Is the CRA to Blame for the Late 2000s Mortgage Meltdown?

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Congress passed the Community Reinvestment Act (CRA) in 1977.  The law has many features, but its primary purpose is to prohibit the practice of ‘redlining.’ Prior to passage of the CRA, financial institutions routinely refused to lend funds for real estate purchases and improvements in certain neighborhoods. In effect, bank officials drew a red line on a city map across which funds could not cross. In some cases, loan officers used maps with certain neighborhoods marked as unbankable. The two-fold effect of redlining was to 1) exacerbate the flight of businesses and middle-class families out of inner city neighborhoods; and 2) to deny creditworthy borrowers financing for acquisition or improvement of residential and commercial properties in those areas.

The CRA requires banks to lend in neighborhoods where they accept deposits (somewhat counter-intuitively low-income households are profitable banking customers), many people blame the CRA for contributing to the proliferation of subprime loans first in the 1990’s and again in the mid 2000’s. As we all know by now, a subprime mortgage is a loan that offsets the higher risk of lending to un-creditworthy individuals with high interest rates, adjustable rates, fees, points, and other unusual repayment terms. Subprime borrowers pay more for the use of bank funds than prime borrowers and default at much higher rates.

Edward Pinto, former Chief Credit Officer at Fannie Mae, and resident fellow at the American Enterprise Institute (AEI) argues that the CRA contributed to the mortgage meltdown of 2007 and continues to generate toxic assets.  In 2009 he outlined his argument in the City Journal. Essentially, he posits that no one really knows how much the CRA contributed to the spike in mortgage defaults because regulators obscure the relevant data. Information provided by banks indicates that a substantial amount of lost capital comes from CRA related loans.

Randall Kroszner, Ph.D., former Federal Reserve Governor and professor at the University of Chicago, contends that the CRA did not contribute to the crisis. The Wall Street Journal cited Kroszner in a 2008 article after he testified before Congress about the relationship between the CRA and the mortgage meltdown. In support of his argument, he notes that most subprime loans were made outside of CRA neighborhoods, and that a substantial percentage of subprime loans within CRA neighborhoods were originated by non-bank lenders (not subject to the CRA). It is for this reason that – that much of the wreckage of the crisis in low-income neighborhoods flows from non-bank lenders – that another scholar, Dan Immergluck, recommends extending the CRA to cover all mortgage lenders in his book Foreclosed.

The Human Consequences of Housing Discrimination: A Sarasota Story

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I recently read the story of Elizabeth Moore, a real estate broker from Sarasota, Florida. With her husband, L.A. Moore, she owned the Moore Realty Company. Sometime between 1961 and 1963, the Sarasota Board of Realtors forced Elizabeth out the profession for a breach of ethics. Afterward, she relocated to Pennsylvania.  The reason she was expelled from the profession and effectively run out of town: in 1961 she sold a home in Whitfield Estates to Dr. John W. Chenault, and his spouse Dorothy Chenault.

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Elizabeth Moore, Sarasota Real Estate Broker

"What could have happened? Certainly the doctor has done nothing to provoke this outburst. It was as though a sudden sickness had taken the White man, wiping out his normal good sense and leaving him a raving idiot, feverishly gibbering absurdities."

Dr. John W. Chenault was born in Wyoming in 1904. He attended the University of Minnesota for both his undergraduate education and medical training. He completed orthopedic fellowships at the University of Chicago and the University of Iowa. Dr. Chenault was Director of Orthopedics for the Andrew Memorial Hospital, part of the Tuskegee Institute in Alabama. In 1937 he established the Crippled Children’s Service at Tuskegee. From 1953-1957 he was administrator of the hospital at FAMU in Tallahassee, Florida. He moved to the Sarasota-Bradenton area in 1957, and became the first Black physician to practice at Sarasota Memorial Hospital. Dorothy Chenault attended Oberlin Conservatory where she received a degree in music. She taught choral music at the Tuskegee Institute before the couple moved to Florida. In 1961, the Chenaults met Elizabeth Moore. She helped them purchase the home in Whitfield Estates.

Aware of the prejudice the Chenaults were likely to encounter, Moore began a charm offensive. She introduced Dr. Chenault to neighbors, and asked people how they would feel if a Black couple purchased a home on their street. Although friendly to her face, neighbors accused her of blockbusting. Whitfield residents and fellow Realtors encouraged her to cease her dealings with the Chanaults. Another broker offered to help Dr. Chenault find a more appropriate location in a "remote neighborhood." A member of the Sara Bay Country Club encouraged her to walk away from the transaction and offered to pay her legal fees if the Chenaults sued her. After the sale was complete, some residents of Whitfield Estates attempted to raise funds to purchase the home from the Chenaults. Some even argued that their property taxes should be reduced because the presence of a Black neighbor diminished the value of their homes. Eventually, Moore was effectively expelled from the profession for completing the transaction. Ebony magazine published Moore's story in October 1963 (p.93-100).

There is an even more tragic follow up to this story. On Sunday, March 14, 1965, Dorothy Chenault attended a demonstration in Tampa to protest the brutal attacks on non-violent marchers in Selma, Alabama a week earlier. A few days later, on Thursday, March 18, 1965, after Dorothy had gone to bed, Dr. Chenault penned a suicide note. "I'm tired of living" he wrote, "but I'm scared of dying." He walked into the bedroom and murdered his wife; then he took his own life. The next month, Jet Magazine published a profile of the couple. Although the Chenaults, by all accounts, had eventually won over their neighbors and enjoyed close friendship with people from all walks of life, Elizabeth Moore believed that racism contributed to Dr. Chenault's breakdown. "They were not permitted to lead normal lives" she said; "[t]hey were expected to be superhuman." She believed that Dr. Chenault had been driven to suicide by White resistance to their integration of the neighborhood.

I am from the Sarasota-Bradenton area. The Chenaults home was somewhere adjacent to the Sara Bay Club, down the street from Whitfield Presbyterian Church. I used to attend monthly FPZA luncheons at the Sara Bay Club; I've been to dozens of events at Whitfield Presbyterian. In all likelihood, I have driven past the Chenault home site many times. For a time, I was a member of the successor organization of the Sarasota Board of Realtors. I have never heard this story. How is that possible?

One Third of a Nation – The Movie

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In 1939 Paramount pictures created a screen adaptation of the WP Federal Theater Production, One-Third of a Nation. The movie’s storyline deviates significantly from the stage play. It is an excellent view into the spirit of the age during the New Deal. The film opens with a fire. A little boy – Joey – is badly injured. Joey has a much older sister – Mary – who is easy-on-the-eyes, intelligent, and extraordinarily confident. Throughout the film she is the voice of the New Deal. A well-intentioned but clueless millionaire playboy – Peter – stops to help. He is aghast to learn about the conditions of the “firetrap” tenement buildings. It turns out, of course, that he is the owner.

There is a public inquiry into the fire. Mary persuades Peter to tear down the tenements and build…affordable housing. Mary describes low-rent apartments with amenities like grass fields and “real playgrounds with handball courts.” Mary promises repeatedly that the children will no longer have to play in the streets (I picture Jane Jacobs storming out of the theater and pounding away at her old-timey typewriter).

As the story unfolds, every possible social ill is connected to slum housing conditions. Conversely, it is implied that the plebeians on the East Side would thrive if only they had new apartments. Juvenile delinquents will be transformed into boy scouts by grass athletic fields and playgrounds. Prostitutes would give up their trade and find legitimate employment. Young couples could get married and start families.  Eventually, Peter partners with the City to build public housing. His family objects, and that provides the conflict of the story. Meanwhile, poor little Joey argues with the tenement house (the talking building feature does carry over from the play). The house taunts him and mocks his dream of a happier life. Out of desperation, Joey starts a fire, and then dies. Joey’s death provides Peter the fortitude to implement his plans. The final scenes show the tenements coming down; then happy youths play on “real playgrounds.”

The all White cast is striking to the contemporary viewer. Although the 1940 Census shows that almost 90% of the American population was White; the setting is New York City. Nearly 28% of the population of New York was foreign born at the time. The Great Migration was well underway, and more than 6% of the City’s population was Black. Yet there’s not a single non-white face in the entire film (with the possible exception of a waiter near the very end of the story). There’s a character named Rosen with a vague accent whose family is killed in the fire, but precise ethnic identities are obscured throughout the story. Still, as a guy named McCarthy, I enjoy the Irish-American-ness of the neighborhood. The accents and dialogue are wonderful, exactly how I imagine working class 1930s New Yorkers. It’s also important to see depictions of the general level of poverty among all Americans, including White Americans, during the 1930s. The film – with a strong dose of hyperbole – forcefully communicates the idea that social conditions experienced by poor people are intimately tied to their physical environment, not their own culture or behavior.

How can we communicate that message effectively today? How can we show people that their own well being is tied to housing, and that their housing choices are largely shaped by public policy? Almost all Americans whose families were in the country during the 1930s are descended from people who experienced real grinding poverty. The nation’s housing policy transformed our society for the better, but some were categorically excluded. How do we use that to create a unifying “we all go up, or else we all go down, as one people” message?

One Third of a Nation – the Play

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Did you know that the United States government once produced a stage play about affordable housing?

In 1938 the Federal Theater Project, part of the Works Progress Administration, produced a stage play about affordable housing. The purpose of the play is obviously to engender support for implementation of the Housing Act of 1937 (a.k.a the Wagner-Steagall Act). The play’s title “One Third of a Nation” is a direct and obvious reference to FDR’s second inaugural speech. Paramount Pictures made a film adaptation of the play in 1939.

“One Third of a Nation”

I was able to find a copy of the script. It is posted below. Incredibly, more than 200,000 people saw the play during its New York City run. The WPA Federal Theater Project went on to produce the show in 10 cities over a two year period. The play follows the plight of the not-quite-making-it poor of New York City over a one hundred year period. There are heartless exploitative landlords, unscrupulous real estate agents, and hopeful immigrants. These unfortunate souls are beset with cholera, crime, fire, and all of the other ills of inadequate housing. Although newcomers find a land of plenty (“there’s no famine here, Kate, plenty of potatoes and bread and meat.”), their toils amount to nothing because they are forced to pay exorbitant rents for rat-hole tenements. As the cast repeats again and again, “we’ve got to have a place to live.” At various intervals throughout the play, a narrator actually reads out the provisions of various laws and ordinances affecting housing! In response, a tenement house itself boasts about its noncompliance. I wish I could have seen it on the stage.

“It shall be required that there be a proper fire escape for each tenement, and there shall be one toilet for every twenty occupants.” – New York City Tenement House Act of 1867

One Third of a Nation – The Speech

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In 1937, President Franklin D. Roosevelt began his second term. At his inauguration, the first held in January rather than March, Roosevelt described how he saw the nation emerging from the economic difficulties of the Great Depression. Although China and Japan were on the brink of war in Asia, and Hitler had just remilitarized the Rhineland, the President focused almost entirely on domestic economic issues.

Roosevelt felt emboldened to pursue an aggressive economic agenda. He succinctly stated the animating principle underlying the policies of his administration’s second term: that “[t]he lowest standard of living can be raised far above the level of mere subsistence.” Without question, the most remembered portion of the speech is “one-third of a nation”.

“I see millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day.

I see millions whose daily lives in city and on farm continue under conditions labeled indecent by a so-called polite society half a century ago.

I see millions denied education, recreation, and the opportunity to better their lot and the lot of their children.

I see millions lacking the means to buy the products of farm and factory and by their poverty denying work and productiveness to many other millions.

I see one-third of a nation ill-housed, ill-clad, ill-nourished.”

He went on to predict – correctly – that from that day on the federal government would play a much larger role in the lives of individuals.

“We are determined to make every American citizen the subject of his country’s interest and concern; and we will never regard any faithful law-abiding group within our borders as superfluous.”

Roosevelt promised that  “in our seeking for economic and political progress as a nation, we all go up, or else we all go down, as one people.” These words continue to resonate with the political left. At the time, however, they had a much broader appeal. Advocates for housing reform made constant reference to the concept that “one-third of a nation” remained trapped in poverty by an exploitative system. The phrase itself became part of the rhetorical justification for the housing initiatives about to transform the nation. According to this worldview, all social ills related back to substandard housing. Within eight months, Congress passed the Housing Act of 1937 (a.k.a the Wagner-Steagall Act). Although substantially amended in 1949 and 1954, the 1937 Act is still in effect.

The Legacy of Redlining

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When I was in planning school at the University of South Florida, I took a course in American housing policy. Looking back, the material covered in that class significantly influenced my views about my work, and society generally. Among other topics, the course material covered the impact of redlining on the development of American cities and suburbs during the mid-20th Century. The short version is that:

  • The federal government greatly expanded its role in the housing market during the Great Depression.
  • Early in this process, the Homeowners’ Loan Corporation (HOLC) dispatched analysts to evaluate neighborhood conditions in major cities across the nation.
    • Part of their evaluation was based on explicitly racist and classicist assumptions.
    • At times their reports show a bias against White-ethnics (e.g. an “infiltration of Italians” in the Bronx).
    • All of the reports for areas with significant Black populations show a strong anti-Black bias.
    • In Florida, the reports describe neighborhoods characterized by “cheap sort of tourists,” White “laborers and mechanics,” and “the best grade Negro.” The Tampa Heights neighborhood is described as “rapidly filling with Latins.”
  • During the post-war period, access to insured fully amortized 30-year mortgages made a majority-homeowner society possible.
  • However, discriminatory banking practices discouraged originating loans collateralized by properties in certain neighborhoods and geographic areas. Many private banks relied on the “residential security maps” produced by HOLC to make these determinations.
  • At the same time, racially restrictive covenants blocked Black families from many of the new suburban residential developments transforming working class White-America into a middle class nation. In the South, some cities continued to illegally enforce racial zoning as late as 1951 (technically unenforceable as early as 1917). Although Shelly v. Kramer prohibited enforcement of racially restrictive covenants after 1948, it was not until the Fair Housing Act of 1968 that there was real enforcement against racial discrimination in the housing market.
  • Black families of means began to move into integrated communities during the Civil Rights era, following a decades-long process of suburbanization by White families. The combined result of these two trends was the systematic disinvestment and neglect of urban residential nieghborhoods.
  • The Community Reinvestment Act of 1977 finally prohibited the practice of redlining. Mortgage loan decisions must now be made based on the credit worthiness of the borrower, as well as value and condition of the specific collateral.

Many books and scholarly articles discuss the importance and impact of HOLC in establishing the practice of redlining. My favorites include American Apartheid, and Crabgrass Frontier. Jane Jacobs describes the impact of redlining on predominately White working class neighborhoods in New York and Boston during the 1950s. That implies that there was more to the practice than racial discrimination. I have also seen some research which suggests that HOLC’s analysis did not actually impact lending practices in subsequent decades. Nonetheless, it’s a fascinating story and a possible partial explanation of the current state of many American cities.

The professor who taught my Housing Policy class had a copy of the residential security map and report prepared by HOLC for the city of Tampa. It provided some of my first inklings that the “boring” technical details of public policy can shape the physical and social environment we live in for years to come.

Today, I found out that the University of Richmond has posted all of the HOLC security maps and reports to an interactive website! I have posted it in the iframe below. There are reports for four Florida cities (St. Petersburg, Tampa, Jacksonville, and Miami).



What is a Public Housing Authority?

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What is a Public Housing Authority?

A Public Housing Authority (PHA) – sometimes called a Public Housing Agency, or a Housing Agency (HA) – is a state or local government entity that receives federal funding to administer certain housing programs. The Housing Act of 1937 (the Act) defines a “public housing agency” as:

“any State, county, municipality, or other governmental entity or public body (or agency or instrumentality thereof) which is authorized to engage in or assist in the development or operation of public housing.”

Administrative Structure

The administrative structure of public housing follows the public utility model which grew out of public administration theory during the first half of the 20th Century. PHAs are instrumentalites of state government. In Florida they are special purpose local governments created under Chapter 421. Each PHA has an independent board of commissioners which sets policy and hires professional staff. Generally, an executive director provides day-to-day leadership. The commissioners of PHAs originally created to serve a municipality are appointed by the mayor; commissioners of PHAs created to serve counties are appointed by the Governor.


Over time, through inter-local agreements, a PHA’s jurisdiction may become much larger than that of the locality for which it is named (i.e. a City or a County). In Florida it is common for PHA jurisdictions to overlap.[1] In rural areas, such as North Florida, regional housing authorities sometimes administer HCV programs over large geographic regions.[2]

Funding – The Annual Contributions Contract

Each PHA must enter into a Consolidated Annual Contributions Contract (ACC) with the U.S. Department of Housing and Urban Development (HUD). The ACC provides for the transfer of funds from the federal government to the PHA for public housing and the voucher program.  At the federal level, the Office of Public and Indian Housing (PIH) within HUD oversees administration of public housing and voucher programs.

Public housing (also known as Section 9 or low-rent housing) is the PHA’s owned-portfolio of rental housing. Each public housing property is subject to a recorded Declaration of Trust (DOT) between HUD and the PHA. Under the ACC, HUD transfers operating and capital subsidies to the PHA; the amount depends on the number of units within the PHA’s portfolio. For decades, the formula for these funds has been inadequate, leading to the physical deterioration of much of the public housing inventory.  PHAs which operate a Housing Choice Voucher (HCV) program (one of the programs authorized under Section 8 of the Housing Act) receive a basic budget authority with which to issue vouchers. Assisted families live in privately owned rental housing; the HCV program pays a portion of their rent.

There are currently 102 PHAs in Florida.[3] Of those, 21 only operate a portfolio of low-rent housing; 21 only operate an HCV program; 58 operate both; and 4 are not currently active in either program. Beginning in the 1990s, many PHAs began to redevelop their portfolios using mixed-finance methods. Some also began to develop and acquire other forms of affordable housing. The pace of this shift from public housing to affordable housing has accelerated under the RAD program. As a result, some PHAs now own significant portfolios of affordable housing, often in partnership with private sector co-developers. Many PHAs currently operate very little public housing. In time, it’s possible that most PHAs will administer HCV programs, and manage non-public housing affordable housing assets.

Planning & Implementation

Consistent with the New Deal era governance structure, PHAs have a formal two-horizon planning process. Each PHA submits a 5-year PHA Plan to HUD, identifying its goals, objectives, and policies. These long-term plans are implemented through more detailed annual plans. Planning documents and processes are consistent across PHAs. Prior to formally adopting a plan and submitting it to HUD for approval, PHAs must allow public comment and formally engage residents of public housing through Resident Advisory Boards (RABs).

[1] For example, HCV assisted families living in Manatee County south of the Manatee River may be served by the Manatee County Housing Authority, The Bradenton Housing Authority, or the Sarasota Housing Authority.

[2] Taken together, the HCV programs of the North Central Florida Regional Housing Authority and the Northwest Florida Regional Housing Authority serve a 20 county region.

[3] HUD lists profiles of all PHAs in the United States on its website. In Florida, the Shimberg Center for Housing Studies presents the information in a more useful format as part of the Assisted Housing Inventory (AHI).

What has been the impact of Areas of Opportunity in Florida? Part 1 of 3

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In 2016, the Florida Housing Finance Corporation (Florida Housing) began to implement its Area of Opportunity (AofO) strategy. The developments awarded funding under the 2016 geographic RFAs are currently in underwriting or under construction. Now we can begin to see whether the AofO strategy has made a difference. This is the first of three posts on the topic.

Below, I describe the process used to collect and compare information related to tax credit financed developments. If you do not share my enthusiasm for the technical minutia of housing policy, you may want to skip past that section. There’s also a brief discussion of how I chose to measure segregation. The results follow a description of the baseline data used for comparison.

In general, the AofO policy has not yet made much of a difference. The 2016 allocation yielded a somewhat more limited range of housing options for low-income families. Looking at Florida Housing designated Areas of Opportunity specifically, the early results of the policy change are encouraging. The properties funded in these tracts create affordable housing options in diverse neighborhoods with opportunities for upward mobility.

NOTE: Someone kindly pointed out an error in my reading of the demographic data described below. The misreading led me to make a slight overstatement in the original version of this post. I have corrected the content below accordingly.


Florida Housing has made a great leap forward in its use of GIS over the past year. Mercifully, the Corporation now collects Development Location Points (DLPs) in decimal form on the application for tax credits. This allows Florida Housing to list the latitude and longitude of proposed sites in Excel format on the applications submitted report. This is a fantastic improvement both operationally, and in terms of public transparency. Unfortunately, the DLPs for the 2016 applications are only available in Degree-Minute-Second (DMS) format on PDFs of the surveyor certification form.

We need to know where the new developments will be located in order to evaluate the neighborhood level indicators of community well being for the winning applications. Accordingly, I copied the DMS coordinates for each DLP from the PDFs into an Excel workbook. Then I converted the values to decimal form.  Adding these X,Y data to an ArcGIS map document, I intersected the points with 2010 Census Tracts using a 2016 TIGER shapefile. I then exported the records back to Excel. In this way, I compiled location information for the preliminary awards made under the three geographic RFAs. Florida Housing limited its AofO strategy to metropolitan counties. For this reason, I excluded the small county award made under RFA 2016-110, as it is located in a non-metropolitan county.

We are really after neighborhood-level data. “Neighborhood” is of course a tricky term. Census tracts are our best approximation. I downloaded data tables from American FactFinder for the 2016 5-year average of the American Community Survey (ACS). The data I used include poverty status (table S1701), median income (table S1903), employment (S2301), Hispanic identity by race (B03002), tenure (B25003), and SNAP utilization (S2201). I added each of these tables to the workbook. Additionally, I added the county level data for Hispanic identity by race, as well as poverty, for the counties which produced winning tax credit applications.

Finally, I associated the ACS data with each DLP. This was accomplished with a simple index/match function in Excel.[1] In this way, the relevant data from the ASC tables are associated with each DLP.

Measuring Segregation & Housing Choice

In my opinion, HUD defined and Florida Housing designated RECAPs are too generic to be of much use. Both designations are based on a minority concentration of 50.0% or more, and an incidence of poverty greater than or equal to 40.0%. This standard is based on academic research and federal policy that is national in scope. The consistent measure is a helpful starting point, but it is not sufficiently context-sensitive to tell us whether a state housing finance agency’s allocation criteria effectively further fair housing.

Florida is characterized by heterogeneous social geography. In Charlotte County, a tract with a minority population of 50.0% would indicate extreme racial/ethnic concentration. Such concentration could only be explained by a history of housing discrimination. However, in Miami-Dade County, and the other minority-majority counties in Florida, a minority population of only 50.0% would indicate a high concentration of non-Hispanic Whites.

Similarly, although a poverty rate of 40.0% is high anywhere in the state, the incidence of poverty varies considerably from county to county. For example, a census tract with a 20.0% incidence of poverty would be fairly typical in Miami-Dade County. However, the same value equates to 165.0% of the county-wide rate of poverty in Seminole County.

A high minority concentration is not in itself problematic, of course. It is the nexus of unusually high rates of poverty, and racial/ethnic isolation from the majority population, which perpetuates the pattern of residential segregation established during de jure segregation. I also do not mean to say that the existence of high incidences of poverty in non-Hispanic White majority areas is not a public concern. The point is that if the AofO strategy is at least in part intended to address the persistence of residential segregation, we must have some context-sensitive means of measuring it. Consequently, I identified tracts which are characterized by BOTH an incidence of poverty greater than 1.5x the county-wide incidence of poverty, AND a non-Hispanic White population less than half that of the county as a whole.

Setting a Baseline for Comparison

To establish a baseline, I identified properties awarded tax credits over several years prior to 2016. The Assisted Housing Inventory (maintained by the Shimberg Center for Housing Studies) lists 116 properties with affordability start dates between 2010 and 2015 located in the same counties as the 2016 awards. Fortunately, Shimberg reports the decimal form latitude and longitude coordinates for each site. I filtered out sites which were not listed as “ready for occupancy.”

Larger data sets are more stable and therefore more reliable. Comparing more than 100 properties funded over several years to a handful of properties funded in a single year may lead to incorrect conclusions. For this reason, I also evaluated the properties awarded 9% tax credits under the 2013 geographic RFAs. This allows a year-to-year comparison pre- and post- policy change.

Census Tracts – Preliminary Awards – 2016 Geographic 9% Tax Credit RFAs

Average of All Tracts Range
Labor Force Participation Rate 58.8% 43.1% – 77.1%
Tract Median Income $39,467 $9,693 – $64,444
Homeownership Rate 49.5% 2.5% – 84.1%
Incidence of Poverty 27.2% 4.4% – 75.9%
SNAP Utilization Rate 29.5% 6.8% – 85.3%
Total Minority

(Other than Non-Hispanic White)

60.6% 16.7% – 98.9%

A high percentage of the properties are located in census tracts with overlapping characteristics of poverty and racial/ethnic isolation. 5 of the 19 properties (26.3%) funded in 2016 are located in tracts characterized by BOTH an incidence of poverty greater than 1.5x the county-wide incidence of poverty, AND a non-Hispanic White population less than half that of the county as a whole.

Census Tracts – In Service – 2010-2015 9% Tax Credit Properties

Average of All Tracts Range
Labor Force Participation Rate 58.9% 26.1% – 77.1%
Tract Median Income $35,719 $13,660 – $110,521
Homeownership Rate 40.0% 3.7% – 92.2%
Incidence of Poverty 27.5% 2.5% – 56.0%
SNAP Utilization Rate 29.5% 2.8% – 64.4%
Total Minority

(Other than Non-Hispanic White)

67.4% 4.7% – 99.7%

35 of the 117 properties (29.9%) are located in tracts characterized by BOTH an incidence of poverty greater than 1.5x the county-wide incidence of poverty, AND a non-Hispanic White population less than half that of the county as a whole.

Census Tracts – 2013 Geographic 9% Tax Credit RFAs

Average of All Tracts Range
Labor Force Participation Rate 58.5% 35.5% – 79.5%
Tract Median Income $32,733 $16,219 – $60,882
Homeownership Rate 35.3% 2.9% – 82.3%
Incidence of Poverty 31.3% 15.1% – 61.2%
SNAP Utilization Rate 26.5% 5.5% – 49.2%
Total Minority

(Other than Non-Hispanic White)

62.6% 12.2% – 97.6%

5 of the 17 properties (29.4%) awarded funding under the 2013 geographic RFAs are located in tracts characterized by BOTH an incidence of poverty greater than 1.5x the county-wide incidence of poverty, AND a non-Hispanic White population less than half that of the county as a whole.

In General, there is No Meaningful Difference

In general, there are few meaningful differences between the 2016 allocation and Florida Housing’s competitive tax credit allocations over previous years. There are some positive results. The average tract median income has increased. Also, the average total minority concentration has decreased. Additionally, the 2016 sites are in tracts with a slightly lower average incidence of poverty, and higher average rates of home ownership. However, the ranges indicate a narrowing of neighborhood choice. During the 2010 – 2015 period, at least some properties were funded in tracts with home ownership rates as high as 92.2%, the highest incidence of poverty was 56.0%. In tracts containing sites awarded tax credits in 2016, the highest rate of home ownership is 84.1%; the highest incidence of poverty is 75.9%. Although the range of tract median incomes indicates that properties were funded in middle-income neighborhoods in 2016, at least a few were funded in more affluent census tracts during the earlier period.

But…Geographic AofOs Yield Measurably Better Spatial Outcomes

Of the 19 properties funded through the geographic RFAs in 2016, 4 are located in Florida Housing designated Areas of Opportunity. The proposed developments are located in 4 unique census tracts. The average rate of labor force participation is 64.4%; the average tract median income is $49,142; the average incidence of poverty is 17.4%; and, the average rate of home ownership is 65.3%. Interestingly, the average minority population is 70.8%; excluding the 2 Miami-Dade AofO tracts, is 65.2%.  Nonetheless, non-Hispanic Whites are present in these communities. In the 2 Miami-Dade tracts, non-Hispanic Whites are present at more than double the county-wide rate in one tract, and just under the county-wide rate in the other. In the other AofO tracts, non-Hispanic Whites account for about one-third of the population.

Funded properties in geographic Areas of Opportunity offer affordable housing options in neighborhoods where both diversity, and upward mobility (in the form of work and home ownership), are normative. Moreover, although these are not the most exclusive neighborhoods, they are characterized by relatively moderate incidences of poverty.

The data are available here. Feel free to take a look and let me know in the comments section below if you see any potential improvements.

[1] =index(ACS_variable_array,match(tractnumber,acs_table_tract_array,exact_match))

Miami-Dade Tax Credit Applications

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In December of 2017, the Florida Housing Finance Corporation received 27 applications for competitive 9% tax credits in Miami-Dade County. The locations of the associated development sites are mapped below.

Comparing the Sites to the Average Miami-Dade Neighborhood

Let's take a closer look at the communities where theses sites are located.

In the census tracts containing sites for which developers submitted applications for competetive tax-credit funding:

  • The average poverty rate is 31.3% (with a range of 11.5% to 54.0%);
  • The average rate of households receiving food assistance benefits is 43.2% (with a range of 14.3% to 55.7%);
  • The average adult labor force participation rate is 58.9% (with a range of 42.8% to 74.1%); and
  • The average unemployment rate (among individuals over 16 years of age) is 13.6%.

Let’s put that all in context. For all populated census tracts in Miami-Dade County:

  • The average poverty rate is 20.0%;
  • The average rate of households receiving food assistance benefits is 25.0%;
  • The average adult labor force particiaption rate is 62.2%; and
  • The average unemployment rate (among individuals over 16 years of age) is 8.6%.

That means that on average, applications for tax credits are originating from census tracts where the incidence of poverty is 56.5% greater than the typical Miami-Dade County census tract; dependence on food assistance is 72.8% greater. Applications are originating from tracts where labor force participation is meaningfully less; and among those in the work force, unemployment is 58% greater than in the typical Miami-Dade County census tract.

Comparing Sites to Each Other

Among the 17 applications indicating that the development will serve the family demographic (i.e occupancy will not be limited to older persons), 3 are in census tracts where the rate of poverty is less than the average Miami-Dade County census tract. Another 8 are located in census tracts with rates of poverty less than a full standard deviation above the mean.

There are 20 applications which supposedly include participation by not-for-profit organizations (including one in which the true principal is a for-profit developer subject to a deferred prosecution agreement for lying to the Corporation about construction costs in order to enrich himself). Of these, 11 indicate that the property will serve the family demographic. In all likelihood, the funded deals will be among these applications.

All of these applications come from competent developers who can make it through underwriting, complete construction, and place the buildings in service on time. The buildings will all be physically indistinguishable from market rate housing.  All of the proposals are for concrete new construction. The most significant difference between these sites is social geography. Simply put, most are located in neighborhoods where poverty and dependence on public assistance are normative. A few are located in neighborhoods where poverty is not normative and upward mobility is more likely. To put this all in perspective, the peak unemployment rate in Florida during the Great Recession was 11.2%. That means that employment prospects in the neighborhoods producing tax credit applications during normal – even good times – are worse than most people experienced during the bleakest economic period in living memory.

Looking Ahead - Fair Housing Implications

The Corporation is in the process of updating the rules which guide the allocation of competitive resources, as well as the Qualified Allocation Plan. These guidelines will be operationalized in future RFAs. If Florida is committed to fair housing, it must recognize that where a person lives, especially during childhood, has a a significant impact on her opportunities for upward mobility. Our housing production programs should not be focused on warehousing the poor and keeping them in a position of dependence. Instead, we should expand the options available to low-income households and use the tax credit program to create housing opportunities in otherwise inaccessible neighborhoods.



Florida Housing Finance Corporation RFA 2017-112; RFA 2017-112 Applications Submitted Report

American Community Survey 2016 5-yr Average tables: S2301; S2201; S1501; S1701



What does ELI mean, and why is it different in Florida?

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What does ELI mean, and why is it different in Florida?

It means Extremely Low Income (ELI). Many housing programs utilize the income category. The U.S. Department of Housing and Urban Development (HUD) Office of Community Planning and Development (CPD), and Office of Public and Indian Housing (PIH), make frequent use of the income category in guidance issued to state and local government grantees, as well as Public Housing Authorities (PHAs).

For example, 100% of National Housing Trust Fund (NHTF) monies administered by the states must be used to serve ELI households in years when the total fund is less than $1 Billion. In public housing, no less than 40% of units which become available during the year must be made available to ELI households. When PHAs admit new families to the Housing Choice Voucher (HCV) program, at least 75% of the families admitted to the program during the course of a year must be ELI. As units become available in multifamily buildings assisted through project-based Section 8 programs (excluding PBVs), 40% must be made available to ELI families.

From 1998 through 2014, HUD defined ELI simply: families with incomes at or below 30% of Area Median Income (AMI)[1]. However, as part of its annual appropriations act of 2014, Congress directed HUD to update the definition and modify its ELI targeting in some programs. The change, describe in the Federal Register on June 25, 2014, defines an ELI family as one whose income does not exceed:

  • the Federal poverty level; or
  • 30% of AMI.[2]

The new definition helps families who live in places where the AMI itself is extremely low. As a relative measure, the previous definition punished households living in impoverished areas. The poverty level is a measure of absolute, rather than relative, need. Conceptually, a family living below the poverty level does not have sufficient income to sustain itself. The fact that the median household in the same geographic area is also poor should not exclude such families from housing assistance programs.

Why is it different in Florida?

Because, everything is different in Florida! The serious answer is that the Florida Housing Finance Corporation uses an adjusted ELI level to establish set-aside requirements. When the Corporation provides capital subsidies to developers, it often requires that a portion of the units be “deeply targeted” to ELI households. The rationale for this is straightforward. Rent levels at properties financed through the Low Income Housing Tax Credit (LIHTC) program are generally set at 30% of the household-size-adjusted maximum income allowed under the program.[3] By definition, an ELI household has an income half that of a household at the maximum of LIHTC eligibility. An ELI family faces a potential rent burden equal to 60% of its total income in a tax credit unit. Therefore, in order to get the credit, or additional subsidies through the State Apartment Incentive Loan (SAIL) program, the Corporation requires developers to set-aside some of its units for ELI households at more affordable rents.

But why is the ELI level different?  

The Corporation requires developers to set-aside units for households at an ELI level which varies by county. The level can be greater than or less than 30% of AMI. Florida Statute 420.0004(9) adopts HUD’s ELI definition, but empowers the Corporation to adjust the threshold by rule. In 67-48.002(39) of the Florida Administrative Code, the Corporation repeats the definition. In actual practice, the Corporation determines the full-time income of a person earning the current minimum wage as an approximate proportion of the median income for each county. The results vary widely and reflect the economic geography of the state. For example, the ELI level in Broward County is 28% of AMI; in rural North Florida (e.g. Union County, Levy County, and Jackson County) it is 45% of AMI.

This is an area in which Florida has been a leader in housing policy. The Corporation’s approach to allocating competitive resources has long recognized economic variation across the state. The county-adjusted ELI level is perhaps the most elegant illustration of this forward thinking. At the federal level, HUD has only recently begun to utilize more fine-grained geographies through Small Area Fair Market Rents (SAFMRs) and Small Area Difficult Development Areas (SDDAs).  The county is a very coarse geography for this purpose. Hopefully the Corporation will update its approach, now that it is using more advanced GIS tools.

Thank you for reading. Please feel free to leave a comment below.






[1] Already in use in academic literature, Congress established the new income standard as part of the Quality Housing and Work Responsibility Act (HWRA) of 1998. The new standard more narrowly focused housing assistance within the Very Low Income (VLI) category introduced as part of Housing and Community Development Act of 1974.

[2] For the curious:  Area Median Income, as we are using the phrase here, is determined by HUD’s Office of Policy Development and Research (PD&R)  using the geographic area definitions developed by the White House Office of Management and Budget (OMB) and data from the American Community Survey (ACS). The poverty guidelines refered to here are developed by the U.S. Department of Health and Human Services (HHS).

[3] Under Section 42 of the Internal Revenue Code, LIHTC properties must serve households with incomes at or below 60% of AMI.