Smart Communities

Urban Growth Boundaries: A “Smart” Approach for our Communities?

I recently attended a lecture on Smart Growth strategies, implementation, and implications, where the speaker discussed his work analyzing eight cities with varying degrees of implementation of Smart Growth measures.  At one point, he showed a graphic ranking these cities 1-8 in several categories.  Portland, a city chosen for the study due to its highly touted Smart Growth plan and strict Urban Growth Boundary (UGB), ranked high on several measures related to growth management, but lowest of all in housing affordability.  This got me thinking: is Smart Growth actually a smart strategy for our cities, which are typically home to many low- and moderate- income residents?

Since the 1970’s, UGBs have gained widespread popularity, have been instituted in over 100 cities, and are required by the state governments in Oregon, Washington, and Tennessee.  Essentially, a UGB is a line drawn around a city, outside of which development is limited or, in some cases, prohibited.  UGBs are used as a strategy of directing higher-density development into the cores of cities, thereby controlling growth and acting as a strong antidote to suburban, low-density sprawl.  Sounds great, right?  Well, it seems as though they are a little bit more complicated than they initially appear.

 

The Affordability Argument

Many people argue against UGBs on the basis that they result in a loss of affordable housing within the boundary.  The crux of this argument is that, logically, when growth is constrained, development will slow, and housing demand will rise disproportionately to supply, resulting in an increase in housing costs and a decrease in overall affordability.  This case is argued by Samuel Staley and Gerard Milner, who oppose the implementation of UGBs due to this negative effect upon affordability.  Between 1985 and 1997, they demonstrate a 158% increase in average values for single family homes in Napa, California; this time period corresponds to Napa’s implementation of growth controls.  Along similar lines, in Portland, Oregon, between 1995 and 1997, 80,000 units previously deemed “affordable” were lost to rapid market appreciation. 

Staley and Milner argue that even the successes associated with UGBs are double-edged swords.  The UGB in Portland has achieved its goal of downtown revitalization: the lack of vacant, developable land within the boundary has led developers to build new construction within the city core.  This achievement, however, has an unrecognized downside: with revitalization has come gentrification, and Portland’s low-income population has nowhere else to go.

 

The Counter-Argument

 The logical argument connecting growth constraints and decreasing affordability may not hold water, however.  A recent paper prepared by Arthur Nelson, Rolf Pendall, Casey Dawkins, and Gerrit Knapp for the Brookings Institute claims that it is not actually land constraints, but rather market demand, that have led to the increases in housing cost in Portland.  In fact, they claim that, since a spike in housing price in the mid 1990’s, Portland has seen housing prices rise at approximately the national average.  On top of that, they make the case that traditional land use regulation can have this effect on affordability as well, for many zoning codes have minimum lot sizes and maximum density requirements that allow only for more expensive development, effectively eliminating low-income individuals from participating in the housing market.  Looking at the issue in light of these counterarguments, UGBs don’t seem to negatively affect housing affordability any more than typical land use management, implemented across the country.

 

How To Proceed?

Both sides of this debate have logical and legitimate arguments, making it difficult to determine which has it right. It’s a fact that Portland has problems with affordability: the city has recently risen into the top ten least affordable cities in the United States, with an average housing cost to income ratio of 4.2 (anything over 4.1 is considered “seriously unaffordable”).  Ultimately, I’m not sure there’s enough research to say definitively whether this unaffordability is due to the city’s UGB, or just the fact that Portland is apparently an incredible place to live, and therefore must attract a large number of people, and, subsequently, housing demand.  In case Smart Growth is to blame, though, to make sure that it really is a smart decision for our cities, cities should make sure to pair UGBs with the following strategies:

• Make sure to increase density.  Some possible ideas:
  • Incentivize density: Cities can upzone their districts all they want, but without incentives, they may not be able to achieve the high levels of vertical growth required to offset the loss of horizontal growth.
  • Minimum density standards: Metro, Portland’s regional planning body, has instituted a minimum density standard of 80% of the maximum density, for all new housing development (with a few exceptions).
  • Promote hidden and invisible density measures, such as alleyway housing and accessory units.  These are strategies that can be used to increase density, especially in neighborhoods dominated by single-family detached homes.  These units are often much smaller than the home they are associated with, and therefore provide a more affordable option in otherwise unattainable neighborhood. 
  • Create an inclusionary zoning plan.  Inclusionary zoning can be used to set minimum requirements for affordable housing in all developments.  Portland’s ordinance allows for reduction in development fees, priority permitting, density bonus’, and reduction in parking requirements in exchange for the development of affordable housing. 
  • Promote transit-oriented development.  If homes are built in areas that are accessible to public transportation, the necessity of owning a vehicle is reduced. While this does not reduce housing price, it can offset this cost by reducing commuting and vehicle maintenance costs. 

 

Guest Contributor:  Margot Elton

 

 

 

Proposed Rule to Patch Holes in HUD’s HOME Program

The U.S. Department of Housing and Urban Development (“HUD”) touts its Home Investment Partnership Program (“HOME”) as “the largest Federal block grant to State and local governments designed exclusively to create affordable housing for low-income households.”  Each year, HOME allocates roughly $3.2 billion to states and localities for a wide range of activities, from home purchase finance assistance to the construction of new housing. From its inception, HOME was intended to provide partnering jurisdictions with flexibility, and relatively few restrictions have traditionally been placed on the federal grants. Recently, however, this flexibility has proven to be one of the program’s greatest weaknesses.

 

 In 2011, The Washington Post released the results of a yearlong investigation of the HOME program demonstrating widespread mismanagement of HOME funds by participating jurisdictions and a shocking lack of oversight by HUD. The Post’s original report revealed that of the 5,100 “major projects” funded through the HOME program at the time of the investigation, 700 had been “idling for years,” some for over a decade. In total, these idle projects represented $400 million of federal investment. The Post identified five major problems with the use of HOME funds for low income housing construction and renovation, including:

 (1)  funding awarded to inexperienced developers for shoddy work;

(2)  funding awarded to developers without land, financing, or permits in hand;

(3)  a failure of local and state housing agencies to cancel bad projects or keep HUD informed;

(4)  HUD’s failure to impose additional requirements on participating jurisdictions despite knowing of the widespread problems, and

(5)  HUD’s lack of authority to demand repayment from participating jurisdictions of wasted or mismanaged funds.

 

 In November of 2011, the Post released an article adding 75 idle HOME-funded housing projects to the list of 700 discover earlier in the year. The newspaper also identified severe problems with HUD’s traditional method of tracking the success of the program.  The Post’s reporting led to a Congressional probe and a cut in HOME funding for 2013 by nearly 38 percent, generating protests from housing groups across the country.  HUD officials also vigorously denied the paper’s findings, although the department quickly began a process to introduce new, tighter regulations to oversee HOME program spending.

 

According to HUD, in addition to improving the department’s data collection and reporting system, the new regulations would:

 (1)  Require state and local governments to adopt policies and procedures to improve their oversight of projects, develop a system for assessing the relative risk of projects, and more closely monitor their HOME-funded sub-recipients;

(2)  Require state and local governments to assess a developer’s capacity and the long-term viability of the project, before they commit HOME funds to a project;

(3)  Require more frequent reporting by state and local ‘participating jurisdictions’ to enable HUD to more closely track projects once they’re under way; and

(4)  Set a higher ‘performance bar’ by establishing specific timeframes for taking appropriate corrective actions against participating jurisdictions who fail to complete what they started.

 

A subsequent article in the Post called the monitoring required under the new rule “unprecedented,” and noted a number of additional requirements, including a four year limit on construction, after which a project will be automatically terminated.  The proposed rule is significant in size, running nearly forty pages in the Federal Register. Public comments on the rule were due in February of 2012. If the rule is adopted by HUD, it should address many of the problems identified in the Post investigations and ensure that future federal dollars are more wisely spent in constructing and rehabilitating low-income housing.

Guest Contributor: Nick Dumais

 

This Election Season, Let’s Vote for the Future of our Communities

The long-winded and winding primary for the Republican party’s presidential nominee has all but come to a close. Despite the flashing parade-like rise and fall political characters, few are surprised that Mitt Romney will challenge Barack Obama for the White House this November. Furthermore, there seems to be consistent agreement on what the major topics for debate and contention are in the months ahead. Campaign ads and election news cycles will ensure we don’t forget about our gridlocked political system and still-ailing economy. 

 If the coverage of an election in the media has its roots in the personal lives and sound-bites of our leaders then it feels like a big part of democracy is not being taken seriously—the needs of voters. Mainstream election-cycle coverage dilutes the well of useful information available to voters with too much triviality. Insufficient and superficial coverage of political campaigns alienates voters from active and vocal participation in the political process. Political gossip breeds little other than an empty banter humming in our cars and living rooms. Does this help explain why 43%  of the Voting Age Population (VAP) did not vote in 2008 and furthermore why 28% of the VAP is not even registered to vote?

Shrinking voter participation rates since the Sixties are a result of factors greater than mainstream media outlets’ misrepresentation of political dialogue and its implications (i.e. why is low voter turnout not a pressing news topic). A convincing argument can be made that poor voter turnout occurs, because voters do not believe that they have a stake in the political process and that voting will not affect their lives.

 The most distressing element of this argument is its affect on young voters.  Not only do they have the most remaining years to vote, but they are also tomorrow’s leaders and politicians in our communities and nationally. Young voter turnout rates declined steadily from 1972 onward but then began to climb in 2004. They surged even higher in 2008 due to an exciting political dynamic, but even more so to substantial "get out the vote" and voter registration drives.

 Advancements in communication and Internet technology also harnessed young voters’ attention and better engaged them in the voting process than traditional media outlets. In this November’s election digital and social media will be utilized even more to reach voters as the social landscape of our communities has evolved.

 When viewing recent voter participation trends and exploring means to increase voter turnout, perhaps the best wisdom comes from the past. Our nation’s third President (and the Father of University of Virginia) Thomas Jefferson wrote that the surest safeguard of our democracy is “the diffusion of knowledge among the people.” The hope that an educated citizenry would be an active, caring one serves today as a pointer of how we can not only engage more voters but also how communities can produce young people who value participatory democracy.

Every four years political analysts and reporters proclaim that the presidential election will make or break a cause. This is the year for women. This is the year for Christians. This is the year that the ultimate fate of our country will be decided.  But maybe the real concern communities and voters should have is making sure their voices are heard and that leaders will address their needs. Voting is an individual’s role in holding leadership accountable—but it’s more than that. To vote is to have a stake in our communities’ future. Practicing democracy now helps secure the ability to strengthen our communities and society for generations tomorrow.

Guest Contributor: Clay Kerchof

 

 

 

 

Female Leaders in Community Development: What it Means to be an “Urban Princess”

 This week, I opened my mailbox to find a familiar bulging envelope mailed from my parents’ law firm.  I knew the letter was from my father.  He has sent me occasional articles or family news through snail mail throughout my three years at college, knowing that I barely ever remember to check the mailbox.  The hand written address on the envelope was more evidence of his sometimes stubborn commitment to the traditions of the old southern gentleman.

 The article inside, however, is contrastingly modern. Torn from the Wall Street Journal Magazine, the piece describes Amanda Burden, director of New York’s city planning department.  Working closely with Mayor Bloomberg, she has led the effort to rezone much of the city and to revitalize areas along the waterfront.   She is known for her pickiness in even the smallest details of site plans, often driving developers to become frustrated with her suggestions about plant placement or rooftop cornices.  At the same time, Burden is obviously also able to macro-manage, as one of her most important contributions has been to use inclusionary zoning to promote affordable housing projects in East Harlem, Brooklyn, South Bronx and High Line.

 The most interesting part of the article, and the reason I know my dad recommended it to me, is about how Burden negotiated the male-dominated spheres of architecture and real estate development.   Partly because she is a woman who seems too obsessed with the small things, and partly because she comes from a wealthy, elite background that cast her as somewhat of a socialite in her youth, Burden had trouble getting people to take her seriously.  She developed the unusual tactic of using her reputation to her advantage saying, “I used everything in my power—my brain, my looks, my powers of persuasion.”  Burden wields her “social prowess” as a weapon against her critics, ironically using her reputation as a social elite to promote an affordable housing agenda. 

 The article drew my attention towards the role of female leaders in this field of community development.  Recently, many including Sheryl Sandberg, have argued that women bring valuable strengths to leadership positions including being detail oriented, more empathic, and more willing to work on conflicts through mediation.  These traits seem particularly well suited for community development.  Pair this with women’s higher likelihood of volunteering at the grassroots level of an organization, and there seems to be much potential.  Burden certainly demonstrates a level of success; she is well respected by her peers and her plans are being studied around the globe, especially in Hong Kong and Singapore. 

 At the same time, the article insinuates that Burden must prove an extra layer of toughness for people to consider her a serious player.  The almost full-page picture of the chic woman in the Chanel suit has her arms crossed assertively.   The woman obviously gets what she wants, but she also has to fight for it from “difficult, demanding men”.  Taking this as a message from dear old dad, still writing drawn out letters on an old legal pad, seems to represent a willingness to respect this new kind of female leader and the pressures she faces.  Community development, it seems, has a future to look forward to, wrapped in an old fashioned envelope.   

 Guest Contributor: Candace Pearson

 

 

 

Living Tight: Shifting Popular Perception of How Much Space Is Enough

Can you imagine another time period in history when someone actually made a living by writing books on how to organize or sort through all of your stuff?  Amazon.com lists over 19,000 titles related to organizing the home in order to reduce stress, simplify your life, and bring you one step closer to that elusive state of contentedness when you finally plop down on your couch with a glass of wine and say, “It is done.”  The problem is that after taking a sip and flipping on the TV you will find a barrage of reality shows about hoarding that are grotesquely mesmerizing and slightly depressing but hard to resist.  It’s a fact—we have too much stuff in the United States and we could all do with less.  The conundrum is complicated by the fact that some of those amassing “stuff” lived through some tight times themselves.  Depression-era mindsets put great value on manufactured goods but when you consider the short shelf lives of technology today you are left with people saddling unnecessary monthly costs for storage units holding 1980s latest fashions, yellow-paged Janet Evanovich novels from that beach trip in ‘91, and a VHS collection that once drew the admiration of neighbors.  This has become a serious sickness with which the mental health field now contends. 

            A simple solution that is slowly gaining in popularity and bubbling up through major media outlets is learning (or relearning for some generations) to inhabit smaller spaces.  The idea is simple—smaller spaces necessitate better organization and more thoughtful design.  The preferences of each generation ebb and flow, often acting as counterbalances to our parents’ desires as we seek to set ourselves apart and try something different.  In the 1950s and 60s, an entire family with three children sharing one bathroom was the norm.  Now, we need  instructions on how to share a bathroom without spontaneously combusting or committing murder.   My partner and I talk about living spaces a lot—what’s enough, what’s too much, how to pare down our belongings.   She bought an RV and lived in it for her last semester of college in Miami, FL—talk about a lesson in organization and learning what’s necessary to live well.

            So why has the American ideal of how much space is enough to live comfortably risen over the past few decades?  The answer to this question is closely tied to the underlying functions that housing provides—security, an investment (for owners and a nagging money gobbler for renters) and a private respite from public life.  Theories about the increase in housing size abound:

• “It’s all about context.”  The achievement of considerable wealth by a number of Americans shifts the farm of reference, claims Robert Frank, professor of Management and Economics at Cornell. 
• “Atomizing of the American family.”  We have our fair share of distractions today.  Many white collar jobs require long hours hunched at a desk clicking and responding to stimuli on a screen.  Teenagers glue their faces to phones and shoot off 200 text messages in a day, easy.  John Stilgoe, Landscape Architecture Professor at Harvard, sees massive house sizes as indicative of family members who no longer have to share space, interact in a meaningful way, or compromise. 
• Purchasing larger homes seemed like a logical investment and a great way to build equity at a faster rate than the previous generation.  “How the heck would you expect my family and our stuff to fit into THAT?!”  The housing collapse over the past few years revealed shortcomings in that line of thinking, though. 

The counterforce to the McMansion phenomenon that some have called dead with changing attitudes in the Great Recession is the Small Houses movement.  Sarah Susanka’s The Not So Big House is credited with starting the Small Houses movement, but I think the movement derives much more from rationality and a number of people stepping away from widely-adopted middle class norms of living space and fruitless competition with neighbors to reexamine what they truly need in a living space.  I actually found Susanka’s idea of a “not so big house” to be quite antithetical to the real small spaces movement.  The Atlantic Cities recently had a great write-up by Emily Badger on the allure, practicality and even voyeuristic addiction of viewing small houses. 

The small house movement still maintains a fringe status but has garnered some mainstream attention.  Mimi Zeigler, who has written two books on small houses, seems more true to the essence of the small house movement and typifies the types most attracted to them:

• “First, she says, there are the people who are into tiny homes because they want to decrease their environmental footprint, to live smaller, with less stuff in less space. These are not your New York studio apartment-dwellers, people who live small because they have to. These are the Walden types.”  They include DIYers (Do-it-yourself), homesteaders, and anyone with an interest in simplifying and streamlining their lives to avoid the negative health effects associated with material clutter, among many other valid reasons.
• “Next are the people who are tapping into kawaii, the Japanese concept that means, Zieger says, “more than cute – the quality of cuteness.”(Skip Wikipedia’s write-up and see ‘Coffee Land’ skit from Portlandia for insight into kawaii.)

The concept of kawaii honestly befuddles me.  A more inclusive description would be those fans still in the nosebleed bleachers of the sideline—they’re interested in observing and maybe see the benefits of smaller living spaces but aren’t ready to give up their 2,000 sq. feet of living space just yet (or ever). 

• Lastly, you have the puzzle people.  They see a small space as a challenge in which to fit furniture, belongings, and appliances.  They have no interest in reducing belongings but figuring out where to put them all.  A number Americans could naturally fall into this category if they had the gumption to take on the challenge. 

These are interesting typifications of people who are drawn to small houses, but how do these principles apply in a broader national context of an ongoing affordable housing crisis, thirty five years of stagnant wages, and an average, overworked American who has no time to coo over small space postings online but must choose from rental housing stock in her community or find herself on the street? 

Shifting the collective psyche of a critical mass of people in America to embrace small spaces and reduced consumption will be no small task.  These are some ways in which affordable housing in particular could benefit by embracing it:

• Lower construction and maintenance costs.  To architect Dean Goodman, it’s simple mathematics.  If you reduce the size of a home or apartment, it requires fewer materials and loses less energy traveling through wires and pipes.  Habitat for Humanity specifies that a three-bedroom home in North America may be no larger than 1,050 sq. ft.—a reasonable standard sufficient for a 4-member family. 
• Lower taxes paid on housing by affordable home builders and occupants.  Property taxes in states like Texas are assessed based on property value, which is intertwined with square footage.  Smaller homes=cheaper property taxes in some states.
• Health benefits to tenants.  Kentin Waits suggested in his piece (see above link) that living in smaller spaces may encourage us to be outdoors more and presumably more likely to be engaged in physical activity.  There’s no doubt that spending time outdoors has benefits to both adults and children, but it would be interesting to see data on the effects of smaller spaces on time spent outside by subsidized housing residents.   It has already been shown that children living in public housing play outside more.  More adult eyes and feet present on the street could embolden community policing efforts and combat widespread diabetes and obesity among low-income individuals.
• Mobility.  With a selling prices as low as $20,000, tiny homes on wheels can be purchased.  While this would probably fail to suit the needs of an entire family, low-income individuals or couples could benefit from the increased mobility.  The biggest challenge may be finding a suitable place to park the units with appropriate hook-ups for water and.  Additionally, there’s a need for zoning approvals for mobile residences and land to be acquired for infrastructural arrangements like RV parks to accommodate units.  With the disinvestment and flight of employment opportunities from central cities and inner-ring suburbs over decades, the tiny mobile house could be a mechanism to quite literally chase those fleeing jobs.  Although, this does not address the desire of most low-income individuals to remain within their communities.  15-20% of Americans already relocate once a year, with the majority of them being low-income individuals who rent, so this could still be a better alternative. 

 

As with any ‘trend’, the staying power of the principles of this movement has been called into question and labeled a temporary response to the intense financial burn that so many Americans experienced in their housing investments over the past five years.  The concept of shedding material belongings and adapting to more miniature spaces than we are currently accustomed to is not revolutionary.  It’s where we’ve come from and could very well be where we’re headed.  We shouldn’t fear or disparage it, but use it as an opportunity to pick our elder’s brains, ask them what it was like for them and take some cues from their formative experiences in living arrangements below the 2,000 sq. ft. mark.  The next step is figuring out what to do with newfound time, money, and sanity not spent cleaning or maintaining a house or worrying about our neighbor's judgments.

Guest Contributor: Lucas Lyons

 

What's in the Numbers: Understanding Employment Data & Workforce Development

When the national unemployment rate was revealed on April 6 – as it is the first Friday of every month – most people probably heard about it on the news. Analysts, economists, and others  debated, as they always do, whether the rate is “good” or “bad” and its various implications. What does it mean for the economy? Are employers hiring more workers and in what industries? How will businesses and the stock market react? Who will it help or hurt in the upcoming fall election?

 While all of these questions are certainly relevant, a bigger question – and one that we should be asking more often – is who actually understands these numbers and how are they using them to find jobs or guide their careers. While many people are familiar with the difficult job market and realize that the unemployment rate has reflected this reality to some degree, very few probably know where the employment data come from and how they can use this information to their benefit. After working for a year at the U.S. Bureau of Labor Statistics (BLS), the government’s principal agency responsible for measuring labor market activity, I came across this reality on a daily basis. Too often, it seemed that many job seekers, ranging from laid-off construction workers to recent college graduates, struggled to access and understand data relevant to their potential career paths.       

 Whether workers are looking to transition to a career in a growing field or considering to move to a city with low unemployment, labor market information can serve as a useful guide in the decision-making process. With a lack of time, knowledge, and resources, however, many individuals may find it difficult to obtain data, despite it being free and readily accessible online. Think about it: if you come from a low-income community, do not own a computer, and must balance two (or more) jobs to make ends meet, are you going to consider or even know about this information? If you have been unemployed for over a year and have little guidance when applying to jobs, are you going to necessarily look at employment data first and then make decisions? Realizing the importance of this information to workers and employers, government bodies at the federal, state, and local level have sought ways to disperse data and expand public outreach as part of workforce development strategies.

 At the federal level, BLS provides a wide range of data that highlight overarching trends in unemployment, workforce characteristics, and occupational employment among other statistical information. Depending on the specific data released, individuals can access timely articles, interactive maps, and detailed reports to guide their decisions. The Current Population Survey Program, for example, provides a comprehensive body of data on the labor force, hours of work, earnings, and other demographic characteristics. In contrast, the Job Openings and Labor Turnover Survey Program produces data on job openings, hires, and separations by industry and region. The Occupational Outlook Handbook serves as perhaps the most useful resource for students by describing the pay, work environment, and employment growth in hundreds of occupations. Job seekers, for instance, may be interested to find that personal care aides, home health aides, and biomedical engineers are the three fastest-growing occupations, which are all expected to grow more than 60 percent in total employment over the next ten years.  

 State and local government bodies, likewise, have prioritized the expanded access of labor market information. Similar to other states, the New Jersey Department of Labor and Workforce Development, for example, releases articles, maps, and fact sheets to illustrate various industries and occupations. Interactive online tools, including a “Real Time Jobs in Demand” tool, allow individuals to locate jobs by browsing listings that are aggregated from employers throughout the state.  In much the same way, the Oregon Labor Market Information System aims to provide useful, readily accessible data on job training and emerging employment opportunities to address persistent unemployment, the state’s “key workforce challenge.” At a more local level, workforce investment boards and other community development bodies have explored ways to expand access to data. The Los Angeles Workforce Investment Board, for instance, provides a directory of labor market tools on hiring and salary trends. In recent years, the use of social media, ranging from Twitter to Facebook, has also become increasingly important in One-Stop Career Centers to raise awareness of available data. 

 As the job market begins to recover from the economic downturn, the importance of labor market information should not be overlooked. For both workers and employers alike, gaining access to relevant data is an essential part of workforce development. Federal, state, and local government bodies should continue exploring ways to release data to those who can benefit from it most in the months and years to come. 

Guest Contributor: Joe Kane

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Green Jackets Come From a Real Community

In the sporting world, the Masters golf tournament has come to represent a tradition of excellence that few other events can match.  Residing at Augusta National Golf Club, nestled in the picturesque scenery of northern Georgia, the tournament has built a reputation of competitiveness, but one with dignity and class.  (While the ongoing debate on club membership focuses a different lens on the club but from a golfing point of view, it holds the US equivalent stature of St. Andrews and vice versa.) So when I learned I’d be traveling to Augusta, Georgia last spring for a service trip, I half expected to see manicured lawns and plantation homes lining the streets.  The reality of Augusta is a little different.

 Last year Augusta was ranked as having the 9^th highest suburban poverty rate in the country by the Brookings Institution with 16.9%.  For Augusta-Richmond County itself, this value is 23.7%, exactly 8% higher than the national average.  This fact particularly struck me when we went downtown one evening.  As the 2^nd largest metro area in Georgia, with approximately 556,877 residents, we were surprised to find the quaint buildings all but vacant.  The only store we actually found open was a small but delicious cake shop (who’s food is called “as familiar as an old Gospel hymn” by Southern living) down one of the side streets. 

Augusta National, a private club, opens its gates but once a year to the public.  Even then, many residents of Augusta can only get tickets to the practice rounds.  The cameras never stray from the course and perhaps there’s no reason to.  During the single week in April the money rolls in by the millions.  In fact, locals rent out properties for Masters week, often at a huge profit.  The Chamber of Commerce’s Masters Housing Bureau even helps negotiate prices for a 7% commission, all of which is invested back in the city.  Combined with restaurant sales, shopping, and hotel accommodations, the city always has a reliable source of revenue.

Perhaps that’s the key then.  Perhaps reliability is the way to brand Augusta.  The unemployment rate is about 9%.  Not bad.  The highly trained workforce from nearby Fort Gordon (military base), Augusta State University, Augusta Technical College, and Paine College were cited as reasons why Starbucks is opening a new manufacturing plant there.  Fort Gordon and the Medical College of Georgia (and its hospital) are major, stable employers in the area.  Fort Gordon has the largest communications training center in the nation, employs about 27,000 military and civilian workers, and is estimated to have a $1.4 billion economic impact on Augusta.  The Medical College of Georgia employees about 7,800 employees and generates about $2 billion for the Augusta area.

With a “tradition unlike any other” the Masters is the only PGA major that returns to the same place every year.  Perhaps it’s because of the beautiful course and the wonderful climate.  Perhaps it’s also because the PGA realizes something that other businesses haven’t.  In economic hard times the military and health systems are very stable industries.  There are always wars to be fought and sick people to take care of.  Pair this with strong training institutions that provide lots of skilled labor and you have quite a recipe for success.  It’s no wonder, then, why Augusta fluctuates between the Brookings 20 best and 20 worst performing cities each year.  It does relatively better in poor times, but doesn’t grow as much in good times.  It’s a reliable, stable economy that somehow slips under the radar.

As the Masters rolls through town again this week, it’s easy to get lost in the leaderboard and forget about the problems of Augusta.  But it’s a different “tradition unlike any other” that holds promise for the future.  The unique economy truly makes Augusta a green jacket city, and it seems about time the business world noticed. 

Guest Contributor: Rick Passerelli

 

To Rent or To Buy – The Role of Homeownership after the Housing Bubble

Housing issues seem to come up on a daily basis. The news is flooded with information about housing starts, the strength (or weakness) of homes sales, foreclosure rates, underwater mortgages, the availability of credit – the list goes on and on. A recent article in The Guardian, a news journal from the United Kingdom (UK), titled “Brits buy homes, the Germans rent – which of us has got it right?” . The article noted that while the homeownership rate in England is much higher than that of Germany (69% vs. 42% respectively), the number of renters is increasing in the UK.  This piqued my interest.  I wondered, given the current economic downturn, due in large part to the housing industry itself, should the balance between homeowners and renters change in the post-recession economy?

 Historically, homeownership has been and continues to be central to the American dream.  Since the Great Depression government policies have been designed to promote homeownership.  Many studies have documented the virtues of homeownership – neighborhood stability, higher education achievement, greater civic participation, improved health, and increased safety.  However, the underlying assumption has always been that home values would not decline and, more than likely, would increase.The burst of the housing bubble has shown us that this is no longer a safe assumption.

 In its 2011 “The State of the Nation’s Housing” report, The Joint Center for Housing Studies of Harvard University observed several significant changes in the US housing and rental markets:

• While single-family housing vacancies were relatively unchanged from 2008 to 2009, rental vacancies have fallen creating upward pressure on rental rates. 
• Well over one-third of US households pay more than 30% of their income on housing (HUD’s generally accepted standard for determining housing affordability).
• Furthermore, in 2009, more than 19.4 million households paid more than 50% of their income for housing (the distribution was almost equally split between homeowners and renters).
• The US’s homeownership rate has fallen from its peak of 69% in 2008 to below 67% and, depending on foreclosure trends, may continue to fall.
• A Fannie Mae survey showed that the number of renters who believe that buying a home is a safe investment is sharply lower than in 2003 and continues to decline.

 These observations should not be overlooked as we continue to climb out of the Great Recession.  Affordable housing is needed now more than ever yet external factors are working against it.  Reduced access to credit due to higher income, down payment and credit score requirements, while justifiable in light of the subprime mortgage crisis, will continue to hinder homeownership opportunities. This disproportionately affects the low- and middle-income families who are also facing the resultant rising rental rates.

 As the baby boom generation ages and begins to exit the housing market, there is not an ample market waiting to enter. And the future impact of the echo-boomer generation (those born 1986 and later) is less predictable than previous generations.  Not only do they face a soft employment market, they cannot expect to find a job with a company for whom they will work for their entire career.  Many of the jobs now available have lower income returns.  Renting becomes an attractive option since it offers greater mobility in finding employment.  Additionally, the increasing amount of student loan debt that faces many recent graduates may also affect their credit worthiness and willingness to take on more debt.

 All of these factors put increasing pressure on the rental markets both in terms of supply and affordability.  We need to take stock of where we are and where we are headed and begin to think creatively about the affordable rental supply and housing policies.

 Despite the plethora of gloomy statistics, I still believe that homeownership remains a virtuous goal and has a stabilizing effect on the economy.  What is unclear to me is to what extent we need to redefine our expectations of a homeownership society.  Considering the new externalities affecting the housing equation, is there or should there be a different equilibrium for the homeownership–rental ratio?  Understanding this better may help in attaining our goals of providing safe, decent and affordable housing options for everyone.

Guest Contributor: Rosalyn Keesee