised.org/commu-

nity_development/community-outlook-survey/. The surveyinorms the St. Louis Fed andits branches in Little Rock,Louisville and Memphis aboutthe current conditions o theDistricts LMI communities andis shared with policymakers atthe Federal Reserve Board o

Governors in Washington, D.C.I you dont already participatein the survey but would likeyour voice to be heard in uturerounds, send us an e-mail atcommunitydevelopment@stls.rb.org.

New 1:1 Fund Will Boost College

Savings or Low-Income Missis-sippi Kids

The 1:1 Fund, launched inNovember, is an innovativenew program that matches low-income students in Mississippiwith donors who help themmaintain and build college sav-ings accounts. In its rst year,1:1 aims to provide matchingunds or nearly 9,000 childrenin two test marketsMissis-sippi and San Franciscowithplans to expand nationally

and reachas many as100,000 chil-dren by 2015.

Mississippiranks second to last in thepercentage o residents with aour-year college degree (19.5percent) and 47th in thosewith two-year degrees (27.9percent), according to CFEDs

2012 Assets & OpportunityScorecard. The 1:1 Fund willmatch donors with nearly 700children already saving orcollege through the MississippiCollege Savings Account Pro-gram. For more inormation,visit www.1to1und.org.

New St. Louis Fund Pairs Commu-nity Investment with Engagement

A new grassroots charitableund dedicated to commu-nity development in the St.Louis region gives individualdonors a say in which orga-nizations to support. TheundinveSTLraises money

through donations and eventproceeds to build a ounda-tion ocused on neighborhooddevelopment. When the undreaches specic undraisinggoals, it will grant 25 percentto an organization and retain75 percent to build up theendowment. Donations areaccepted in all amounts, anddonors who contribute $100 ormore in a given unding cycleare able to vote on the organi-zations that receive unding.

To learn more, contact KarlGuenther at guentherk@umsl.edu or www.invest.org.

Save the Date! Resilience and

Rebuilding or Low-Income Com-

munities Conerence

The Federal Reserve Systemwill host its eighth biennialcommunity developmentconerence on April 1112,2013, in Washington, D.C.This event will eature multi-disciplinary, action-orientedresearch to inorm strate-gies and policies that orge

vibrant and resilient com-munities. To learn more, visitwww.rbatlanta.org/news/conerences/13resilience_rebuilding.cm.

Glenda Wilson Retires

Ater 36years at

the FederalReserveBank oSt. Louis,Glenda Wil-son retiredon Nov. 30.

Wilson, the Banks assistantvice president o CommunityDevelopment, was hired at theSt. Louis Fed in 1976 as an assis-tant bank examiner. She workedin various departments through-out the Bank beore landing in

Community Development in1990, when the departmentsocus was on assisting com-munities with issues related tothe Community Reinvestment

Act (CRA). Although todaysCommunity Development

department still provides CRAinormation as part o its mis-sion, that mission has expandedto also ocus on areas suchas community and economicdevelopment as well as access tocreditwith a goal o helping toimprove communities and thelives o their residents.

Over time, we have evolvedinto looking more closely atcommunity issues such asaordable housing, and takingmore o a holistic approachto community and economicdevelopment, Wilson says.Such an approach, which oteninvolves working directly with

community organizations andneighborhoods, has madeWilsons winding career pathespecially rewarding, she says.We get to work with all othese people and organizationswho do such good work andwho are trying so hard to makelie better or their communi-ties, she says. Its been reallyrewarding to play a part inhelping to make those eortssuccessul.

Wilson

0L I N K I N G L E N D E R S A N D C O M M U N I T I E S

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BRIDGESBridges is a publication o the Commu-nity Development Oce o the FederalReserve Bank o St. Louis. It is intendedto inorm bankers, community develop-ment organizations, representatives o

state and local government agencies andothers in the Eighth District about currentissues and initiatives in community andeconomic development. The EighthDistrict includes the state o Arkansas andparts o Illinois, Indiana, Kentucky, Mis-sissippi, Missouri and Tennessee.

Glenda WilsonAssistant Vice Presidentand Managing Editor314-444-8317

Yvonne Sparks

Community Development Ocer314-444-8650

Daniel DavisManager314-444-8308

Maureen SlatenSenior Editor314-444-8732

Community Development StaffSt. Louis: Matthew Ashby

314-444-8891Jeanne Marra

314-444-6146Ross Clarke314-444-6148

Memphis: Kathy Moore Cowan901-579-4103Teresa Cheeks Wilson901-579-4101

Little Rock: Drew Pack501-324-8268

Louisville: Lisa Locke502-568-9292Faith Weekly502-568-9216

The views expressed in Bridges are notnecessarily those o the Federal ReserveBank o St. Louis or the Federal ReserveSystem. Material herein may be reprintedor abstracted as long as Bridges is credited.Please provide the editor with a copy oany reprinted articles.

Free subscriptions and additional copiesare available by calling 314-444-8761 orby e-mail to communitydevelopment@stls.rb.org.

RESOURCES

New Scorecard Data on the

Strength o State Policies

CFED has released new data on the strength o 12 state

policies (http://scorecard.assetsandopportunity.org/2012/

policychange.php) that help amilies create fnancial security

and opportunity. These data capture policy changes that

occurred in the 2012 state legislative session, or or which

data became available ater all 2011. For more inorma-

tion, visit http://assetsandopportunity.org/scorecard/.

Bank Branches rom the FDIC

Visualize the location o bank branches across the nation,

overlay them on top o market indicators like income,

households, racial composition and more. Learn about each

banks assets and total deposits and see how bank branch

locations compare rom one part o the country to another.

This public dataset is now available on PolicyMap under

Banking in the Add Sites menu (let navigation bar) or

ree (www.policymap.com/maps).

College Attainmentcontinued rom Page 9

is a ree college resource centerdesigned to increase postsecond-ary attainment among adults.

Funded by a $1.7 million grantrom the Plough Foundation, itis staed by a coordinator, threesta college advisors, and collegeadvisors on loan to the center bylocal colleges and universities.Counselors meet one-on-onewith prospective students, andtelephone counselors are avail-

able. Workshops on relevanttopics are held monthly, anda web site provides links toresources ocused on the needso adults returning to school.Since its opening in July, Gradu-ate Memphis has reached more

than 400 potential students, and20 participants have enrolled ina local college.

MTD is also attempting towin $1 million or the metropol-itan area as part o the National

Talent Dividend contest spon-sored by CEOs or Cities andthe Kresge and Lumina ounda-tions. More than 50 cities haveregistered or the competition,including three additional citiesin the Federal Reserves EighthDistrictSt. Louis, Louisvilleand Little Rock. The prize will

be awarded in September 2014to the metropolitan area withthe greatest increase in the num-ber o postsecondary degreesgranted per capita over a three-year period. I all registeredcities are successul in raising

college attainment by 1 percent,CEOs or Cities calculates a$124 billion increase in nationalearnings per year.

Other programs are helpingMemphis reach the college-

attainment goal (e.g., Memphis/Shelby Achieves). The area ispreparing or its uture and byall indications the uture is here.It will take the collective worko all communities across thecountry to create the talentthat is required to meet thechallenging and ever-changing

needs o the global economy.

Kathy Moore Cowan is a seniorcommunity development specialistat the Memphis Branch o the Fed-eral Reserve Bank o St. Louis.

New Podcast Series on Workorce Development

How might we rethink workorce development to best respond

to current and uture economies? Experts rom industry and

academia provide their thoughts on this and other related topics

in Economic Developmentpodcasts. Recent podcasts ocus on

jobs and unemployment, and eature speakers rom the national

conerence, Future o Workorce Development: Where Research

Meets Practice, co-sponsored by the Federal Reserve Banks o

Kansas City and Atlanta.

Metrics or Success: Critical Elements or WorkorceDevelopment Programs

Elizabeth Weigensberg, University o Chicago, discusses

recent research on key components o the most successul

workorce development programs and provides recommen-

dations or how existing programs can be more eective.

Collaborative Eorts: Colleges and Nonprofts Partner to

Enhance Workers Skills

Maureen Conway, Aspen Institute, discusses the results o the

Courses to Employment project, which analyzed how com-

munity colleges and nonprofts worked together to help low-

income adults succeed in the classroom and labor market.

To view transcripts or play the audio MP3 fles, visit

www.rbatlanta.org/podcasts/economicdevelopment/

#O N T H E I N T E R N E T A T W W W . S T L O U I S F E D . O R G

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PRSRT STD

U.S. POSTAGE

PAID

ST. LOUIS, MO

PERMIT NO. 444

CALENDAR

DECEMBER4

What Works or Job Creators?

Experimenting with Integrated Delivery

Systems or Microenterprise Services

Online Webinar

Sponsors: CFED, NeighborWorks America,

NYSE Foundation

www1.gotomeeting.com/

register/683696128

JANUARY

15

CRA RoundtableSt. Louis

Sponsors: Federal Reserve Bank o

St. Louis, OCC, FDIC

Contact Matt Ashby at Matthew.W.Ashby@

stls.rb.org

APRIL1112

SAVE THE DATE!

Resilience and Rebuilding or Low-Income

Communities Conerence

Washington, D.C.

Sponsor: Federal Reserve System

www.rbatlanta.org/news/

conerences/13resilience_rebuilding.cm

ONLINE ONLY

www.stlouisfed.org/

publications/br

In addition to the print version,

each issue of Bridgesoffers

information that is exclusively

online. This content expands

on topics in the current or a

past issue. For this issue:

Underwater Mortgages

in the Eighth District

By Julia Maus

FEBRUARY57

Research SymposiumRestoring

Household Financial Stability Ater the

Great Recession: Why Household Balance

Sheets MatterSt. Louis

Sponsors: Federal Reserve Bank o

St. Louis, Center or Social Development at

Washington University in St. Louis

www.stlouised.org/event/46CA

1920

Mississippi Annual Aordable Housing

ConerenceBiloxi, Miss.

Sponsor: Mississippi Home Corporation

www.acebook.com/mshomecorp

21

Bank-On Save-Up St. Louis Launch

St. Louis

Sponsor: St. Louis Regional Unbanked

Task Force

www.stlunbanked.com/index.php/all-

about-us/initatives/itemlist/category/97-

bank-on-save-up-st-louis