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

1. Communities of Opportunity:A Framework to Produce Greater Racial, Social and Regional EquityBreakout Session: Housing September 23, 2006 Calhoun County Summit on the Healing of Racism Jason Reece, AICP; Senior Research Associate Christy Rogers, Research Associate Kirwan Institute for the Study of Race and Ethnicity The Ohio State University http://www.kirwaninstitute.org/ Reece.35@osu.edu

2. 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

3. 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

4. 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

5. 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)

6. 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

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

8. Fiscal Policies Health Childcare Employment Housing Effective Participation Education Transportation Housing and Opportunity Housing is Critical in Determining Access to Opportunity

9. The Cumulative Impacts of Racial and Opportunity Segregation Segregation impacts a number of life-opportunities Impacts on Health School Segregation Impacts on Educational Achievement Exposure to crime; arrest Transportation limitations and other inequitable public services Job segregation Neighborhood Segregation Racial stigma, other psychological impacts Impacts on community power and individual assets Adapted from figure by Barbara Reskin at: http://faculty.washington.edu/reskin/

10. 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

11. 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

12. 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

13. 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

14. 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)

15. 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

16. Racial Steering in Detroit

17. 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

18. The Opportunity Based Housing Model • 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

19. Linking Housing to Opportunity • 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

20. 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

21. Conditions in High and Low Opportunity Areas Economic Opportunities High Opportunity Low Opportunity

22. Children and Schools High Opportunity Low Opportunity

23. Housing Low Opportunity High Opportunity

24. 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

25. 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

26. 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

27. 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

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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.

34. 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.

35. 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

36. 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

37. 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

38. Fair Housing Benefits Everyone • 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.