Protecting the Missouri Historic Preservation Tax Credit Means Protecting Community Revitalization

By Bill Hart, Executive Director of the Missouri Alliance for Historic Preservation (Missouri Preservation)

Through my work with the non-profit Missouri Alliance for Historic Preservation, I am asked almost daily about funding possibilities for historic buildings. A few grants are available to non-profits through government agencies and private foundations. Options for the individual property owner, however, are much more limited. The Historic Preservation Tax Credit is typically the one financial incentive I can offer someone interested in preserving or repurposing a historic building in Missouri. This tax credit is the only program that makes historic preservation and economic development one and the same.

Historic Preservation Tax Credits have been used to renovate and reuse historic buildings, promote neighborhood stabilization efforts, and support local economies for 50 years. The Federal Credit, established in 1976, has helped communities nationwide transform the appearance and economic health of urban cores and small towns. It has allowed our country to see historic preservation not only for its intrinsic value, but for its capacity to spur economic development and vitality. The Federal Credit has been limited to income-producing properties since 1984, but continues to encourage smart development and has stimulated over $78 billion in private investment, representing the renovation and reuse of over 41,250 historic buildings. Today, the Federal Historic Preservation Tax Incentive Program allows a 20 percent credit on qualified rehabilitation expenses (QREs).

Missouri is one of over 30 states to offer a tax credit for historic building rehabilitation. Missouri’s Historic Preservation Tax Credit (HPTC), installed in 1997, is administered by the state’s Department of Economic Development and offers a 25 percent credit for QREs. Missouri’s credit is for commercial and residential buildings, and is available not only to developers with income-producing properties, but also to individual home owners and small developers looking to rehabilitate historic buildings for return to the market.

Since its inception, the State Tax Credit has been used in nearly 3,000 projects statewide and has incited over $8 billion in private investment—dollars that are spent on historic building stock before any tax relief is issued. Unlike some grant programs, use of HPTCs is neither prioritized or politicized. If an application is granted and the applicant follows accounting and design guidelines, the home owner or developer is guaranteed to receive the credits. Many states have crafted their own historic tax credit programs using Missouri’s as a model.

The Missouri HPTC is an excellent economic development and neighborhood stabilization tool. David Listokin and his group of researchers at the Center for Urban Policy Research at Rutgers University report that historic preservation surpasses both new construction and highway building in creating jobs, increasing household income, and raising revenue from both state and local taxes. Additionally, investment in rehabilitation keeps on giving. New construction generally requires about 50 percent building materials and 50 percent labor, while rehab uses 60 or 70 percent labor. This labor intensity affects a community’s economy on two levels. We buy materials from all over the nation, but to purchase the labor of a plumber or electrician, we go across the street. Once purchased, materials don’t spend any more money. But the plumber gets a haircut on the way home, buys groceries, and joins the YMCA—so his or her paycheck recirculates within the community.

Washington, D.C.-based PlaceEconomics recounts surprising findings on the economics of building rehabilitation versus manufacturing. They report that one million dollars of manufacturing output in Missouri will add on average about $470,000 to household incomes. But one million dollars in rehabilitation will add nearly $704,000.

Some might argue that job creation is over once building renovation is complete, but PlaceEconomics Principal Donovan Rypkema has two responses to that: “First, real estate is a capital asset—like a drill press or a box car. It has an economic impact during construction, but a subsequent economic impact when it is in productive use. Additionally, since most building components have a life of between 25 and 40 years, a community could rehabilitate 2 to 3 percent of its building stock per year and have perpetual employment in the building trades.” And these are jobs that can’t be shipped overseas.

Missouri’s HPTC was instituted without a yearly dollar amount limit on credit-supported rehabilitation, but has since been capped twice, with today’s cap at $140 million. That limit has not been reached in the years since the 2008 economic crisis. But during the first half of fiscal year 2016-2017, we have already reached over $100 million, with over half a year left to go. Simultaneously, there is movement within the legislature to impair or eliminate the HPTC program. Senate Bill 6, sponsored by President Pro Tempore of the Senate Ron Richard, proposes an additional cap of $20 million. Senate Bill 226, sponsored by Senator Andrew Koenig, suggests eliminating tax credits altogether. State Representative Kathy Swan is almost certain to reintroduce a perennial bill requiring all tax credits be awarded based on a yearly budget allocation. Whatever happens, we face a tough battle in the state legislature to keep our HPTC intact.

I encourage you to lend your voice physically and economically to saving our Historic Preservation Tax Credit. Contribute to the lobbying effort at historicmo.org or support Preservation Day at the Capitol on February 1st.

***

Bill Hart joined the staff of the Missouri Alliance for Historic Preservation (Missouri Preservation) in 2008 as its first full-time Field Representative. Since then he has logged thousands of miles visiting every one of Missouri’s 114 counties and bringing boots-on-the-ground preservation services to Missouri communities. He has conducted workshops on historic building materials and conservation, historic recognition programs, heritage tourism, tax credits, and the economic benefits of historic preservation. He has worked to enlarge and strengthen Missouri Preservation’s Local Liaisons Program, seeking to identify a preservation point person in every county. Through his work in identifying emerging issues and providing advocacy for endangered resources, he has been instrumental in forming Missouri’s first historic barn alliance.

Bill was named Executive Director of Missouri Preservation in 2014. He holds a Bachelor of Science degree in Historic Preservation from Southeast Missouri State University, where he was inducted into the Sigma Pi Kappa honor society for history. He did his graduate work in Architectural History at the Savannah College of Art and Design in Georgia, where he received the Tau Sigma Delta Bronze Medal for Excellence in Architectural History. He has a special interest in commercial archaeology and roadside architecture and recently wrote Historic Missouri Roadsides, a travel guide to historic Missouri towns on two lane highways, published by Reedy Press.

***

Articles in “From the Field” represent the opinions of the author only and do not represent the views of the Community Builders Network of Metro St. Louis or the University of Missouri-St. Louis.

Aldermen Should Protect Current Language Of Board Bill 227

By Sal Martinez, CBN Board President (representing CBN’s Board of Directors) and Executive Director of North Newstead Association

The Community Builders Network of Metro St. Louis (CBN) recognizes that the City of St. Louis is facing a sizeable opportunity to invest in the economic development of our region through a proposed ballot initiative for a 1/2 cent sales tax increase. The current proposal dedicates funding to the varied aspects of economic development, including neighborhood revitalization, expansion of MetroLink, safety, workforce development, and infrastructure improvements. CBN must emphasize the importance of retaining this comprehensive use of funds for economic development in Board Bill 227 (BB227).

CBN has members carrying out neighborhood revitalization in over 50 neighborhoods throughout north, central, and south St. Louis. These practitioners have commended the neighborhood revitalization aspect of BB227 for employing best practices for improving our communities. This source of funding and approach toward neighborhood revitalization is critically important as federal funding for housing and community development has been cut over the past ten years and state support and distribution of tax credits continues to be uncertain. Between 2003-2014 alone, the city lost 49 percent of its Community Development Block Grant funding and 61 percent of its HOME funds when adjusting for inflation.

The current details of the sales tax proposal include language for a percentage allocation dedicated to neighborhood revitalization that is supported by the many organizations and businesses within CBN. Earmarking expenditures to percentages is crucial to ensure that investment in all the core issues of economic development in the City are maintained for years to come. Furthermore, changes in language that do not specifically identify a percentage allocation of funds could result in CBN not supporting the bill.

Increased investment in community development and neighborhood-based planning allows more dollars to be leveraged by the private sector into helping families and communities thrive. Without the support and leveraging power of protected revenue streams, St. Louis will continue to face tough decisions on how to support economic and community development with shrinking federal and state resources. CBN urges the Board of Aldermen and the Ways and Means Committee to protect the current language of BB227 with regard to the percentage allocation of funds and the ongoing support for neighborhood revitalization in comprehensive economic development.

As a regional association of nonprofit community building organizations, banks, foundations, government agencies, and businesses that support building strong neighborhoods in our region, we at CBN believe that strong neighborhoods help to build a stronger and more competitive regional economy. We appreciate the Board of Aldermen considering ways to increase support for our City’s neighborhoods and community-based economic development.

***

Sal Martinez has established himself as a force in the comprehensive revitalization of the St. Louis region. Martinez, who received his Bachelor of Science degree in Urban Education in 1994 from Harris-Stowe State College, was employed by the college as Neighborhood Services Coordinator from 1996-1998. During his tenure at College, Martinez served as a liaison to many local social service and non-profit agencies. These experiences had a profound effect on Martinez, as he developed a keen interest in assisting in the rebuilding of St. Louis’s many disinvested neighborhoods.

Since then, Martinez has spent years working with St. Louis-area efforts to develop and promote mixed income and affordable housing, innovative economic development, historic revitalization, and safety, security, and health programming for residents. He has served as Executive Director of the Grand Rock Community Economic Development Corporation, the Vashon/Jeff-Vander-Lou Initiative, and Community Renewal and Redevelopment, Inc. In January of 2017, Martinez was appointed as the Executive Director of the North Newstead Association (NNA). The NNA (which recently merged with CRD) is recognized as a community development corporation and has developed over 180 units of affordable housing in addition to promoting a number of human development initiatives for families residing in North St. Louis City.

Martinez has served two terms with the St. Louis Housing Authority Board of Commissioners; during his first, he was elected as the Board’s youngest-ever chairman. He serves on several advisory boards and committees designed to increase minority (MBE), women-owned (WBE), and Section 3 business and workforce participation on both publicly and privately funded construction projects, and is the co-founder of the Minority Contractor Initiative (MCI), which provides training, capacity building and technical assistance to St. Louis-region MBE/WBE/Section 3 construction firms. Martinez is also a long-time member of the Hispanic Chamber of Commerce.

Martinez has received numerous community service awards from regional and national organizations, including the Human Development Corporation; Alpha Kappa Alpha Sorority, Inc.; Alpha Phi Alpha Fraternity, Inc.; Better Family Life; Zeta Phi Beta Sorority, Inc.; Metro Sentinel Journal; Senior and Disabled Services Committee; St. Louis Argus Newspaper; Employment Connection; St. Louis Housing Authority; Community Asset Management Company; Dr. Martin Luther King, Jr. Holiday Committee; and the East-West Gateway Coordinating Council. He also has received the Harris-Stowe State University Distinguished Alumni Award. Martinez serves on the boards of several civic organizations, including the Community Builders Network, Central Patrol Business/Police Association, Civil Rights Enforcement Agency, North Grand Neighborhood Services, Inc., the City of St. Louis Community Jobs Board, and the City of St. Louis MBE/WBE Advisory Board.

Articles in “From the Field” represent the opinions of the author only and do not represent the views of the Community Builders Network of Metro St. Louis or the University of Missouri-St. Louis.

Measuring the Benefits of the City’s Tax Incentives

By Otis Williams, Executive Director of the St. Louis Development Corporation (SLDC)

This column was originally published in the St. Louis Post-Dispatch.

The City of St. Louis, under Mayor Francis Slay’s direction, commissioned an independent study of all incentives offered throughout the city as a checkup to our progress and to monitor the results of incentivized projects.

It was done in an effort to reinforce our chief goal as the city’s economic development agency, which is to support and cultivate sustainable economic and financial growth—both of which need to be equitable and sufficient to provide enough jobs and opportunities for our residents, while also supporting the fiscal health of our government bodies.

The incentives study was conducted to show us what we’re doing well and where we can improve. Together with the Board of Aldermen, we are focusing on those improvements and dedicated to implementing the study’s recommendations, which include: a more quantitative decision-making process for awarding incentives; a more solid connection between incentive use and a citywide development plan; and better data collection and tracking afterward to help better inform future decision making.

To that end, we are moving forward with three interrelated goals. First, we will refine and build upon the quantitative decision-making process, which will help ensure that we are investing in projects that strengthen the city and wouldn’t happen otherwise.

Second, we are committed to using incentives to advance equity. Although incentive allocation ultimately follows the market (we can’t incentivize projects that don’t exist), we are raising the bar for projects in stronger, more stable neighborhoods, while making it easier to get more help out to distressed parts of the city.

Third, St. Louis Development Corp. will continue to recommend the appropriate incentive package to the Board of Aldermen to depoliticize the incentive process, which is designed for—and has resulted in—strengthened neighborhoods and the attraction and retention of city residents, who shop and eat in the city and pay sales and earnings taxes.

We already have developed and implemented a sophisticated system that measures the direct financial costs and benefits to the city, schools and other taxing bodies. However, we are measuring more than just the financial aspects of projects. We also are assessing projects by their contribution to quality, walkable urban design and opportunities provided to our minority and lower-income residents.

Beginning in early 2017, we will implement the first part of our online database and incentive tracking system. And, by the end of this year we will commence a community-driven, citywide economic development plan, which will take about a year to complete and will then drive future use of development resources, including incentives.

Similar to the report, I also want to clarify some misunderstandings of how incentives work.

Value-capture incentives like tax increment financing and tax abatement do not reduce the city’s existing revenue. These redevelopment tools freeze property tax revenues at their pre-development levels—which owners must continue to pay—while helping to fill the capital gap needed to successfully invest in our city. These property owners must also pay for permits and hire contractors—all of which generate additional revenue.

The city then captures the subsequent growth in tax revenue when the abatement expires. These subsidized projects would not happen without financial assistance and thus the city would be in identical fiscal positions with or without the incentive, for the duration of the incentive period. In fact, once the abatement expires, the city is in a stronger position by reaping a larger contribution to our tax rolls, because of that incentive.

While growth in the city is both measurable and strong, I caution that we still have work to do to retain and grow our population. Incentives have played a large part in resuscitating neighborhoods and slowing the population slide, especially in neighborhoods that were in poorer condition a decade ago, such as The Grove, Tower Grove South, Fox Park, Shaw, McKinley Heights and now north of Delmar with the North Sarah development project. Old North, Hyde Park and Arlington Grove also are seeing greater growth.

All of these neighborhoods have been supported by tax-abated homes and projects that would not have been completed otherwise. As a result of the stabilization and growth that we have seen, the city has been able to reduce the length of the abatement period necessary to ensure that a project happens. The use of both TIFs and abatements has declined. And now on the heels of a major construction boom and sustained growth among many of the city’s neighborhoods, we are at a juncture where we can become more surgical in our approach to allocate them.

We are encouraged by the renewed interest in the use of public incentives, and we are committed to being good stewards of these vital tools to use them for the betterment of our city.

Otis Williams is the Executive Director of the St. Louis Development Corporation (SLDC). Williams leads the agency’s economic development activities City-wide, aimed at bringing people, jobs, and investment to the City. Prior to joining SLDC, Williams served over 28 years in the U.S. Army and retired at the rank of Colonel. Since coming to St. Louis in 1998, Williams has served as a Senior Project manager, Director of Major Projects, and Deputy Executive Director for the St. Louis Development Corporation. In those positions, Williams had a leadership role in several multimillion-dollar development projects that are revitalizing the City’s downtown and neighborhoods.

Williams previously served three years on the National Board of Directors of the Society of American Military Engineers. He was the 1997 recipient of the National Black Engineer of the Year Award for Government Service; received the Better Family Life in Excellence Community Service Award (2014); was selected by the Community Development Administration (CDA), City of St. Louis as the 2015 Executive Director of the Year; was honored with the Joe Rinke Owner Award by the St. Louis Construction Cooperative at the Eighth Annual Construction Awards Luncheon (August 2015); received the 2016 J.H. Poelker Levee Stone Award from Downtown STL, Inc.; and received the 2016 Governor’s Award for Career Service in Economic Development. He is a registered professional engineer in the District of Columbia, and is a member of the International Council of Shopping Centers, the Urban Land Institute, and other professional and social organizations.

Williams is a native of Covington, Georgia and is married to the former Gwen Smith of St. Louis. They have two adult daughters.

Articles in “From the Field” represent the opinions of the author only and do not represent the views of the Community Builders Network of Metro St. Louis or the University of Missouri-St. Louis.

Wanted: Development Policies for a More Equitable St. Louis

By Andrew Arkills, Data Analyst and Community Leader

In May of 2016, the City of St. Louis released a detailed report on tax incentives. Since then, we have seen few proposals for more equitable policies. For all the talk of applying racial equity lenses to systems, somehow, St. Louis’ development policy continues to escape serious examination.

Let’s not sugarcoat things:

Over the past 15 years, the City’s development community has been awarded billions of dollars in city, state and federal tax subsidies and incentives. The result? More racial segregation and an accelerating trend toward neighborhood-level income segregation. Recent analysis shows that 72 percent of these subsidies went to developments in the Central Corridor, where we are seeing another incentive-fueled development boom. St. Louis Development Corporation (SLDC) is doling out obscene amounts of tax abatement for posh, non-university-owned dormitories for children of wealthy families. Meanwhile, thousands of families with kids who are working multiple jobs to get through community college, UMSL or a trade school are subsidizing them.

Just north of Delmar, there is now an unbroken line of high-poverty census tracts stretching from the river to Wellston. This is new. Concurrently, many Central Corridor neighborhoods are becoming wealthier and whiter. These things are not unrelated. As long as our city continues down an outdated path of “trickle down”-style development policies, these outcomes will continue to be entirely predictable. As Bob Lewis (President of Development Strategies) said in 2014: “It’s other people’s money. You might as well ask for it.”

Why should this matter for those in the community development sector?

Why would many development companies or lending institutions look to much of north or south St. Louis for non-Low Income Housing Tax Credit (LIHTC)-fueled opportunities when they know they can get massive subsidies to build luxury high-margin apartments, condos and retail in higher-income neighborhoods? Our city’s development policy encourages exclusionary developments. For smaller rehabbers that understand the system, “spot blight”-enabled abatements similarly encourage targeted rehabbing in neighborhoods that already have healthy markets, which is the opposite of the policy’s stated intent.

What is TeamTIF?

TeamTIF is a group of residents that have come together to counterbalance the status quo concepts driving our city’s development policy and to help revitalize a movement to enact the community development recommendations of the Ferguson Commission. TeamTIF believes we need real change. We also believe that equitable development is in the city’s long-term economic best interest.

At a basic level, TeamTIF believes that the City can and should be asking for more when negotiating with developers. Projects are offered TIF, abatement, and site-specific, “developer-driven” special taxation districts that inflate developers’ bottom lines. As a result, developers demand continually higher development fees (a.k.a. profits). Meanwhile, our city’s debt rating is being downgraded, and ratings agencies cite these sweetheart deals as a reason. This raises our city’s lending costs, which are largely passed on to homeowners and renters in the city’s northern and southern wings. There seems to be little concern for the social costs of our current development policies. TeamTIF believes that SLDC has abdicated its fiduciary responsibility to the vast majority of our citizenry.

The City seems unwilling to learn that if our goal is to drive equitable development, building lots of higher-end housing in the Central Corridor hasn’t been a winning strategy. These no-strings-attached deals have increased neighborhood-level economic and racial segregation patterns, and there is no rational reason to believe that will change.

TeamTIF believes we deserve both better negotiators and better strategies. Central to this will be incentive-linked Inclusionary Zoning and stronger safeguards against unnecessary tax abatements in areas with higher property values and/or lower poverty rates.

How Would Incentive-Linked Inclusionary Zoning Work?

If a sizable multifamily development is being built, we need to tie Inclusionary Zoning requirements to incentives. You can build your 250-unit building with aid from the City, but in return, you must set aside units for various levels of affordability. If we are to effectively combat growing economic segregation, this is the only option left to the City. If current developments had Inclusionary Zoning requirements, we could be creating affordable housing units in neighborhoods where we want to integrate lower- and moderate-income families.

A growing number of cities are instituting incentive-linked Inclusionary Zoning requirements, and not just coastal real estate hotspots. Fellow “Rust Belt” city Pittsburgh appears close to adopting incentive-linked Inclusionary Zoning. Even as far south as New Orleans, they are considering these ordinances. We should join them.

By instituting Inclusionary Zoning and a stricter approval process for the “spot blighting” system, we will begin to de-incentivize inequitable development practices. As businesspeople, developers look for the easiest money available, which is currently tax-subsidized development projects that are marketed to higher-income families. If we are to see more broadly shared prosperity, we must both pass an Inclusionary Zoning ordinance and remove incentivizing systems that grant developers abatements in the neighborhoods where they would already be turning a decent profit anyway.

In the wake of #Ferguson, many in our metropolitan area have recognized that building a more equitable St. Louis remains central among the challenges facing our region. We should not let this historical window pass us by. If we do not adopt reforms during the current construction boom, we will have missed a great opportunity. Who knows? Maybe we’ll even save the City’s credit rating in the process.

Andrew Arkills is a data analyst and community leader, with a professional focus in supply chain and logistics. His community work is focused on neighborhood leadership and advocacy, where he pushes for more racially equitable, transparent, and responsible government. He has a BA in Psychology from Purdue University and an MBA from Saint Louis University. Andrew works for a large, local non-profit healthcare organization in St. Louis. He is the current President of the Tower Grove South Neighborhood Association, and has also served as Treasurer of that organization.

Articles in “From the Field” represent the opinions of the author only and do not represent the views of the Community Builders Network of Metro St. Louis or the University of Missouri-St. Louis.

Community Development at Work: Lemay

Collaboration Continues to Lift the Community of Lemay

View fullsize

Lemay Homes Grand Opening and Ribbon Cutting Ceremony, November 2016

The community of Lemay in South St. Louis County gained 40 brand-new single-family homes this year with the completion of Lemay Homes, a project co-developed by Lemay Housing Partnership, Inc. (LHP) and Rise Community Development (Rise). The lease-purchase homes are affordable to families earning 60 percent or less of the Area Median Income. The units were financed using State and Federal Low-Income Housing Tax Credits and with support from the Missouri Housing Development Commission (MHDC), the St. Louis County Office of Community Development, PNC Bank, and Sugar Creek Capital.

“Lemay Homes is really providing an opportunity for more housing options in this community,” said Reginald Scott, LHP’s Executive Director. “That’s one of LHP’s goals, to create more quality housing options for people who live here and also to encourage folks to move here.”

View fullsize

Reginald Scott, Executive Director of Lemay Housing Partnership, Inc.

Lemay Homes is the latest in a series of efforts to lift the well-being of the Lemay community. After the flood of 1993 wiped out many area homes and part of what was then downtown Lemay, local leaders and residents worked together and developed plans and implementation strategies that eventually led to the formation of LHP in 1998.

For Scott, those foundations speak to the resilient, engaged spirit of Lemay’s residents. “LHP was created via concerned people in the community coming together and working hard to look out for one another,” he said. “They decided that there needed to be an organization in the community that dealt with housing issues. With additional seed funds from the St. Louis County Port Authority, LHP was born.”

Since then, LHP has worked to implement projects and programs that strengthen and support that community. As a certified Community Housing Development Organization (CHDO) and U.S. Housing Department of Housing and Urban Development (HUD)-Certified Housing Counseling Agency, LHP provides homebuyer training and counseling, home repair financial assistance through forgivable loans, and down payment and closing cost assistance as a participant in St. Louis County’s HOME Consortium 1st Home Program.

LHP also executes residential development projects like Lemay Homes. The Lemay Homes development provided a valuable opportunity to tackle blight in the community. During the property acquisition process, the project team targeted derelict and vacant properties that had been causing problems for existing residents, St. Louis County Public Works, and/or the St. Louis County Police. One lot, for example, was the former site of a now-demolished methamphetamine lab.

Standing in the place of those properties now are 40 high-quality, affordable three- and four-bedroom homes. All will remain rental properties for the next 15 years. However, since the project is designed as a lease-purchase program, residents will become eligible to purchase their units at the end of the tax credit compliance period. The longer a resident family remains in their home, the lower their potential home’s effective purchase price at the end of the mandatory lease period.

Until then, residents have the opportunity to prepare for homeownership with help from LHP. That includes coaching as well as a gradual transfer of homeownership responsibilities, which started this year with participation in lawn care upkeep. “They will learn to be homeowners,” Scott explained. “A lot of the units came online over the summer, and we gave them hoses and sprinklers so they could water the sod and seed. And each year we hope to pass on more responsibilities, so at the end of the day they can function comfortably and confidently.”

Scott cites this capacity to provide comfort and security as one of Lemay Homes’ biggest strengths. “For some of the new residents, it’s been amazing to see the impact on them and their family living in a brand-new, single-family home. It can have a huge impact on your self-esteem,” he said. “What’s occurred in other lease-purchase projects similar to this one is that people really take ownership and pride in a brand-new home with new appliances and modern features. So we hope that the new home will be a motivator and stabilizer for the new residents and that its affordable price will create and sustain an improved quality of life for all the families.”

The positive impact of Lemay Homes has also carried over to the community at-large. Expanded housing options and improved housing stock mean higher home values for area residents, and the new construction projects have drawn noticeable responses from neighbors who have been inspired to complete their own home improvements. “Once we started doing development work of scale, we saw a lot of folks come out and start to invest,” Scott said. “A lot of fix-up, painting, new windows, et cetera.”

LHP’s home repair program makes that home repair work more economically viable for Lemay residents. “We’re trying to reinforce and provide services to existing homeowners so that they don’t feel like they can’t improve their conditions as well,” Scott explained. “Maybe they’re not able to purchase or rent one of the new homes because of the pricing or demand, but they can make improvements and critical repairs. We are assisting them with making sure that their homes are safe and healthy.”

View fullsize

Dr. Kevin Carl, Superintendent of Schools, Hancock Place School District

The Lemay Homes development has added families to the Lemay community, too. All but a few residents are new to the area, and most have children who are now students in Lemay’s Hancock Place School District (HPSD), where local resident enrollment increased this year for the first time in ten years.

For a school district doing all it can to be an active partner and community asset in Lemay, that shift was a big win. Dr. Kevin Carl, HPSD’s Superintendent of Schools, believes this commitment is critical to the area’s well-being. “Here’s the reality,” he said. “I don’t care where you live, but if you’re in Missouri, because we’re not an open enrollment state, one of the questions you’re going to ask when you move somewhere, even if you don’t have kids, is ‘What school district is this?’”

That’s why HPSD provides top-notch technology and teaching resources to students and wraparound services to area families, including a free health clinic that’s open to all residents of the 63125 zip code. It’s also why Dr. Carl spends so much time seeking out ways to collaborate with other community organizations. “In the end, we all want the same positive outcome in the community,” he said. So when leaders and residents come together, the question they often consider is, “How do we think we can best facilitate that?”

Rise, too, has been a key partner in these long-term efforts to engage and revitalize the Lemay community. Rise provided a portion of the start-up capital for local news and outreach through the Community Link, a local quarterly newspaper that’s managed by LHP, HPSD, Lemay Development Corporation, and the Lemay Chamber of Commerce. In 2014, LHP broke ground on its first relatively large residential development project, Smith Place at Linn, which featured ten new affordable for-sale homes. Rise provided some predevelopment funding and helped secure a Priority Markets Grant from Wells-Fargo to cover part of the project’s cost. Midwest Bank Centre, the St. Louis County Office of Community Development, and the St. Louis County Port Authority also supplied financing. The homes sold quickly once they were completed, and in 2015, Smith Place at Linn earned LHP a Better Neighborhoods Award from DeSales Community Housing Corporation.

Both Smith Place and Lemay Homes have been outgrowths of the Lemay Comprehensive Plan, adopted by St. Louis County in 2006. The Plan was developed by the County Council and Lemay stakeholders to identify community needs and strategies for improvements. Using the comprehensive plan, LHP worked with local residents and stakeholders to develop the East of Broadway Neighborhood Plan. Smith Place was the initial project implemented as a result of the neighborhood plan. Next in line could be a series of economic development projects along South Broadway, which will likely focus on local services prioritized by Lemay neighbors at a recent charrette. “I give this community credit—they do show up and are engaged in the planning,” Scott said. Residents said they’d like to see coffee and ice cream shops, cafes, and other small, community-oriented businesses within walking distance. Development work might also feature service providers that offer workforce training, financial services and counseling, health services, or office space for local professionals.

These possibilities and completed projects have lifted the collective spirit of Lemay residents, many of whom have faced uncertainty about the area’s future in years past. The community has been hit with foreclosures and tax delinquencies, previous development plans included speculation about a potential industrial park, and some residents worried that an expansion of River City Casino might capture vacant land for parking. The result, Scott said, was that “people held off on really making significant equity investments in their property.”

Larry Perlmutter, Communications and Development Manager, Rise Community Development

Thanks to committed community partners like LHP, Rise, and HPSD, that’s no longer the case. Larry Perlmutter, Rise’s Communications and Development Manager, links their shared work in Lemay to powerful ripple effects. “Anytime you can create a development that not only improves the appearance of the community, but that contributes to the overall community’s quality of life, it’s a good thing,” he said. “When you bring in more tax revenue, when you bring in more students to the school system, when you create work in the community—all of those things are good.”

Dr. Carl agrees. He encourages community-building organizations and partnerships to “think big”: “Don’t underestimate the ability of your community to do things that they’ve not seen before, or to think about things they haven’t otherwise thought of,” he said. “Foundationally, you need to make sure you’ve got the right people in the right places. That’s number one. And then, don’t limit yourself. Include everybody in that conversation.”

That inclusive, cooperative framework is important to LHP, too. “The coolest thing about doing this work is that we are trying to constantly stay engaged with the local residents, institutions, and businesses to make sure that LHP’s work reflects programming and projects consistent with the real needs in the community. That’s important,” Scott emphasized. “You have to really work to create a game plan, and make sure you have shared ownership of the plan with the stakeholders in the community.”

As far as that plan is concerned, LHP remains committed to celebrating the community’s achievements along the way as it continues to explore next steps. “We’re one of many folks out here trying to figure it out,” Scott said. “And collectively we’ll get there sooner rather than later.”

Click here to watch a video of testimonials from LHP stakeholders and community members who have been touched by the organization’s work. Below are photos from November’s Lemay Homes Grand Opening and Ribbon Cutting Ceremony, courtesy of Rise.

Written by Jenny Connelly-Bowen, CBN Graduate Research Assistant

Community Development at Work: LinkSTL Spooktacular

LinkSTL Brings Together Over 500 Neighbors for Trick-Or-Treating and Community Building

When LinkSTL in North St. Louis City’s Hyde Park neighborhood began planning their second annual Spooktacular Halloween event this year, they set sights on a higher turnout than they’d had in 2015. Last October, Spooktacular drew about 150 registered attendees and over 200 by the end of the day’s event. As a part of their aim to grow Spooktacular this year, LinkSTL set its 2016 attendance goal at 300 people.

So even they were surprised when the event drew over 500 registrants—and even more neighbors who stopped by unexpectedly on the day of the event.

For Timetria Murphy-Watson, LinkSTL’s Executive Director, this was a signal of the passion Hyde Park’s residents have for their community. “It’s one thing for people just to come in the park because they see other people, they hear music,” she said. “But they actually took the time to go to the office and get registered and follow protocol, so they can stay in contact and stay engaged.”

LinkSTL faced a slightly different response when pulling together their first Spooktacular event last year. The place-based community organization was met with skepticism from residents as they began announcing the event in 2015. “It wasn’t until the day of the event that I think people really took it seriously,” Murphy-Watson recounted. “We passed out flyers, we had meetings. But the day of, we ordered orange balloons and we put them up along the neighborhood to light a route.”

Those balloons caught the attention of neighbors. Murphy-Watson described residents’ reactions as the President of LinkSTL’s Board of Directors, Michele Duffe, helped to place the balloons: “People are looking at her, and she’s smiling, and people are smiling back. And it was something as simple as one orange balloon that made people smile.”

LinkSTL didn’t start out intending to host a Halloween event. “Our purpose in the neighborhood is to bring the neighbors to different things that already exist,” Murphy-Watson explained. Communities First, a nonprofit agency that serves children and families primarily in North St. Louis City and County, had already been holding Halloween parties in the neighborhood for several years. But in 2015, as LinkSTL began convening community meetings to draw out residents’ thoughts about what they wanted to see in their neighborhood, it quickly became obvious that neighbors wanted to create opportunities for trick-or-treating.

As Murphy-Watson pointed out, trick-or-treating is a natural fit for community-building. “We wanted to provide an opportunity in the neighborhood where people felt like they would in any other neighborhood. People trick-or-treat. That’s how you get to know your neighbors,” she said. “But if you don’t know your neighbors, you’re less likely to trick-or-treat in your neighborhood.”

That type of isolation can dampen residents’ perceptions of their communities. “The kids in this neighborhood always described other neighborhoods with more positive thoughts and emotions,” Murphy-Watson recalled. “So the whole purpose of Spooktacular was to bring the neighbor to the neighborhood and to provide a positive experience through trick-or-treating and going out.”

When the event started that first year, LinkSTL’s office filled up more quickly than the team was expecting. Attendees were clustered into groups of about 15 with adult volunteer chaperones for each group. The trick-or-treating route, which had been planned in advance, consisted of about 30 homes and 5 organizations that had opted in to participate as safe stops along the way. Group leaders were given residents’ names beforehand to allow families and kids participating a chance to meet their neighbors and remember where they lived going forward. LinkSTL created maps to accompany the route and provided candy for homes that volunteered to participate as handout locations.

Once groups started making their way through the neighborhood, other residents came outside to join in. “People were just sending their kids outside, and kids were running to get along the route,” Murphy-Watson said. “They talked about what school they went to and things of that nature.” Trick-or-treating was followed with a party at Clay Elementary, where the team received overwhelmingly positive feedback. Many longtime neighborhood residents shared that they had never taken their children trick-or-treating in Hyde Park before. “It was an awakening moment for us all,” Murphy-Watson shared. “Because we just thought, ‘Let’s just do trick-or-treating. People say that they don’t trick-or-treat here; I think that that’s a positive way to move the community forward. Let’s do it.’ But we didn’t know that all those little things would happen in-between.”

This year, LinkSTL set out to make Spooktacular “bigger and better,” Murphy-Watson said. Part of their efforts dovetailed with an initiative that had grown out of LinkSTL’s community development work groups: a desire among residents to rebrand both the neighborhood and park. The LinkSTL team had also heard from residents that they wanted the celebration to feel more like a festival, so Spooktacular this year incorporated a handful of new features: a haunted house, face painting, a bounce house, a game area, and stations to make caramel apples and decorate cupcakes.

Many of these new elements were entirely volunteer-driven. “We had a resident volunteer to make 250 cupcakes, and she did it,” Murphy-Watson said. “She’s a really good baker. And the kids just came in and decorated the cupcakes.” Residents also volunteered to build the haunted house, which was a huge hit among kids and parents. “That was a lot of kids’ first time being in a haunted house,” Murphy-Watson said. “Kids were really running through screaming with their parents. It was good.”

LinkSTL invited local businesses to take part in Spooktacular too. One resident’s company, Creative Balloons, crafted balloon sculptures to display in the park and at event starting locations. Other businesses were invited to set up a table at the event, and many who didn’t opted to send a donation instead.

Spooktacular also held a costume contest for kids. And for families who volunteered to hand out candy along the route, LinkSTL had a special thank-you gift this year: a pumpkin to carve and enter into a pumpkin-decorating contest. “Everything happened so fast last year, and my regret was we didn’t have a culminating time to say ‘thank you’ besides the thank-you letters that we sent out later,” Murphy-Watson said. “So I wanted to give the families something.”

LinkSTL conducted a survey after the event to gather resident feedback. Again, the results were incredibly positive: “The only complaint that some people had was that it ended early,” Murphy-Watson noted.

Spooktacular’s success has done a lot to raise the visibility of LinkSTL and the community-building work it’s been encouraging in Hyde Park. Murphy-Watson, who has led LinkSTL for almost two years and owns a house in the neighborhood, acknowledged that Spooktacular has helped draw many residents in to participate in some of the organization’s longer-term programming, like its summer camp, community work groups, and Youth Council. That movement will ultimately help bolster LinkSTL’s core mission, which focuses on acting as a link between residents and the community’s opportunities. “I think we have to prioritize the things that are smaller, and the things that you do more consistently,” Murphy-Watson said. “We really see ourselves as just the facilitator to community-building, and allowing the neighbors to really take ownership and pride in what they’ve become, and could become.”

So while events like Spooktacular and this spring’s Earth Day celebration provide positive reinforcement, Murphy-Watson wants to “change the ownership dynamic” as neighbors get involved: “I want them to feel like this is something that has been done so we know it’s possible—and now, how can we do it together?” she said. “People are happy; people want to help; people want to be involved. And you know, that’s all I can ask for. We set the example with the community for the things we want to see, and for the goals and the priorities we want to have.”

When asked what makes her proudest about her work at LinkSTL, Murphy-Watson circled back to this theme, reflecting on the connections that the organization’s programs have developed to involve residents in building community. Many participants in LinkSTL’s summer camp, for example, came from different schools. But Murphy-Watson said she now sees many of those kids spending time together in the neighborhood. LinkSTL has also been working with residents on economic development and financial literacy initiatives, helping them to see how opportunities like homeownership might be within their reach, even if that had never seemed possible to them before. “We’re just providing them with the encouragement,” Murphy-Watson said. “We’re saying, ‘You can do this.’ Because some are thinking, ‘Why me? This isn’t for me.’ But no, it’s for you if you want it to be.”

That type of empowerment is at the heart of what LinkSTL hopes to continue building in Hyde Park. “It starts with the people, and it will end with the people,” Murphy-Watson said. “That’s simple, but I think it’s underrated. The more work and energy and time people put into people, the better we will be as a society.”

For Murphy-Watson, that mission is deeply personal. “I’m proud of the neighborhood, and I’m proud of the people in the neighborhood,” she said. “Which is why I made the decision to move into the neighborhood. I think that Hyde Park is a hidden jewel. I really believe that.”

To view photos from Spooktacular, click here.

Written by Jenny Connelly-Bowen, CBN Graduate Research Assistant

A Holistic, Community-Based Approach to Health: Addressing Toxic Stress and Trauma

By Heidi B. Miller, M.D

Dr. Heidi Miller is a primary care physician and policy advocate who has focused her career on assuring high quality, trauma-informed, equitable access to healthcare for our most vulnerable patients. She trained at Yale University and Harvard Medical School and completed her residency in Internal Medicine at Harvard’s Brigham and Women’s Hospital. She serves as a primary care doctor at Family Care Health Centers, a Federally Qualified Health Center in St. Louis. Dr. Miller is also the Medical Director for the Gateway to Better Health Program, which serves 20,000 uninsured patients via the St. Louis Regional Health Commission, an organization that has also spearheaded the Alive and Well STL initiative to reduce the community-wide impact of toxic stress and trauma.

Dr. Miller consults for the St. Louis Integrated Health Network and the Siteman Cancer Center’s Breast Cancer Partnership. She was appointed by the Missouri Governor to the Oversight Committee for Medicaid, served on the Missouri Medical Home Collaborative Steering Committee that oversaw the state-wide implementation of the Patient-Centered Medical Home model, and has been invited repeatedly to testify to the Missouri House and Senate Committees on health policies. Dr. Miller was recognized by the St. Louis Business Journal as one of its “40 Under 40” honorees.

In addressing health issues, too often we focus on individual behaviors, such as eating unhealthy food or neglecting to take prescribed medication. This can lead us to blame people for their poor health. But many individuals experience toxic stress and trauma that powerfully shape the choices they make. We need a more holistic, community-based approach to health.

In medicine, universal precautions are used as a means to ensure the safety of both our patients and staff. We wear gloves while drawing blood for all patients, regardless of which patients have contagious conditions. Medicine is not alone in this approach—all industries utilize safety measures: hard hats in construction zones and flashers for truck drivers carrying wide payloads. These universal precautions are a good start at protecting the well-being of those we serve and those providing the service, but we need to consider these as just the beginning if we’re going to address toxic stress and trauma in our community.

Physicians traditionally learn to take the human body and break it down into organ systems, tissues, and cells. However, when we only look at a single piece, we lose sight of the larger puzzle—the whole. For example, the customary approach for a patient with diabetes is to test for elevated blood sugar levels and write a prescription for insulin to correct the imbalance. When we merely focus on balancing blood sugar levels, however, we can overlook a much larger medical concern, such as debilitating stress. To support the overall health and well-being of patients, the entirety of a person’s body and experiences must be considered, not just a single symptom or laboratory test.

After enduring a detailed history and physical examination, some patients may seem inattentive when their clinician explains their diagnosis and provides guidance on how to take their medications, what foods to avoid, and what lifestyle changes to make. In these instances, false assumptions could be made about patients simply not caring about their own health. Through a lens of toxic stress and trauma, however, we can appreciate that much more is happening in this moment. Possibly this patient is concerned about finding the means to pay for their medications, worried that with everything else going on in their lives that there is no time to take care of themselves, or scared of what the future may hold.

Too often we see a behavior—the customer that’s yelling at the service representative or the cousin who always drinks—and we assign judgement based on that behavior. When simply focusing on the behavior, one may easily assume that a person is bad or deviant. If we reduce a person to the sum of his or her behaviors, we fail to see the person as a whole and fail to acknowledge the toxic stress or trauma the individual has experienced.

To best serve patients and support our fellow community members, we have to stop thinking, “What’s wrong with you?” and instead ask “What happened to you?” By changing the question, we acknowledge that the behavior of an individual, much like the symptom in a patient, is part of a larger story. If we want to effectively make change in our community, we need to change the question in each and every interaction we have.

Alive and Well STL, an initiative of the St. Louis Regional Health Commission, is working to build this dialogue. Challenge yourself: next time you think, “What’s wrong with you?”, consider instead “What happened to you?” Notice if this changes how you feel about the situation. Notice if your understanding of underlying toxic stress or trauma affects how you respond.

If you want to learn more about how you can get involved in making St. Louis a more supportive place to live, please visit Alive and Well’s website: www.aliveandwellstl.com.

Articles in “From the Field” represent the opinions of the author only and do not represent the views of the Community Builders Network of Metro St. Louis or the University of Missouri-St. Louis.

Pooled Purchasing: Leveraging Economies Of Scale For Efficiency And Impact

By Constance Siu

Constance Siu is Master of Social Work candidate at the Brown School of Social Work at Washington University in St. Louis concentrating in Social and Economic Development (Domestic). Prior to attending the Brown School in 2015, she lived in Kansas City and worked at a child development center. Constance graduated from Beloit College in Wisconsin with a B.S. in Biochemistry and a minor in Philosophy. Upon graduation, she plans to pursue a career in community development in St. Louis.

Community building organizations, simply put, are having a difficult time sustaining themselves financially. Not only are many unable to support themselves for an extended period of time on reserves alone, but many are operating on a deficit. With fewer funding streams supporting operational costs as many foundations move to a more issue- or place-based approach, there is a need for organizations to start thinking more strategically and collaboratively about the future in order to survive and thrive.

The need to collaborate at an operational level drove the Community Builders Network to look for ways to support their members in this area, giving way to the inception of the Professional Services Support Program. Modeled after a similar program in Cincinnati, Ohio, the Professional Services Support Program borrows the basic value proposition from companies like Costco where members access items and services in a pooled manner allowing for discounted rates.

Sounds simple, right? Well, that’s because it is! However, for such a simple model, it isn’t as widespread in the nonprofit realm as you might think—especially since a model such as this has immense benefits for its participants.

Even for St. Louis, this idea is not a particularly innovative one. The Chesterfield Cooperative has already been practicing this model through their bulk rock salt purchases. Working with Beyond Housing and the Chesterfield Cooperative, the 24:1 Community was able to join the Cooperative, resulting in a 40 percent decrease in rock salt costs. With that success, the same collaborative approach was taken with trash collection as smaller communities got to piggyback off larger trash contracts, which again cut costs drastically.

By working together and pooling together their collective weight, not only are smaller groups able to leverage their newfound economy of scale for cost reduction, but doing so also allows for increased operational efficiency and effectiveness.

A simple example of this is in office supplies and printing. Often overlooked as a significant operational expense, as a $20 stapler may not seem like a big difference compared to a $15 stapler, most organizations currently either order these items online or make emergency trips to regular retail stores, costing organizations precious time and human capital as people are doing things that are not mission-centered. By participating in a pooled purchasing program, not only can organizations have a personal account manager take care of their office supplies and printing, but it can also save them those $5 increments that will add up over time.

Over the last few weeks, as I’ve worked on establishing this program, I’ve realized that the benefits of the Professional Services Support Program are so much more than the cost savings that nonprofits can gain. Arguably more important is that participation in pooled purchasing will increase professionalism, efficiency, and the ability to attract financial support from nontraditional funding streams, such as banks and private foundations.

One area where nontraditional funding streams can be leveraged to support a pooled purchasing program would be in accounting. Instead of trying to fit budgeting into the busy day-to-day schedule of running an organization and relying on basic budgeting knowledge probably gained from either a budget 101 course at some point or from balancing our own checkbooks, nonprofits can take advantage of professional accounting services. Not only does this add a sense of professionalism and credibility to their finances, but it also introduces another layer of control as another set of eyes are added to the mix. With a more transparent and professionally managed budget, potential funders will be able to see that organizations they are supporting have more fiscal controls and understand where each dollar is going and how effective each dollar is in terms of mission fulfillment. This makes these organizations safer and more trustworthy investments.

All in all, by collaborating and purchasing services and goods in a pooled manner, organizations can increase their transparency to funders and gain a better understanding of their operational costs, allowing for more funds and time to be spent on mission-fulfilling activities.

Articles in “From the Field” represent the opinions of the author only and do not represent the views of the Community Builders Network of Metro St. Louis or the University of Missouri-St. Louis.

Community Development at Work: DeSales Community Housing Corporation

Opportunity Knocks: DeSales Community Housing Corporation Continues to Grow its Property Management Business

When faced with competing the demands of emerging opportunities and strategic planning, DeSales Community Housing Corporation in South St. Louis City has adopted a flexible approach.

As DeSales Executive Director Tom Pickel puts it, “opportunity doesn’t always come just as you want it, when you want it,” especially when you’re working to grow your organization’s sustainability and resilience.

The DeSales team’s most recent accomplishment has the potential to help them do that. Earlier this year, DeSales was approached by the leadership of the St. Louis Equity Fund (SLEFI) to discuss Community Asset Management Company (CAMCO), a property management company SLEFI had formed 20 years before. SLEFI wanted to know if DeSales would be interested in taking over management of CAMCO’s portfolio of about 1,100 units that are concentrated primarily in St. Louis City.

This isn’t the first time that DeSales’ property management expertise has drawn the attention of community stakeholders. The non-profit, 501(c)(3) community development corporation (CDC) was founded in 1976 to promote investment in the Fox Park and Tower Grove East neighborhoods. DeSales began developing housing during the 1990s, but it didn’t enter the property management business until 2005, when it formed Fox Grove Management. Fox Grove was created to manage DeSales’ own portfolio of about 200 apartments.

A few years later, then-President of Northside Community Housing, Inc. (NCHI) Ernecia Coles asked DeSales if Fox Grove could take over the management of NCHI’s properties in The Ville neighborhood as well. DeSales wasn’t quite ready to start managing for other organizations at that point, but when Coles asked again in 2009, they agreed. Fox Grove now manages over 190 units for NCHI. As of early October, Fox Grove had a total of just over 550 units under management.

So when SLEFI approached DeSales this year, Pickel knew immediately that taking on the CAMCO portfolio would mean big changes for the CDC. After the deal closed on October 14th, DeSales/Fox Grove tripled in size “literally overnight,” Pickel said. “We went from managing about 550 units to over 1,600 units, and our total staffing went from 15 to 46.”

This was not a decision that DeSales made lightly. Staff and board members talked at length about what the acquisition would mean for the organization. One of the deciding factors was Pickel’s review of the opportunity with Stan Presson, Fox Grove’s Director of Property Management. “Stan is a great part of our team,” Pickel said. “He has a great reputation in this business. And I thought, if Stan doesn’t want to do this, we’re not going to do it.”

But Presson was receptive to the idea. “He realizes, as much or more than I do, that if we’re going to have a sustainable, resilient organization, it’s going to have to get bigger,” Pickel explained.

Also aiding in the decision was the presence of DeSales’ Controller, Lisette Ortega-Vidal. She came to work for DeSales in 2015 after serving as CAMCO’s Accounting Manager for several years. “Lisette has great knowledge of the organization, the properties, and the people at CAMCO,” Pickel said. “That was an advantage for us.”

Additional revenue from the expanded management company could eventually allow DeSales to expand some of its programming in other focus areas, like community health. It could also make it easier to recruit, promote, and retain good staff members.

There are deeper reasons DeSales decided to move into the property management business in the first place. As Pickel likes to put it, “good property management iscommunity development,” especially in the kinds of neighborhoods where DeSales works, which have a lot of multifamily housing. Management of such properties is a critical function that is all too often overlooked.

Venturing into housing development and management has also enabled DeSales to make a bigger contribution in the neighborhoods it serves. “We’re able to capture some of the wealth and revenue that a neighborhood—even a low-income neighborhood—generates and reinvest that in the neighborhood,” Pickel explained.

So far, the expansion of Fox Grove Management seems to be going well. Pickel is taking the transition one step at a time. “When people congratulate me, I say, ‘come back in about 12 months and I’ll let you know whether we deserve congratulation or condolences,'” he joked. But Pickel and the rest of the DeSales team are confident that the change makes strategic sense for the organization. He said that surprise opportunities like this one are a good reason for organizations to retain a measure of flexibility when it comes to strategic planning: it can be hard to predict how the external environment might change tomorrow, let alone five years down the road.

Written by Jenny Connelly-Bowen, CBN Graduate Research Assistant

All Low- and Moderate-Income Areas Are Not Created Equal

By Mike Eggleston

This article was originally published in the Federal Reserve Bank of St. Louis’s quarterly newsletter, Bridges.

Mike is a Senior Community Development Specialist with the Federal Reserve Bank of St. Louis. In this role, he provides financial institutions, community based organizations and government entities tools to effectively address community development issues affecting economically vulnerable individuals and communities. Mike serves on the Board of Directors at the Incarnate Word Foundation.

There are stark disparities in consumer credit in low- and-moderate-income (LMI) neighborhoods across United States metropolitan areas (MSAs), and their full impact on residents’ access to opportunity is not currently accounted for under the Community Reinvestment Act (CRA). Consider George, who lives in Montgomery, Alabama, and Francine, who lives in Madison, Wisconsin. Both live in an LMI neighborhood, where the median income is 80 percent of the average median income in the metro area or state. Each is looking to buy a car, to reduce their commute time to work and to allow them more child care options for their young children.

Like many in his neighborhood, George has poor credit. As a result, he is not able to secure financing from a financial institution to buy a car. Francine, however, is among the vast majority of people in her neighborhood who have good credit—so she has no trouble securing a car loan from a bank.

This story plays out among MSAs across the country in over 200 areas where data is available. Boulder, Colorado is on one end of the spectrum, where 35.9 percent of the population in LMI neighborhoods is credit constrained: that is, they have poor, fair, or no credit history. On the other end in Memphis, Tennessee, nearly eight out of every 10 people in LMI neighborhoods are credit constrained. This disparity has big implications for both neighborhood residents and the regulated financial institutions that serve them, thanks to the obligations these institutions face under the Community Reinvestment Act (CRA).

Before going further, it’s worth noting some additional observations. LMI neighborhoods where residents have better credit tend to have a larger percentage of white occupants. They are usually located in the East, West, and parts of the upper Midwest, and tend to have relatively low poverty rates. LMI neighborhoods where residents with poor credit predominate tend to have a larger share of African-American occupants. They are usually located in the South and tend to have relatively high poverty rates. In fact, among the ten MSAs where people living in LMI neighborhoods have the poorest credit, the average poverty rate is 68 percent higher than the average poverty rate of the ten MSAs where people living in LMI neighborhoods have the best credit. Jackson, Mississippi, Shreveport, Louisiana, and Montgomery, Alabama all fall into this category.

In sum, the credit profiles of people living in LMI neighborhoods across the country vary significantly. Why should that matter? There are at least two groups for whom this matters a great deal.

A good credit profile can be the make-or-break detail that determines someone’s ability to get a mortgage, car loan, or student loan. It can also be a factor in whether someone can rent an apartment, in how much insurance costs, and in securing employment. In short, good credit can signal whether someone’s financial situation is on the right track. This can be especially powerful for someone living in an LMI neighborhood, where opportunities to improve life circumstances can be scarce. That’s why many nonprofit organizations throughout the country—sometimes in partnership with bank representatives—work with people to improve their credit profiles. It’s also why some community-based organizations (like Justine Petersen, headquartered in St. Louis) view credit as an asset.

Depending on their size, regulated financial institutions are required to comply with the CRA by meeting certain thresholds for investments, loans, and service in LMI neighborhoods. Currently, the credit profile of a bank’s assessment area—which may include an entire MSA or just part of it—is not weighed as a factor when determining whether a bank is meeting CRA obligations. But maybe it should be. As the data illustrates, a bank operating in Madison, Wisconsin will have a much easier time finding qualified borrowers in LMI neighborhoods than a bank in Memphis, Tennessee. A bank operating in both metro areas must work twice as hard to find qualified borrowers in Memphis.

This raises important questions about the appropriate role of the CRA in promoting fair and impartial access to credit in underserved communities. Should extra weight be given to loans and investments made in LMI areas where more people are credit constrained? How can the CRA’s service test better encourage credit building in LMI areas where more people are credit constrained? Can other measures, such as the poverty rate, complement area median income to select CRA target populations?

For the first time, consumer credit data for LMI areas in 200-plus MSAs is publicly available via the Consumer Credit Explorer, thanks to Equifax and the Federal Reserve banks of Minneapolis, New York and Philadelphia. Using this data, researchers will soon be able to better understand why LMI neighborhoods in one MSA have drastically different credit profiles from LMI neighborhoods in other MSAs. Until that is sorted out, LMI neighborhood residents like Francine in MSAs such as Madison, Boulder, and San Jose will have a much better shot at accessing credit—and opportunity—than LMI neighborhood residents like George in MSAs such as Montgomery, Memphis and Jackson.

Data: FRBNY Consumer Credit Panel/Equifax Data (12/1/2015), tabulated by the Federal Reserve Banks of Philadelphia and Minneapolis and accessed via the Consumer Credit Explorer.

Articles in “From the Field” represent the opinions of the author only and do not represent the views of the Community Builders Network of Metro St. Louis or the University of Missouri-St. Louis.