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AfrAm farmers

History, Housing Discrimination, and Homeownership: A Step Towards Racial Equity

Image: An African-American farming family in the 19th or early 20th cent. Starting around this time, about 14 million acres of land was stolen from African-Americans.

Centuries of theft. Millions of acres stolen. And a denial of opportunity at every turn. The story of black homeownership in America is a mirror image of the American dream. It’s the reason the average black family in this country has just 1/16th the wealth of the average white family.

That’s why MANNA is especially intent on extending affordable homeownership to black families, and why MANNA opposes long-term affordability restrictions. Because without real opportunities for black families to build wealth, our country will never achieve racial equity.

What was stolen

The numbers are staggering. Between 1910 and 2001, black families lost about 14 million acres of farmland—a land mass roughly the size of West Virginia. That’s about 95 percent of what they once owned. This land was taken in a variety of ways—from lynchings to fraudulent tax charges, the theft ran the gamut. It continues today through a practice called “partition sales,” something used disproportionately by unscrupulous developers to separate black families from their land.

And that’s only the physical theft. Perhaps even worse is the theft of opportunity.

The American 30-year mortgage was born in the 1930s, and with it the dream of homeownership as a pathway to a middle-class life and economic stability—for white people, that is. Mortgages were essentially unavailable to black people until the Fair Housing Act of 1968.

As anyone who’s ever been introduced to the concept of compounding interest will tell you, a forty-year head start will make a difference. Since the wealth of homeownership is passed down along family lines, white families got wealthier with each successive generation, as at the same time black families were losing millions of acres of land.

And although the Fair Housing Act opened significant new opportunities for black families, opportunity theft remained rampant. Practices like block busting, where speculators intentionally drove up and then crashed the value of a neighborhood that was becoming majority black, and modern day redlining, where banks steer families of color away from houses they could afford in majority white neighborhoods, continued and continue to exacerbate the disparity.

With the crash of the housing market in the late 2000s, another truth came to light: black families, regardless of income, were more likely to be given predatory subprime loans than white families. Translation: you were better off buying a house as a poor white family than a wealthier black family.

Where we go from here

We’ve only scratched the surface of discrimination in homeownership—and homeownership is only one kind of asset, and assets are only part of the story on wealth building, and wealth building only works if…

You get the picture. Interest isn’t the only thing compounding in this story.

What this all adds up to is a situation in which the average American white family has 16 times the wealth of the average black family. In the DC area, it’s an incomprehensible 81 times the wealth. For every $1,000 of worth a black family has, a white family has $81,000.

But it’s not a hopeless scene. A report last year from Demos found that even without any other changes, equalizing racial homeownership rates would shrink the racial wealth gap by almost a third.

Wealth gap and homeownership rates

And that’s where MANNA sees its mission. Affordable homeownership opportunities are, for black families, an essential opportunity for moving towards racial equity.

That’s why MANNA opposes long-term affordability restrictions that require homeowners to sell to others in their income category for decades. These restrictions keep low-income families from growing their investment, often keeping them from even being able to sell to their own family members and stopping the generational transfer of wealth. Black families have to be afforded the same opportunities as white families, or the wealth gap will continue to grow.

The chance to build back some of the wealth that was stolen from and in other cases never available to people of color is not just a moral but a practical imperative for our country. To achieve a functioning society, a country that works at its full potential, we need to close the racial wealth gap.

We need affordable homeownership.

We need racial equity.

Asset Building cover

New Push in DC for Racial Justice Through Asset Building

A bold new report released this month details the disparity of wealth along racial lines in DC, then plots several ways the city can achieve a more equitable future. Its authors hope it’s just the start of a city-wide movement for building wealth in communities of color.

The report, entitled An Introduction to Asset Building in the District of Columbia, was written by the Coalition for Nonprofit Housing and Economic Development (CNHED) and Capital Area Asset Builders (CAAB), two long-time players in DC’s asset building landscape.

The need is clear. According to the report, 40 percent of DC residents don’t have enough net worth to stay above the poverty line for three months if their income disappeared. One in ten don’t even have a bank account—and among those who do a full quarter of residents are still forced to use predatory institutions like payday loan offices.

Asset building stats

It’s a problem that largely falls along racial lines. An analysis of DC post-recession found that the average white household has over 80 times the wealth of the average black household. That’s largely due to a lack of asset ownership, especially homeownership, in black communities.

CNHED and CAAB want to start a new coalition to take this problem on. Because this disparity has been created by several centuries of discriminatory laws and spending, it will take smart new investments by public and private actors to start to shrink this racial wealth gap.

The report outlines four general approaches that an asset building coalition could take, from pressuring the city government to institute new programs for low-income wealth building, to creating and managing new programs through a steering committee made up of members from this future coalition.

Whatever form this coalition takes, DC residents are counting on it to be impactful. Many literally can’t afford failure.

For more info about the Asset Building Policy Project and how to join the coalition, click here!

Asset Building strategies

stop trumpcare

Supportive Housing Could Be First to Go if Medicaid Cuts Pass

Even with a series of recent defections, Republicans are still working to roll back Obamacare. Various versions of their bill have all had a couple things in common—tens of millions would be made uninsured and Medicaid would be slashed dramatically.

Between trying to figure out how many people would die, how many people would lose insurance, and just how much money billionaires would save, there are a lot of pieces of this bill worth investigating. In the turmoil, however, one important component has often been overlooked: housing.

With the expansion of Medicaid under the Affordable Care Act, millions of people across the country gained access to healthcare for the first time. Included in that number (but often forgotten) were many who gained housing or housing stability with the expansion.

Programs like Los Angeles’ Housing for Health program use Medicaid dollars to offer mental health counseling and substance abuse treatment alongside the housing it provides to formerly homeless residents. The two parts work together—patients often can’t keep up with counseling sessions or rehab without the stability of a home, and those who receive housing without supportive services too frequently end up back on the streets.

Supportive housing, which includes a variety of social services that people may need to live outside of an institution, became available to thousands more Americans with Medicaid expansion. These programs offer help to people with disabilities, mental illness, substance abuse issues, and those recovering from homelessness.

Under the Republican plan, however, Medicaid would be rolled back—and not just to pre-Obamacare levels. GOP leadership has pushed to end Medicaid as an entitlement, meaning that states would no longer receive funding based on residents’ needs. Instead, states would get a set amount of money for each resident on Medicaid. It would then be up to the states to decide what to do with that money.

The proposed amount per person is far less than what is needed, and it wouldn’t grow with rising costs. That would create a scenario in which state governments are forced to make more and more painful cuts each year, continually shrinking the number of services they provide to their most vulnerable residents.

And experts have predicted that supportive housing could be among the first services to go.

Disability activists and others have been relentless in organizing opposition to the bill, with actions happening almost every day at the Capitol. On Monday alone, 33 people were arrested in Senate buildings and offices while peacefully sitting in to demand that Republican senators kill the bill–not an atypical day.

Because of these efforts, both the initial Republican bill and a follow-up attempt to repeal the Affordable Care Act without a replacement have  failed. Yet activists warn against complacency. As unpopular as the draconian cuts are with the general public, they have broad support among Republican legislators and continued action will likely be necessary to prevent the bill’s revival.

Nam_Viet_DC

New Bill Would Help DC Restaurants with Rent Increases

Nam-Viet in Cleveland Park, which closed on June 25

After two high-profile restaurant closings in Cleveland Park, Councilmember Brianne Nadeau (Ward 1) has introduced a new bill to help longtime DC restaurants deal with rising rents.

The bill, supported by Councilmembers Elissa Silverman (At-Large), Robert White (At-Large), Trayon White (Ward 8), David Grosso (At-Large), and Charles Allen (Ward 6), would provide restaurants that have been in the same location for at least a decade with up to $50,000 of assistance a year for up to five years. The restaurants must also be certified small business enterprises.

With this bill, CM Nadeau is trying to not only stop the displacement of longtime DC eateries, but also to prevent the cultural gentrification that many life-long Washingtonians say makes them feel like strangers in their own neighborhoods.

CM Nadeau’s website says that she hopes the bill will help mitigate “commercial gentrification [that] risks the vibrancy and continuity of our neighborhoods…”

In one study on the topic, researchers at the City University of New York found that longtime restaurants in a gentrifying majority-black New York City neighborhood were likely to receive online reviews portraying them in a negative light.

Reviewers used words like “sketchy” or “ghetto” to describe the neighborhood’s black owned businesses, language that is almost always a coded racial condemnation of a majority-black space.

The CUNY researchers termed this practice “discursive redlining,” noting that the public branding of black-owned institutions as undesirable is an important part of the neighborhood takeover.

While rental assistance alone can’t shift newcomers’ perceptions, it can give longtime restaurants—and by extension, residents—a better chance to feel secure in a changing neighborhood. Perhaps a longer time frame would even convince newcomers to try longtime establishments, increasing chances of connections forming between the old and the new.

In any case, CM Nadeau’s bill would help otherwise sound restaurants deal with rising rents. And that in itself may be enough to make it law.

Anita Bonds

CM Bonds Moves Rent Control Fixes

Councilmember Anita Bonds (At-Large) symbolically closes a rent control loophole at an event in October 2016

DC has one of the strongest rent control laws in the nation. Unfortunately, several landlord-sized loopholes turn lots of ostensibly rent controlled housing into market rate units each year. But Councilmember Anita Bonds (At-Large) is working on passing a pair of bills to fix that.

The problem comes in both cases when a rental unit changes hands.

Currently, anyone living in a rent controlled building (any building built before 1975 that has five or more units) by law sees only modest increases in their rent each year. For people who find an affordable rent-controlled unit and then are able to age in place, the protections are stellar.

But when a unit experiences turnover, as units are liable to do in DC’s fast-paced rental market, landlords are able to raise prices by up to 30 percent—often essentially taking the unit to market rate. One family may leave a home that costs $1300 a month only for the next family who moves in to find themselves facing rent of $1700 a month or more.

One of CM Bonds’ bills, entitled the Rental Housing Affordability Stabilization Amendment Act of 2017, would cap that increase at just 5 percent—an amount that preserves the unit’s affordability and doesn’t incentivize pushing current tenants out the door. Publicly supported by Councilmembers Cheh (Ward 3), Silverman (At-Large), Gray (Ward 7), Grosso (At-Large), and Trayon White (Ward 8), the bill would also limit yearly rent increases to strictly the rate of inflation.

Another tactic landlords sometimes use to raise prices is to make voluntary agreements with tenant associations. It’s a process that involves several steps of abuse.

Landlords can file to raise rent above allowable rates with a “hardship petition,”* claiming that they can’t afford to make necessary improvements (or at least can’t earn enough profit while doing so) without more revenue. If their petition is accepted, tenants have no negotiating power—they can pay the new, higher rates or move out.

But sometimes landlords are unsure whether their petition would succeed or not. If that’s the case, they’ll go a different direction and use the threat of a hardship petition as a bargaining chip. In negotiating with tenant associations, landlords portray the tenants’ choices as this: you can either go through with the petition process and likely see automatic rent increases, or you can sit down with me and work on a deal where you’re guaranteed not to see any increases—but you wave future tenants’ rent control rights.

With the voluntary agreement from the tenant association in hand, landlords are able to make any unit that changes hands into a market rate apartment.

CM Bonds’ other bill, the Preservation of Affordable Rent Control Housing Amendment Act of 2017, wants to stop landlords from pitting current and future tenants against each other. It would outlaw the practice of making deals that only raise prices for newcomers, mandating that any agreed upon increases must be applied across the board.

It was co-introduced by Councilmembers Robert White (At-Large), Silverman, Cheh, and Trayon White.

If passed by the Council and signed into law, both bills would move DC closer to protecting tenants as the District’s rent control law intended.

 

*Another one of CM Bonds’ bills on rent control, this one targeting hardship petitions, was signed into law last December. It succeeded in lowering the return on investment guaranteed to landlords from 12 percent to 5 percent.

OOR_2017_Cover

What’s needed to afford housing in DC? $33 an hour

At the current minimum wage of $12.50/hr, Washingtonians need to work 107 hours each week to afford a two-bedroom apartment. That’s according to a new report by the National Low Income Housing Coalition, entitled Out of Reach: The High Cost of Housing.

The report shines a spotlight on the increasing impossibility of affording rental housing in the US, coming during a period where the portion of the population that is renting continues to rise.

It’s a crisis that is truly national in nature: not a single state has an average one-bedroom rent that is affordable to someone working 40 hours a week at minimum wage. (Affordability is defined as requiring only 30 percent or less of a household’s income.)

In the District’s overheated housing market, the situation is particularly dire. As the numbers for a two-bedroom apartment indicate, families have little hope of finding housing while working for the minimum wage. Single people, however, fair little better. The average rent for a one-bedroom apartment is $1,513—more than double what someone earning minimum wage can afford.

And it’s not just those earning low wages that are affected. The average full-time wage paid to a renter in DC still leaves that worker $100 short for rent each month.

Talk of more subsidy for affordable housing is often met with immediate resistance. There’s a sense that the people who need affordable housing aren’t our neighbors, friends, and families—and certainly not ourselves. Rather, they’re some vague unknown other who probably isn’t working as hard as they should be.

Add in the fact that activists are currently fighting simply to preserve what funding there is for low- and moderate-income families, and it can be a complete nonstarter. Besides, our country already spends billions on affordable housing, and it doesn’t seem to be working, right?

As Rep. Keith Ellison (D-MN) notes in his introduction for the report, a full three-quarters of the $200 billion the federal government spends on housing each year goes to wealthy families through the mortgage interest deduction and other tax incentives.

That’s $150 billion in assistance for households who don’t need it. It’s time to take a hard look at our discourse around housing subsidy and redefine the makers, the takers, and the deserving. Otherwise, housing will continue to be out of reach for an ever-growing number of Americans.

out of reach

week of action cover

July 26 DC Rally Against HUD Cuts Part of Week of Action

On Wednesday, July 26, at 11am DC residents will rally at the Capitol with Senator Chris Van Hollen (D-MD).

It’s part of an effort to stop draconian cuts that the Trump Administration has proposed for the Department of Housing and Urban Development. Activists are organizing a National Week of Action under the banner “Our Homes, Our Voices,” and thousands across the country are expected to come out for a series of rallies, teach-ins, HUD site visits, and Congressional meetings.

The Trump Administration has proposed $6 billion in cuts for HUD, which would have devastating and wide-ranging effects. Hundreds of thousands of low-income families would lose their rent vouchers and potentially their homes. Public housing, already in a desperate state of disrepair, would further deteriorate, putting children and families across the country in danger.

In DC, funding for the Home Purchase Assistance Program, the District’s impactful first-time homebuyer assistance, is under threat. 80 percent of HPAP money comes from Community Development Block Grants—a program with bipartisan support that the Trump Administration has proposed eliminating entirely.

Action to oppose these cuts will be crucial, as Congress has so far shown that public involvement (or lack thereof) is the determining factor in its willingness to stand up to the Trump Administration.

You can see the full list of local events here! Be sure to let your enfranchised friends know that they need to call their representatives.

week of action

HOTH 2017 2

HAT, Partners Work Against Racial Wealth Gap with Town Hall; Trump Administration Exacerbates It

One-sixteenth.

That’s the average wealth of a black family compared to a white family in America. It’s the result of centuries of racist policy in education, employment, and especially homeownership.

MANNA’s Housing Advocacy Team has long had an explicit focus on closing the racial wealth gap in our communities, and along with our partners at the Coalition for Nonprofit Housing and Economic Development and the Latino Economic Development Center, this past Saturday we hosted a Homeownership Town Hall aimed at connecting low-income families, especially families of color, to homeownership opportunities.

HAT and our partners are proud of the work we do, and we can see the impact that it has in DC. At the same time, however, we realize that there needs to be national progress in order to achieve justice in our country. The Trump Administration, on the other hand, is looking for a massive transfer of wealth from the bottom to the top; one that’s sure to widen America’s racial wealth divide.

The Town Hall

Close to 200 people came on Saturday for a series of workshops, vendor tables, and presenters covering every step of the affordable homebuying and ownership process. Participants learned about how to improve their credit scores, how to connect with organizations like MANNA that can help them find a home, and the wide variety of city programs that can help make affordable homeownership possible.

Current homeowners were able to learn about city property tax laws and legal estate planning, helping to ensure that their homes will be passed on to their children.

MANNA’s Director of Homebuyer Education, TC Caviness, started off the strong lineup of speakers by articulating the extent to which a gap in homeownership holds back wealth building for black families. Even other areas that are typically thought of as wealth builders, like education level, pale in comparison to the impact that homeownership has.

Despite having worked around housing for years, said TC, “I was shocked when I saw these charts.”

RacialWealthGap_1.pdf college RacialWealthGap_1.pdf

A college education, while important for many, many reasons beyond money, does almost nothing to close the racial wealth gap, explained TC. Homeownership, on the other hand, shrinks that gap by more than a third.

Polly Donaldson, Director of the DC Department of Housing and Community Development, and Councilmember Anita Bonds, Chair of the Council’s housing committee, both spoke about the importance of affordable homeownership for building a city where all residents can thrive.

Councilmember Bonds, reflecting on the positive impact of recent increases to DC’s Home Purchase Assistance Program for first time low- and moderate-income homebuyers, told the crowd, “Next year, I want to increase it again!”

Trump Administration’s Reverse Robin Hood

That was in stark contrast to the ideas that are coming out of the White House. The Trump Administration has released a series of tax cuts for the wealthy that would collectively cost around $6.2 trillion over the next decade.

To pay for them, the President has introduced a budget plan that would drastically cut many programs targeting poor families, among which families of color are disproportionately represented.

Here are a few of his proposed tax and budget cuts, juxtaposed for context.

  • $192 billion cut to food stamps pays for $174 billion giveaway by abolishing the Estate Tax
  • $143 billion in cuts to student loans helps pay for $158 billion lost by repealing a tax on the unearned income of the wealthy (interest, dividends, capital gains, etc.)
  • $40 billion in cuts to EITC and the child tax credit vs. $400 billion lost by abolishing the Alternative Minimum Tax (AMT is often the only tax paid by billionaires)

(from Americans for Tax Fairness)

While HAT and others are prepared to continue our push for fair funding in the District, we need help from our national partners and from people all around the country to stop the Trump Administration’s disastrous and immoral plan to take from the poor and give to the rich. We know that the impact of this theft will disproportionately fall on communities of color, causing the racial wealth gap to grow wider and wider.

Looking at our country’s history, it’s certainly not unprecedented. But as MANNA’s work in DC has proven, it’s not inevitable, either.

grosso

As Budget Holes Abound, Council Approves Tax Break for Millionaires

Councilmember Davd Grosso (At-Large)

In front of a packed hearing room, as many held signs in silent protest, the DC Council Tuesday morning rejected an effort by Councilmember David Grosso (At-Large) to delay a cut in the District’s estate tax. The tax cut, which would raise the threshold for the estate tax from $2 million to $5 million, will go into effect in January 2018 unless the Council acts before then.

Some have estimated that the proposed cut in the estate tax would affect only a hundred families in the District.

Alongside a reduction in the business franchise tax that Councilmember Grosso and advocates also unsuccessfully opposed, these cuts come against the backdrop of a tight and stressful budget season.

Metro funding, investments in education, looming federal cuts, and an on-going affordable housing crisis have made for a lot of hard discussions about what should be funded and at what levels. Yet as we’ve covered before, the Council has made things unnecessarily harder for themselves with tax cuts that do little to help the city move forward.

Councilmember Grosso laid out in plain terms the reasons for his opposition. When the District was struggling, he said, the Council bent over backwards to try to attract new businesses. But that effort was with an explicit goal in mind: to lift up all the city’s residents, especially those that had been left behind by a changing economy.

Now, said the councilmember, the District is thriving—but the boom times aren’t being shared by all. Not giving away the revenue from multi-million dollar estates and big businesses’ franchise expansions is a simple way to move towards fulfilling the original vision for growth.

“I’m not quite sure,” said Councilmember Grosso, “how we ended up as a Council aligning with the Trump administration’s budget priorities. We’re looking at underfunding social services and prioritizing tax cuts for big business and the wealthy.”

Councilmembers Brianne Nadeau (Ward 1) and Elissa Silverman (At-Large) joined Grosso in their opposition. Both spoke about the challenges facing the District and the impact that this money could have if directed towards community needs.

Councilmember Trayon White (Ward 8) supported the effort to postpone the estate tax cut, while joining the majority in allowing the business franchise tax cut to move forward.

The rest of the Council followed Chairman Phil Mendelson’s lead in preserving the cuts, with many speaking about a desire to grow the District’s economic output.

As Councilmember Grosso noted, however, economic output is no longer in question. It’s the original vision of inclusive growth that now is imperiled.

Poverty Politics and Profit FRONTLINE PBS

Frontline Goes for Flash Over Substance in LIHTC Report

In a recent year-long investigation, Frontline PBS and NPR delved into the affordable housing industry. The result was Poverty, Politics and Profit, an hour-long documentary on PBS, as well as several pieces on NPR and on both organization’s websites. While drawing attention to the nation’s affordable housing crisis is an important goal, in their work PBS and NPR seriously misrepresent the Low-Income Housing Tax Credit (LIHTC), a crucial tool for building affordable housing.

LIHTC works as a public-private partnership, and it was created under President Reagan as a replacement for the old system of government built public housing. It offers a tax credit to developers in exchange for building affordable housing. The developer then sells that tax credit to an investor to raise money for construction, with the resulting units required to remain affordable for 30 years.

The program has produced millions of units affordable to low-income families (14,000 in DC alone), and it enjoys widespread bipartisan support.

Over the past two decades LIHTC funding has grown considerably, from just over $4 billion in 1997 (inflation adjusted) to almost $7 billion in 2014. But during that time, the number of units produced each year has dropped from 70,000 to under 60,000. It’s a problem that’s worth looking into.

Unfortunately, this investigation was more interested in flashy anecdotes than a data driven analysis. Their work repeatedly refers to two cases of fraud found in south Florida, where developers embezzled a combined $38 million. Certainly, any level of fraud is too much, and it’s very possible that more federal oversight of LIHTC could be helpful.

But this represents a drop in the bucket of the program’s multi-billion-dollar budget. The PBS/NPR investigation found no other instances of fraud, and they uncovered no evidence pointing to wide-spread fraud in the industry.

The report also spends considerable time focusing on the commissions that investors and middle-men, called syndicators, make for their work. These payments are portrayed as a ballooning, shadowy industry, complete with images of men in suits laughing into their cocktails.

In fact, in recent decades increasing market competition has cut the rate of return for LIHTC investors by half. Since the mid-1990s, rates have gone from double digits to a more moderate 4 to 6 percent.

So why hasn’t increased money resulted in more LIHTC units? PBS and NPR actually covered all the major reasons in their reporting—albeit with significantly less gusto than the fraud and abuse angle.

Why more money is producing less units

1)      Rising construction costs: Over the same period the report considered, construction costs increased significantly faster than inflation. According to their own calculations, this alone accounts for 50 percent of the change in price per unit.

2)      Cuts in other federal funding: Affordable housing units often have multiple channels of subsidy, with more than one program helping to keep a unit affordable. Two of the biggest programs that supply this extra coverage, the federal HOME grant and the Community Development Block Grant, have been subject to painful cuts during the period in focus. This means that more LIHTC funding is needed for each unit to hit the same affordability levels.

3)      Deeper affordability: At the same time that other funding has been disappearing, officials have been making a push to make units affordable to lower-income families. That’s a great goal, but it costs more money, meaning that fewer units get built overall.

4)      Neighborhood choice: Similarly, in an effort to avoid creating concentrated pockets of poverty, more LIHTC buildings are being built in wealthier areas. It’s another worthy goal that, again, costs more money.

While Poverty, Politics and Profit seems to love the idea of a shadow network of affordable housing political bosses, what emerges instead is the picture of a program that’s consistently producing in the face of rising costs and changing priorities.

Then again, Bipartisan Program Provides Affordable Homes for Millions just doesn’t have the same ring to it.