Community Issues and Insights 2016

Covering over 75,000 square miles, the Fourth District contains nearly 17 million people living in large urban metropolises, rural Appalachian towns, and everything in between.

Keeping track of issues across the Fourth District, which includes Ohio, western Pennsylvania, the northern panhandle of West Virginia, and eastern Kentucky, can be challenging. To help meet that challenge, the Community Development Department at the Federal Reserve Bank of Cleveland has been distributing a short survey to hundreds of community leaders across the District to better understand current and emerging issues facing leaders' communities. This year, 145 people responded.

The rankings haven't changed much from last year's. In fact, they're nearly identical except for a single difference: a tie for third place.

Current issue #1—Jobs

Jobs continue to top the list of current issues. Some common themes respondents cited were weak job availability, lack of jobs that pay a living wage in both urban and rural areas, and employers' having a difficult time finding qualified workers. Wrote a director at a Dayton community development organization, “jobs that pay a living wage are still a challenge to come by . . . , and for those people who do try to seek even menial employment, they then may not qualify for social services they rely on.”

It's a double-edged sword: A job may be available paying minimum wage, but that income, well below a living wage, could lead to a dramatic decline in various federal benefits because of means testing. Better known as the “benefits cliff,” the steep drop in benefits such as food stamps or childcare subsidies occurs when a household attains a certain income. In some instances, a rise in earned income can actually cause damage to a household's finances by limiting access to benefits and services.

Access to employment is another concern, encompassing both training and viable transportation options. The president of a northeast Ohio foundation explained that “there is a significant disconnect between available jobs and those who need them, and much of that disconnect is due to training needs and barriers such as transportation.”

Current issue #2—Affordable housing

Access to quality affordable housing, or the lack thereof, is number 2 on the list. The executive director of a northeast Ohio foundation noted that the supply of current housing options resembles a barbell: very expensive housing for rent at one end, very poorly maintained housing at the other, and “nothing in between that is decent and affordable.”

Another issue in the affordable housing category concerns property maintenance: “Homeowners and landlords cannot seem to come up with the money to make necessary home repairs . . . ; there is no savings for emergencies, and many landlords in poor areas cannot secure equity loans,” writes a director at a Montgomery County community development organization.

Several other respondents commented that a growing number of seniors will place increasing pressure on the need for affordable housing.

The reality is that many developers working on affordable housing projects rely heavily on tax credits and grants to finance projects. In some regions, these types of funding are strong, while in others the incentives are distributed imperfectly.

Current issue #3—TIE between vacant properties and budgetary cuts and financing issues at the state government level

Perennial concern about vacant properties is tied with state budget and financing issues as the third most important current issue.

Regarding vacant properties, most respondents cited such properties' contribution to declining property values, concerns over increased crime, negative neighborhood perceptions, and neighborhood instability. The sheer magnitude of the problem makes securing enough resources to deal with vacant properties nearly impossible at best.

The Fourth District lies in the heart of the Rust Belt, where many communities have been dealing with neighborhood instability because of vacant and abandoned property since well before the Great Recession. One byproduct of this instability, noted a chamber of commerce vice president, is disconnect between population and necessary infrastructure. When a city has more housing than population, city government needs to determine how to reduce overall city infrastructure appropriately in order to meet current reality.

Concerns about state budget and finance issues were driven by a combination of those frustrated by the Pennsylvania state budget impasse and those concerned about the impact of continued cuts to the state of Ohio budget.

In Pennsylvania, political disagreements have prevented the state from passing an on-time budget by June 30, 2015. Instead, a stopgap budget was implemented at the end of 2015 to help restore some lost funding, but debate regarding an official budget is still underway at the time of this report. Public service agencies are particularly hard-hit by the impasse, as are public schools and universities, local government, nonprofits, and vendors and contractors who do business with the state. A Pennsylvania banker wrote that such “dependence on state funding has crippled a number of nonprofits and government-funded agencies during the ongoing budget state crisis.”

It's much the same in Ohio in terms of reductions, as recent state budgets have included cuts to local government funding. According to the state director of a federal agency, “state cuts to the local government fund,” or the portion of general revenue tax collections distributed to counties and municipalities across the state, “have imperiled local infrastructure.”

Emerging issues, positive and negative

Positive

Neighborhood revitalization and improved economic conditions: Several positive comments identified recent influxes of population revitalizing downtowns in cities across the Fourth District, as well as potential for this revitalization to spill over into surrounding neighborhoods. Increasing corporate involvement around community issues has made for a stronger region.

Energy: States in the Fourth District are no strangers to natural resource extraction, as evidenced by the natural gas boom in Ohio, Pennsylvania, and West Virginia. Recent major declines in natural gas prices, however, have dramatically slowed drilling and exploration. The hope is that when prices rebound, development and investment will resume. Several comments referenced a long-term project, the potential location of a cracker plant in the District. This plant would process natural gas and separate it into components used by the region's petrochemical and plastics-manufacturing companies.

Although Kentucky's coal industry has seen dramatic job losses, mine closures, and bankruptcies of some of the largest producers, it has also stimulated action throughout the state to develop a more diverse economy not centered on coal, particularly in eastern Kentucky. One example is Strengthening Our Appalachian Region (SOAR), “an initiative of the governor's office and Rep. Hal Rogers that has brought together key stakeholders and identified solutions to big issues in our region. The common view that we need to be people of action is now held by many,” writes the chief executive officer of an economic development organization in eastern Kentucky.

Housing: A new phase of funding for the US Department of the Treasury's Hardest Hit Fund (HHF) spurred several comments. The HHF was established in 2010 following the housing crisis and provided money to housing-finance agencies in 18 states and the District of Columbia to use for foreclosure prevention and neighborhood stabilization activities. The Fourth District contains 2 states receiving HHF money: Kentucky and Ohio. Original funding gave Ohio $570 million and Kentucky $149 million. Recently, a second phase of funding was announced. Based on an allocation formula, Kentucky and Ohio will receive $98 million and $30 million, respectively. However, through an application process, up to $250 million in additional funding can be awarded to each state based on its specific needs.

Negative

Health and safety: Drug abuse is a major concern, and several respondents cited resultant community impacts such as the strain placed on social services, foster homes, law enforcement, and families. According to analysis by the Centers for Disease Control and Prevention, Fourth District states have some of the highest drug-overdose fatality rates in the country. In fact, West Virginia has the highest rate, more than double the national average.

Displacement and public transportation: “Poor public transportation infrastructure is becoming a bigger problem as several centrally located and well-served neighborhoods become unaffordable because of rising rents and home prices,” writes a senior attorney at a nonprofit legal service agency, and “As low-income renters and homeowners are pushed to areas that are less well-connected by transportation options, opportunities for these citizens to get and keep employment and to access other services are being diminished.” A deputy director for a Pennsylvania county department of planning additionally reminds us that “an overlooked component of vibrant and revitalizing communities is a strong, multi-modal transportation network.”

Community development capacity and theory: Several respondents expressed concerns about the community development field. Some suggested there may be too many community and economic development organizations and a “need to draw these organizations together to partner together to accomplish common goals.” In this landscape of limited available resources, organizations could benefit from such things as sharing services or merging when geographies and missions overlap.

Others commented on the types of programs that should be funded. A program officer at a Pennsylvania foundation writes, “We keep wanting to fund intervention programs, but never prevention programs,” and thus “we are not addressing the root causes of social disparities, but putting Band-Aids on the problems.”

Others saw a difference of opinion within community development theory and practice, a growing divide between “those who support and believe in intensely focused, place-based initiatives such as the place matters model” and “others who want to spread funding over all neighborhoods and all communities to allow for simultaneous development opportunities regardless of location.”

Sum and substance: Fourth District community leaders find the most significant challenges facing their communities aren't much changed from last year's, including job, housing, and state financing issues.

How are you building better communities in the Fourth District?

Northeast Shores has instituted a renter equity model to allow renters in our multifamily properties to earn money with long-term positive rental history.” Northeast Shores, Cleveland, Ohio

We are launching a new partnership with Cincinnati Children's Hospital focused on decreasing infant mortality in our community. Lack of healthy, affordable housing is one factor in our service area's high infant mortality rates, so working with low-income mothers to improve their housing will be one part of this program.” Legal Aid Society of Southwest Ohio, Cincinnati, Ohio

I volunteer through the Northern Kentucky Chamber of Commerce on the Advanced Manufacturing Coalition. I will go into 30 high schools in the next 4 weeks to talk to students about accepting apprenticeship positions that begin at $14 per hour, and these companies will pay full-ride tuition and books. I am begging students to take these positions. We need 600 workers in this industry sector, and these seniors are the answer to the equation. The students don't have resumes, don't know how to access company applications online, and have not applied to college. The lack of counselors and the lack of preparation of the students are truly worrisome.” Taylor Career Strategies, Ft. Thomas, Kentucky

Survey methodology

The Federal Reserve Bank of Cleveland developed this survey to elicit perspectives from regional stakeholders on key issues facing the communities and individuals they serve. In January 2016, we sent an online survey to 573 individuals working in organizations throughout the Fourth District; 145 completed the survey. Below is a breakdown of the types of organizations respondents work for and in what states these organizations are located. Please note that the responses reflect only the perspectives of those responding to the survey and not the perspectives of all the organizations within the Fourth District.

To participate in future surveys, contact Community Development Advisor Lisa Nelson at lisa.a.nelson@clev.frb.org.