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Rethinking and Re Strategizing our
REtHInkIng And RE stRAtEgIzIng OuR nEIgHbORHOOds: tHE nEIgHbORHOOd HOmEs InvEstmEnt ACt
Black neighborhoods are at risk! Two decades ago, black neighborhoods were doing well financially, but today, most of them are poverty-stricken!
A good example is Cleveland which had more than 900,000 residents in 1950, but by the year 2000, its population had fallen below 500,000. Large cities like Baltimore, Chicago, Detroit,
Milwaukee, and Philadelphia are losing great not unless we start doing something. Why are these once glorious black neighborhoods and cities slipping into poverty? What’s causing it?
What does the NHI Act propose?
Is that all we need, or could the industry do more? Let’s find out.
Over the past two decades, most of the famous and glorious black neighborhoods have fallen into poverty. What is happening? In 2005, a record of 307 families purchased houses in 16 neighborhoods dominated by Middle-class African-Americans in Cleveland. About 13 years later, in 2018, the number had dipped by three-quarter, with more than half of the 73 home purchases occurring in just one neighborhood. Of the 16 neighborhoods, five attracted zero buyers.
From this, we get that lack of homebuyers in the once-glorious Black neighborhoods is a major contributor, which has created “a crisis of non-replacement,” according to Alan Mallach, a senior fellow at the Center for Community Progress. A lack of home buyers also results in a vicious cycle, bringing a further decline to those neighborhoods.
Mallach says.
Meanwhile, Mallach proceeded to carry out a study focused on the fortunes of Black middleclass neighborhoods in six large cities in the US, including Baltimore, Chicago, Detroit, Milwaukee and Philadelphia, and Cleveland— and his findings were “disturbing.” Of the 300 neighborhoods all with good median incomes in 2000, “a large majority had slipped into poverty in 2018.” The study further determined that homeownership had dropped, while vacancy and poverty rates were up in almost all the neighborhoods.
The big question here is, why is this happening? According to the findings of the study, there has been less focus on the health of the places where AfricanAmericans live. Mallach further notes that neighborhoods are more than just a collection of people. Rather, neighborhoods represent both fixed assets, such as homes, businesses and schools, as well as less tangible assets such as civic and cultural engagement.
Another huge contributor to the fall of Black neighborhoods is discrimination in real estate, including in lending and appraising. According to the Brookings Institution, homes in Black-dominated neighborhoods are undervalued by $156 billion nationwide. And folks, this is not a small number.
AT THIS POINT, YOU COULD BE WONDERING, IS THERE ANY HOPE LEFT?
The Neighborhood Homes Investment Act (NHIA). The NHIA is a federal proposal that was formed to break the stalemate of distressed neighborhoods that cannot retain or attract working families
due to poor quality homes and have property values that are too low to support the cost of building or substantially rehabilitating quality homes. Well, how would it achieve this?
NHIA would do this by offering tax credits to attract private investment for building and rehabilitating owner-occupied homes, creating a pathway to neighborhood stability through sustainable homeownership.
Currently, there are no federal financing sources in place to combat these issues. And that’s why the NHI Act is so important, and that’s why our policymakers need to take this Act seriously and treat it with utmost urgency. The Act has already been introduced in the House of Representatives and has been included in the American Jobs Plan under Biden’s administration.
The NHI Act builds on the success of the Low Income Housing Tax Credit (LIHTC) for affordable rental housing and New Markets Tax Credit (NMTC) for economic development. Similar to LIHTC and NMTC, the NHI Act utilizes the creativity and discipline of the private market and still addresses a specified purpose of developing owner-occupied homes, unlike LIHTC and NMTC.
The NHI Act aims to create a financial tool for single-family housing, as powerful as LIHTC, to aid in the transformation of neighborhoods across the US. The financial tool created by the NHI Act will not only drive the much-needed resources to investment-needy communities but also expand and speed up the nascent affordable, singlefamily housing development sector that was slowed down by events such as Hurricane Katrina and the mortgage foreclosure crisis.
HOW THE NHI ACT WILL WORK.
If passed, states will allocate and administer the NHI Act the same way they are doing with LIHTC for rental housing. The states will first write plans for allocating their NHIA tax credits based on specified criteria, such as the prospect that a proposed project will contribute to neighborhood stabilization and revitalization and the potential of project sponsors. States would then pick NHIA project sponsors— including investors, local governments, developers, and lenders— through a competitive process. Through the tax credits, sponsors would raise equity capital from investors to administer the development and marketing of the homes. However, it is the investors who will assume all the construction and marketing risks. Moreover, investors will only receive the tax credits after the construction or rehabilitating work is completed and the property occupied by a qualified homeowner.
The tax credits provided by the NHI Act will provide a strong incentive for the private sector or investors to build and reinstate homes to uplift struggling neighborhoods. With this, we can assert that there is hope of rebuilding the fallen, mighty Black neighborhoods in the country.
Work cited.
https://www.governing.com/community/ why-black-neighborhoods-continue-tostruggle. https:// neighborhoodhomesinvestmentact.org/ proposal.
