January 2011 VANTAGE POINT The 12th District Community Indicators Project In 2010, the Community Development Department at the Federal Reserve Bank of San Francisco launched the Community Indicators Project, a new initiative that seeks to collect input from community stakeholders about the issues and trends facing low- and moderate-income communities in the 12th District. We hope that by systematically collecting local viewpoints, we will be able to inform community development policy and practice in a richer way than by relying on quantitative statistics alone. In this first wave of the survey, 175 community stakeholders from across the 12th District participated. Questions were open-ended, allowing respondents to raise the issues of most concern to them. This brief is the first in what will become a quarterly series of reports, and synthesizes the key themes that emerged in the September 2010 survey. Introduction According to the National Bureau of Economic Research, the nation’s economy began to grow again in June of 2009, ending an 18-month recession that was the longest on record since the Great Depression. Economic indicators related to recovery—including those on housing, employment, and trends in consumer spending—have been mixed, with positive data published one day followed by more tepid statistics the next. But in the first wave of our Community Indicators Project, the data and viewpoints we TOP ISSUES Employment Conditions 43% Housing Market 25% Capacity of Nonprofit Service Providers 7% Public Education 7% Small Business & Micro Enterprise 6% Public Sector Budget Crises 6% Access to Credit 3% Neighborhood Disinvestment 3% 0% 10% 20% 30% 40% 50%Source: FRBSF Community Development Indicators Survey.
ABOUT THE gathered about how the recession has affected low- and moderateINDICATORS income (LMI) communities all pointed in the same direction: low- income communities across the 12th District are in crisis, and arePROJECT feeling the brunt of the compounding effects of job losses, foreclosures, neighborhood disinvestment, and crime. Unemployment and housingThe Community Indicators Project conditions topped the list of concerns, garnering 68 percent ofis a quarterly survey conducted respondents’ votes for the largest challenges facing LMI communities.by the Community DevelopmentDepartment of the Federal Reserve When asked to rank the top issues going forward, respondents simi-Bank of San Francisco. The goal is larly chose employment and housing, noting that neither is likely to beto collect insights from community resolved without improvements in the other. In addition, survey respon-leaders about the conditions dents highlighted that the expanded need for social services at a time ofand trends affecting low-income diminishing public sector resources is proving to be particularly difficult,households and communities especially for nonprofits. State budget crises—resulting in cutbacks inwithin the Federal Reserve’s 12th education and social services—emerged as the third largest challengeDistrict. Respondents include going forward, especially in California, Arizona, and Nevada.representatives from banks,nonprofits and community based Overall, the survey responses painted a grim picture of conditions inorganizations, foundations, local LMI communities in the 12th District, and the multiple dimensions alonggovernments, and the private sector. which these communities are struggling suggests a need for cross-sec-The survey is administered online, toral policies and interventions that could aid in reversing these trends.and combines both multiple choiceand short answer questions. Allresponses are kept confidential. Ifyou would like to participate in future ISSUES GOING FORWARDwaves of the Community Indicators MOST IMPORTANTProject survey, please firstname.lastname@example.org. Employment #1 Housing #2Community Development Department Budget Crises #3Federal Reserve Bank of San Francisco Education101 Market Street, MS 215San Francisco, CA 94105 Credit Accesswww.frbsf.org/community Nonprofit Capacity Small BusinessResearch Manager HealthCarolina Reid, Ph.D. Immigrationcarolina.email@example.com Neighborhood DisinvestmentProject Coordinator EnvironmentMatthew Soursourian LEAST IMPORTANTmatthew.firstname.lastname@example.orgThe views expressed in thispublication are not necessarily Source: FRBSF Community Development Indicators Survey. Respondents werethose of the Federal Reserve Bank asked to rank the top three challenges going forward. Reponses were weighted andof San Francisco or the Federal overall score calculated based on both the frequency of selection and rank order.Reserve System.
Unemployment Key Concern COMMUNITYamong RespondentsUnemployment emerged as the dominant theme across survey respon- VIEWPOINTSdents, reflecting the persistent high rates of unemployment, especially Prolonged unemployment and under-in Arizona, California, Oregon and Nevada. Respondents emphasized employment are causing a huge growth in the number of LMI individuals andtwo primary challenges facing LMI communities when it came to unem- communities. Unemployment is now theployment: the lack of jobs (which contributes to the duration of unem- driving force behind most of the otherployment) and a mismatch between available jobs and the skill sets of crises we are facing. —Arizonathe unemployed. Respondents conveyed their concern in particular forlower-skilled workers who once worked in construction or housing related Business expansion and start ups areoccupations, and emphasized the need to retrain lower-skilled workers nearly nonexistent. Arizona’s reliance on construction jobs during this time whenfor jobs in emerging sectors. supply outweighs demand has caused a tremendous increase in workers whoRespondents also noted that unemployment is driving new distress in have no chance of employment.the housing sector. New foreclosures are being driven by unemploy- —Arizonament, and affordable housing developers are finding that more of the Shifting Arizona’s economy from oneresidents in their developments are struggling to make their rent pay- based on housing construction andments, which threatens their financial viability. Several respondents sug- growth mandates new types of employ- ment opportunities and the need forgested the need for a bridge loan or grant that could assist unemployed retraining.mortgage holders in meeting their monthly payments. —Arizona We work with foreclosure interventionRespondents emphasized the need to support the establishment and and financial crisis counseling. Almostviability of small businesses, calling for policies that promote small busi- all cases are related to employment.ness development and incentives to encourage small business to invest —Oregonin human capital and new jobs. In certain regions, such as Arizona and The impact of unemployment on LMICalifornia’s Central Valley, respondents called attention to the need to communities is exacerbated. Thediversify local economies (away from construction and housing related working poor can’t afford a job loss,industries) and emphasized the potential for investment in emerging and youth in LMI communities are not gaining the necessary skills to enter thesectors, such as health care and green jobs. workforce productively. —California The people in our LMI community want to work—but have very low levels of employment skills or have high bar- UNEMPLOYMENT riers to employment (criminal record, unstable housing, unreliable childcare). 15% They require specialized training to be able to obtain and retain living wage 12% jobs—especially in this very competitive labor market. 9% —Oregon 6% In our city, small businesses are strug- gling and leaving the heart of the city— 3% we expect to see a growing increase in 0% vacant retail and small office space and U N Ca O Ar Id W A U H a higher need for small business techni- S e r ah as las ta aw Av va lifo ego izo hi h cal assistance and loans er da rn n na o ng ka ai i ag ia to —Arizona e nSource: Bureau of Labor Statistics, October 2010.
COMMUNITY Foreclosures Continue to Drive Distress inVIEWPOINTS Housing Market Although levels of mortgage delinquencies are dropping, foreclosuresForeclosures are very high in many remain a critical concern in many 12th District states. Respondentsneighborhoods, but particularly in LMI reported that the main driver of foreclosures in the past year has shifted[communities]. The impact of foreclo-sures and declining home values has far from unsuitable mortgage products to unemployment. Respondentsreaching consequences for things like also focused on the spillover effects of foreclosure on other issuescredit scores (and ability to find work such as health, public safety, and education. Concerns were alsoor suitable rental housing), tax base raised around investors buying REO properties and the effect this has(so that neighborhood services declineeven further), and the safety of neigh- on neighborhood disinvestment and destabilization. Even with existingborhoods. First Look programs in place, nonprofits are struggling to compete with—California private investors, and many real estate professionals are hesitant toThe loan modification programs are work with nonprofits and governments who are purchasing REOs usingnot working. Lenders need to recog- government financing.nize their losses and create mortgageprograms on the current lower homevalues. Banks are still not recognizing Many of the written responses on foreclosures expressed disappoint-the reality of losses in specific commu- ment and frustration with the loan modification process and the limitednities and are not adjusting their asset number of loan modifications being completed. Respondents called formanagement policies to reflect the aggressive anti-foreclosure reforms, including widespread adoption ofchanges.—Idaho principal reductions for underwater mortgages, more aggressive account- ability by state and federal agencies for servicers to advance loan modifi-There is no good reason why this partic- cations, and moving the foreclosure process to bankruptcy court.ular category of debt should be the onlyone excluded from power of bankruptcycourt to modify terms and conditions. Looking forward, respondents expressed concern about the ability of—California households to access credit. Long term affordability also emerged as aThe poor performance of lenders and priority, and respondents expressed frustration that government poli-servicers is a shame that homeowners cies don’t always support community development interventions, forshould not have to suffer. A direct “yes example, the inability to use FHA loans for homes within a Communityor no” by the lender would be much Land Trust.better than 6 to 12 months of wait-ing only to learn that you are going tobe foreclosed on anyway and no loanmodification will be approved.—Nevada FORECLOSURES AND DELINQUENCIESForeclosures are having an impact 1,500,000on community engagement —with somany empty homes and people having 1,200,000to move around, the stability and inter-action in the neighborhoods is limitedand this is not contributing to renewing 900,000a healthy community.—California 600,000 300,000 0 2005 2006 2007 2008 2009 2010 Loans in Foreclosure: 12th District All Mortgages Past Due: 12th District Source: Mortgage Bankers Association, December 2010.
The Impact of Public Budget Shortfallson LMI Communities COMMUNITYThree of the states within the 12th District face end-of-year budget VIEWPOINTSshortfalls exceeding 40 percent. The steep decline in home values and The budget problems faced by all levelsthe subsequent drop in property tax revenue have contributed to the of government are reducing or eliminat- ing essential services to the LMI com-massive shortfalls in these states. The instability of public funding raised munities at the time when they are mostconcern for many respondents, particularly in regards to its impact on needed.agencies and programs that serve LMI communities. —Utah Most human services rely on publicInterestingly, a strong theme that emerged in the responses was the sector support for sustainability. As weconcern that public dollars are not being directed appropriately for long- continue to struggle with state and localterm impact. Respondents worried that the focus on the deficit and the budgets, social safety net programs are realizing significant cuts or elimination.interest in immediate spending reductions could be costly to society in —Californiathe long run. Others pointed to the lack of good research that demon-strates the return on investment of spending on areas such as affordable The budget shortfall in Oregon is so profound that it will cripple systems andhousing, small business incentives, and education. set us back many years if we can’t work our way through pro-actively. —Oregon TOTAL END-OF-YEAR BUDGET SHORTFALL No Data as Percentage of Fiscal Year 2010 Budget Less than10% Many decisions cost society more in the 10 - 20% long run but satisfy short-term budget 20 - 30% constraints, thereby creating a thought 30 - 40% process driven by “what will cost the Greater than 40% least” rather than what will serve the community best in terms of meeting the needs AND paying off the best in the long run from a financial standpoint. —Idaho Policies to secure funding for K-12 and higher education are needed immedi- ately. Our ability to attract new busi- ness will be negatively impacted as our already strained education system begins to unravel and fail. —Nevada In rural areas, the dramatic decline in funding for nonprofits combined with increased needs is threatening to col- lapse significant sectors of the nonprofitSource: Center on Budget and Policy Priorities, December 16, 2010, available service delivery system. In addition toonline http://www.cbpp.org/files/9-8-08sfp.pdf. reducing the services LMI communities can access, the loss of nonprofits will also bring a loss of advocacy and public education efforts for LMI needs. —Washington
COMMUNITY Heightened Vulnerability of Low-Income FamiliesVIEWPOINTS Across the District, respondents voiced concern for the severe levelsWill the resources utilized to assist LMI of hardship that families are currently facing, and the sharp uptick incommunities last until the economy demand for basic services such as food and housing assistance. Inimproves?—California addition, respondents noted that the crisis is moving up the income ladder, and that they are seeing increased demand for services among[Demand for] food assistance is moderate- and middle-income families. Increasing levels of homeless-a ‘canary in the coal mine.’ Food ness were also cited as evidence of worsening financial conditions inassistance is often the first sign offamilies falling off the edge. The LMI communities.demand for food assistance hasincreased by at least 30% during thiseconomic downturn, and nonprofits arestruggling to meet this demand.—Alaska INCREASE IN PEOPLE ON FOOD STAMPSFamilies that were once moderate- 2009 - 2010income are now the new low/moderate-income. 40%—Arizona 35%The budget problems faced by alllevels of government are reducing or 30%eliminating essential services to the LMI 25%communities at the time when they aremost needed. 20%—Utah 15%We work with homeless LMI familieswho are unable to find affordable 10%housing. Stock is low and rents arehigh. These families may also have 5%housing barriers including poor credit 0 A O A H W C U N I Uhistory or a criminal history. In addition ri zo reg la aw as al t ev da .Sthe waitlist for housing vouchers is so sk ai hi ifo ah ad ho . na on a ng rnlong that most families will never get a i a to iavoucher. n—Alaska Source: Supplemental Nutrition Assistance Program, U.S. Department of Agriculture, Food and Nutrition Service, December 2, 2010.
Social Costs of the Recession COMMUNITYAn unexpected theme that emerged in the short answers was the per-ceived social costs of the recession. We were surprised by the frank- VIEWPOINTSness and candor with which respondents described how the recession I worry about increased crime andwas leading to a loss of social cohesion in their communities. Respon- safety. With increased financialdents voiced concern over the increased crime, violence, divorce, challenges, there seems to be more crime at a time when there is less lawsuicide and substance abuse in LMI communities during the downturn. enforcement to address it due to stateRespondents also highlighted rising xenophobia, racism, and anti- and local budget cuts.immigrant hostility, further straining interpersonal and intercommunity —Californiarelations. This loss of social cohesion and community engagement were Increasing crime and suicides.seen as posing significant challenges and could interfere with the ability —Idahoof communities to emerge from this crisis. Increased violence against women. —Oregon High rates of divorce, substance abuse, CHILDREN IN POVERTY and increased crime. 2008 2009 —Utah 25% Economic stress is causing stress in communities. Under stress, people 20% tend to see things in black and white, 15% to be less patient and less tolerant. Negativism is taking its toll. 10% —Utah 5% The growing dissatisfaction of people to everything they perceive to be hurting 0% their chances for economic success Arizona US Average California Oregon Idaho Nevada Washington Hawaii Alaska Utah whether that perception is real or not. —Hawaii Lack of a sense that we are all 12th District increase in the number of children in poverty, 2008-2009 299,146 interconnected and in this together. —Idaho 11% 12th District increase in the percent of children in poverty, 2008-2009 The negative civic discourse directed towards LMI individuals and families. —CaliforniaSource: U.S. Census, American Community Survey, 2008 and 20091-year estimates. There seems to be an attitude of detachment instead of willingness to work hard to bring the community together. —Alaska
COMMUNITY Responding to the CrisisVIEWPOINTS Survey respondents were asked not only to identify challenges, but also to offer policy solutions; responses ranged from suggestions on how toThere needs to be a multi-prong improve the loan modification process to how to stimulate economicapproach to dealing with the housing development in rural areas, to calls for increased funding for afford-situation that takes into account able housing and workforce development. However, the responsesfamily self-sufficiency, education, also reflected a growing interest in working across silos and developingtransportation, supportive services,and housing. There needs to be a more comprehensive approaches to addressing the challenges facingsustainable community plan that LMI communities. Many of the responses pointed to the important rolecombines all aspects and there needs that cross-sectoral partnerships can play. The idea that affordable rentalto be a will to implement the plan.Policies and programs need to grow housing and homeownership are competing interests was disputed,from this plan. with respondents instead focusing on the need to address a continuum—Hawaii of housing needs for LMI families, and connecting housing to jobs and other neighborhood amenities.There needs to be a combined ap-proach of increasing workforce skills so Respondents also emphasized the important role that nonprofits play inthat folks get better paying jobs, and delivering services to LMI communities, and the need to build technicalprovision of housing that is affordable topeople of all income levels. Affordable capacity and expertise of nonprofits, particularly in some of the morerent or mortgage means more dispos- remote and rural areas of the District.able income, which means an ability tocontribute better to the local economy,and better ability to spend money on Conclusioneducation. This first wave of the Community Indicators Project was conducted—California during a particularly challenging time for the U.S. economy, and theThe administration’s high goals of responses clearly reflected the grave concern among respondents aboutinterconnecting housing, transporta- how the financial and economic crisis is affecting LMI communities. Ourtion, education, commerce and health hope is that the second wave of the survey will help us to identify wheretogether is another prime example ofa solid positive new direction—being there are signs of improvement, and where the challenges continue toreflected in discretionary and competi- require significant resources and policy attention. In addition, in futuretive grant funding awards. waves of the survey, we hope to be able to better distinguish among the—Arizona issues facing the different regions within the Federal Reserve’s vast 12thWe need policies and programs that District. Ultimately, we hope that this type of information, especially ascreate and sustain a variety of rental we begin to report these community viewpoints over time, will increaseand owned homes such as regional the capacity of policymakers and local stakeholders to respond to theplanning that helps connect homes to issues facing LMI communities.jobs, education, shopping and recre-ation without increasing transportationcosts.—CaliforniaNeed to shift business model for non-profit service providers to become moreentrepreneurial and away from justhousing construction to a place-basedcomprehensive revitalization approach.—Arizona