Category Archives: Advocacy Days

Failure By Flagstaff

In recent months many factions of the financial industry have been penalized for the participation in the mortgage crisis of 2008, but in recent news the Consumer Financial Protection Bureau has narrowed its scope and taken aim at the mortgage servicing firms who play a large role in whether struggling individuals either lose their home or receive extra time to rectify their situations.

In its first act of enforcement under new mortgage servicing rules that began this year, the consumer financial regulatory bureau and Flagstar bank reached a $37.5 million settlement because of accusations the bank prevented thousands of people from accessing tools that would have helped them escape foreclosure. Flagstar has been accused of withholding information from clients, stringing clients along for months, then wrongfully denying them loan modifications, they also failed to inform clients that documents critical to the approval of their modifications were needed. Richard Cordray, the director of the consumer protection bureau said “Flagstar took excessive time to process borrowers’ applications, did not tell them when their applications were incomplete, denied loan modifications to qualified borrowers, and illegally delayed finalizing permanent loan modifications”

One of the biggest concerns generated from this situation is the lack of options or even community oriented departments in these large financial institutions, focused on helping clients find the best option. Here in the District we have an opportunity to provide an incentive to some of these financial institutions. The Community Development Act of 2013 would incentivize more community development from financial institutions, by evaluating their community development plans and factoring those evaluations into which banks secure financial contracts with the city. This latest settlement by Flagstar shows our financial institutions need a little push in the right direction; a Responsible Banking Ordinance seems like the perfect start.

Financial Crisis Conundrum

There have been many long term consequences following the financial crisis of 2008, but recently, one that has taken the forefront of the discussion is the growing divide between economic classes and the disappearance of diverse communities. One of the largest contributors to this issue is the severe credit crunch that followed the crash. Today, black homeowners in America are so likely to return to renter status that all the gains made by blacks in homeownership since the 1970s have been wiped out. Black and Hispanic households have gained the least from the recovery, making it all but one-sided.  While the credit squeeze has significantly contributed to the overall problem, individuals of color already lagged behind due to factors like lack of access to good schools, which in large part reside in more affluent communities, etc. This greater economic stratification has only widened the gap.

 

In a paper released earlier this year, researchers Amine Ouazad and Romain Rancière show that the credit boom leading up to the crash allowed many families of color to move into more mixed-income and culturally diverse areas, but that also caused white borrowers to move out as well, which lead to more isolated black communities. The paper details how people of color tend to become homeowners in their current neighborhoods or diverse communities, while white individuals usually use homeownership as an opportunity to move into predominately white communities.

 

The District is very special in this regard. Due to a cultural and economic boom, the city has become a melting pot filled with homeowners from all walks of life. However, in order to maintain diversity, the city must be very strategic and targeted with its resources, ensuring an adequate amount of affordable housing is available. In an article written by Cheryl Cort for Greater Greater Washington, the author speaks on the city’s history of using public land for affordable development, and how this practice has waned. She references a current development proposal that would require no affordable development in a more affluent area of the city, but allow the developers to produce the units in a more distressed area of the city. While this allows the developer to develop more affordable units, it strips potential affordable owners of the access to transit, employment, and education opportunities that are more plentiful in more affluent areas of the city, and are critical to economic mobility. The choices in this situation are not easy, and the District also needs to be mindful of enacting policies that allow lower income and minority homeowners to have access to good credit as well as access to growing equity in their homes. The District is in a great position and must leverage all of it resources to produce as much affordable housing as possible. If not, it runs the risk of ending its cultural and economically diverse renaissance.

The Future of Community Wealth Building

Since the financial crash of 2008 many low-to-moderate income families have had a hard time getting back on their feet during these years following. One city is taking an innovative approach to helping families in their community build wealth. Founded on the rich legacy of Maggie Lena Walker, the first woman of any race in the nation to charter a bank, the City Richmond is trying an innovative approach called the Maggie L. Walker initiative for Expanding Opportunity and Fighting Poverty. The main focus of the program is developing an Anti-Poverty Task force comprised of key administrators, issue experts, non-profit and business stakeholders, and community leaders to oversee the development and implementation of programs such as an Affordable Housing trust fund for the development of more affordable housing and a revamped workforce development program. There will also be a focus on developing rapid bus transit and the establishing of a citywide scholarship program to increase the access to college and vocational education. A Citizen Advisory Board will also be assembled to ensure poverty stays at the top of the agenda and that persons living or working in or near poverty have a seat at the table.

 

According to columnist Michael Paul Williams, this innovative approach aims to “undo centuries of Richmond history, including a poverty infrastructure built by ill-advised or malevolent public policies and sustained by latter-day indifference.” Policies like redlining and discriminatory housing covenants made it difficult for people of color to become homeowners following WW!!, hampering their wealth creation. Although this initiative has yet to fail or succeed, fresh ideas like these are needed to truly combat the current economic crisis. The District of Columbia is currently facing a homelessness crisis, as well as an affordable housing crisis. In addition to common sense policies focused on wealth generation for low-to-moderate income families and the development of more affordable housing, fresh ideas like the ones in Richmond are key to addressing these crises. DC is way ahead financially and programmatically (we have a huge Trust Fund, Workforce Development programs funded, etc.), but what’s unique is a stated focus on wealth building and the connection between all of the issues and a board of leaders and citizens to push the initiative forward. The resources are in place, but a commitment to fresh ideas and community development are needed to ensure the District’s sustained economic and cultural boom.

Mounting Frustration

The District’s plan for revitalized mixed-income public housing through the New Communities Project has not moved forward, and this has frustrated residents. The New Communities project was first developed in 2005 as a way to redevelop aging public housing facilitates into mixed-income developments, two of them being Barry Farms, located in Ward 8, and Park Morton, located in Ward 4. None of the four projects are close to completion, and the developer originally assigned to the Park Morton project was given the boot this past spring. These deficiencies have led to a high level of frustration among residents. This situation has been especially disruptive because many residents have been displaced or relocated due to the development, leaving boarded up apartments in its place. In the past, meetings between developers and residents have been very tense. In a meeting last summer about the Barry Farms project, developers were met by protesters and tired residents, and police intervention was called to bring peace. Because of these events, meeting rules have been changed and very little details are now disclosed early on – meetings have simply become a meet and greet between residents and prospective developers, with plans for a panel to choose a developer and hammer out details with residents and others afterwards. Other issues, particularly with the Lincoln Heights development in Ward 7, include inappropriate financing assumptions and timelines. The New Communities Project needs a revamp, and there is no time to waste. Perhaps a Council Committee dedicated solely to housing, as Councilmember Grosso suggested last week as well as other actions from the DC Executive would help move this and other affordable housing processes along.

Rapid Solutions

As the city continues to grapple with its affordable housing crisis and the sharp rise in the homeless population, rapid rehousing has been one of the few bright spots. However, a recent change in how the program is administered could create a self-re-enforcing system of continued homelessness and a growing homeless population. Due to a recent change all rapid re-housing subsidies end after one year; prior to this change the subsidies where reviewed by a case manager every three months.

In a Washington Post article shedding light on this issue, the author spends time with Nkechi Feaster, someone who would be considered a rapid re-housing success, but is currently on the brink of homelessness. As a recipient of the District’s rapid re-housing program Ms. Feaster was given a full housing subsidy to cover her monthly rent of $950 and her case was reviewed every three months. The next year, after she found a temp job as a community organizer paying $1,000 each month, the city asked her to put half of her income toward rent.  Shortly after she began paying her rent in full, her temp position expired and she was once again facing financial hardship. Instead of helping families break the cycle of poverty, the program can contribute to very briefly delaying it. A program first developed in Los Angeles and Minneapolis in the 1980′s, rapid re-housing was intended as a crisis intervention program, not a tool to break generational poverty. Next year the city has appropriated $20 million to rapid re-housing, while funding for homeless family services is being reduced by $6 million.

According to the Interagency Council of Homelessness families displaced are expected to increase 16% this winter and there is still huge demand for affordable housing in the city. Rapid re-housing is a phenomenal tool for quickly assisting displaced and homeless families, helping them find housing in difficult times, but to truly curb homelessness it must be paired with complementary programs that helps move families out of poverty and into stable housing. The city needs to continue to focus on funding the Interagency Council on Homelessness’ plan to end chronic homelessness by 2020, creating new units through the Housing Production Trust Fund (HPTF) whose rents are supported by the Local Rent Supplement Program (LRSP). As CNHED testified in May 2014, “ If we instead continue to focus our attention only on the “crisis” of homelessness and fail to increase the stock of affordable housing, we continue to fail these families and individuals, providing them with only an overcrowded shelter system, and no real strategies to prevent homelessness or provide permanent affordable housing.” Rapid re-housing is a great tool if used strategically, and can only work alongside these other production tools.  All of these tools, used correctly, will be greatly needed in the city’s battle to curb the homelessness crisis.

No More Poor Door


As demand for housing continues to rise in more economically emerging areas, public and affordable housing continues to dwindle, soon becoming a thing of the past. In an attempt to curb this crisis Mayor Bill Deblasio has commissioned the development of 80,000 new affordable units in NYC over the next 10 years, but this hasn’t come without its fair share of problems. One of these problems has been the “Poor Door”, separate entrances for affordable housing recipients in market rate building in NYC, which began to cause widespread outrage among residents and city leaders. This problem stems from indirect policies that allow developers to have multiple entrances on developments that feature a variety of housing options-like condos and rentals in the same building. What has been more difficult than managing the bad publicity, is finding a clear cut solution to the problem. Market-rate buildings in high priced cities typically offer concierge service, entertainment rooms, and breathe taking views, amenities that are not necessarily requested by affordable residents or even expected. So, how do meet your affordable housing goal of creating 80,000 new units, a large amount that will need to be developed alongside market-rate development, while ensuring market-rate residents get the amenities they pay for without offending affordable residents. This is the question that has many stumped.

There are solutions, one being offsite development. This would require developers to still develop the same amount of affordable units, and likely more than they would have developed in their market-rate buildings, but at another location. This would remove the economic totem pole that is mixed-income development, and in condo developments avoid some of the economic issues that have resulted from escalating common fees and a minority of affordable owners at risk of getting priced out.

Aside from policies, cities like New York and even Washington, DC use a variety of tax breaks and subsidies to encourage more affordable development, often times providing tax relief or allowing the developer to build more square feet then typically allowed. Many developers prefer to develop the affordable units offsite, because it allows them to maximize profits at the most desirable locations. Gary Barnett, the founder and president of Extell development in NYC says, that affordable developments incorporated in market rate buildings means “giving away” the most valuable units. “We wouldn’t be able to do affordable,” he said. “It wouldn’t make any financial sense.”

While there is some backlash to this approach, most affordable housing supporters agree that the development of affordable units is much more important than where they are located as long as the alternate location is reasonable, and hopefully close by. “It’s so important to build as much affordable housing as possible, and you always have to compromise,” said Carol Lamberg, co-chairwoman of the New York Housing Conference, an affordable housing coalition. “I just think the need is so great, you don’t need a fancy lobby.” Currently, the New York city council is working on past policies that have allowed the “Poor Door” to exist. “It’s such a visual separation,” Assemblywoman Rosenthal said. “It gets at people when they see two separate doors. It’s no longer theoretical. It looks and smells like discrimination.” While New York works to add its 80,000 units of affordability through private developments so the city can remain home to individuals from all walks of life, the District of Columbia already has policies in place requiring the development of affordable housing in all new developments. The city can also use government owned land for increased affordable development. We continually need to find ways to creatively maximize our production and provide quality affordable housing in as many neighborhoods as possible.

No Refuge For The Homeless

 

Homelessness has steadily risen throughout the United States. While many of the District’s homeless population have found refuge on the streets, even this is becoming increasingly difficult. In many places being homeless is now a crime, possibly being arraigned or imprisoned for simple standing, sitting, or sleeping in the wrong areas.

While there are many laws specific to homelessness, many laws affecting the homeless population are often hidden or blended in with other laws. Park or public area curfews are often used to regulate the homeless population. In high-priced cities like the District of Columbia where affordable housing options are in high demand, there simply aren’t enough places for the homeless to go.

Recently, in March of 2014 a homeless man in New York died due to the criminalization of the homeless. A former war veteran, he was imprisoned for trespassing because he was unable to find shelter. He was sent to Rikers Island because he was unable to post the $2,500 bail set for him; he was place in a hot cell and ignored for days “basically baking him to death”.

Since 2011 there has been a great increase in the laws affecting the homeless, even prohibiting individuals from feeding the homeless. As homelessness continues to steadily rise in the District we must begin implementing creative solutions to solve this crisis. Would you be able to survive if there was no place to go and you could be jailed simply for asking for help? There are many better solutions than these and we should start looking at them.

 

Surburban Flight

It’s no secret America is economically segregated. The current tradegy in Ferguson, Mo has shed a light on a greater problem in our country, the economic stratification of our nation. This issue is much deeper than the tragedy that is the death of 18 year old Mike Brown. It has shed light on a long list of systemic issues and policy failure that have contributed to what Aaron Wiener of the Washington City Paper calls, The Suburban Poverty Shift. Historically, many policies were put in place to stagnate the wealth accumulation of people of color. One of those primary policy decisions being redlining practices restricting African American from building wealth during key wealth building periods in American history. Wiener references in his article a Brookings Institute study focused on the shift in wealth in the Ferguson area. The unemployment rate in the St. Louis suburb increased from less than 5 percent in 2000 to more than 13 percent in 2010-2012. For residents who do have a job, real earnings declined by a third. The poverty rate doubled. On the surface these changes are a result of urban revitalization, the return of more affluent white individuals back to cities. But if a closer look is taken, the discriminatory policies that forced people of color to remain in cities as renters, while their white counterparts were able to build wealth and assets in the suburbs are the direct cause of some of the disparities we see today. In the District of Columbia many of the same economic disparities facing Ferguson, Mo are present here, but a booming economy provides the city the resources to make a difference by providing affordable housing options to help the District’s lower-to-moderate income residents. Supporting the production of affordable units as well as the support and increase funding for affordable housing programs such as HPAP (Housing Production Assistance Program) and LRSP (Local Rent Supplement Program) is the first step in addressing the District’s economic disparities.

Credit Unions To The Rescue

For many Americans who face financial hardships, banking is simply out of the question due to poor customer service and outrageous fees. In its place, credit unions have been filling the void, offering a more personal banking experience and fewer fees. These practices have significantly contributed to the rise in credit union membership. According to Mike Schneck, chief economist for the Credit Union National Association, credit union membership has risen by 2.9%, adding 2.85 million new members. It was the largest increase in more than 25 years. Research has shown that this growth isn’t due to individuals leaving the banks, but the large population of individuals who simple can’t participate in basic commercial banking. Many individuals are excluded from traditional banking because they don’t meet the banks’ criteria, don’t have enough money, or may not make enough transactions in a month. These fees and requirements exclude many low-to-moderate income individuals who don’t have the money to spare, or meet the requirements to hold these accounts. Citi Bank, for example, charges their checking account holders $10 a month unless they maintain $1500 in their account or receive at least one direct deposit per month - for many people these simply aren’t options.

About 72% of nation’s 50 largest credit unions currently offer free checking to their customers, according to Bankrate’s 2014 Credit Union Checking survey. As for banks, that number dropped from 76% in 2009 to 38% in 2013. This news is also very enlightening because of the recent actions by large financial institutions to attempt to clean up their images. Bank of America and JP Morgan Chase are just two of the big banks that have developed products and educational tools specifically designed for lower income individuals.

While high fees and requirements are a large issue, they represent a much larger problem – a lack of equitable banking. A responsible banking ordinance would begin changing that by leveraging city funds for community investments by the District’s financial institutions. This ordinance would provide an incentive for community development from large institutions - a simple solution to a very critical issue.

 

Fairness For Fastfood

This past weekend, over 1,200 fast food workers gathered together to coordinate their efforts for increased pressure on raising the minimum wage. The conference, which was held in Chicago, was attended by low wage workers that have worked for companies, some over a decade, but have seen very little to no increase in their wages. One of these workers, Cherri Delisline, a single mother who earns $7.35 an hour after 10 years as a McDonald’s cashier in North Charleston, S.C. said “I get paid so little money that it’s hard to make ends meet, and I’ve had to move back in with my mother.”

The actions by these fearless workers have paid great dividends so far.  In their most recent strike in mid-May, workers walked out at restaurants in 150 cities nationwide, with solidarity protests held in 30 countries. They cite these efforts as key factors in the passage of a bill in Seattle that would raise the wage to $15 an hour, as well as similar bills that will be introduced in Chicago and San Francisco.  These movements have not come without their fair share of opposition – business groups all over the country oppose this. However, these are the same companies, like McDonalds, whose CEOs makes double in one day what the average employee does annually. In order for families to be able to build wealth and have access to opportunities like higher education and generational wealth building, they must share in the gains produced by their productivity. If everyone works hard for the profits, but only a select few at the top reap the rewards, the cycle cannot be sustained, nor is it equitable. Nothing less than a fair and living wage is acceptable for those who dedicate themselves to their work.