Racial disparity: here we go again

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debt

ProPublica has a fine expose on racial disparities in debt-collection litigation. Reporters examined court judgments in St. Louis, Chicago and Newark and found that court judgments were twice the size in predominantly black neighborhoods compared to predominantly white neighborhoods – even controlling for income. African Americans significantly more likely than whites to be sued by debt collectors.

So what, you might ask, does this have to with housing, or more particularly, housing discrimination (AKA fair housing)?

Two things:

  • One inference from the findings is that blacks tend to have less resources – less wealth – to fall back on in hard times. Specifically, they have less wealth in the form of home equity to pass on one from one generation to the next, and that’s a legacy of housing racial discrimination that was promoted and enforced by governments at all levels – and notably, by the federal government from the 1930s on.

As the ProPublic article puts it:

“Experts cite many reasons why blacks might face more lawsuits, foremost among them the immense gap in wealth between blacks and whites in the U.S. It’s a gap that extends back to the institution of slavery and, more recently, to 20th century policies that promoted white homeownership while restricting it for blacks.”

That gap has even widened since the Great Recession, according to the Pew Foundation. The typical black household has a net worth more than 10 times less that of the typical white household:

wealthgap

 

 

 

 

 

  • The other connection to fair housing is that the racial disparity in debt-litigation cases runs parallel to the racial disparity in predatory lending that was revealed during the housing bubble years of the early 2000s. In many areas, blacks were steered to expensive home loans even when they could have qualified for standard mortgage loans. The debt collectors insist they’re treating everyone the same and not screening cases by race. That may be true, but the mass effect is similar to that produced when minorities were are targeted by predatory lenders in the years leading up to the Great Recession.

For a brief description of how a bank was called to account under the Fair Housing Act, check out this synopsis of a case that the civil rights law form Relman, Dane & Colfax filed against Wells Fargo in Baltimore, or this summary in the Baltimore Sun.

Variations on a sordid theme

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“Forty families on one lot, using one water faucet. Living in barren one room huts, they were deprived of the glory of sunshine in the daytime, and were so poor they could not even at night use the electricity that is to be generated by our great river…

“I found one family that might almost be called typical. Living within one dreary room, where no single window let in the beneficent sunlight, and where not even the smallest vagrant breeze brought them relief in the hot summer – here they slept, here they cooked and ate, here they washed themselves in a leaky tin tub after carrying the water for 100 yards. Here they brought up their children ill-nourished and amid sordid surroundings…”

The speaker was Congressman Lyndon B. Johnson, in his home district of Austin, describing the “slum tarnish” he observed during a Christmas Day walk through town. He made his remarks in a radio address to his constituents (this was well before LBJ himself got into the radio business), hoping to win their support for something new in town: public housing. The address became known as his “Tarnish” speech.

Here’s a photo (albeit not from Texas) that seems to capture what he was talking about:

slumscene

 

 

 

 

 

Thirty years before he orchestrated the passage of the Fair Housing Act as president, Johnson – whose ambition as a young congressman is captured by this 1937 photo of him shortly after his election, with FDR in Galveston – prevailed in that housing campaign.

lbj1938B

The first public housing in the country built under the 1937 housing act was in Austin. It was segregated, like most public housing that sprang up around the country over the next few decades, but less sordid than what they replaced. LBJ used that word – sordid – to good effect at HUD’s inauguration, when he declared: “Our cities and our new urban age must not be symbols of a sordid society.”

“Sordid” might be an apt description for some blocks of big-city, high-rise public housing, thoroughly segregated, underfunded and bereft of hope, if not sunlight. High rises came into planners’ favor in the ‘40s, but a couple of decades later they were not. For a tidy history of public housing, click here.

Some argue that public housing outside the big inner cities has worked quite well, and perhaps that can be said for places like Vermont, which apparently got into public housing fairly late in the game. (Burlington’s housing authority dates from 1961, and the state’s, from 1968.) If a history of Vermont’s public housing hasn’t been written, it’s a thesis topic in waiting.

Housing opinions get short shrift in D.C.

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questionnaire

You may have missed it, but the MacArthur Foundation, by way of Hart Research Associates, did a national poll of 1,401 adults last spring on housing issues – the third such survey since the Great Recession. Guess what: A majority thought the housing crisis isn’t over yet!

No surprise there, given that 60 percent said they regard housing affordability as a “serious problem,” and 55 percent said they’d made at least one sacrifice (e.g. taking second job, eating more junk food, etc.) to cover their housing costs.

We’ll spare you the responses to the questions on class mobility and Millennial stresses, and simply highlight a couple of disconnects:

  • Respondents appeared divided about what role, if any, the federal government has in addressing the housing-affordability problem. Fifty-three percent said it wasn’t the federal government’s responsibility, compared to 39 percent who thought the federal government should be involved.

And yet, a big majority – 75 percent – said they want elected leaders in Washington to make housing affordability a priority. (See? We’re not alone in saying stuff like this, or this.) And 79 percent said they wanted state and local elected leaders to do so.

  • But those elected leaders – national, state and local – are not making affordable housing enough of a priority, at least in respondents’ eyes, as suggested by this chart:

Maca$

Dare we suggest a reason why public officials are not responding? Because they have a sense of impunity, inasmuch as making affordable housing a high priority would, in all likelihood, require spending appreciable amounts of tax dollars. How would the poll’s respondents feel about that?

More housing-crisis dispatches

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Another of our occasional samplers on the unaffordability epidemic:

  • As Seattle wrestles with housing unaffordability, an op-ed in the local paper recommends looking to Berlin!

berlin2

Germany’s largest city, newly flooded by young people and immigrants, has a population of 85 percent renters and has introduced a new form of rent control — the “rental price brake,” which seeks to rein in rent increases. (Median rents have gone up 50 percent in six years, by one account.) And government has imposed other constraints – on renovations (can’t be too fancy without approval) and on conversion to vacation homes. Well, that may sound promising, but to what effect? Protesters are in the streets, we learn in the Wall Street Journal, as “Berlin’s Housing Problems Boil Over.”

Unicode

  • In Edina, Minn., a suburb of Minneapolis, 96 percent of the housing stock is unaffordable to a family of four earning $43,000 annually. So, the City Council is considering a form of inclusionary zoning with a buy-out provision. New developments would have to include 10 percent affordable units, or that requirement could be waived if the developer pays $220,000 per unit into a city fund to support affordable housing. Now, that’s not a new idea, but the buy-out figure looks rather high (Burlington’s is $100,000 per unit), and of course, there’s the concern that any new housing developed by the city not lump all the lower-income people together in their own blighted enclave.
  • In Columbus, Ohio’s Franklin County, more than 24,000 people applied for Section 8 vouchers from an agency that is prepared to give out … 200, followed by 70 a month. That’s in a county where 13,000 vouchers are in use.
  • In Miami, old people camped out overnight just so they could file applications to live in an affordable senior housing complex.
  • In Portland, Ore., the newly declared “housing emergency” is expected to last at least a year.
  • And in Palo Alto – we know, we know, this is Silicon Valley and expected to be unaffordable beyond  imagining – a local man and college graduate who earns a “decent salary” is living with his parents because he can’t afford an apartment. He graduated from Palo Alto High 20 years ago, so he’s too old to be a Millennial! Here’s what he told the City Council about himself and his cohorts:

“All of us went to great colleges, great grad schools, and not one of us can live in the city.”

 

So much for artists’ affordable housing

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When Burlington’s mayor announced that he would not support housing in the South End’s Enterprise Zone, he won cheers from artists who feared gentrification. While the mayor’s isn’t necessarily the last word in “Plan BTV South End,” the product of extensive public input (or so the city proudly insists), it does stack the odds against any kind of housing in the zone.

Too bad. One of the more intriguing prospects raised in the draft plan was to create work/live spaces – aka, affordable housing – for artists. Could that be done deftly in some of those South End warehouses without gussying up the surrounding neighborhood and driving up rents for everyone else? Maybe, maybe not, but it seems a shame not to consider this. A blanket ban on housing seems to foreclose the possibility.

southend

Well, it’s a possibility that’s being embraced elsewhere, all around the country – in little towns and big cities, both. “Colorado’s affordable artist housing efforts catching on quickly,” read a headline in Saturday’s Denver Post. Artspace, out of Minneapolis, has been developing work/live artists’ lofts for more than 20 years – but apparently none yet in New England.

If Burlington’s artists aren’t interested, perhaps their counterparts in other warehouse-rich Vermont towns might be. Bellows Falls, Springfield, Rutland, Brattleboro, among many others? Here’s the view in Colorado, according to the Post article:

“The hope is that some rural projects will have the added advantage of preserving historic structures in need of attention. That makes Trinidad, with its excess of significant, and underused, buildings, a good candidate for the pilot program…”

Check out what’s been done in Fergus Falls, Minn. (pop. 13,300)…

fergus

or  Hastings, Minn. (22,400).

hastings

If you’re looking for an example of a dreary warehouse transformed, look at Council Bluffs, Iowa …

council bluffs

or even Memphis – which is fashioning an arts district around its project.

memphsis

Now, it may be that some of projects, the affordable housing notwithstanding, have contributed to surrounding gentrification. But if so, did it have to be that way? Municipal planners take note.

 

 

Carrots and sticks

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Affirmatively furthering fair housing (AFFH) is a recurrent theme on this website, so if you’re still not conversant with the phrase, today’s post is another opportunity. Essentially, the AFFH rule issued by HUD over the summer represents a reinvigorated push to promote inclusive communities and to break up concentrated areas of segregation and poverty that the 1968 Fair Housing Act was intended to dispel.

AFFH

If for no other reason, you should become familiar with AFFH because it’s a key addition to contemporary American civil rights vocabulary. You can bone up on previous posts here,  or here, or delve in to some of this website’s Resources.

And if you’re a citizen committed to supporting affordable housing development in mixed-income, higher opportunity areas, your role may be important than you thought. Consider this excerpt from an essay by Michael Allen, a partner in the civil rights law firm of Relman, Dane & Colfax and one of the leading legal lights nationally in fair housing litigation:

“What HUD produced is a Final Rule long on ‘carrots,’ but painfully short on ‘sticks.’ To compound that problem, HUD does not currently have—and is very unlikely to acquire—sufficient resources to police the compliance of 1200 block grant recipients and 3400 public housing agencies. As a consequence, the promise of the Affirmatively Furthering Fair Housing (AFFH) mandate is likely to be realized only in communities where grassroots and legal advocates mobilize and create their own enforcement strategies. The success of the Final Rule will depend on this grassroots mobilization, on a community-by-community basis, all over the country. That means advocates, collectively, need to step up to the plate and provide the tools and resources for a sustained ‘ground game.’”

As for “carrots” that municipalities can offer for affordable housing development, the Fair Housing Project’s own Ted Wimpey offered a nice summation in his August testimony to the Vermont Advisory Committee to the U.S. Commission on Civil Rights: inclusionary zoning, density bonuses and impact-fee reductions, among others.

 

Burlington’s unaffordability update

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Yesterday was the due date for Burlington’s CAPER – that is, the Consolidated Annual Performance & Evaluation Report that the city has to file with HUD every year as a condition of receiving Community Development Block Grant (CDBG) and HOME funds. (HOME is a federal program that supports the rehabilitation, acquisition and construction of rental housing.)

burlingtonapt

If you want to know more about the allocation of these funds, which amount to several million dollars, and about the beneficiaries, you can go to the report, which covers July 1, 2014 to June 30 , 2015. Here, we’re just going to refer to  three graphics that apply to housing.

The first two may look familiar to you. They’re in Appendix A, Pages 53 and 54. Rental vacancy rates in Chittenden County have been exceedingly low for at least two decades, as shown on the first graph, and still are. That’s one reason rents are as high as they are.

The vacancy rate here here is typically below 2 percent. That’s below  the “Balanced rate” of 4 percent supposedly the threshold for a healthy rental market, and its well below the rates for the Northeast and the U.S.

As for the housing wage – that is, the amount a person has to earn to be able to afford to rent an dwelling of average cost — well, no big surprises here, either. The graph on Page 25 shows four pillars, left to right, represent the costs of renting apartments: efficiency, one-bedroom, two-bedroom and three-bedroom. As you can see, a minimum-wage worker is out of luck, as is a median-wage worker who wants anything bigger than an efficiency.

By definition, you can “afford” an apartment if you spend no more than 30 percent of your income on housing. For context: According to the 2015 edition of “Out of Reach,” put out by the National Low Income Housing Coalition, Vermont’s two-bedroom-apartment housing wage is $20.68 an hour, and the average wage for renters is $11.78.

OK, so how did Burlington fare for the year in its affordable housing program? It came up short, as you can see in the following table:

CR-20 – Affordable Housing 91.520(b)

Evaluation of the jurisdiction’s progress in providing affordable housing, including the number and types of families served, the number of extremely low-income, low-income, moderate-income, and middle-income persons served.

 

  One-Year Goal Actual
Number of Homeless households to be provided affordable housing units  

15

  

0
Number of Non-Homeless households to be provided affordable housing units  

76

  

46
Number of Special-Needs households to be provided affordable housing units  

0

  

0
Total 91 46

 

  One-Year Goal Actual
Number of households supported through Rental Assistance  

0

  

0
Number of households supported through The Production of New Units  

25

  

28
Number of households supported through Rehab of Existing Units  

6

  

6
Number of households supported through Acquisition of Existing Units  

60

  

12
Total 91 46

Granted, a single year is a rather arbitrary term to judge and overall program, given that affordable units might well be coming on line before or after. Such is the case here, the report notes, with the prospect of the Bright Street Co-op. You can read the city’s account of its affordable housing program on Pages 24-26, where the reader is assured that:

“Ensuring the availability of a continuum of housing, for all residents of Burlington, continues to be a top priority for the City.”

 

Plotting neighborhoods, top and bottom

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To your library of testimonials on the growing income inequality, you can add this one from the Urban Institute, a study titled “Worlds Apart: Inequality between America’s Most and Least Affluent Neighborhoods,” that shows disparities increasing from 1990 to 2010. This paper uses a composite index (income, educational attainment, home ownership rates, median house value) to identify neighborhoods in the top 10 percent and bottom 10 percent.

You can see them plotted on an interactive national map. Here’s 2010  (blue is “top,” grey “bottom”):

citylab

If you scroll to the Northeast you can check out Vermont’s evolution – interesting, but not particularly dramatic.

As is the case with most such national surveys that focus on metropolitan areas, this one analyzes “commuting zones.” In Vermont’s case, that’s a designation of questionable applicability, because it means a zone centered on Burlington with a population of 321,946, more than half the state’s total.

In an appendix, the study lists dozens of commuting zones, each with its “inequality index,” and Burlington comes out OK – somewhere in the middle. Ditto Burlington’s growth of income disparity over 20 years.

Although there has been some shifting of the top and bottom zones across the country, the wealthy zones have remained fairly impregnable. One reason for that, as this analysis of the Urban Institute data emphasizes, is that discriminatory housing policies, such as exclusionary zoning (e.g., large lot sizes) that preserve richer residential enclaves. Multi-family rental housing, affordable or not, is typically missing from these neighborhoods altogether.

Of course, discriminatory land use policies aren’t the sole culprit. High land prices are an obvious deterrent for affordable housing development. Then again, discriminatory policies in many cases may have contributed to the higher prices … a vicious circle.

 

A non-presidential candidate gets to the point

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Elizabeth Warren, the Massachusetts senator, gave a speech Sunday in Boston that the website “Salon” called “the realest talk on race by any American politician.” She delivered her remarks at the Edward M. Kennedy Institute for the United States Senate as part of a “Getting to the Point” lecture series.

Congressional Oversight Panel for TARP Chairman Elizabeth Warren briefs reporters on the latest news of her agency, which oversees the government's disbursement of billions of dollars to U.S. banks and the auto industry by the Troubled Assets Relief Program, at the Reuters Financial Regulation Summit in Washington, April 27, 2009. REUTERS/Mike Theiler (UNITED STATES POLITICS BUSINESS)

She had something to say about violence, about voting, and about economic justice – and economic justice as it relates to housing. Some excerpts:

“For most middle class families in America, buying a home is the number one way to build wealth. It’s a retirement plan-pay off the house and live on Social Security. An investment option-mortgage the house to start a business. It’s a way to help the kids get through college, a safety net if someone gets really sick, and, if all goes well and Grandma and Grandpa can hang on to the house until they die, it’s a way to give the next generation a boost-extra money to move the family up the ladder.

“For much of the 20th Century, that’s how it worked for generation after generation of white Americans – but not black Americans. Entire legal structures were created to prevent African Americans from building economic security through home ownership. Legally-enforced segregation. Restrictive deeds. Redlining. Land contracts. Coming out of the Great Depression, America built a middle class, but systematic discrimination kept most African-American families from being part of it.

“State-sanctioned discrimination wasn’t limited to homeownership. The government enforced discrimination in public accommodations, discrimination in schools, discrimination in credit-it was a long and spiteful list.”

Here we interject that she’s just scratching the surface of the federal government’s tawdry history of promoting residential segregation by race. For an eye-opening summation, check out what Richard Rothstein, of the Economic Policy Institute, had to say at the recent HUD conference in Washington. See the video we posted previously.

We note also the racial disparity in home ownership. In 2010,  in Vermont, according to the 2012 “Analysis of Impediments to Fair Housing Choice,” the home-ownership for whites (71.4 percent) was nearly twice that for blacks (32.5 percent).

Warren went on to talk inequality over the last few decades, including the disparate effects of predatory lending that preceded the housing crash:

“Research shows that the legal changes in the civil rights era created new employment and housing opportunities. In the 1960s and the 1970s, African-American men and women began to close the wage gap with white workers, giving millions of black families hope that they might build real wealth.

“But then, Republicans’ trickle-down economic theory arrived. Just as this country was taking the first steps toward economic justice, the Republicans pushed a theory that meant helping the richest people and the most powerful corporations get richer and more powerful. I’ll just do one statistic on this: From 1980 to 2012, GDP continued to rise, but how much of the income growth went to the 90% of America – everyone outside the top 10% – black, white, Latino? None. Zero. Nothing. 100% of all the new income produced in this country over the past 30 years has gone to the top ten percent.

“Today, 90% of Americans see no real wage growth. For African-Americans, who were so far behind earlier in the 20th Century, this means that since the 1980s they have been hit particularly hard. In January of this year, African-American unemployment was 10.3% – more than twice the rate of white unemployment. And, after beginning to make progress during the civil rights era to close the wealth gap between black and white families, in the 1980s the wealth gap exploded, so that from 1984 to 2009, the wealth gap between black and white families tripled.

“The 2008 housing collapse destroyed trillions in family wealth across the country, but the crash hit African-Americans like a punch in the gut. Because middle class black families’ wealth was disproportionately tied up in homeownership and not other forms of savings, these families were hit harder by the housing collapse. But they also got hit harder because of discriminatory lending practices-yes, discriminatory lending practices in the 21st Century. Recently several big banks and other mortgage lenders paid hundreds of millions in fines, admitting that they illegally steered black and Latino borrowers into more expensive mortgages than white borrowers who had similar credit. Tom Perez, who at the time was the Assistant Attorney General for Civil Rights, called it a “racial surtax.” And it’s still happening – earlier this month, the National Fair Housing alliance filed a discrimination complaint against real estate agents in Mississippi after an investigation showed those agents consistently steering white buyers away from interracial neighborhoods and black buyers away from affluent ones. Another investigation showed similar results across our nation’s cities. Housing discrimination alive and well in 2015.”

Fascinating notes from all over

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A Monday potpourri that panders to our friends with short attention spans:

starbucks

  • Starbucks, which offers tuition-assistance to its U.S. employees, offers rental assistance to its workers in the U.K. After a year’s employment, they can get a no-interest loan for a rental deposit.

downsize

  • The U.K., never short of fresh approaches to chronic social problems, offers this one for the housing affordability shortage: oldsters downsizing to free up their unused extra space for youngsters. Worthy of debate, no?
  • Vermont’s recurrent lament that it’s getting too old and can’t hang on to its youth prompts the question: Where are the youth going? Well, here’s one answer, in the form of a list of cities where Millennials are buying homes in large numbers. They’re mostly out west (Des Moines! Grand Rapids!), the same territory where young Vermonters fled during the 1830s. Back then, the people they left behind wrung their hands about that exodus, too.

dubai

  • Maybe some of the fleeing youth are heading to Dubai, but if they are, they’re encountering – ta-dah! –– an affordable housing shortage, complete with 30-mile commutes from the suburbs.