Handout – 3: Expanded narrative that corresponds to the outline associated with Session 2
Session 2: Four Eras of Federal Government Role in Community Development
A. 1900 – 1930 - No Government Role: let the private sector do it; constrain the excesses of free market
B. 1930 – 1950 - Government Reinforces the Private Sector: rebuild from the Depression; create new institutions to extend the private sector
New Deal Housing in Theory: Expand homeownership; market “trickle down” raises housing equality for all; suburbs provide the infrastructure to foster growth; public housing, if direct action, government does the least
New Deal Housing in Practice: S & L’s need money; Deposit insurance/FDIC; S & L’s need confidence in Mortgage Insurance/FHA borrowers; builders need buyers Mortgage Innovation/FHA; S & L’s need more money for Secondary Market/FNMA; in the 1940’s – 1950’s: S & L’s/banks need more confidence; Veterans Administration provides no down payment, extended term, low interest; for low-income renters and temporary tenants public housing authorities; growth in welfare and racial change with African-American migration
Post World War II and Prelude to the 60’s - Suburbs and Slums: - population growth – baby boom, immigration and migration
C. 1950 – 1975 - Government as Leader: government draws the private sector into areas of “market failure”; government goes beyond the conventional market to meet social needs
Kennedy’s New Frontier and “The War on Poverty”: Framework for legislation (economic development; poverty - welfare expansion; slums; subsidy to expand private sector housing and role of Fannie Mae; urban renewal, special focus on Appalachia)
*Birth of Community Development Corporations: Ford Foundation’s Gray Areas experience began in 1955 when it financed a program to smooth the way for the expansion of downtowns into low-income neighborhoods through urban renewal; Community Development Corporations emerged, in part, from this experience
Johnson’s “War on Poverty” and “Great Society”: unofficial names for comprehensive anti-poverty legislation (1964) that included Model Cities, the Economic Opportunity Act, Community Action Program, Head Start, Volunteers in Service to America (VISTA), the Job Corps, among other things; the “Great Society” in scope and sweep resembled theNew Dealdomestic agenda ofFranklin D. Roosevelt; by end of 60’s public support is waning; attention to African Americans creates the grounds for the backlash that began in the 1970s (perception by the white middle class that it was footing the bill for ever-increasing services to poor urban minorities led to diminished support for welfare programs, especially those that targeted specific groups and neighborhoods)
*Community organizing grows: most prominently in the form of the “Black Power Movement”
Nixon’s Policy Changes: cuts federal domestic spending and gives local government control by consolidating “block grants” through revenue sharing; ends the Office of Economic Opportunity (1973); ); Neighborhood Housing Services (NHS) created; Home Mortgage Disclosure Act (1975) requiring financial institutions to maintain and annually disclose data about home purchases, home purchase pre-approvals, home improvement, and refinance applications involving
*“Redlining” is revealed: the practice of designating primarily African-American communities by geographic “redlining” in contrast to primarily white communities with “greenlining”; a major source of racially-based asset inequality
*Changes in outer ring neighborhoods (Burgess’ Concentric Zonal Hypothesis): Next neighborhoods out start imitating inner city problems and organizing; ethnic identity movement – coalition is more than African-American; neighborhood-based strategies, including commercial revitalization are explored; reinvestment takes hold in some neighborhoods with national economic recovery taking place in later 70’s
D. 1975 – Now - Government in Partnership: government a catalyst for collaboration of public, private, nonprofit and community sectors; government resources leverage private investment with exception of Reagan era
Carter’s emphasis on neighborhoods: National Neighborhood Commission; neighborhood development focus of HUD; Neighborhood Reinvestment Corporation (1978) doing business as NeighborWorks America with focus on housing and commercial development; capacity building theme
Reagan’s domestic spending cuts: deep domestic spending cuts (HUD 80%); neighborhood offices eliminated; suburban development policies promoted; no federal review of local programs; Job Training Partnership Act replaces Comprehensive Employment and Training Act; concentration of poverty deepens
*Emergence of National Intermediaries in 80’s: community-based development grows; Local Initiative Support Corporation (LISC), Enterprise Foundation, and Development Training Institute are created; Community Reinvestment Act (1977) incentivizes banks to invest in low-income communities; Community Development Credit Unions emerge; low-income housing tax credits are expanded; new housing partnerships are developed; by late 80’s national housing comeback experienced with significant emphasis on fair housing enforcement
*Emergence of National Foundations: growing underclass, characterized as persistent poverty with geographic concentration (slums); response from Ford, Casey, MacArthur, Rockefeller foundations among others; related development of African-American church initiatives
Bush I’s Points of Light Foundation: supports citizen and volunteer community problem solving initiatives with public-private grants
Clinton’s Community Planning and Development: creation of Enterprise Zones and Enterprise Communities (1993) with comprehensive funding but most heavily on housing (various HOPE initiatives), as well as homeless programs, Colonias (new Latino focus on border communities), Youthbuild (employment and business creation), neighborhood networks and resident initiatives
Bush II’s Community Renewal Tax Relief Act (2000): intended to improve development in economically distressed communities. The law offers "tax incentives for businesses to locate and hire residents in urban and rural areas that have not experienced recent economic expansion."Investment is through one of three primary means (renewal communities, empowerment zones or community development entities) which have access to the New Markets Tax Credit financing program
Obama’s Social Impact Bonds: A social impact bond, or SIB, is an innovative financial tool that enables government agencies to pay for programs that deliver results. In a SIB agreement, the government sets a specific, measurable outcome that it wants achieved in a population and promises to pay an external organization—sometimes called an intermediary—if and only if the organization accomplishes the outcome (“Pay for Success” financing). Private investors (venture capitalists, foundations, etc) provide the working capital for the external organization to hire and manage service providers. A third-party evaluator determines whether the outcome has been achieved. If the agreement succeeds, the government releases an agreed-upon sum of money to the external organization, which then repays its investors with a return for taking on the upfront risk. If the agreement fails, the government is not on the hook, and the investors do not get repaid with public funds. SIBs are most appropriate for areas in which: outcomes can be clearly defined and historical data are available; and preventive interventions exist that cost less to administer than remedial services, such as recidivism, homelessness, and workforce development.