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Community Development
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2006 Community Development Policy Summit: |
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ProceedingsThese Proceedings summarize the Federal Reserve Bank of Cleveland’s 4th Annual Community Development Policy Summit held June 22-23, 2006, at the Federal Reserve Bank of Cleveland.
OverviewThe Cleveland Fed’s Fourth Annual Community Development Policy Summit provided a two-day forum for nearly 200 community development practitioners to examine the issue of concentrated poverty through a community development lens. The aim of the conference was to give community development funders and practitioners – among them bankers, public officials, government representatives, academics, and nonprofit community developers – an opportunity to step back from their work and consider the policy landscape surrounding concentrated poverty. “These are the people who should be informing policy,” notes Ruth Clevenger, Community Affairs Officer for the Federal Reserve Bank of Cleveland and the Policy Summit’s key organizer. “They know what works and what doesn’t.” An impressive line-up of accomplished speakers and panelists helped draw a sell-out crowd to the Policy Summit. The agenda was based on four pillars. First, a panel discussion clarified the who’s and where’s of concentrated poverty. The keynote address then introduced new challenges facing impoverished Americans and the communities they live in. Next, the program examined the role that community development plays in alleviating poverty. And the final session of the Policy Summit featured a policy discussion among state and federal policy experts, who were joined on the panel by community development practitioners. The group discussed best practices, strategies, and recommendations for how to best influence policy that addresses concentrated poverty. Opening RemarksJune 22, 2006 Federal Reserve Bank of Cleveland President and CEO Sandra Pianalto opened the 2006 Policy Summit, sharing with the audience just why the Fed cares about concentrated poverty:
See full text of President Pianalto’s opening remarks. Panel Discussion #1—Who and Where are the Poor?June 22, 2006 The opening panel set the stage for the Policy Summit. In this first plenary session, poverty experts and academics shared results of recent research on concentrated poverty and demonstrated how jobs, neighborhoods, and families are inextricably linked. Many variations exist among poor neighborhoods, including the level of safety and the number and quality of connections that neighbors have with each other. Knowing such specifics about poor neighborhoods will help community development practitioners better address the needs of the poor, noted panelist Claudia Coulton. According to Fed Economist Mark Schweitzer, over the past few years macro-economists have focused attention on the labor force participation rate. We can improve our understanding of labor force participation, he noted, by better understanding the issues affecting low- and moderate-income individuals and communities. There was additional discourse among panelists about the definition, impact, and value of social capital; on what factors employers consider in choosing specific locations for their businesses; and on how our country’s measuring of poverty has changed since the 1950s. Key Messages:
Breakout Session—Connecting People and OpportunitiesJune 22, 2006 This session examined the relationship between poverty and mobility in our country’s sprawling communities. If people can’t get to jobs in outlying areas, then those jobs hold no value to them. Mobility also connects people to schools, affordable housing, and services. Experts from Urban Edge in Boston and Reconnecting America in Washington, D.C., explained how critical mobility is to successful community development efforts, and discussed strategies for implementing effective policies to improve mobility, particularly in areas of concentrated poverty. One speaker began his presentation asking for a show of hands from those who had ever lived in subsidized housing. A few hands went up. Next questions: How many owned homes? And have we ever written off mortgage-loan interest on our tax returns? The second time he asked who lived in subsidized housing, most of those in the room held up their hands. Hacobian was making two points – that there is an undeserved negative connotation with the term “subsidized housing,” and that federal subsidies, even those aimed specifically at a target group, often benefit others whose need for the subsidy is not as great, thus diluting the effect on the intended audience. Each of the speakers gave examples of collaborative efforts involving other community development agents that led to the successful construction of transit systems and community revitalization. Hacobian cited Africans’ ability to do so much with so little. “The human capital we could deploy [here in this country] could change the world,” he stated. Key Messages:
Breakout Session—Poverty: A View from the State HouseJune 22, 2006 This session explored state initiatives that tackle core poverty. Panelists from three states – Illinois, Ohio, and Pennsylvania – shared some of the successes and ongoing challenges faced by their respective state legislatures in addressing the needs of the poor. There’s been a steady devolution of the federal government, leading to greater responsibility at the state level to come up with replacement funds for cuts in federal block grants, federal housing money, and Medicaid. With states’ increased financial contribution, though, comes greater flexibility. Discussion centered on successes within the speakers’ states. Illinois residents now benefit from more relaxed asset ceilings, financial education programs, and a greater emphasis on the value of education. In Pennsylvania, the governor is making investments in infrastructure, community development, and education through innovative children’s healthcare programs, integrating community development with community colleges, and teaming with IBM to offer training programs for jobs of the future. Ohio’s Cuyahoga County is a leader in early childcare programs. The great unanswered question is, 20 years from now, which of these initiatives will prove most successful at alleviating poverty? Key Messages:
Breakout Session—Evaluating the Financial System in the Wake of KatrinaJune 22, 2006 Hurricane Katrina wrought devastation not only on people and property, but also on the Gulf Coast region’s infrastructure, including its financial services system. This breakout session sought answers to questions surrounding how well the financial needs of the poor were met in the weeks and months after the hurricane. The response of federal bank, thrift, and credit union regulatory agencies included taking immediate steps to ensure that the market had sufficient liquidity to meet consumers’ and businesses’ needs for cash in the absence of alternative electronic payment options. The Federal Reserve Bank of Atlanta, for example, began armored car transports to the region as soon as the hurricane had passed, moved check clearing operations to Atlanta, and maintained the discount window to assist all depositories in meeting their liquidity needs. Related challenges were touched on, including how delayed benefits affected Gulf Coast residents’ credit ratings, and how many evacuees were faced with having no official identification papers or documents when they were rushed out of New Orleans. Key Messages:
Keynote Address—New Challenges in Poor Urban NeighborhoodsJune 23, 2006 Dr. William Julius Wilson, one of the nation’s leading scholars on urban poverty, delivered a keynote address on the current plight of the urban poor. Calling concentrated poverty “one of our most serious domestic problems,” Dr. Wilson described the pattern of migration from many of our nation’s cities, driven primarily by the economy’s shift from manufacturing to financial services and computer technology as well as by transportation improvements. Population declines have continued in Rust Belt cities like Detroit, Philadelphia and Cleveland, leading to dramatic changes in the development of neighborhoods. In older cities, 80% of entry-level jobs are located in the suburbs, leaving poor urban residents dependent on public transportation. Dr. Wilson defines new urban poverty as poor, segregated neighborhoods in which substantial percentages of adults have dropped out of – or were never a part of – the job market. He drew a distinction between unemployment rates and joblessness rates. Where unemployment numbers do not include those looking for work, joblessness rates include those who have dropped out of the labor market and are no longer looking for jobs. Many poor, young African-American males, Dr. Wilson noted, fall into the second category. “Any program that addresses concentrated poverty,” he noted, “must face the challenge of poor Black joblessness. The two are inextricably linked.” There are bright spots to note and to learn from. Dr. Wilson cited a coalition in New Jersey that comprises some 200 CDCs and has been successful effecting legislation to convert vacant and abandoned properties into community assets. Key Messages:
Panel Discussion #2—Exploring the Community Development AngleJune 23, 2006 The second plenary session of the Policy Summit focused on identifying and exploring high-impact opportunities for community development practitioners to address concentrated poverty. The panelists, all hailing from national organizations, articulated challenges and opportunities facing community development practitioners. One such challenge – the so-called “dilemma of community development” – results in negative consequences for the people most in need of help. For example, the Columbia Heights neighborhood in Washington, DC, has been the beneficiary of considerable CDC involvement. However, long-term residents are now priced out of this market. “If neighborhoods are bad, the upwardly mobile move out. If they’re improving, the poor move out,” said Buchholz. One solution is greater collaboration. Place-based strategies can reduce poverty, Buchholz noted, but rarely in isolation. Kirsten Moy presented a model for taking innovations to scale. “Standardization is something of a dirty word in our industry,” stated Moy, “but without it, we can’t go to scale.” Most state- and federally funded programs aimed at creating jobs do not consider transportation issues in awarding money. Illinois is the first state in the country to reward jobs and funds to companies located near public transportation and affordable housing. Key Messages:
Breakout Session—Poverty Alleviation: Wealth-Creation StrategiesJune 23, 2006 Asset-building strategies can help people build wealth and move out of poverty. This session examined existing programs and tools, including financial education, Earned Income Tax Credits, and Individual Retirement Accounts, with an eye toward identifying new policy directions. The speakers made note of the benefits to the poor of tax incentives, but also pointed out challenges to their fully reaping the benefits. For example, understanding the codes and filing a return that incorporates all the appropriate tax benefits can be difficult. As a result, many people hire a service to prepare their returns. Up to 50% of low-income filers on EITC get refund loans in advance of their actual return, loans that typically carry high interest rates and/or fees that consume a significant portion of the return. David Marzahl, whose organization is linked to the national tax code organization, struck repeated points on the link between policy and infrastructure. He noted that, with all Americans obliged to file a tax return, there is an infrastructure in place to perhaps go to scale with programs to help people maximize the use of tax credits. One such instance is a pilot program that, beginning with the 2007 tax filing season, will allow filers to split their refund among three accounts. Buchholz mentioned CFED’s Scorecard as a tool to share data and influence policy. Karen Belsey, from the City of Portland (Oregon)’s Bureau of Housing and Community Development, was unable to make the Policy Summit. She shared via PowerPoint the story of Portland’s success at helping residents move out of poverty. The program—Portland’s Economic Opportunity Initiative—was aimed at increasing the incomes and assets of low-income Portland residents by at least 25% within three years. Key Messages:
Breakout Session—Poverty: A View from the State HouseJune 23, 2006 Breakout Session—Rural Poverty: Taking a Closer LookJune 23, 2006 This session examined issues facing impoverished individuals and communities in rural areas. Although commonalities exist among the core issues of rural and urban poverty, approaches that are effective in urban areas may not work in rural areas. Access itself can be a problem: those living in rural communities often have a harder time locating and benefiting from resources aimed at helping them. Persistent poverty – defined as at least four decades’ worth of very high poverty – shows up in the greatest concentrations in the rural South and on Native American Indian reservations. Such entrenched poverty, argued one of the panelists, gives us a mandate to make changes and establish a new framework for better policy. Moises Loza of Washington, DC’s Housing Assistance Council, a speaker for this session who was unable to make the conference, assembled a presentation on trends and conditions among the rural poor. While many challenges remain, there are bright spots. Intensive early-childhood intervention is an investment that has yielded a sizable rate of return, including higher earnings and lower crime. And Kentucky has seen human capital gains in increased high school graduation rates, although the rate is still low relative to other Appalachian states. Key Messages:
Panel Discussion #3—Developing Responsive Federal PolicyJune 23, 2006 During the final plenary session of the conference, policy experts and community development practitioners debated policy strategies for addressing concentrated poverty. Moderator Buzz Roberts, LISC’s senior vice president for policy and program development, lauded community development block grants (CDBGs) and collaboration. Several examples of best practices were shared, including Neighborhoods in Bloom, a partnership involving the City of Richmond, community development corporations, resident leaders, the Richmond Redevelopment and Housing Authority, LISC, and others. By focusing resources on six neighborhoods with the greatest potential for improvement, the Neighborhoods in Bloom partnership was able to target funds and effort, leading to visible and lasting improvements. Another success story came from Brenda McDaniel of the Kentucky Highlands Investment Corporation, a CDC-turned-venture-capital firm in London, Kentucky. Once the area was designated an empowerment zone, Brenda and her group got busy raising money and asking counties what they most needed. The results are astonishing: $120 million in private investments. An increase of 6,100 employees. A significant drop in the unemployment rate. An increase in high-skilled jobs. Enhanced infrastructure, including a new hospital wing. And educational improvements, among them the introduction of college-level classes at the high school. The group also started a credit union, which issues thousands of loans to low-income families and sharply curtails opportunities for predatory lenders. If she had the chance to advise federal legislators, Brenda would tell them that “they need to target funds to low-income areas. It works!” Is raising the minimum wage an effective policy approach to addressing concentrated poverty? Economist David Neumark, a national expert on minimum wage, explained that raising the minimum wage actually results in more families at or near the poverty level (see also the Q&A). A more effective strategy to address poverty than raising the minimum wage is the Earned Income Tax Credit, a program targeted to poor and low-income families. EITC encourages people to work and to lift themselves out of poverty. In addition, EITC has broader societal support, since it’s a means of self-improvement, not a handout. Key Messages:
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