Communities of Opportunity:A Framework to Produce Greater Racial, Social and Regional EquityBreakout Session: Housing

September 23, 2006Calhoun County Summit on the Healing of Racism

Jason Reece, AICP; Senior Research AssociateChristy Rogers, Research Associate

Kirwan Institute for the Study of Race and EthnicityThe Ohio State University

http://www.kirwaninstitute.org/Reece.35@osu.edu

Today’s Discussion Critical importance of housing as means to access social,

economic and educational opportunity

Review of housing challenges Segregation, realtor steering Exclusionary land use policy Lack of affordability; concentration of affordable units

Summary of policy best practices Opportunity Based Housing Housing Opportunity Revenue Streams Inclusive Housing Fair-share Housing Employer-assisted Housing

Place and Life Outcomes Where you live is more important than what

you live in… Housing, in particular its location, is the primary

mechanism for accessing opportunity in our society

Housing location determines the quality of schools children attend, the quality of public services, access to employment and transportation, health risks, access to health care and public safety

For those living in high poverty neighborhoods these factors can significantly inhibit life outcomes

Social science research on the “Neighborhood Effect”

Neighborhoods vary in terms of Resources and local service quality (public and

private services: schools, grocery stores, child care, after school activities, parks)

Crime and violence rates Job access Model learning via social ties and inter-relationships Socialization and collective efficacy / norms Resident perceptions of deviance

Ex: Influence of Neighborhoods on Health Research suggests that living in disadvantaged

neighborhoods increases the risk of mortality and disease

Possible mechanisms: direct physical influences (i.e. exposure to toxic waste) cumulative stress associated with living in unsafe

neighborhoods with limited resources harder to sustain healthy behaviors (i.e. less good

grocery stores) more likely to be targeted by companies promoting

unhealthy lifestyles (tobacco, alcohol, fast food)

Housing and Wealth Housing is the primary way people build assets and wealth

in the United States, by developing home equity Home equity accounts for 70% of the average net worth of

households in the US

African Americans and Latinos are often denied access to this wealth building opportunity Why: Impediments to homeownership and the loss of property

values due to segregation and isolation from opportunity

Why is wealth important? It is intergenerational, provides a safety net, and allows people

to access other opportunities

Housing and Wealth The median asset value for a white household was $79,400; for the median

African American household this was $7,500 (a disparity of 900%) For every $1 in assets held by African Americans, Whites hold $9

This disparity is primarily due to differences in home equity

Source: “Net Worth and Asset Ownership 1998-2000”. Household Economic Studies. U.S. Census Bureau (2003)

Housing is Critical in Determining Access to Opportunity

Housing

Childcare Employment

Education

Health

Transportation

Effective Participation

Housing and Opportunity

Neighborhood Neighborhood SegregationSegregation

School SegregationSchool Segregation

Racial stigma, other Racial stigma, other psychological impactspsychological impacts

Job segregationJob segregation

Impacts on community Impacts on community power and individual power and individual

assetsassets

Impacts on Educational Impacts on Educational AchievementAchievement

The Cumulative Impacts of Racial and Opportunity Segregation

Exposure to crime; arrestExposure to crime; arrest

Transportation limitations Transportation limitations and other inequitable public and other inequitable public servicesservices

Adapted from figure by Barbara Reskin at: http://faculty.washington.edu/reskin/

Segregation impacts a number of life-opportunitiesSegregation impacts a number of life-opportunities

Impacts on HealthImpacts on Health

Racial Segregation, Opportunity Segregation and Racial Disparities

Housing policies, land use patterns and patterns of regional investment and disinvestment converge to produce continued racial segregation in our society

Often this racial segregation coexists with segregation into high poverty neighborhoods and separation from many of the opportunities in our metropolitan regions Producing a racial isolation in neighborhoods that are

lacking the essential opportunities to advance in our society, and fueling racial disparities

Housing Challenges A well documented web of housing challenges

disproportionately impact people of color A housing market that does not produce units that are

affordable to most people of color Exclusionary land use policies Discriminatory and predatory lending practices Racial discrimination and steering Subsidized housing funding and policy

Resulting in segregation and concentration for many African American households

Growing Affordability Problems in Many Markets

The nation has a growing affordability problem Appreciation in coastal markets and lagging

incomes in other markets are contributing to this trend

Median Household IncomeInflation Adjusted In 2004 $'s

$30,000$35,000$40,000$45,000$50,000$55,000$60,000

2000 2001 2002 2003 2004

Median HH Income

Median Home ValueInflation Adjusted In 2004 $'s

$120,000$125,000$130,000$135,000$140,000$145,000$150,000

2000 2001 2002 2003 2004

Median Home Value

People of Color Disproportionately Impacted by Affordability Issues As housing affordability declines, communities of

color (who are more likely to have fewer assets and less income) bear a disproportionate impact Approximately 40% of African American and Latino

households had housing problems (usually due to cost) in 2000

For Whites only 25% experienced housing problems

Exclusionary Land Use Policy Local government land use restrictions can enable

suburban communities to exclude affordable housing These restrictions drive up the cost of housing and block

access to lower-income families, most often African American and Hispanic households

This is often referred to as “exclusionary zoning” density restrictions (lots too large) building size (large square footage requirements) site restrictions (requiring driveways, large setbacks) use restrictions (not allowing enough multi-family

zoned land)

Realtor steering “HDS2000 finds that discrimination still persists in both

rental and sales markets of large metropolitan areas nationwide, but that its incidence has generally declined since 1989.”

“African Americans still face discrimination when they search for rental housing in metropolitan markets nationwide.”

Geographic steering rose, suggesting that whites and blacks are increasingly likely to be recommended and shown homes in different neighborhoods.”

Source: Discrimination in Metropolitan Housing Markets: National Results from Phase 1, Phase 2, and Phase 3 of the Housing Discrimination Study (HDS)

Available at: http://www.huduser.org/publications/hsgfin/hds.html

Racial Steering in Detroit

Policy Best Practices Opportunity Based Housing

Communities of Opportunity Housing Opportunity Revenue Streams

LIHTC and HCV revisions Inclusive Housing Fair-share Housing Employer-assisted Housing

The “opportunity based housing” model was proposed by Kirwan Institute Executive Director john powell Affordable housing must be deliberately

and intelligently connected to high performing schools, sustaining employment, necessary transportation infrastructure, childcare, and institutions that facilitate civic and political activity

The Opportunity Based Housing Model

Need to move beyond thinking of affordable housing/subsidized housing in terms of “fair share” or suburban/urban dichotomy

Need to think in terms of opportunity “Opportunity structures” are the resources and

services that contribute to stability and advancement Employment Safety from crime and health environments Good schools Neighborhood investment Health care Child care

Linking Housing to Opportunity

What Policies Can Connect People to Opportunity?

Utilizing opportunity based housing principles to guide housing policy, coordinate affordable housing initiatives and target neighborhood revitalization Target affordable housing development in

areas of opportunity Target revitalization initiatives in areas of

low opportunity

Conditions in High and Low Opportunity Areas

High Opportunity

Low Opportunity

Economic

Opportunities

Children and Schools

High Opportunity

Low Opportunity

Housing

High OpportunityLow Opportunity

How do property values respond to neighboring public and affordable housing? Scale, density, and context matter Nguyen (2005) found that instances in which

affordable housing appears to have no effect occur when (1) affordable housing is sited in healthy and

vibrant neighborhoods (2) the structure of the affordable housing does

not change the quality or character of the neighborhood

(3) the management of affordable housing is responsive to problems and concerns

(4) affordable housing is dispersed

Housing Opportunity Revenue Streams LIHTC: Low-Income Housing Tax Credits

Apply regional equity criteria to the supply-side: amend state policies; add additional siting criteria)

California, Wisconsin, Illinois, Minnesota

HCV: Housing Choice Vouchers Improve demand-side rental subsidy programs

Illinois: Housing Opportunity Tax Incentive Act provided economic incentives for landlords

Subsidized Housing Policy, Opportunity and Segregation Subsidized housing siting supports racial

segregation by concentrating units in predominately poor African American communities In 2000, three quarters of the nation’s traditional

assisted housing units were located in central cities, while only 37% of the nation’s metropolitan population lived in central cities

The average metropolitan neighborhood with subsidized housing had a poverty rate that was three times higher than the average neighborhood

LIHTC Advocacy and Research

The LIHTC program is a $5 billion tax credit program for private developers to create affordable housing opportunities

While recent federal budgets have reduced funding for most housing programs (public housing, vouchers, Hope VI), the LIHTC program has remained untouched

The LIHTC program is the primary source of new subsidized housing construction in the US LIHTC projects produced over 800,000 units in the 1990’s,

compared to just 50,000 units of traditional site based subsidized housing

Is the LIHTC Producing Segregation?

Although the LIHTC program is siting units in slightly better neighborhoods than traditional public housing, these neighborhoods still continue to be areas of very high poverty and predominately segregated Most notably in urban areas of the Midwest and Northeast

The LIHTC program is administered by the IRS and has become a “civil rights free zone” because of the unusual way the program is implemented

KI and PRRAC are working with state advocates and housing finance agencies to set guidelines to reduce segregation in LIHTC siting and connect more LIHTC units to high opportunity areas

Inclusive Housing End exclusionary land use policies

State review Barrier removal grants (FL) Model land use codes

Promote inclusionary zoning Promote mixed-income communities Ex: Montgomery Co., MD and Highland Park, IL

Montgomery Co., MD The oldest inclusionary zoning (IZ) ordinance in

the country. Known as the “Moderate Price Dwelling Unit

Ordinance” Provides that between 12.5 and 15 percent of all new

housing development with 35 or more housing units must be affordable to the county’s low- and moderate-income residents (65 percent of the Area Median Income).

By setting aside 12.5 percent of units as affordable, a developer can receive a “density bonus” of up to 22 percent from the county.

As a result of its IZ ordinance, by 2003, Montgomery County had produced 11,210 units of affordable housing

Highland Park, IL In 2003, the city of Highland Park, Illinois approved an

inclusionary zoning ordinance following a rapid decline in its stock of affordable housing.

The ordinance applies to all residential developments—new construction, renovations of existing housing, or condominium conversions—that result in 5 or more units.

All residential developments covered by the ordinance are required to make 20 percent of their units affordable to low- and moderate-income residents. For example, a 20-unit development would include 4 units that are made affordable. Long-term affordability “In-Lieu” Payments Made to a Housing Trust Fund Dispersal of Affordable Units within the Development Incentives: fee waivers and a density bonus that grants one

additional market-rate unit per affordable unit built. Priority to residents who work in Highland Park

Fair-Share Housing Distribute affordable housing across the

region NJ Fair Share CA Fair Share MA, RI, CT, IL: State “appeal boards” to

override exclusionary zoning decisions

Fair Share Housing: California Enacted in 1980, California has one of the oldest fair share

housing policies in the country. The state’s “housing element law” requires local

governments to include affordable housing planning in their comprehensive plans

Regional councils of governments allocate to each city and county in the state a specific number of new housing units that must be planned for that are targeted to four income categories (very low, low, moderate, and above moderate).

Housing elements must be updated every five years and localities must submit their plans for review and approval by the state.

Housing elements must meet a number of requirements to be found in “substantial compliance” with the state’s fair share law by the California Department of Housing and Community Development.

Fair Share Housing: MA The Massachusetts fair share housing law, known as

Chapter 40B, was enacted in 1960. Rather than calculate housing need, Chapter 40B seeks to

determine whether a community has met its fair share of the region’s affordable housing. If 10 percent of a community’s housing stock consists of local, state, or federally subsidized housing, Chapter 40B does not apply.

If less than 10 percent of the housing stock is considered affordable under 40B, affordable housing developers can override local zoning laws. Because of its intended purpose, 40B has become known throughout Massachusetts as the “anti-snob zoning law.”

Since 1970, 40,000 units have been approved under Chapter 40B.

Employer-assisted Housing Tie housing to jobs by increasing

affordable housing where the jobs are EAH programs include

Home-buying assistance Support for new affordable housing

construction Credit repair / financial counseling Investment in affordable housing funding

sources

Other Important Interventions Aggressively enforce fair housing laws Strategies/education to reduce racial steering by

realtors Tighter regulations to reduce the potential for

predatory lending Mobility counseling to assist families looking to

relocate Assuring preservation of affordable housing in

gentrifying areas

Linked Fate: Why Should Others Care About Equity and Inclusion

Why should those who are not marginalized care about equity challenges? A region and all its residents share a linked fate This issue is particularly important today

To thrive, regions must be competitive in the global economy

Inequality is a sign of an economically/socially inefficient region, where proper investments are not made in human capital, and where much of the population can not meet its creative potential

These disparities make the region less competitive, nationally and globally

Not only are people of color negatively impacted by our housing market; low-income Whites are harmed as well Low-income Whites also have their housing mobility limited

by some fair housing impediments (such as exclusionary zoning)

This opportunity segregation also impacts their outcomes in life

Large-lot zoning results in artificially higher housing costs, making entire suburban neighborhoods vulnerable to market “corrections” and a precipitous drop in value.

Meanwhile, the exodus from existing communities can result in underutilized or vacant land, and loss of home equity for lifelong residents of these areas.

As neighborhoods become more and more internally homogenous, residents become isolated from the diverse life experiences of other people in the region.

Fair Housing Benefits Everyone