Connecting People to Jobs: The Economics of Job Hubs and Employment Access

July 19th, 2017

Glue Cleveland Tour 229

 

By Jason Warner, GOPC Manager of Government Affairs

Recent studies have shown that over the past two decades or more, more land is being used today, expanding the places where jobs are located, but this is occurring without a net increase in population or jobs. This new type of urban sprawl, known as “no-growth sprawl,” has the effect of separating workers from the jobs they need to support themselves and their families. Cleveland is one of those cities where this has been an especially troubling trend. Now, a number of groups are working on solutions to the problem of erasing the disconnect between people and jobs. 

Fund for Our Economic Future (“The Fund”), working in partnership with the Northeast Ohio Areawide Coordinating Agency (NOACA) and Team NEO, has been examining the concentration of jobs hubs in Northeast Ohio and the benefits and challenges they present to the region. Job hubs are specific places of concentrated economic activity in a city or region, with specific focus on where “traded sector” companies are located in the region. Traded sector companies are organizations that can sell their goods and services outside of the local economy.  The Fund examined job concentration centers in the five counties that make up the NOACA area, Cuyahoga, Geauga, Lake, Lorain, and Medina Counties, and identified 23 job hubs. These include obvious locations such as Downtown Cleveland, but others as well, including places are far away from the city as Oberlin to the west and Middlefield to the east.

The disbursement of these jobs hubs is at the center of the research the Fund is currently reviewing. Half of the traded sector employment was found to be in a jobs hub in the region.  These jobs are very much in demand and are needed for the local, state and national economy. Additionally, these are jobs that traditionally provide higher income and greater career opportunity than typical service employment jobs. As these hubs move further and further from population centers, transporting people to the jobs is becoming an increasing problem. A survey conducted  by Team NEO found that, when asked to rate what was the biggest challenge to making new employees successful, the most popular answer among employers was employees showing up to work on time and being ready to work when they got there.

This is not to suggest that job hubs are bad things – as the Fund points out, when job hub are integrated into a regional growth strategy, they can improve economic competitiveness and increase opportunities for residents who are currently disconnected from jobs[i]. The biggest obstacle that job hubs present is ensuring that workers have access to these locations. The current pattern of growth that Northeast Ohio and other regions of the state have experienced is increased costs of both time and money for residents. Research by the Brookings Institute shows that the number of jobs within a typical commuting distance fell by 26 percent between 2000 and 2012, which is among the worse measurable rates in the nation[ii]. Furthermore, the research shows many Ohioans spend a disproportionate amount of their income on transportation as opposed to housing[iii].

Most concerning of all is that the Fund’s research shows that 25 percent of Cleveland residents do not have access either to a vehicle they own or, in increasing numbers, to public transportation[iv]. Hence, the challenge the Fund and others face is finding a solution to connect people who lack transportation to job locations, where employers find that their biggest struggle is finding workers who can get to work on time and be ready to work.

Transit agencies statewide are struggling to meet the ever-increasing demands for public transit. Greater Ohio Policy Center (GOPC) is working with groups like Fund for Our Economic Future to ensure that sufficient funding is available for public transportation and that service is designed to ensure that workers can be connected with jobs. For more resources on GOPC’s work in this area, please see our Transportation Modernization webpage.

 

[i]  Fund for Our Economic Future: Why Job Hubs are Important

[ii]Fund for Our Economic Future: Job Access

[iii] Ibid.

[iv]Governing Magazine: Car Ownership Numbers

 

Shrinking Cities Reading Series Part VI: Voices of Decline

July 13th, 2017

By Torey Hollingsworth, GOPC Manager of Research and Policy

In Voices of Decline, Robert A. Beauregard traces the national discourse about urban decline over the majority of the 20th Century. This is done primarily by reviewing historical sources like magazines, journal articles, and opinion pieces that discuss the current state of urban affairs. He traces how commentators and intellectuals discussed urban issues over time and how that served to create a collective set of narratives about declining cities. This discourse is not always based in objective reality, but Beauregard demonstrates how the discourse impacts public perception and potentially, the realities that cities themselves face.

Beauregard argues that the discourse over urban decline is rooted in American ambivalence about urban life which can trace its roots to the founding of the country. The tensions between the city and the countryside eventually morphed into the more contemporary tensions between central cities and their surrounding suburbs. Many of these tensions are related to space and migration – as either the city or the countryside/suburbs attract residents, they must leave the other place behind. Political power requires population, so shifts away from one location to another means a loss of political power as well. Due in part to this political reality, the discourse around cities is rarely neutral as to their value or their moral position.

Portsmouth Historic Buildings 2

Even in the 1920s before urban decline took hold, commentators focused on how congestion and slums made cities unappealing. At this point, some of the ambivalence about cities was due to their role in pulling youth away from rural areas. Still, for the most part, cities were still considered to be the centers of action and any dark clouds were still faint on the horizon. The discourse about cities really began to shift during and after World War II as the urban population losses created by wartime and the Great Depression were not reversed. Suburbanization that began during the 1920s was clearly an enduring trend, and commentators began to recognize the the growth of outlying areas came at the expense of the central cities. Still, many commentators believed that no clear change in the prospects of cities had occurred and that there were technical solutions to the problems at hand, such as annexation. Others began to call for a rethinking of what exactly constituted the city itself, claiming that the broader metropolitan region might be the essential urban unit.

The growing number of African-American migrants from the South moving to northern cities in search of jobs and an escape from Jim Crow presaged a rapid, racially-charged change in the discourse about urban decline. The prospects for recovery were no longer seen as being as bright, and some commenters began to argue that cities were no longer worth saving. Others, however, began to see the moral dimensions of allowing cities that were rapidly growing poorer to decay and sought to show the growing inequalities between the central city and the suburbs. Federal urban renewal programs provided some momentary enthusiasm about reversing decline, but an increasing focus on race and the clear failures of that program quickly deadened any predictions of an urban turnaround. At this point, the rhetoric around urban decline was not about physical deterioration, but shifted to a social and moral deterioration that was deeply rooted in racism. With the election of Richard Nixon, the federal government no longer took direct responsibility for dealing with urban problems and a new focus on replaced traditional anti-poverty programs aimed at rebuilding industrial cities that were continuing to lose jobs and population.

But then, beginning in the late 1970s but coming fully into view in the 1980s, things began to briefly turn around as some higher income people began moving back into the cities. As the service-based economy consolidated their headquarters into central cities, higher educated workers followed them and began to gentrify neighborhoods that had previously been abandoned by the white middle class. Although this trend continued only in fits and starts, it did signal a major change in the perceived function of central cities – they were no longer centers of production, but of consumption. Beauregard’s analysis ends in the early 2000s, but it is easy to see how this trend has extended on into today.

Beauregard concludes by pulling at a deeper meaning in the discourse about urban decline. He argues that urban decline is a central part of American identity and political economy because a He claims that and cities are the essential loci of this interaction. Beauregard argues that the focus of the discourse on the cities themselves shields the broader issues of capitalism from public view. As cities become symbols for broader social forces that cause anxiety, the decline of cities is viewed with ambivalence and even acceptance.

This article is part of a blog series exploring books and articles written about shrinking cities, or communities that are losing population and dealing with housing vacancy and abandonment. For more information on this series, see the first post “Reading Series on Shrinking Cities”. These summaries are provided only for educational purposes and opinions expressed in these summaries do not necessarily reflect those of Greater Ohio Policy Center.

 

GOPC On The Road: Springfield

July 5th, 2017

This summer, Greater Ohio Policy Center continues to travel across Ohio visiting legacy cities. We have heard the struggles these cities face, but also the opportunities that lie ahead in these smaller legacy cities.

Most recently, we traveled to Springfield, Ohio, the county seat for Clark County. Springfield is 45 miles west of Columbus and 25 miles east of Dayton. Springfield is home to Wittenberg University, a liberal arts college which was founded in 1845. Below is a collection of pictures we took on our trip as well as a historic image of Springfield circa 1900.

 

 

Springfield, OH

Springfield, OH

 

Downtown Springfield, circa 1900

Downtown Springfield, circa 1900

 

Springfield, OH

Springfield, OH

 

Springfield, OH

Springfield, OH

 

Springfield, OH

Springfield, OH


 

GOPC On The Road: Marion, Hamilton, and Middletown

June 14th, 2017

This summer, GOPC staff will be traveling across Ohio as we engage in discussions with stakeholders in Ohio’s small and medium sized legacy cities. The GOPC On The Road photo series will be highlighting the rich history of these cities as the revitalization efforts that are currently being made. Over the past weeks, GOPC staff has already made trips to Marion, Hamilton, and Middletown.

 Marion, OH

Located in north-central Ohio, Marion is the county seat of Marion County. As of the 2010 census, Marion’s population was  36,837.  Former U.S. President Warren G. Harding was a resident of Marion for much of his adult life..

Marion Mural

Marion Mural

Downtown Marion

Downtown Marion

Marion Palace Theatre

Marion Palace Theatre

Main Street

Main Street

 

Hamilton, OH

Originally founded in 1791 as Fort Hamilton, the City of Hamilton is located in Ohio’s southwest corner. Hamilton is the county seat of Butler County, and part of the Cincinnati metropolitan area. As of the 2010 census, Hamilton’s population was 62,447. 

Downtown Hamilton

Downtown Hamilton

19146084_10155453780046133_1611863564455601078_n

Inside the historic Mercantile Building

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Historic Mercantile Building

Hamilton Mural

Mural of Alexander Hamilton

 

Middletown, OH

Middletown is located in Butler and Warren counties in SW Ohio. Middletown was incorporated by the Ohio General Assembly on February 11, 1833, and became a city in 1886. As of the 2010 census, Middletown’s population was 48,694. Recently Middletown received national attention from J.D. Vance’s New York Times bestseller “Hillbilly Elegy”, in which Vance describes his life in Middletown.

Port Middletown Mural

Port Middletown Mural

Chalk Art in Middletown

Chalk Art in Middletown

Main Street Middletown

Main Street Middletown

Mural in Middletown

Mural in Middletown

Shrinking Cities Reading Series Part IV: “What Helps or Hinders Nonprofit Developers in Reusing Vacant, Abandoned, and Contaminated Land?” In The City After Abandonment

June 7th, 2017

By Torey Hollingsworth, GOPC Manager of Research and Policy

Margaret Dewar discusses the differences in capacity in the community development field in Detroit and Cleveland in her article “What Helps or Hinders Nonprofit Developers in Reusing Vacant, Abandoned, and Contaminated Land?” The article, published in 2013, is focused around a central question – why are developers in Cleveland, where challenges related to demand for land that are nearly identical to Detroit, so much more successful in reusing vacant property? Although Cleveland is a smaller city, nonprofit developers there bought three times as many vacant properties as their peers in Detroit and completed twice as many projects on purchased land.

Dewar concludes that organizational capacity within community development corporations (CDC) is what separates the experiences of Cleveland from Detroit. Cleveland CDCs benefit from an established community development system that supports their actions and makes them more likely to succeed. A critical actor in this system is the city of Cleveland itself, which works closely with CDCs to enact its own neighborhood goals and provides the organizations with substantial funding through the Community Development Block Grant program. In Detroit, on the other hand, the relationship between the city and community development organizations was less collaborative and could be openly hostile. Detroit also provided a much smaller share of their CDBG dollars to local community development groups, something that Dewar concludes may be due to the city council’s at-large method of representation instead of a ward-based system that encourages spreading money across different neighborhoods. Additionally, the city of Cleveland was more effective in transferring property to nonprofit developers through its land bank while Detroit struggled to efficiently hand over land, particularly with a clear title.

DetroitSkyline wikicommons Cropped   Akron-Cle 012

Detroit, Michigan (source: Wikicommons) and Cleveland, Ohio (source: GOPC). 

Beyond city government, Dewar argues that CDCs in Cleveland have other significant advantages. Perhaps most importantly, a network of support organizations arose to help neighborhood-level CDCs take on more complex projects. Neighborhood Progress, Inc. (now known as Cleveland Neighborhood Progress) is particularly important, as they work directly on building local CDCs’ capacity and take on projects that would be hard for small CDCs to do alone. The Cleveland Housing Network can also help CDCs approach more complex or risky projects by serving as a developer and arranging financing. Detroit has neither of these kinds of organizations, although there is a trade association for local CDCs that has been moderately helpful in illuminating the challenges local CDCs are facing.

According to Dewar, personal relationships are also a challenge in Detroit more so than in Cleveland. In Cleveland, representatives of the community development industry report that most actors work collaboratively and focus on solving systemic problems together. Although a history of strained race relations exists in both cities, representatives of nonprofit developers in Detroit mentioned race as an ongoing issue in the local community development industry. According to these stakeholders, leadership in the industry is disproportionately white for a majority black city.  

Dewar concludes that the differences in the evolution of Detroit and Cleveland’s community development sectors have played out visibly in their abilities’ to reuse vacant and abandoned land. She suggests that stakeholders in Detroit can work to create a more robust community development system by reforming the city’s CDBG program, developing a local intermediary like Cleveland Neighborhood Progress, or create a regional, large scale non-profit housing developer like Cleveland Housing Network.

This article is part of a blog series exploring books and articles written about shrinking cities, or communities that are losing population and dealing with housing vacancy and abandonment. For more information on this series, see the first post “Reading Series on Shrinking Cities”. These summaries are provided only for educational purposes and opinions expressed in these summaries do not necessarily reflect those of Greater Ohio Policy Center.

 

Shrinking Cities Reading Series Part III: Why the Garden Club Couldn’t Save Youngstown

May 31st, 2017

By Torey Hollingsworth, GOPC Manager of Research and Policy

Why the Garden Club Couldn’t Save Youngstown by Sean Safford is a commonly cited work on struggling cities, particularly smaller ones. Unlike the other work profiled so far, Safford deals less directly with issues of vacant land but examines how civic capacity and social networks can influence a city’s path. Why the Garden Club Couldn’t Save Youngstown compares the trajectory of two very similar Rust Belt cities – Allentown, Pennsylvania and Youngstown, Ohio – and examines why Allentown has been more successful in rebounding from economic decline and adapting to the 21st Century economy. Both cities experienced significant crises as their primary economic engine – the steel industry – retooled in the 1970s, resulting in fewer local jobs and the eventual dissolution of each city’s key local company. Despite these challenges, Allentown has recently experienced economic and population regrowth while Youngstown has still largely not rebounded from the crisis of 40 years ago.

Safford narrows in on the social networks between economic and business elites as a key point of divergence between the cities. He traces the structure of social networks back to the founding of each city to determine its effect on the community’s response to later crises. In Allentown, business scions settled among the various cities and towns in the Lehigh Valley and built a spirit of friendly competition amongst themselves. This resulted in investment in civic, educational, and cultural institutions that were ultimately to the benefit of the community as a whole. In Youngstown, on the other hand, Safford finds that business leaders were more closely knit together and identified more with their class identity than another identity tied to place or ethnic group.

In Allentown, community leaders, including the president of Bethlehem Steel, sought to increase their own power by building stronger ties among members of disparate communities. In a particularly notable example, Allentown leaders worked to build a literal bridge between two communities and raised money and support for the project through a grassroots level campaign. The stronger ties among members of different economic classes that resulted from this effort helped build networks that were resilient in the face of eventual crisis. In Youngstown, on the other hand, Safford concludes that business leaders saw little personal value in engaging with the broader community and instead actively worked to pit ethnic groups against one another.

As the crisis in steel manufacturing loomed, leaders in Allentown responded by laying the groundwork for greater economic diversification. In Youngstown, business leaders doubled down on steel manufacturing. Once the crisis finally hit in the 1970s, Allentown was insulated from the worst effects of the downturn due to increased diversification. Local leaders turned to building local economic engines outside of the steel industry. In Youngstown, Safford says that business leaders essentially left the community on its own to figure out an answer – and the fragmented communities within the city all proposed competing responses to the crisis.

Ytown downtown

Youngstown, Ohio

Safford is able to follow the connections between economic elites in both cities to trace what kinds of networks produced the different kinds of results. He found that in 1950, economic connections in both cities are relatively dense among different powerful people. In Youngstown, those connections extended into the social realm as well, as many members of the economic elite attended the same churches and participated in the same clubs. In Allentown, social networks among economic players were much more diffuse, although a few key organizations appeared to connect many of the most prestigious leaders. Safford argues that Allentown’s more diffuse network allowed economic elites to respond to the crisis more effectively. Allentown’s social networks create multiple layers of interaction among participants that are connected but not identical to one another. When one of the layers went into crisis – as occurred in the economic realm – actors had other, insulated layers of interaction to pull from to creatively respond to the crisis at hand. Safford argues that actors were able to receive more and different kinds of opinions about potential responses to the crisis by hearing from a more diverse set of actors. Additionally, a broader set of leaders could emerge than the closed off set of “usual suspects” present in Youngstown.

Safford examined the network ties of the most powerful people in both cities again in 2000. His research showed a striking difference in the makeup of each city’s powerbrokers. Quite a few economic elites and political figures remained in prominent positions in Allentown, while in Youngstown power was much more concentrated among leaders of nonprofit organizations and educational institutions. Safford claims that Allentown was stronger because there were still economic leaders involved in its civic structure – and Youngstown suffered because that was not the case. There is little economic incentive for corporate leaders to actively participate in their communities, but in Allentown, the multiple layers of network ties led actors to find other value in participating in civic activities.

This article is part of a blog series exploring books and articles written about shrinking cities, or communities that are losing population and dealing with housing vacancy and abandonment. For more information on this series, see the first post “Reading Series on Shrinking Cities”. These summaries are provided only for educational purposes and opinions expressed in these summaries do not necessarily reflect those of Greater Ohio Policy Center.

 

“The Future of the Great Lakes Region”: New Urban Institute Report Explores How Decline in Manufacturing Industry is Shaping the Industrial Midwest

April 27th, 2017

By Torey Hollingsworth, GOPC Manager of Research and Policy

A new report from the Metropolitan Housing and Communities Policy Center at the Urban Institute examines economic and demographic changes over the past century in the Great Lakes region (Ohio, Illinois, Indiana, Michigan, Minnesota, and Wisconsin) and projects trends into the middle of the twenty-first century.  The report finds that that region’s reliance on manufacturing has created unique challenges that set it on a different path than the rest of the country. Importantly, the challenges in the manufacturing sector have deepened dramatically in the last fifteen years. Although there were major shocks to the manufacturing sector in the 1970s, employment in the sector recovered and eventually grew to its highest level in 1999. At that point, the sector experienced an even greater shock from automation and foreign competition, causing it to shed 35 percent of jobs in the region from 2000 to 2010.

This dramatic loss in employment had a number of important ripple effects. Manufacturing jobs pay an average of $78,000, dramatically higher than average wages in the region. As a result of the loss of manufacturing employment, the Great Lakes states saw a decline in higher wage jobs while other regions experienced growth. Meanwhile, other regions saw net job growth of 17.5 percent from 2000 to 2015, while the Great Lakes states saw only 3.7 percent growth in that time period. Notably, low-wage jobs accounted for all of this job growth in the Great Lakes region.

Toledo-glassmaking

Glass-maker in Toledo, Ohio

Demographic trends appear to mirror recent economic decline. The Great Lakes region has continued to grow population slowly, but the authors estimate that the region will stop growing by 2030 as baby boomers age and out-migration continues. Between 50,000 and 105,000 people left the region every year between 2007 and 2014, but out-migration appeared to slow after the end of the Great Recession. The timing of this trend is particularly impactful because it happened just as the millennial generation came of age and began entering the workforce. As a result, the Great Lakes region lost younger workers as other regions saw growth in this cohort.

The region’s workforce is aging, particularly in the manufacturing sector: people ages 45 to 64 account for 46 percent of manufacturing employees, up from 36 percent in 2000. The number of people in the workforce is anticipated to remain flat as baby boomers retire and young people leave the region. The authors predict that this could result in a tight labor market in the 2020s, potentially pushing wages higher if the workforce has skills appropriate for available jobs.

Despite population loss – or perhaps because of it – the region is becoming more racially diverse. The non-Hispanic white population has declined back to 1990 levels, while the African-American population is 17 percent higher than in 1990. The Hispanic population has seen the greatest growth – surging from 800,000 in 1990 to 3.1 million in 2015. Correspondingly, the foreign-born population in the Great Lakes region has grown, but not to the same extent as other parts of the country. The authors argue that efforts to invest in communities of color and mitigate long-standing racial disparities are crucial to the long-term health of the region. People of color are the only growing population cohort in the region, and will make up an increasingly large portion of the local labor force.

While many of the findings of the report are quite sobering, the authors suggest that wise investments in human capital, civic capacity, and community revitalization can help reverse decline by encouraging young people to stay and by sharing prosperity more broadly among residents. Recommended investments include sustainable financial support for upgrading and maintaining water and energy infrastructure to bolster economic development. Critically, these investments cannot be focused only on the largest metropolitan areas in the region. The Great Lakes states’ deep challenges are present – sometimes to an even greater extent – in small cities and rural areas as well, and efforts to restore the region’s prosperity must be fully inclusive of these communities.

New paper explores the connection between economic growth and opportunity in smaller legacy cities

April 26th, 2017

By Torey Hollingsworth, GOPC Manager of Research and Policy

A new report examining the role that funders can play in promoting equitable economic growth in smaller legacy cities was recently released by a collaborative of four Federal Reserve Banks and members of the Funders Network for Smart Growth and Livable Communities. The report features case studies from four smaller legacy cities – Cedar Rapids, IA; Chattanooga, TN; Grand Rapids, MI; and Rochester, NY – that have shown some signs of economic revitalization since the Great Recession. The report’s authors travelled to each of these cities to get a better sense of whether there was an “arc of recovery” for revitalizing smaller legacy cities and to see what lessons could be learned from these comparatively strong communities.

Instead of identifying a single arc of recovery, the authors observed that there are truly two arcs of revitalization in smaller cities: an arc of growth and an arc of opportunity. The arc of growth reflects improved economic performance, with stabilized or growing populations, increased jobs, rising household incomes, new business starts, and other signs of economic growth. The arc of opportunity, however, traces how widely the benefits of economic growth are shared within the community. While each of the cities examined were moving steadily along the arc of growth, few of them appeared to have made significant progress in spreading opportunity among all members of the community, particularly low-income and minority residents.

In studying the arc of growth, the authors found important common features among the case study cities. Economic revitalization in each of the communities was kick-started by some kind of catalytic event that convinced local leaders they had to take action. Leaders from a variety of sectors, including the business community and philanthropy, stepped in to address significant challenges. Critically, these leaders – locally-focused funders in particular – could provide access to long-term, patient capital to fund revitalization efforts that did not align well with the time-horizons of public dollars or most private capital. These projects were largely successful in reshaping downtowns, but their benefits did not spill into neighborhoods across the city.

Local stakeholders reported that conversations about revitalization were beginning to acknowledge that economic growth alone may not be sufficient to improve outcomes for all residents. This mirrors the conversation in the academic literature, which is increasingly coalescing around the notion that inclusive growth is more sustainable and robust than growth that only benefits some people. The authors conclude that local funders have a unique role to play in helping to unite the two arcs, due to their access to patient capital for revitalization projects and their role as conveners of cross-sectoral partners. In particular, funders can promote accountability in connecting growth with prosperity by continually raising the “equity question.”  

The authors also identified promising strategies that funders in the four case study cities had begun to pursue to ensure broader access to the benefits of economic growth:

  • Place-based interventions to address poverty: Funders are engaged in multi-generational, multi-pronged approaches to poverty reduction that are focused on a particular neighborhood or community.
  • Policy changes to address poverty: Funders are advocating for policies that help marginalized communities access opportunity and ensure that economic development efforts help alleviate poverty.
  • Focus on preserving affordable housing while revitalizing downtown: Funders are promoting investments in affordable and family-oriented housing near emerging employment centers.
  • Focus on business retention and supply chain recruitment: Funders are encouraging communities to place emphasis on retaining existing businesses through workforce development and focus recruitment efforts on companies in the supply chain of existing industries.
  • Develop new leaders: Funders are guiding communities to focus on ensuring the next two generations of civic leaders are cultivated and will work to connect the arcs of growth and prosperity.
  • Make evidence-based decisions:  Funders use and publicize data on neighborhood and regional conditions.

This piece raises important issues around how to ensure that urban revitalization efforts are equitable and sustainable in smaller legacy cities and beyond. As more communities recover from the Great Recession, these questions will become increasingly important in ensuring long-term growth and prosperity. 

 

Community Development Block Grants Proposed for Elimination

April 10th, 2017

By John Collier, GOPC Intern

The Community Development Block Grant (CDBG) is one of the longest running programs of the US Department of Housing and Urban Development. Beginning in 1974, the program has provided communities with a source of flexible funds to aid in affordable housing and anti-poverty programs. The future of the program is unclear, as the Trump Administration, in its 2018 Budget Blueprint, is calling for the elimination of the CDBG program.

The flexibility of the CDBG program sets it apart from other grant programs provided by the federal government. With CDBG grants, state and local governments have a large amount of discretion in how the money is spent, and require less federal oversight.

CDBG funds are allocated in two separate funding streams.  One goes to states and the other directly to cities meeting certain requirements. Seventy percent of CDBG funds are allocated to what is referred to as the CDBG Entitlement Program. This program distributes funds directly to large cities and urban counties. Eligible communities receive CDBG funds determined by a formula based on population, poverty rates, and housing units. Since the funding is based on a formula and depends on a number of factors, CDBG funding can vary from year to year. 

The other 30 percent of CDBG funds are allocated to the State CDBG Program. States award the CDBG funds to smaller units of government for a wide array of purposes. The State CDBG Program allows non-entitlement cities (typically cities with populations fewer than 50,000) to benefit from this CDBG program. In Ohio, CDBG funds are administered by the Office of Community Development at ODSA. The Office of Community Development outlines four areas for CDBG funding in Ohio:

  1. Community Allocation – projects including public facilities, services, housing, and economic development
  2. Neighborhood Revitalization – targeted investment in low and moderate-income neighborhoods
  3. Downtown Revitalization – targeted investment in façade improvements, streetscapes, and public infrastructure
  4. Critical Infrastructure – high priority projects, typically single-component projects such as roads and drainage, which provide a community wide impact

In 2016, Ohio received $137,566,074 from HUD’s CDBG programs, $41,292,727 went to the State Program and $96,173,347 was distributed through the Entitlement Program. Forty-five communities in Ohio were eligible for the Entitlement Program. The breakdown of expenditures of the State Program funds is as follows:

  • 55% for Public Facilities and Improvements
  • 20% for Housing
  • 14% for General Administration/Planning
  • 7.5% for Economic Development
  • 2% for Public Services

According to the State of Ohio’s 2014 Accomplishment Report submitted to HUD, state program funds benefitted an estimated 885,599 individuals through the various projects funded by CDBGs. One of these state projects took place in Preble County, which assisted the Village of Lewisburg in a revitalization of its downtown district. The funds helped repair building facades, install decorative brick pavers, decorative planters, sidewalks, etc. In Miami County, state CDBG funds were utilized in a critical infrastructure project. CDBG funds allowed Bradford Village to replace 1,250 feet of water lines as well as to install 3 fire hydrants. The project benefited the entire village.

While total CDBG disbursement has decreased every year since 2002, it may now be completely eliminated. President Trump’s proposed 2018 Budget requests a $6.2 billion or 13.2 percent decrease in discretionary funding for HUD from 2017 levels and a complete elimination of the CDBG program. The blueprint claims the program “is not well-targeted to the poorest populations and has not demonstrated results” and aims to redistribute the funds to other activities.  The CDBG remains a valuable source of flexible funding for community development, and there is no obvious replacement source for cash-strapped communities.  Federal lawmakers need to carefully consider the merit of the program before making any changes.

For more detailed information on the CDBG program visit the HUD Exchange.

 

GOPC Assesses Suitability of Replicating Peers’ Funding Tools to Support Affordable Housing in Central Ohio

March 31st, 2017

By Alex Highley, GOPC Project Associate

The Affordable Housing Alliance of Central Ohio (AHACO) has released a new report, The Columbus and Franklin County Affordable Housing Challenge: Needs, Resources, and Funding Models, underscoring the difficulties many residents face in obtaining affordable housing in Columbus and the surrounding suburbs. Informed by Greater Ohio Policy Center (GOPC) research, the report then investigates ways that the public sector can aid in increasing the affordable housing supply. GOPC’s systematic study of tools and programs that have been successfully used in cities outside Ohio highlights opportunities for expanding affordable housing in and around Columbus.

With Central Ohio’s population growing at a substantial rate and wages not keeping up with increasing rent prices, affordable housing is harder to come by for renters in the region. Between 2009 and 2014, median rents went up by almost twice the rate of median household incomes. Given that Franklin County poverty rates are growing, including in most of the major suburbs, many new job openings do not pay a “housing wage,” and the stark spatial mismatch between where jobs are located and where people live, AHACO concluded there is a strong need for new affordable housing. AHACO sought GOPC’s expertise to deliver robust research of viable models that could support much of the good work already being done throughout communities in Columbus to improve affordable housing opportunities for residents.

Click Here to Access the Executive Summary and the full Report

Methodologically, GOPC conducted an extensive literature scan and internet search to assess the funding mechanisms that communities around the country employ in order to spur the creation of a rich and diverse set of housing choices. In total, GOPC studied 40 funding mechanisms in 25 communities in detail. GOPC judged the merits of possible replication in Central Ohio by comparing the respective cities’ demographic data, summarizing the cities’ relevant economic conditions that made implementation of the tools possible, and concluding with weighing the advantages and limitations of mirroring the tool in Central Ohio. Examples of successful tools and the cities they are used in are listed below.

  • Seattle, WA – Dedicated Property Tax Revenue – $340 million generated over 20 years
  • Austin, TX – General Obligation Bonds – $120 million generated over 7 years
  • Portland, OR – Tax Increment Financing (TIF) – $107 million generated over 4 years
  • Washington, DC  - General Fund Appropriation – $48 million generated over 1 year
  • San Francisco, CA – Linkage Fees & Impact Fees – $188 million generated over 9 years
  • Denver, CO – Inclusionary Zoning: Developer Set Asides – $7.6 million generated over 13 years
  • Denver, CO – Social Impact Bonds – $8.7 million generated over 1 year

Along with explaining the mechanism of each tool and highlighting the number of affordable housing units produced through the program, GOPC discussed the tools’ applicability to Columbus. In many cases, the tools already exist and are used to some extent, or current law precludes their usage towards affordable housing purposes. For instance, General Obligation bonds issued by a county, township, or municipality can be used for housing construction costs, but may not be used for a rental or operating subsidy in Ohio. The county sales tax offers another opportunity; the current temporary permissive Franklin county sales tax of .25% generates over $58 million per year. If this revenue were to be directed toward affordable housing purposes, then this would represent a sizable amount of revenue available for funding solutions should voters renew the tax in 2018.

To understand how many new units of affordable housing could be created using these tools, GOPC estimated the total costs of various housing projects. For instance, permanent supportive housing costs $165,000 per unit to build and $7,000 per person per year in operation costs. GOPC also reviewed the feasibility of particular tools from a legal standpoint. For example, Franklin County has the authority to devote general funds toward rent subsidies, similar to the Local Rent Subsidy Program used in Washington DC. To conclude the report, GOPC created a chart for the Appendix which organizes each funding source according to the political subdivision (states, cities, counties, etc.) that may implement a program to support affordable housing along with whether that program is currently being used for housing purposes in Franklin County.

Click Here to Access the Executive Summary and the full Report