OpportunityBased Development: Rethinking Community Development Strategies

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Opportunity-Based Development Rethinking
Community Development Strategies

• john powell
• The Kirwan Institute for the
• Study of Race and Ethnicity
• October 8, 2003

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Housing and Opportunity

• The current paradigm regarding low-income housing
  is failing to provide occupants with access to
  opportunity, wherever that is located in a region
  (the city, the inner-ring, the outer-ring).
• Housing is a component of a larger set of
  interrelated structures that are both affected by
  housing and have impacts for the attainment of
  safe, stable housing.
• 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.
• Where you live is as important as what you live
  in.

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Housing and Opportunity

• Is housing affordable?
• Is the housing located near employment
  opportunities, or does it otherwise help sustain
  employment?
• Is the housing situated in proximity to
  transportation options?
• Does the housing support school readiness and
  stability?
• Does the housing support the health of occupants?
  
• Does the housing support the creation of wealth?
  

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Source Metropolitan Area Research Corporation
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Opportunity Jobs

• In the 1990s, 14 million jobs were created in the
  U.S., but only 13 were created in central
  cities.
• Only 10 of all entry-level jobs are now located
  in central cities.
• Because entry-level workers tend to live in the
  city and inner-ring suburbs where housing is more
  affordable, sprawl limits access to opportunity
  and thereby limits the attainment of racial and
  economic equity.
• Many jobs, and 69 percent of the office space,
  have moved out of the city in Detroit seventy
  percent of all new jobs are in the suburbs.
• In parts of Oakland County, an affluent county
  just outside of Detroit, there are twice as many
  jobs as people.  Willing workers in many
  lower-income communities in southeast Michigan
  have no way to get to those jobs.

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Opportunity Jobs

• The Brookings Institute found Detroit to be the
  second-most decentralized metropolitan area.
  78.05 percent of its employment is located beyond
  the ten-mile ring.

• Source Job Sprawl Employment Location in U.S.
  Metropolitan Areas (2001), Brookings Institution.

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Opportunity Transportation

• According to numerous national studies, metro
  Detroit has the worst public transportation of
  any major region in the country forty percent of
  all suburban jobs cannot be reached by public
  transportation.
• A third of Detroit's residents do not own cars
  and cannot find reliable transportation to the
  suburbs.
• Those who do have cars are being forced to spend
  an ever-greater portion of their income on them,
  for insurance, gas, parking and repairs.
• Fifty eight percent of all welfare participants
  in the nation live in central cities.
• Detroit and its suburbs are losing an estimated
  300 million every year in economic development
  (jobs) because there is no regional mass transit.

Source Metropolitan Organizing Strategy Enabling
Strength, a regional affiliate of the Gamaliel
Foundation 
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Opportunity Education

• Over half of the residents of the Detroit area
  are in communities facing low or slow-growing tax
  bases or social stresses denoted by high poverty,
  low median incomes or slow-growing population.
• 45 percent of Detroit-area students attended
  school districts exhibiting clear signs of stress
  - either high rates of student poverty,
  significant enrollment growth or serious decline
  - combined with low or moderate revenue
  capacities.

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Property Tax Base per Household by Municipality,
2000
Source Metropolitan Area Research Corporation
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City-Suburban Disparity

• The economic advantages enjoyed by suburban
  regions over the last four decades continue to
  outpace those of cities.
• The income gap between city and suburban dwellers
  persists increases in median income were twice
  as large in the suburbs than in the cities and
  per capita income increased by about 1,000 more
  for the suburbanite than the city dweller.
• Cities have over a third more unemployment than
  suburbs.
• The poverty rate is twice as high in the cities
  than in the suburbs, remaining relatively
  unchanged since 1990.

Source Lewis Mumford Center
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Detroits City-Suburban Disparity

• Detroit continues to suffer great disparities
  between the city and suburbs, ranking 48th out of
  the top 50 largest metro areas in 2000.
• It is possible for the suburbs to prosper while
  the central city declines, but a large disparity
  between cities and suburbs is likely to damage
  the region as a whole in the long run.

Source Lewis Mumford Center
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Sprawl Percentage Change in Population by Census
Tract, 1990-2000
Source Metropolitan Area Research Corporation
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Limiting Sprawl Through Smart Growth

• Smart Growth limits the supply of developable
  land through growth boundaries.
• More than 100 cities and counties have enacted
  urban growth boundaries. Examples of benefits
  realized include
• Redirection of resources to the central city in
  the Portland region
• Opening up of housing opportunity in Montgomery
  County, Maryland
• Reduction in tax base disparities in the Twin
  Cities
• Successful results from growth control
  initiatives debunk the claim that sprawl is
  simply a result of market forces, but instead the
  result of choices that are reinforced by
  structures and incentives.

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Current Housing Paradigm

• Programs such as the Low Income Housing Tax
  Credit plan have not desegregated our
  neighborhoods or provided occupants access to
  opportunity
• In a national survey conducted by the Fannie Mae
  Foundation, 39 percent of the central-city
  neighborhoods where LIHTC units were built are at
  least 90 percent nonwhite, and 51 percent are at
  least 80 percent nonwhite.
• Newman and Schnare (1997) found that LIHTC
  housing is concentrated in low-income
  neighborhoods. In major central cities the
  program is used much more often to provide better
  housing in poor neighborhoods than to provide
  affordable housing in higher-income
  neighborhoods.
• The low income housing tax credit rent for a two
  bedroom unit in Detroit is 96 percent of the
  fair market rent as of 1990. This means the
  average tenants rent was 547, as compared to
  568.

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Housing Development by Census Tract, 1970-2000
Source Metropolitan Area Research Corporation
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Percentage of Housing Affordable to Households
with 80 of the Regional Median Income by
Municipality, 2000
Source Metropolitan Area Research Corporation
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Incentives for Change

• We are subsidizing ghettoization and encouraging
  segregation through legal and financial
  incentives.
• It is time to rethink our processes and
  practices, such as lending policies, to provide
  incentives in line with our goals.
• One example of such an incentive is
  location-efficient mortgages. These enable lower
  income families to qualify for a greater mortgage
  when the home is located in an access rich
  central location, ultimately linking individuals
  with opportunities.

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National Initiatives Resources

• Policy Link (www.policylink.org)
• Several initiatives aimed at creating and
  increasing economic opportunities for low-income
  neighborhoods such as Saving the Community
  Reinvestment Act.
• Avocation for equity in the smart growth movement
  through an approach called Regional Equity.
• Institute on Race and Poverty (http//www1.umn.edu
  /irp/)
• The Racial Justice Regional Equity Project
  (RJRE) examines the impact urban sprawl has on
  people of color who live in central cities and
  inner-ring suburbs. Through this project, they
  seek to highlight and analyze regional strategies
  in affordable housing, quality education,
  employment opportunities, and other initiatives.

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Initiatives in Michigan

• Michigan has several initiatives in place aimed
  at addressing disparities and alleviating
  inequities.
• Detroit has a strong history of initiatives led
  by faith-based organizations. These organizations
  are increasingly forming allegiances in order to
  combat social injustices, such as MOSES.
• The business community is also coming together to
  identify and discuss structural issues, which
  perpetuate disparities.
• Governor Granholm has demonstrated a commitment
  to containing sprawl through Michigans Smart
  Growth Commission, the Land Use Leadership
  Council.
• Legal initiatives are being enacted in Michigan,
  such as the House bill passed July 2003,
  facilitating the creation of land banks.

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The Turning Point

• Instead of focusing on the tipping point, we need
  to better define what neighborhoods require to
  reach the turning point.
• Pushing development beyond the turning point
  threshold requires an intervention strategy to
  positively transform the neighborhoods physical,
  social, economic, and political environment.

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Detroit and the Creative Class

• American demographics are becoming increasingly
  diverse along racial, ethnic, and religious
  lines. The creative class embodies this
  diversity.
• Much of the population growth in cities comes
  from the movement of the creative class. A key to
  prosperity lies in making Detroit desirable to
  this group.
• Detroit is currently placed in the bottom ten
  cities in its ability to attract the creative
  class.
• In order to attract and retain the creative
  class, a city needs to have a strong technology
  base, it needs to be a place that attracts and
  retains talent, and it must embrace diversity.
  Factors such as quality of life for residents are
  considered more important than big ticket
  infrastructure projects, such as sports stadiums.
  

Source The Rise of the Creative Class, Richard
Florida
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Looking Forward

• Scrutinize our process and approach consider the
  structures that are creating and perpetuating
  inequalities.
• We need transformative thinking to make lasting
  change.
• Strong initiatives are in place, such as Fix it
  First, the Land Use Planning Act, and Equalized
  School Funding Taxes. Will they be able to
  overcome polarization along racial and
  jurisdictional lines?
• Start with what we are trying to achieve, and
  work back through the process to see how this can
  be accomplished.

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Additional Slides
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Detroit Overview

• Characteristics of the Community

Source Michigan Metropatterns, a Regional Agenda
for Community and Prosperity in Michigan.
(Amerigis)
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LIHTC Statistics
Source Updating the Low Income Housing Tax
Credit (LIHTC) Database Projects Placed in
Service Through 1999 U.S.
Department of Housing and Urban Development
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LIHTC Statistics
Source Updating the Low Income Housing Tax
Credit (LIHTC) Database Projects Placed in
Service Through 2000 U.S.
Department of Housing and Urban Development
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LIHTC Statistics

• DDAs (Difficult Development Areas) are
  metropolitan areas or non-metropolitan counties
  in which construction, land, and utility costs
  are high relative to incomes.
• QCTs (Qualified Census Tracts) are tracts in
  which at least 50 percent of the households have
  incomes less than 60 percent of the area median
  income.

Source Updating the Low Income Housing Tax
Credit (LIHTC) Database Projects Placed in
Service Through 2000 U.S.
Department of Housing and Urban Development
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Simulated Change in Tax-Base per Household
Resulting From Tax-Base Sharing, 1995-2000

• Tax-base sharing is a highly effective way to
  narrow fiscal inequalities among communities,
  reduce wasteful competition for tax base and
  share some of the benefits of economic growth.
• In the following hypothetical tax-base sharing
  program, an overwhelming majority of residents
  would live in communities benefiting from this
  approach.

Source Metropolitan Area Research Corporation
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Kirwan Institute for the Study of Race and
Ethnicity
www.KirwanInstitute.org