Moderate-income Neighborhoods Research Articles

Impact of the Community Reinvestment Act on small business employment in lower income neighborhoods

This study examines the impact of the Community Reinvestment Act (CRA) on small business growth in low- and moderate-income (LMI) neighborhoods in the United States. Using rich firm-level panel data on every U.S. employer, I exploit the sharp threshold cutoff for CRA eligibility and changes in CRA eligibility over time to estimate the effects on business employment. I find that the firms located in the CRA eligible areas increase employment by about 0.8 percent compared to firms in CRA ineligible areas, and the effects are larger for young firms and firms in minority neighborhoods, which potentially face higher credit access barriers, increasing employment by about 1.5 and 1.9 percent, respectively. I also find that increases in lending in the CRA areas are related to the number of banks, implying that the channel offers greater access to finance.

Understanding Community Development Financial Institutions and their Impact in Low- and Moderate-Income Neighborhoods

Community Development Financial Institutions (CDFIs) are mission-driven lenders that create economic opportunity for low-income communities and individuals throughout the United States. The history of CDFIs dates back to the 1970s. There are currently over 1,100 operating as banks, credit unions, nonprofit loan funds, and venture capital funds. CDFI financing leads to the creation of jobs, affordable housing, community facilities and more. This issue of the Community Development Innovation Review is a collection of research papers designed to expand our understanding of CDFIs and their impacts in vulnerable communities across the country.

Citizen Contacting in Response to Crisis: Voicing Grievances to the Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) came into being in response to the housing and debt crisis that accompanied the Great Recession. Created as a means for aggrieved consumers to bring problems to the attention of federal regulators empowered to fine banking and finance companies, the inflow of complaints began late in 2010 and has steadily risen in the years since. This research examines the variable emergence of complaints across 5 years, asking what types of constituencies are most likely to register grievances with the CFPB. The filing of complaints is mostly responsive to the presence of middle and upper income populations with mortgages, though contacts are also high from African American neighborhoods. Government contacting among lower income populations is facilitated by the presence of counseling and consultative services at the grassroots. Notably, legal aid services often present in lower and moderate income neighborhoods are associated with higher complaint frequency for several financial products. Through street-level consultative organizations, the gap in government service provision separating the affluent, who complain on their own, and less privileged, who do not know where to express their grievances, can be reduced.

Is the CRA Still Relevant to Mortgage Lending?

Market share of conforming-size, home purchase mortgage originations has steadily and substantially shifted from banking institutions to nonbank lenders over recent years. In 2017, nonbanks originated more than 1.8 million conventional and FHA purchase mortgages (53% of the market), as compared to 1.4 million by banks. In contrast, nonbanks originated 30% of purchase-money mortgages (by volume) in 2000 and 24% in 2007. Does the declining role of banking institutions imply that the Community Reinvestment Act (CRA) is becoming less relevant to mortgage lending, since only they are subject to the requirements of the CRA? We address this question by exploring the changing composition of home purchase mortgage originations since 2000. We focus on the share of FHA and conforming-sized conventional loans to low- or moderate income households or to finance properties in low- or moderate-income neighborhoods, and provide a more detailed examination of the shifts in market composition than previous studies. Our analysis points to a conclusion that the CRA continues to be relevant to maintaining broad access to mortgage credit. We find that the overall share of loans to low-or moderate-income borrowers has decreased compared to pre-2004, which we view as a reasonable benchmark period. However, this decrease has mostly been offset by an increased share to borrowers (broadly distributed by income) purchasing properties in low- or moderate-income neighborhoods.

Repurposing a historic school building as a teacher’s village: exploring the connection between school closures, housing affordability, and community goals in a gentrifying neighborhood

ABSTRACTThe redevelopment of urban school buildings of historical value has the potential to contribute to the needs of current residents. Using a case study from Chicago, IL—where more than 50 schools in primarily minority and low- and moderate-income neighborhoods were closed in 2013—this article shows how a community group “Community As A Campus” (CAAC) sought to repurpose a former school site for community purposes in an already mixed-used, amenity-rich, and walkable area. CAAC advocated for housing for educators in the gentrifying neighborhood of West Town. The project, however, created tensions within residents from density related to market-rate units. This paper argues that the future of historic buildings to be preserved sustainably would depend on the ability of local leaders to find a balance between economic and community goals.

Sugar-Sweetened Beverage Intake among Chilean Preschoolers and Adolescents in 2016: A Cross-Sectional Analysis.

Background: Chile has the highest sugar-sweetened beverage (SSB) sales of any country and a growing burden of childhood obesity. This study examines SSB intake in Chilean children after a 5% SSB tax increase in 2014 but prior to marketing, labeling, and school policies implemented in 2016. Methods: 24-h recalls were collected in 2016 from two cohorts comprised of preschoolers 3–5 years of age (n = 961) and adolescents 12–14 years of age (n = 770) from low–moderate income neighborhoods. Beverages were categorized as regulated or unregulated according to whether they exceeded nutrient thresholds established by the 2016 policies. Results: Preschoolers consumed mainly beverage calories from regulated dairy beverages and substitutes (109 kcal, SD 30), unregulated dairy beverages (102 kcal, SD 24), and regulated fruit and vegetables drinks (44 kcal, SD 20). For adolescents, the greatest contributions came from regulated sodas (77 kcal, SD 47), regulated dairy beverages and substitutes (41 kcal, SD 16), and unregulated coffee and tea (41 kcal, SD 11). Overall, regulated beverages provided a greater proportion of calories than unregulated for preschoolers (15.0% vs. 11.8%) and for adolescents (9.1% vs. 5.0%). Conclusions: Before major policy implementation, regulated beverages accounted for a higher percentage of energy intake than unregulated beverages among both age groups. Future research will be needed to evaluate the impact of Chile’s new policies on sugary beverage intake in children.

Neighborhood Housing Resilience: Examining Changes in Foreclosed Homes During the U.S. Housing Recovery

ABSTRACTThe surge in foreclosures in the United States that began in 2007 reached a peak in mid-2011, and since then, the rate of foreclosures has been decreasing, providing evidence of the housing market recovery. This study examines factors that affected changes in ZIP code-level foreclosure rates in more than 300 U.S. metropolitan areas during the national housing recovery. Using multivariate analyses of the long- and short-term effects of foreclosures simultaneously, this finding shows that certain characteristics of the mortgage and housing markets led to more rapid neighborhood recovery. Results also indicate, however, that most urban-form variables led to neighborhood resilience over the long term, that high shares of mixed land use were strongly associated with fewer foreclosures, and that high shares of auto dependency were associated with high foreclosure rates. Finally, findings suggest that low- and moderate-income neighborhoods, particularly in cities, were more vulnerable and less resilient to economic shock, and the accumulated effects of foreclosures worsened over the long term. However, low- and moderate-income neighborhoods surrounded by suburban affluent neighborhoods recovered more rapidly than those in cities did. Understanding such resilience to economic crises will provide policymakers with insights that they can leverage to establish housing policies for sustainable neighborhoods.

Who Pays More in ATM Fees at Large Banks?

This paper explains why large bank customers living in low or moderate income neighborhoods (LMI) pay more in fees for automated teller machine (ATM) use than those in other areas. To determine who pays more in ATM fees, I looked at customer checking account data at several large banks to determine if demographics, account type selected or account usage leads to higher fees. For demographics I use Census tract income, population density, and age. For account type selected, I looked at the distance of the customer (based on their Census tract location) to the location of the closest branch for their institution to see if customers who must travel further to get to their branch pay more in ATM fees. I also used tenure with the bank and the level of account requirements to avoid fees. For account usage I looked at withdrawal activity, deposit activity, average balances and the amount of cash taken out each month. This study looked at data from several major banks consisting of every transaction from a significant sample of the banks’ customers over a 12-month period in 2011. I found customers living in LMI neighborhoods relied more on cash transactions from an ATM than in other areas. I discovered how living far from the closest branch results in greater ATM fees in LMI neighborhoods and how the volume of withdrawal transactions drives up ATM fees paid.

Longitudinal Associations Between Observed and Perceived Neighborhood Food Availability and Body Mass Index in a Multiethnic Urban Sample.

Blacks, Hispanics, and women of lower socioeconomic status tend to have a higher risk of obesity. Numerous studies over the past decade examined the role of the neighborhood food environment in body weight. However, few were longitudinal. This longitudinal study examined whether multiple measures of neighborhood food availability were associated with body mass index (BMI) in a predominately Black and Hispanic adult sample living in low- to moderate-income urban neighborhoods. This longitudinal study used two waves of data (2002, 2008), including interviewer-measured height and weight, from a community survey of adults ( n = 219). In both 2002 and 2008, multiple measures characterized neighborhood food availability: GIS-derived availability of retail food outlets (large grocery store, small grocery store, convenience store, liquor stores), observed fruit and vegetable availability (count of stores selling 10 or more fresh fruit or vegetable varieties), and perceived fruit and vegetable access. Random intercept models estimated multivariable associations, controlling for individual-level demographics and neighborhood median household income. Small grocery store availability was associated with 1.22-unit increase in BMI ( p = .047), while each unit increase in perceived fruit and vegetable access was associated with a 0.69-unit decrease in BMI ( p = .055). BMI was not associated with large grocery store, convenience store, or liquor store availability, or with observed fruit and vegetable availability. Findings suggest that improving the neighborhood food environment, particularly at small grocery stores, may help urban residents living in low- to moderate-income neighborhoods achieve healthier body weights over time.

Refinancing, Default and the Community Reinvestment Act

The Community Reinvestment Act (CRA) provides incentives for banks to supply credit to low and moderate income neighborhoods in the communities they serve. This paper estimates the effect of the act on the supply of mortgage credit. I exploit variation in the number of banks whose lending performance is assessed in a given neighborhood caused by the redefinition of Metropolitan Statistical Areas in late 2003. I find evidence of a substantial increase in mortgage refinancing due to the CRA. I show that the CRA induced loans had a reduced likelihood of default.

Knox Heritage’s Real Estate Program: From Modest Start to Powerful Preservation Tool

Knox Heritage’s Real Estate Program:From Modest Start to Powerful Preservation Tool Kim Trent (bio) In our profession, life frequently serves up lemons. Devastating losses of one-of-a-kind places after hard-fought battles or time-intensive negotiations. But at times like that, it’s empowering to remember an old cliché and find a way to mix up some lemonade. That is how Knox Heritage’s J. Allen Smith Endangered Properties Fund was created in 2004. Knox Heritage’s initial foray into real estate began in 1999 with the help of the National Trust for Historic Preservation’s Inner City Ventures Program. We knew we wanted to make a difference in the historic low- to moderate-income neighborhoods surrounding downtown Knoxville and needed to put our money where our mouth was to have a meaningful impact. Even though we had no staff at the time, we gathered together a group of volunteers with the skills we needed—real estate agents, contractors, city community development staffers, architects and neighborhood residents—to craft a business plan and apply for funding. At the time, the National Trust required that we raise local dollars to match a portion of the line of credit it committed to provide. We had no track record in real estate and little credibility with most funders, so the Trust’s endorsement of our efforts enabled us to approach a local community foundation and obtain a $100,000 line of credit as well as a small grant to create our business plan. We launched our Vintage Properties program with $350,000 in lines of credit and $35,000 in reserves to absorb any losses. But now what? Knox Heritage had never managed a construction project before and we had no staff to do it. Our solution was to contract with a local nonprofit affordable housing provider, Knox Housing Partnership, to manage the general contractor we hired for the job. That partnership worked well for both organizations. We learned the ropes of construction management and our partner organization earned a reasonable fee while learning how to do a [End Page 3] preservation-based rehabilitation project. Knox Heritage went on to manage its own construction projects and Knox Housing Partnership went on to do preservation rehabs in the historic neighborhoods where it works. Click for larger view View full resolution 1300 Kenyon was vacant for 13 years before Knox Heritage stepped in to restore the house in 2005 using its preservation revolving fund. PHOTOS COURTESY KNOX HERITAGE FIRST FORAY The little house we started with was seen as a lost cause by many neighborhood residents after it was abandoned, suffered a fire, and became the site of criminal activity. Plus the economics made no sense for a private developer since there would be no margin in the budget for a profit, and there was more structural deterioration than the average homebuyer would want to tackle. That’s where our nonprofit organization came in—we only needed to break even and were able to purchase the house for $1 through the City of Knoxville’s blighted properties program. Our goals were to save an endangered historic structure, prime the pump of the real estate market in the neighborhood by eliminating a drag on redevelopment efforts, and help revitalize a historic neighborhood. At the end of the day, we achieved all three goals and walked away with a profit of $125 after the house sold almost immediately. [End Page 4] Click for larger view View full resolution In spite of a major setback (a contractor mistakenly stripped the original wood siding from the wrong property) Knox Heritage regrouped and restored 321 Oklahoma in the Old North Knoxville Historic District in 2005. PHOTOS COURTESY HISTORIC KNOX NOT FOR THE FAINT OF HEART That initial win gave us the confidence to move forward, but then we began to realize that this type of work is not for the faint of heart or the impatient. We next bought two foreclosed houses in a neighborhood that was still in the beginning stages of being revitalized. That is where we learned the impact that carrying costs can have on any project. It took longer than expected to...

Residential Migration, Entry, and Exit as Seen Through the Lens of Credit Bureau Data

We analyze a large, nationally representative anonymized data set of consumers with a credit report from 2002 to 2010. This is a period that encompasses a boom and bust in consumer credit. Using census data, we classify consumers into four categories of relative neighborhood income and find that, over time, the number and proportion of consumers with a credit report fell in low- and moderate-income neighborhoods and rose in higher-income neighborhoods. Population trends evident from census data explain only a portion of these changes in the location of the credit bureau population. In most instances, the primary driver reflects residential migration from relatively poorer neighborhoods to ones with relatively higher incomes. Patterns of entry into or exit from the credit bureau population were correlated with the credit cycle, as well as with relative neighborhood income, resulting in slower sample growth in low- and moderate-income neighborhoods during periods of credit contraction. These results are interesting in themselves, but they are also important for interpreting empirical results estimated from credit bureau data.

Collaboration and Foundation Leadership: Challenges, Opportunities, and Impact

· This article describes a successful collaboration among foundation, city government, and nonprofit stakeholders that leveraged an initial investment of $60,000 to $4.5 million in public and private funding to create a sustainable Green & Healthy Homes Initiative™ for low- and moderate-income neighborhoods in Providence, R.I.

Social Capital and Homeownership in Low- to Moderate-Income Neighborhoods

Abstract This study examined the relationship between homeownership and social capital among low-and moderate-income (LMI) households. Using data from the Community Advantage Panel Study, the authors used propensity score weighting and regression analyses to explore the relationship between LMI homeownership, neighborhood conditions, and social capital. After controlling for several important individual-and neighborhood-level characteristics, the authors found that homeownership is related to greater access to social resources in general but not to social resources within the neighborhood. Instead, resource generation within the neighborhood is largely predicted by neighborhood stability and perceived neighborhood size. Policy implications are discussed. KEY WORDS: Community Advantage Home Loan Secondary Market Program; homeownership; low-income; resource generation; social capital Homeownership has long played an integral role in wealth and asset accumulation, community growth, and the promotion of positive social outcomes for individuals and families in the United States (Retsinas & Belsky, 2002; Rohe & Stewart, 1996; Shlay, 2006). Since the 1930s, government policies such as tax incentives, subsidy payments, and market regulation have promoted homeownership as a vehicle to stimulate economic growth (Carliner, 1988). Since the 1980s, they have also been used to spur community redevelopment and provide improved housing options for low-income families (Shlay, 2006). In light of economic and racial disparities in homeownership rates (Collins, 2002; Herbert, Haurin, Rosenthal, & Duda, 2005; Williams, Nesiba, & McConnell, 2005), recent economic and social policies have focused on promotion of homeownership as a way to provide long-term economic stability and other benefits to low- and moderate-income (LMI) families who may not have benefited from earlier policies. As a result, the rate of entry into homeownership for low-income and minority households has been increasing faster than that for other groups (Belsky & Duda, 2002). Research has supported the belief that the benefits of homeownership, such as life satisfaction and neighborhood stability, transcend wealth accumulation for both homeowners and communities (Rohe, Van Zandt, & McCarthy, 2002), although this body of research has primarily focused on middle-and high-income populations. It is important to examine whether LMI individuals and families also experience the positive benefits of homeownership found for middle-and higher-income households. Furthermore, the recent housing crisis, which has been blamed in part on the expansion of risky mortgages to LMI borrowers, underscores the need for a careful look at the costs and benefits of LMI homeownership. This study focused on one perceived benefit of homeownership: its potential impact on access to social capital. Specifically, using data from the 2007 Community Advantage Program (CAP) panel survey and the 2000 U.S. Census, this study examined the differences in the level of access to social resources between LMI homeowners and LMI renters and what role neighborhood economic and social conditions play in the relationship between resource generation (RG) and homeownership. LITERATURE REVIEW Research has sought to identify externalities of homeownership and the potential social benefits that help determine the overall impacts of promotion of homeownership. Rohe et al., (2002) conducted a critical assessment of the research on the costs and benefits of homeownership and concluded there is evidence of positive benefits of homeownership, but they also cautioned that the potential negative impacts should be investigated further. Numerous studies lend support to the belief that homeownership is related to increased involvement in local organizations, neighborhood stability, local problem solving, and satisfaction (DiPasquale & Glaeser, 1999; Rohe & Stegman, 1994b; Rohe & Stewart, 1996). …

Impact of Bus Transit Centers on Values of Nearby Single-Family Residential Land in Houston, Texas

Public transit professionals continue to seek methods that offer greater service opportunities without a material increase in the costs of service provision. One strategy is to construct bus transit centers, which operate much like the airline hub-and-spoke concept. More frequent destinations can be made available with shorter patron wait times and little or no increase in the number of bus hours. Patrons tend to appreciate the convenience of a transfer occurring in a lighted facility as well as the increased level of bus service. Many bus-based centers may be close to single-family neighborhoods, and residents might express concern about property values given the presence of a bus transit center nearby. In addition to the bus transit centers that serve traditional local or express routes, several bus rapid transit lines are planned in other cities, with stations that might lead nearby communities to ask similar questions about property values. The impact of bus transit centers is assessed on nearby single-family residential property values in Houston, Texas. Five Houston transit centers show that the transit centers in low- and moderate-income neighborhoods have a positive influence on property values. In the single affluent neighborhood in the study, results indicate the transit center negatively affects property values, but the influence is less than that of other variables.

Do Bank Branches Matter Anymore?

Bank branches have been disappearing in some major metropolitan areas, as their populations and economic activity decline. Our research suggests that brick-and-mortar branches provide tangible benefits to consumers, especially in low- and moderate-income neighborhoods. When branches are located in these areas, borrowers living there default less and have greater access to credit.

In Defense of the Community Reinvestment Act

In the wake of the 2008 global financial crisis, the Community Reinvestment Act (CRA) of 1977 has probably received more media attention in the past 2 years than it garnered cumulatively over the previous 30 years. Numerous conservative pundits and commentators have blamed the CRA for the subprime crisis and the subsequent worldwide financial meltdown. Most social workers are probably unaware that the CRA is probably responsible for more investment, loans, and wealth creation in low and moderate income neighborhoods than any other single piece of federal legislation over the past 40 years. This article highlights the following features about the CRA that social workers need to know: The CRA was created and passed only because of grassroots community organizing; the CRA has been directly or indirectly related to 8 trillion dollars of investments, mortgage, and small business loans in low income neighborhoods since 1977; community organizing has always been the primary enforcement mechanism of the CRA; contrary to widespread right-wing media accounts, the CRA was not responsible for the housing bubble and worldwide financial crisis in 2008. In this article, we articulate the veridical factors contributing to the financial collapse. Presently, Congress is debating reforms for the financial sector, and the way banking functions will be transacted in the future remains unclear. Regardless of the eventual restructuring of finance, moving forward, social workers should continue to advocate for legislation that will ensure housing for low and moderate income people.

Gentrification and Crime: Identification Using the 1994 Northridge Earthquake in Los Angeles

ABSTRACT:Theory suggests that in the long term, gentrification—which I define as the phenomenon where wealthier individuals move into lower-income areas—should decrease neighborhood crime. In the short term, however, anecdotal evidence indicates that gentrification actually increases crime, perhaps due to the relative difference in status between newcomers and existing residents, and to increased opportunities for criminal behavior. Further, consumers’ choice of residential location depends on crime rates, creating simultaneity that likely biases estimates that overlook this concern. I exploit the 1994 Northridge earthquake in Los Angeles and subsequent short-term government-sponsored home financing incentives as an instrument to control for this endogeneity. The exogenous event induced middle- and upper-income individuals to purchase homes in earthquake-affected low and moderate-income neighborhoods, which I argue is independent of the influence of crime. The results show that in the short term, gentrification increases assaults, robberies, automobile thefts, and thefts from automobiles.

“There’s No Place like New Orleans”: Sense of Place and Community Recovery in the Ninth Ward after Hurricane Katrina

ABSTRACT:This study contributes to the literature on the strength of place attachment, identity, and dependence in low- and moderate-income neighborhoods. It also engages the literature concerning the role of sense of place in community engagement and the disruption in place attachment, identity, and dependence that natural disasters can cause. By drawing on interview data collected from residents who returned to New Orleans after the storm and from former New Orleanians who evacuated to Houston but did not return, this article investigates the “sense of place” that residents in Ninth Ward New Orleans neighborhoods identify in their narratives about their pre- and post-Hurricane Katrina experiences. The data considered here suggest that returning residents believe that New Orleans in general (and their Ninth Ward neighborhoods in particular) possess a unique bundle of characteristics that, when taken together, cannot be found or replicated elsewhere. While sense of place is an important motivator for returning residents, the data also suggest that complementary factors must be in place if the full potential of this social resource is to be realized.

Points and Fees and Balloons, Oh My! Homeowners in Low- and Moderate-Income Neighborhoods

Points and Fees and Balloons, Oh My! Homeowners in Low- and Moderate-Income Neighborhoods