Expanding Opportunity: Understanding HUDs AFFH Regulation (April 28th 2016)

Expanding Opportunity: HUD's Affirmatively Furthering Fair Housing Rule Lisa Rice National Fair Housing Alliance April 28, 2016

Where you live matters

When it comes to opportunity, not all neighborhoods are equal.

New York, NY

Source: http://www.salon.com/2011/03/29/m ost_segregated_cities/

Chicago, IL

Source: http://www.salon.com/2011/03/29/most_segregated_cities/

Cleveland, OH

Source: http://www.salon.com/2011/03/29/most_segregated_cities/

Los Angeles, CA

Source: http://www.salon.com/2011/03/29/most_segregated_cities/

Restrictive Covenant (Washington, DC 1930s-1940s)

Restrictive Covenant (Seattle, WA 1935-1944)

McMichael’s Appraising Manual 1. English, Germans, Scotch 2. North Italians 3. Bohemians or Czechs 4. Poles 5. Lithuanians 6. Greeks 7. Russians, Jews (lower class) 8. South Italians 9. Negroes 10. Mexicans McMichael’s Appraising Manual, 4th Edition, 1951

Government Helped Perpetuate Segregation •

• • • • •

Using methodology developed by Homer Hoyt, HOLC appraisers divided neighborhoods by categories including occupation, income and ethnicity of inhabitants in an attempt to eliminate subjectivity of appraisers.

The Residential Security Area maps had four grades: A (green) were new, homogenous areas (“American Business and Professional Men), in demand as residential location in good times and bad.

B (blue) were “still desirable” areas that had “reached their peak” but were expected to remain stable for many years.

C (yellow) were neighborhoods that were “definitely declining.”

Generally sparsely populated fringe areas that were typically bordering on all black neighborhoods.

D (red) (hence the term “red-lining”) were areas in which “things taking place in 3 had already happened.” Black and low income neighborhoods were considered to be the worst for lending. © 2015 National Fair Housing Alliance Please do not distribute.

11

Š 2015 National Fair Housing Alliance Please do not distribute.

12

FHA Underwriting Manual (1936) 229. Usually the protection against adverse influences ‌ include(s) prevention of the infiltration of business and industrial uses, lower- class occupancy, and inharmonious racial groups...

233. The Valuator should investigate areas surrounding the location to determine whether or not incompatible racial and social groups are present‌ A change in social or racial occupancy generally instability and a reduction in values...

leads to

Cleveland Residential Security Survey

Š 2015 National Fair Housing Alliance Please do not distribute.

14

Cleveland Residential Security Survey

“Proximity to industry is area’s best claim and it will retain present population for a few years at least, without marked increase of negro infiltration.”

© 2015 National Fair Housing Alliance Please do not distribute.

15

Cleveland, OH

Source: http://www.salon.com/2011/03/29/most_segregated_cities/

Facing the Foreclosure Crisis in Greater Cleveland: What happened and how communities are responding Federal Reserve Bank of Cleveland, June, 2010 http://cua6.urban.csuohio.edu/publications/center/center_for_community_planning_and_development/Foreclosure_Report.pdf

Metro Map: New Orleans, Louisiana The average life expectancy for babies born to mothers in New Orleans can vary by as much as 25 years across neighborhoods just a few miles apart.

Black Students Are Far More Likely to Attend High-Poverty Schools

Bifurcated Nature of the US Financial System Bifurcated U.S. Financial System Capital Markets REITs, Mutual Funds, Pensions, 401(k)s, Stocks, Bonds, GSEs AAA Rated Mortgage-Backed Securities

Fringe Financial Services Pawnshops, Check Cashers, Payday Lenders, Rent-to-Own Shops, Title Lenders Finance Lenders Sub-Prime Lenders Land Contracts

Mainstream Financial Services

$

Mortgages, Savings and Checking Accounts, Home Equity Loans, Lines of Credit, CDs

Prime Market Jumbo Market

$

$

Middle / Upper- Income and Lower-Income and Minority Slide provided by Jim Carr Predominately Caucasian Communities © 2015 National Fair Housing Alliance Communities

Please do by notNFHA. distribute. and augmented

38

Incarceration rates by race/ethnicity

AFFH provides a plan for expanding access to opportunity in all communities

What the regulation says: AFFH = taking proactive steps to: •Address significant disparities in access to community assets •Overcome segregated living patterns •Promote integrated communities •End racially/ethnically concentrated areas of poverty •Foster and maintain compliance with civil rights and fair housing laws

Who is covered by the new rule?

• Jurisdictions and Insular Areas that are required to submit consolidated plans for the following programs:  CDBG  ESG  HOME  HOPWA • PHAs receiving assistance under sections 8 or 9 of the United States Housing Act of 1937 [24 CFR § 5.154(b)]

Grantees develop an Assessment of Fair Housing (AFH) • The AFH replaces the Analysis of Impediments to Fair Housing Choice (AI) • The AFH is conducted once every 5 years (or after material changes in local conditions) • The AFH must involve comprehensive community engagement.

5. The AFH is linked to ConPlan or PHA Plan • ConPlans will demonstrate how H/CD priorities & objectives affirmatively further fair housing • Grantees will identify add’l strategies & actions to further goals of AFH • Grantees will describe actions to AFFH in annual action plans and performance reports “Weave fair housing values throughout housing & community development decision-making”

Strategies & Actions AFFH = Both/And Approach • Investment in neighborhood revitalization or stabilization • Promoting greater mobility and access to areas offering vital assets (quality schools, employment, transportation, etc.)

Impact of mobility on children • 31% increase in earnings • More likely to attend college • More likely to establish 2 parent families as adults • More likely to live in better neighborhoods as adults • Better start for the next generation Source: Raj Chetty, et. al. http://www.equality-of-opportunity.org/images/mto_paper.pdf

Benefits of Diversity in Schools  Test scores increase  Students are exposed to more complex discussions  Students develop better critical thinking and problem-solving skills  Students are more likely to understand social injustice  Students exhibit less racial prejudice Philip Tegeler, “Diverse Classrooms Also Benefit White Students,” Huffingon Post, 3/5/2013 Philip Tegeler, “Memo to Department of Education: Diverse Classrooms Create a Better America,” Huffington Post, 1/23/14

Businesses Benefit from a Diverse Workforce    

more customers higher sales revenues larger market share greater net profits Herring, Cedric. "Does Diversity Pay?: Race, Gender, and the Business Case for Diversity." American Sociological Review 74.2 (2009): 208-24. JStor.

Regions Benefit Economically Less racial segregation + more immigrant inclusion + less income inequality = More robust economic growth Sources: An Update of the Regional Growth Model for Large and Mid-Size U.S. Metropolitan Areas: Northeast Ohio Dashboard Indicators (Austrian, Lendel, Yamoah 2007) urban.csuohio.edu/publications/center/center_for_economic_development/dashboard_report_final_0807.pdf; Regional Dashboard of Economic Indicators 2008: Comparative Performance of Midwest and Northeast Ohio Metropolitan Areas (Austrian, Lendel, Yamoah 2008) engagedscholarship.csuohio.edu/cgi/viewcontent.cgi?article=1130&context=urban_facpub

https://www.hudexchange.info/program s/affh/

Important Resources to Keep Handy

https://www.hudexcha nge.info/resources/do cuments/AFFH-FinalRule.pdf

https://www.hudexchang e.info/resources/docume nts/AFFH-RuleGuidebook.pdf

https://www.hudexchang e.info/resources/docume nts/AFFH-DataDocumentation.pdf