Federal Reserve Board member Elizabeth Duke in a recent speech highlighted how the focus of government-assisted community development has shifted to preserving and disposing of existing housing from building new housing.
Duke told attendees in a speech prepared for the annual Interagency Community Reinvestment Conference in Seattle that a more “well-balanced” approach has become “essential,” due to “weak national economic conditions that have caused particular hardships in lower-income communities and have stretched the federal, state, and local resources available to address neighborhood stabilization and revitalization.”
Among examples of regulatory moves in recent years that she said illustrate this shift in focus was the December 2010 amendment to Community Reinvestment Act regulations that officially revised the term “community development” to “include loans, investments and services that support, enable or facilitate projects or activities that meet the ‘eligible uses' criteria in the Housing and Economic Recovery Act of 2008,” she said.
“Neighborhood stabilization is doubtless the precursor to community development in some communities and, in recognition of this, the federal banking agencies amended CRA regulations to specifically recognize neighborhood stabilization activities in designated [Neighborhood Stabilization Program] areas as appropriate for CRA consideration,” Duke noted.
She cited the “land bank” strategy laid out in a 2010 Fed study cosponsored by the Federal Reserve Banks of Boston and Cleveland as one strategy “some communities have found success with” in line with this aim.
These “land banks,” typically limited-purpose public or private entities used to manage low-value properties that might otherwise sit vacant, have proved useful in that they allow a community to “gain control of vacant properties and keep them from causing problems for the surrounding neighborhood until market conditions are more conducive to redevelopment or sale,” said Duke.
“Land banks are just one example of the new approaches to housing issues that are being pursued across the country, many with the assistance of the Neighborhood Stabilization Program administered by the Department of Housing and Urban Development,” she said.
Duke said some funding the NSP has been able to provide has helped address concerns in this area. The program's role in providing “a structure to bring community stakeholders together to identify the best strategies for addressing foreclosures given the particular circumstances of each community” also has proved helpful, “whether a community decides to purchase and rehabilitate homes for resale, demolish vacant homes, or create land banks to help control the destiny of these properties,” she said.
Other efforts Duke said look promising include efforts in Cleveland, Detroit and Baltimore that are use data “to plan for the future in ways that city governments wouldn't have imagined just a few years ago.”
These efforts, detailed in a 2011 Fed report, show how by “partnering with local foundations, universities, and community organizations, these cities are collecting extensive property data to identify neighborhood assets and build on those strengths,” said Duke.
She also emphasized the need for job creation.
“The foreclosure crisis that resulted from unsustainable subprime lending has persisted largely because of high unemployment rates,” Duke said. “Thus, in order to be successful, any effort to stabilize and revitalize lower-income neighborhoods will need to consider housing through the lens of access to jobs and educational opportunities.”
