Bridges - Fall 2012

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L I N K I N G

L E N D E R S

A N D

C O M M U N I T I E S

FALL 2012

PUBLISHED QUARTERLY  BY THE COMMUNITY  DEVELOPMENT DEPARTMENT OF THE FEDERAL RESERVE BANK OF ST. LOUIS

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BRIDGES

Why Did Young Households Lose so Much Wealth During the Crash?

Taking Financial Education to the Next Level

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 w w w . s t l o u i s f e d . o r g

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Local and Regional Economic Development in Rural West Tennessee

Coming Together To Preserve Affordable Housing By Ross Clarke

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ccording to data rom the 2010 American Community Survey, Surv ey, more more than hal o all rental units in the St. Louis region are occupied by people who pay more than 30 percent o their income toward rent. Many are working amilies whose wages don’t stretch ar enough beyond rent payments to allow or savings, or to purchase health insurance or transportation.. A signicant transportation signicant number o these households are considered to be extremely low-income, paying more than 50 percent o their earnings toward housing costs. Recent trends also indicate heightened demand in the rental market and, in some areas, increases in rent prices. prices. There is a clear need or aordable rental housing in the region today. The Low Income Housing Tax Credit (LIHTC) is a

program designed to meet this need, providing a dollar-or-dollar credit against tax liability to encourage the private development o aordable housing. The program has helped nance more than 52,000 aordable units in Missouri since it began, and has brought considerable economic activity and job opportunities to the state and

the region. Today Today,, however, however, many o these aordable units ace uncertain utures. The LIHTC program requires an original compliance period o 15 years, ater which investors in properties are ree to exit partnerships. Those property owners who wish to continue oering rents at aordable rates ace tough

challenges as properties approach Year 15, including: •

•

•

restructuring ownershi ownership p when limited partners exit, nding capital or repairs and rehabilitation, renancing and restructuring debt, continued on Page 2

FIGURE 1

Number o Low-Income Units Approaching Year 15 in the St. Louis MSA  2,000   s    t    i   n    U1,500   e   m   o   c   n    I     w1,000   o    L    f   o   r   e    b   m 500   u    N

 TOTAL:  TOT AL: 13,541 units 1,775

1,326

1,308

1,419

1,751

1,313

1,164

1,090

1,024 826 545

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

 Year  Y ear Units Arrive at Year Year 15 SOURCE: LIHTC Database, United States Departm ent of Housing and Urban Development. Retrieved from http://liht c.huduser.org/.

LIHTC BASICS

Affordable Housing continued rom Page 1

• Introduced as part o the Tax Reorm Act o  1986, LIHTC has helped fnance more than 2 million privately developed aordable housing units.

• Developers o LIHTC properties are awarded ederal credits, distributed by states in accordance with the rules laid out in their Qualifed Allocation Plan. Plan. Developers then sell sell credits to investors to receive capital up ront or  development developm ent cost s.

• There are two types o LIHTC credit: A competitive 9 percent credit that awards credits equal to 70 percent o qualifed construction costs; and a noncompetitive 4 percent credit  or projects fnanced with tax-exempt bonds and various other gap subsidies that provides credits equal to 30 percent o qualifed costs.

• A minimum o 20 percent o all units must be rented by tenants with incomes at or below 50 percent o the area median income (AMI). Alternatively, owners can opt to rent at least  40 percent o units to tenants with incomes at or below 60 percent o the AMI. In many cases, 100 percent o available rental units are aordable, especially in properties operated by nonproft organizations.

YEAR 15 • LIHTC requires properties to comply with restrictions or 15 years.

• Legislation passed in 1989 introduced a urther 15-year required extended-use period.

• Limited partners (investors) are not  bound by extended-use restrictions and are ree to exit in Year 15.

• In some cases, general par tners (owners) exit; but to do so, they must allow the state housing fnance agency to attempt  to fnd a qualifed buyer through their  qualifed contract process.

• I a qualifed buyer cannot be ound, general partners are then ree to sell to any willing buyer.

• Certain nonprofts are given the right  o frst reusal to purchase properties.

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•

•

ongoing issues with physical and asset management o properties, high expenses and low levels o revenue and cash fow,, especially fow especial ly or smaller properties, and a general lack o preparedness or Year 15.

 Another signicant signica nt challenge or LIHTC partnerships is competition rom newer aordable housing developments that open in close proximity to existing existi ng properties. Tenants with mobile Section 8 vouchers may leave older units and move to these newer accommodations, which can impact the nancial viability o older LIHTC developments. I these issues cannot be resolved, property owners may be let with little option but to look or a way out. Though LIHTC requires properties to continue operating at aordable rates or a urther 15 years, owners can request that the state housing nance agency search or a new buyer through their qualied contract process at any time ater the 14th year o the original compliance period. I one cannot be ound, owners are released rom all restrictions and are ree to sell properties to any willing buyers, who are only bound to keep rents aordable a ordable or a urther three years. Most properties do remain aordable

ater Year 15, especially in weaker housing markets, such as many parts o the Midwest. Nevertheless, the Year 15 process is lengthy and challenging, and requires a great deal o  preparation. Between 201 2012 2 and 2022, more than 13,000 properties in the St. Louis region will arrive at Year Year 15. (See Figure 1 on page 1. 1.)) Recogn Recognizing izing the challenges at hand, the Community Development department o  the Federal Reserve Bank o  St. Louis convened a meeting o  representatives representa tives o state and city agencies, and local organizations with extensive experience ex perience in the LIHTC eld. The goals were to clariy the t he issues related to Year 15 in the region; allow those involved to share successul strategies to negotiate this process; generate ideas or new, creative strategies; and plan next steps, both short- and longterm. Some o the most pressing issues were ound to be: •

•

•

•

•

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the reluctance o banks to renance debt on properties; the capacity and stability o some nonprot property owners; county-by-county variability regarding property assessment and the resulting property taxes imposed i properties are valued at market rate; declining external neighborhood conditions; a need or a city-wide plan or the spatial developm development ent o LIHTC properties; and

•

a need or improved communication at state, city and individual property levels.

Several attendees remarked that this was the rst time all parties had gathered to address these issues, and the willingness to engage in constructive discussion about the challenges and possible moves toward action was evident. Perhaps most encouraging was the desire o  many o the participants to orm a LIHTC working group to begin to address these challenges collaboratively; the group held its rst meeting in September. Similar working groups have had considerable success in other cities. In Portla Portland, nd, Ore., a group was ormed comprised o  sta rom state and city housing departments, local and national nonprots, and other LIHTC property stakeholders. The group was tasked with assessing the risk o loss o aordable units approaching Year 15 and developing recommendations to avoid this loss. The results o  the group’s meetings impacted the city o Portland’s Preservation Agenda and the state’s Qualied Allocation Plan.  Another successul LIHTC working group is led by Novogradac & Company C ompany,, a San Francisco-based accounting and consulting rm with a wealth o LIHTC experience. They hold monthly conerence calls and meet annually to discuss best practices or the LIHTC industry and continued on Page 4

Why Did Young Households Lose so Much Wealth During the Crash? The Role of Homeownership By William Emmons and Bryan Noeth



ecently released survey data related to household nancial conditions reveal large wealth losses in virtually every segment o the U.S. population between 2007 and 2010, the most recent years in which the Federal Reserve conducted its triennial Survey o  Consumer Finances.1 Since the deepest economic recession in many decades occurred between December 2007 and June 2009, the 2007 and 20 2010 10 surveys eectively represent “beore and ater” snapshots o U.S. households’ balance sheets or a crosssection o American amilies.

 As detailed in our recent article,2 the Survey o Consumer Finances reported that the wealth o the median U.S. household in 2010 was 39 percent lower than the median household’s wealth wealt h in 2007, 2007, adjusted or infat infation. ion. The amily headed by someone under 40 (henceorth, young households) in the middle o the 2010 2010 wealth distribution likewise had much less wealth than the corresponding median young amily in 2007. 2007. (See Figure 1.) 1.) The decline in the wealth o  a young household measured at the median o the distribution in 2007 and 2010, 2010, respectively, respec tively, was 38 percent. The decline decline was 20 percent among young

households that were members o a historically disadvantaged minority, which we dene to be Arican-Americans and Hispanics, who may be o any race. The median wealth o  young households that were not members o a historically disadvantaged minority (including non-Hispanic whites, Asians and other non-historically disadvantaged minorities) was 42 percent lower in 2010 than the median wealth in 2007. The very large loss o wealth among many young households is notable or at least two t wo reasons. First, many young households are nancially ragile. A serious nancial setback early in lie can have

lasting eects on amily members, including young children.  According to the surveys, the homeownership rate (dened to include primary residences, vacation homes and timeshares) among young amilies declined about our percentage points between 2007 and 2010 (rom 50 to 46 percent). This almost certainly was due, in large part, to oreclosures and other distressed exits rom homeownership. The homeownership rate declined by only two percentage points among amilies headed by someone at least 40 years old but less than tha n 62 (rom 77 to continued on Page 4

FIGURE 1

FIGURE 2

FIGURE 3

Median Net Worth o Families Headed by  Someone Under 40

Homeownership Rate o Families Headed by Someone Under 40

Share o Homeowners with Mortgages Among  Families Headed by Someone Under 40

$50,000 $40,000

60%

100%

50%

90%

40%

80%

30%

70%

$30,000 $20,000 $10,000

20%

1989

1992

1995

2001

2004

2007

2010

60% 1989

1992

1995

2001

2004

2007

2010

1989

1992

1995

2001

2004

2007

2010

SOURCE: Federal Reserve Survey of Consumer Finance

      Y       E       K

Families headed by someone who is under 40 but  is NOT a member o a historically disadvantaged minority group (Arican-American or Hispanic origin)

All amilies headed by someone under 40

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Families headed by someone who is under 40 and is ALSO a member o a historically disadvantaged minority group (Arican-American or Hispanic origin)

Affordable Housing

Young Households Househol ds

continued rom Page 2

continued rom Page 3

address policy and technical issues related to the program. The group regularly provides comments to state and ederal government agencies on issues that impact the LIHTC eld, including recent comments regarding the implementation o the Volcker rule o the Dodd-Frank Act. Communication and shared knowledge are crucial in addressing the many issues that arise in the complicated, messy LIHTC eld. The clearer clearer the issues become, the better the strategies that can be created to to resolve them. Partnering and sharing resources to overcome common obstacles will only make the eld stronger and ensure that the region’s needs or aordable housing preservation preservat ion are addressed. By developing its own working group, the St. Louis region has taken a step closer to overcoming the challenges it aces. For more inormation about the working group, please contact Stephen Acree (Regional Housing and Community Development Alliance) Allia nce) at stephen@ rhcda.com. Ross Clarke is a graduate student in the George Warren Brown School o Social Socia l Work at Washington University in St. Louis and a  practicum student in the Community Development Ofce o the Federal Reserve Bank o St. Louis.

75 percent), while the homeownership rate among amilies headed by someone 62 or older actually increased by one percentage point (rom 83 to 84 percent). percent). Thus, the housing and mortgage crisis appeared to hit young amilies especially hard and may have long-lasting impacts on their nancial positions or in other dimensions. The second noteworthy aspect o the large wealth declines among young households is that amilies who were not members o a historically disadvantaged minority experienced much larger wealth losses—in act, twice as large when comparing their respectivee medians—than did respectiv  Arican-American  Arica n-Americanss and Hispanics. This is unusual in the survey data; in virtually every other age and education group that we examined, historically disadvantaged minority amilies suered larger percentage wealth losses at the median.  What was dierent about young amilies? It appears the source o this unusual pattern is related to homeownership and mortgage borrowing. In a nutshell, young amilies rom historically disadvantaged minorities had lower homeownership rates and less mortgage debt immediately beore the downturn in 2007. 2007. As the economy and housing markets deteriorated, amilies whose balance sheets were relatively more

concentrated in housing and those who had borrowed more to nance homeownership— both more typical o nonminority amilies—suere amilies—suered d greater wealth losses. 3 Figure 2 shows homeownership rates or amilies under 40. In 2007, 2007, the overall young-household homeownership rate was 50 percent. The rate or historically disadvantaged minority amilies was 36 percent, while the rate or non-minority non-min ority amilies was 56 percent. In 2010 2010,, the homeownership rate among all young amilies was 46 percent, with minority and non-minority homeownership rates alling to 32 and 53 percent, respectively. Figure 3 shows that the way homeownership was nanced played an ampliying role in the loss o wealth or nonminority amilies. In 2007 2007, 90 percent o all young homeowners had mortgage debt outstanding. Among historically disadvantaged minority amilies, only 85 percent had mortgage debt, while 92 percent o non-minority amilies had mortgage mortgage debt. debt. Because the value o mortgage debt does not decline when house prices do, the nancial eect o  mortgage debt is to magniy the percentage loss o wealth suered by the homeowner. homeowner. This phenomenon phenomeno n is called “lever“ leverage.”” Just as a physical age. physical lever transorms a given amount o  orce applied at one end into a greater orce at the other end, nancial leverage transorms a given percentage house-price

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decline into a larger percentage loss o homeowners’ equity. equit y. In sum, young non-minority households typically suered larger percentage declines in wealth between 2007 and 2010 than did young historically disadvantaged minority amilies. This was due to the relatively greater concentration o nonminority households’ balance sheets in housing as well as greater nancial leverage in the orm o mortgage debt.  A higher homeownership rate and greater use o mortgage debt among young non-minor non-minor-ity amilies thereore turned out to have negative nancial consequences during the severe recession and housing-market decline o recent years. William Emmons is chie economist or the Household Financial Stability initiative and assistant vice president o Executive Special Projects at the Federal Reserve Bank o St. Louis. Bryan Noeth is a policy analyst or the Household Financial Stability initiative at the Federal Reserve Bank o St. Louis. REFERENCES 1. Bricker, Jesse; Kennickell, Arthur; Moore, Kevin; and Sabelhaus, John. “Changes in U.S. Family Finances rom 2007 to 2010: Evidence rom the Survey o Consumer Fina nces,” Federal Reserve Bulletin, 2012, Vol. 98, pp. 1-80. 2. Emmons, William; and Noeth, Bryan. “Household Financial Stability: Who Suered the Most rom the Crisis? Federal Reserve Bank o St. Louis Regional 11-17. 7. Economist, 2012, Vol. 20, pp. 11-1 3. Emmons, William; and Noeth, Bryan. “Why Did Young Families Lose So Much Wealth During the Crisis? The Role o Homeownership,” Federal Reserve Bank o St. Louis Review, 2013,  Vol. 95, 95, No. 1, 1, orthcoming.

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with all clients at intake and a subsequent 30-milestone and outcome evaluation tool. The Centers strive to understand the ull nancial picture o  their clients regardless o the motivation or or the visit. Subsequent one-on-one counseling sessions include:

Taking Financial Education to the Next Level

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By Mitchell Kent and I-Hsing Sun

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n 2006, New York City Mayor Michael R. Bloomberg charged the Department o Consumer Aairs (DCA) with bringing nancial empowerment services to those with low incomes as part o  his broad antipoverty strategy. DCA ormed the country’s rst Oce o Financial Financia l Empowerment to take on the challenge. It quickly became clear that, while some existing nancial education services were being done well, the eld did not possess the level o proessionalized delivery, outcome-driven metrics and rigorous evaluation required or public programs.  And one-on-one counseling, the gold standard o the eld, was largely unavailable. Even the best program providers lamented this lack o standards and accordingly suered rom undependable resources to support their work.

The U.S. Government  Accountability  Accountab ility Oce similarly concluded in a 2011 2011 report that no consistent approach, delivery mechanism or technology stood out as a best practice in nancial education.1 Individuals and amilies in need o such services had little guidance when seeking them, which increased their vulnerability to predatory, costly and oten harmul actors. Most established models o nancial education ocused on long-term wealth creation, whereas whereas amilies with w ith low incomes typically wrestled with a number o immediate crises and underlying instability concerns that must be addressed rst. Increasingly complex comp lex nancial instruments or banking, borrowing and saving made sae and aordable choices, when available, dicult to identiy and access. DCA’s Oce o Financial Empowerment (OFE), thereore, began developing and delivering rigorous and proessional standards or counselor training,

service delivery quality control control,, and impact measurement and evaluation. evaluatio n. This article examines OFE’s delivery model, the collateral impacts we experienced as we integrated these programs into other services, and the repercussions or national replication. Proessional Financial Counseling in New York City 

Mindul o vast need and standards o public accountaccountability, OFE developed and deployed best practices in content, delivery and evaluation to achieve proessional quality in this eld, employing a threepronged approach: 1. OFE standardi standardized zed an outcome-driven servicedelivery model, implemented through the city’s c ity’s now publicly unded Financial Financia l Empowerment Centers, which oer ree, proessional, one-on-one nancial counseling serv services. ices. The cornerstone o this approach is a comprehensive nancial health assessment completed

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Budget counseling Credit building and repair o  credit reports and scores Debt management strategies Connection to sae and aordable banking products negotiated by OFE Guidance on appropriate and viable savings and assetbuilding opportunities Strategic reerrals to legal services, ree or low-cost tax preparation, benets counseling and other social services, as appropriate Longer-term nancial coaching geared toward assetbuilding goals

2. To ensure the quality and consistency o services oered to the public at the city’s Financial Empowerment Centers, OFE developed develope d a ormal training tra ining program with the City University o New York (CUNY) in 2009. This course is now available as a ull-semester ull-semester,, three-credit undergraduate course oered by CUNY’s CUNY ’s School o Proessional Proessional Studies through a Financial Studies Certicate Program. All Financial Empowerment Center counselors must take and pass continued on Page 6

Financial Education continued rom Page 5

the course. It is also open open to service providers across all elds and all CUNY students. Ensuring quality service serv ice providers is essential to make the case or public unding o the Financial Empowerment Centers and, most important, to enable the city and its partners to steer consumers into the hands o very capable nancial educato educators. rs. OFE also has partnered with the Columbia University School o Social Work (CUSSW) to integrate nancial counseling into the eld o social work through the graduate-l g raduate-level evel course, Personal Financial Management and Financial Counseling Skills. Skills. This course is now a prerequisite to a eld placement in nancial empowermentt and empowermen a nd counseling. 3. Finally, OFE standardi standardized zed processes and protocols across its Financial Empowerment Centers to ensure consistently high quality, regardless o  the provider, and to meet the impact measurement demands o its initially private and now public unders. OFE customized an integrated database system used as both a case management tool to track client progress against our distinct service plans (banking, credit, debt and savings) saving s) and or ongoing perormance evaluation.  The “Supervit amin” Eect

 With the advent and track record o quality metrics, New  York’s  Yo rk’s nancial counseling eld experienced a demand

or nancial counseling that extended beyond counseling clients to include program providers in other antipoverty eorts. Because nancial instability is a common underlying circumstance, other program clients were nding it dicult to make improvements. Proessional nancial counseling, integrated into the delivery stream o other programs, began producing strong evidence o a “supervitamin” eect, helping those programs work aster and more eectively. This exciting development is studied in detail in OFE’s multi-report series, “Municipal Financial Empowerment: Empow erment: A Supe Supervitamin rvitamin or Public Programs.” The rst supervitamin report, released in December 20 2011 11,, ocused on Strategy #1: Integrating Proessional Financial Counseling (www.nyc.gov/html/  dca/downloads/pd/  SupervitaminReport.pd). The second supervitamin report, Strategy #2: Proessio Proessionalizing nalizing the Field o Financial Education and Counseling (www.nyc.gov/  html/dca/downloads/pd/  SupervitaminR Supe rvitaminReport2.p eport2.pd), d), documents the exciting approaches described in this article. The third report ocused on Strategy #3: Integrating Sae and Aordable Bank Accounts (www.nyc. gov/html/dca/downloads/pd/  SupervitaminReport3.pd), and uture reports will ocus on integrating targeted consumer nancial protections, and integrating asset-building and income-boosting strategies.

Replicating Success

Other city governments in the national Cities or Financial Empowerment Coalition, ounded and co-chaired by New  York  Y ork City and San Fran Francisc cisco, o, implemented citywide networks o nancial education providers, like San Francisco’s Smart Money Network and Seattle’s Financial Education Providers Network. Emphasizing the kind o quality control required by public accountability, other opportunities or integrated delivery arose, and the “supervitamin” approach began taking hold across the country. With the promise o  quality, scale and public systems change came urther excitement. Through an initiative o the Cities or Financial Empowerment Fund (CFE Fund), a project o Living Cities, other cities soon will replicate the rigorous, standardized and integrated version o nancial education and oneon-one counseling pioneered by New York City’s Financial Empowerment Centers. As a measure o demand and interest, more than 48 cities, representing 30 million residents in 29 states and one U.S. Commonwealth, applied to oer—and publicly integrate—the proessional nancial counseling model with the CFE Fund. Finally, steps in the direction o greater ederal involvement are emerging. emerging. The ederal Financial Literacy and Education Commission, which convenes regularly at the U.S. Department o the Treasury, revised its National Strategy or Financial Capability in i n 2011, 2011,

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THREE YEARS OF FINANCIAL EMPOWERMENT CENTER ACHIEVEMENTS

 June 30, 2012  Total client s ser ved:

17,160  Total counsel ing ses sions:

32,042  Total amount o s avings:

$870,296.72  Total amount o debt reduced:

$7,048,703.93 including a set o core competencies that should become part o general public nancial knowledge. knowledge. And the new Consumer Financial Protection Bureau has a dedicated Division o Consumer Education and Engagement, with separate Oces o Financial Education and Financial Empowerment. The eld o nancial counseling and education is clearly ripe or the public investment attendant to proessional delivery.  And the public public need is arguably greater than it has ever been. Mitchell Kent is director o legislative policy and special counsel at the New York City Department o  Consumer Aairs Aairs (DCA). I-Hsing Sun is assistant commissioner or   fnancial empowerment empower ment programs at DCA. ENDNOTE 1 United States States Government Accountability Oce: Report to Congressional Committees; Financial Literacy: A Federal Certication Process or Providers Would Pose Challenges. June 2011. Executive Summary.

Local and Regional Economic Development Developme nt in Rural West Tennessee By Andrew A. Pack

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etween Memphis and Nashville along the “Music Highway” (Interstate 40) rests the historic city o Jackson, Tenn. Like many larger towns between two major cities, Jackson serves as a regional hub or many o the smaller surrounding communities. The city is also the headquarters o the Southwest Tennessee Development District (SWTDD). Joe Barker is the director o the SWTDD and has been working on the issues acing rural areas throughout his career as a community and economic developer. Rural America is acing many challenges in the changing economy,, and many economy ma ny o those challenges are present in West Tennessee. Creating regional collaboration to work on issues such as population declines, low educational attainment and the shrinking o manuacturing  jobs is no easy task. Barker has played various roles throughout his career as a community and economic developer— mayor o a small town, county mayor, state-level community and economic developer, and regional economic developer. developer. Each role has its own challenges and opportunities, but each has also given Barker a unique perspective. I sat down

with him to discuss how he views his role in economic development. Economic Development as an Elected Ofcial

 As mayor o the small comcommunity o Savannah, Tenn., Barker conesses that while elected ocials may have a lot o enthusiasm or their communities, this passion isn’t always enough enou gh when trying try ing to increase an area’s economic opportunities. Not every person or potential company shares that same passion. Inrastructure needs, needs, proximity to other markets, available workorce and cost o  property are just some o the actors a prospective company may be ocused on. Elected ocials must work beyond their sense o community pride. Barker believes that educating mayors in many aspects o  economic development development is cr itical, but the mayor should not be the sole leader in this area. Resources in small towns may be limited, but it is important to have a proessional economic developer who is ocused on the long-term impact o community and economic development. Mayors are an essential part o the team, but as elected ocials they work in our-year cycles. Barker says that programs such as the University o  Tennessee’s County Technical

 Assist ance Service (CTAS) and Municipal Technical Assistance Service (MTAS), along with the state’s economic development basic course (through the International Economic Development Council) were very helpul in increasing his and other mayors’ knowledge o economic development.

CDAC Member Spotlight

 JO E BA RK ER is executive director 

Community Assets Oten Get Overlooked

o the Southwest Tennessee Devel-

 Another issue that Barker said took a bit o time to realize is how to really identiy and ocus on a community’s assets. This helped him to shit some o the economic development ocus rom manuacturing recruitrecr uitment in Savannah and Hardin County to a plan that was a better t with their local assets (e.g., (e. g., tourism). According to Barker, local elected ocials oten do not ully realize their community’s assets and opportunities because many communities also overlook them. In the report, “Small Towns, Big Ideas,” the University o  North Carolina ound that “small towns with the most dramatic outcomes tend to be proactive and uture-oriented; they embrace change and assume risk.” risk.” Barker agrees with this statement because he believes it is imperative

planning and economic develop-

opment District (SWTDD), a regional ment organization that serves eight Tennessee Tennessee counties. Barker  has also served as a mayor and the assistant commissioner o the  Tennessee Department o Economic and Community Development. Development. He represented the governor on the Appalachian Regional Commission, Delta Regional Authority and  Tennessee-Tombigbee  Tennessee-Tom bigbee Waterway Authority. Barker is also also a member  o the Community Development  Advisory Council (CDAC) or the Federal Reserve Bank o St. Louis. CDAC members members are exper ts in community and economic development and fnancial education.  They complem ent the inor mation developed through outreach by the District ’s Community Development sta and suggest ways that the Bank might support local eort s. A list o current members

continued on Page 8

is available at www.stlouised.org/ community_development.

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Economic Development continued rom Page 7

that small towns think about creative economic development opportunities that may be dierent than past strategies, which may require some degree o risk. Once Barker ully realized how big o an asset tourism was to Savannah’s economy economy,, he did something dierent than many people would do. He took a risk and called the National  Association  Associ ation o Intercollegiate  Athletics (NAI A) to pitch bringing their championship ootball game to the city. Savannah was successul in hosting the NAIA ootball championship or 12 years, and the city was mentioned on the ront cover o Sports o Sports Illustrated. Illustrated. Hosting this game not only had an immediate impact on Savannah, but it was also a perect t with the small town’s other tourism assets, including the Tennessee River, Lake Pickwick and the nearby historic battleeld o Shiloh. Shiloh. Barker says, “It’s much more than a ootball game and national TV exposure. It’s about economicdevelopment tourism and the experiences players and others have at the game. Outsiders who have a positive experience in Savannah may one day be in a position to bring jobs to the city or the surrounding region. Their positive experiences may lead to uture  uture economic opportunities.” Elected ocials can be helpul when they are integrated appropriately into the

economic development development process proces s and work with proessionals to help develop the community’s assets. Regional Economic Development

Economic development challenges at the regional level may oten be dierent than those in individual communities, such as getting local and elected ocials rom various communities to cooperate. Each community has its own characteristics and local pride that may create a dicult climate or regional collaboration. Barker says regional economic development can be very challenging, but collaboration is especially critical in rural communities because they are stronger working together as a whole. In most cases, more economic opportunities or rural areas exist at a regional level than at the local level. The SWTDD works on regional collaboration by promoting education and workorce development, technology and online jobs that t into rural areas, capacity building to build leadership throughout the region and working to promote entrepreneurship. Barker says that regional development works best when each community is willing to invest nancially in the collaborative eort. There are a lot o entities recruiting manuacturing in West Tennessee, so Barker and the SWTDD have developed other types o economic development developm ent programs, program s, such as digital actories that prepare workers or online jobs, college

career coaches or high school students and entrepreneurship programs. They are currently working to create a business incubator. Barker acknowledged that there is no template or rural and regional economic development because every area is dierent. But there are good examples o economic opportunities created in rural America (e.g., (e. g., North Carolina Carolin a and other areas ocused on by the  Appalachian Regional Regiona l Commission). Barker believes believes there are three advantages that rural communities share. share. They have: 1) a sense o place, 2) people with a strong work ethic, and 3) strong social ties that could help to create more jobs in the uture. To create more opporopportunities, Barker believes that rural communities need to better understand their assets and liabilities, direct resources to these strengths, and take advantage o regional economic developmentt opportunities. developmen opportunit ies.  Andrew A. Pack is a community development specialist at the Little Rock Branch o the Federal Reserve Bank o St. Louis. REFERENCES The University o Tennessee Institute or Public Service (oe (oers rs educational training or elected ocials), ocials), ww w.i w.ips. ps. tennessee.edu/  Lambe, W.: “Small Towns, Big Ideas: Case Studies in Small Town Community Economic Development,” School o Government, University o North Carolina at Chapel Hill, 2008, w ww. sog.unc.edu/programs/cednc/stbi/  pds/stbi_nal.pd 

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TOP 10 THINGS ELECTED OFFICIALS SHOULD KNOW ABOUT ECONOMIC DEVELOPMENT

1. Your local economic strengths and weaknesses. 2. Your community’s place in the broader regional economy. 3. Your community’s economic development  vision and goals. 4. Your community’ community’ss strategy to attain its goals. 5. Connections Connect ions between economic development and other city policies. 6. Your regulatory environment. environment. 7. Your local economic development developm ent stakeholders and partners. 8. The needs o your your local business community. 9. Your community’s economic development message. 10. Your economic eco nomic development developm ent sta. SOURCE McFarland, C. and Seeger, K.: The Role o Local Elected Ofcials In Economic Development: 10 Things You Should Know, International Economic Development Council/  National League o Cities/Center or Research & In novation, http://  http://  iedconline.org/Downloads/NLC_ IEDC_EconDevelop10things.pd 

A Matter of Degrees Increasing College Attainment—Workforce Development Strategy #1 By Kathy Moore Cowan

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arly in 2012, in an eort to develop a deeper understanding o the complex actors creating longterm unemployment conditions and identiy promising work work-orce development solutions, the Federal Reserve held 29 roundtables across the country, countr y, including our in the Eighth District. Distr ict. One common theme heard during these meetings was that the American workorce lacks the skills needed by present and uture employers. It is estimated that 68 percent o all jobs created between 2010 and 2018 2018 will require a college degree. However However,, only 40 percent o America’s current adult population (age 25 and older)) are college graduates. older  America ranks 10th 10th in the world world in college attainment, trailing countries such as Canada (56 percent), South Korea (56 percent) and Japan (54 percent). The Tennessee Higher Education productivity team predicts that by 2018 more more than hal h al o  all jobs in Tennessee will require some orm o postsecondary credentials. Only 29.9 29.9 percent o Tennessee’s adult population holds an associate’s degree or higher, compared to the national average o 37 37.2 .2 percent percent.. While there is some debate about

whether a our-year college degree is worth the cost, many people believe that the uture o   American prospe prosperity rity relies relies on a better-educated workorce. It is not surprising, then, that the president has set a goal or the U.S. to reclaim the lead in college graduation rates by 2020. Tennessee’s governor governor aims to doublee the number o the state’s doubl residents with a college degree or certication by 2025 2025.. And the Memphis metropolitan area intends to raise the college completion rate by 1 percent (8,002) by September 2014. 2014. Here is how the Memphis metropolitan area is working to reach this goal. Metropolitan Memphis, Tenn.

In 2008, CEOs or Cities introduced extensive research that outlined three vital areas— talent, poverty and the environment—that could have a tremendous economic impact on every every city in America. The research showed that educational attainment is the biggest predictor o success or cities and metropolitan areas today. Specically, it showed that 58 percent o a city’s success, as measured by per-capita income, i ncome, is attributable to the percentage o the adult population with a college degree. Rankings o 51 metropolitan metropolitan cities placed Memphis at #48

in college attainment, with only 23.7 percent o the adult population earning a college degree. degree. Recognizing the challenge—and the opportunity—or the metro area, Leadership Memphis launched the Memphis Talent Dividend (MTD), a collaborative o more than 100 stakeholders rom the eight-county region who are working together to increase the percentage o college attainment in the area by 1 percent. I this goal is met, met, CEOs or Cities estimates a $1 billion economic impact or the region. MTD is ocusing on three strategic areas: 1) helping students prepare or and successully enroll in college; 2) 2) helping students stay in college and complete their studies; and 3) helping helping workers return retur n to college to earn a degree. The group has organized six specialized collaboratives—youth organization, community, aith, business, media and higher education— that are open to anyone who wants to work toward reaching the goal. Each collaborative collaborative has an individual ocus and is working to increase ve key areas: 1) high school graduation rate, 2) college enrollment rate, 3) college continuation rate, 4) college completion rate, and 5) college graduate retention rate. David Williams, president/  CEO o Leadership Memphis,

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FOR MORE INFORMA INFORMATION TION

CEOs or Cities www.ceosorcities.org  Leadership Memphis www.leadershipmemphis.org  Memphis Talent Dividend www.memphistalentdividend.com Graduate Memphis graduatememphis.org/about  Kresge Foundation www.kresge.org/programs/education Lumina Foundation www.luminaoundation.org   TNAchi eves and Memphis/Shelby Achieves www.tnachieves.org 

said, “When you look at the top 51 largest metro areas, Memphis is ranked #1 in poverty and #48 in college attainment. The correlation is obvious. Over 200,000 people in the Memphis metro area started but never nished college. Leadership Memphis and our 100 Memphis Talent Dividend partners know we can make a dierence by helping them nish their postsecondary education and improve our workorce at the same time.” That’s where Graduate Memphis comes comes in. Housed in Memphis’ Benjamin Hooks Central Library, L ibrary, Graduate Memphis Memphis continued on Page 10

SPANNING

THE REGION The region served by the Federal Reserve Bank of

Fall Results o Community o Community Outlook Survey Coming Survey Coming Soon

The all 20 2012 12 edition o the t he semiannual Community Outlook Survey o low- and moderateincome (LMI) communities across the states that comprise the Eighth Federal Reserve District will soon be released on the St. Louis Fed’s web site: www.stlouised.org/community_development/communityoutlook-survey/.. The survey outlook-survey/ inorms the St. Louis Fed and its branches in Little Rock, Louisville and Memphis about the current conditions o the District’s LMI communities and is shared with policymakers at the Federal Reserve Board o  Governors in Washington, D.C. I you don’t already participate in the survey but would like your voice to be heard in uture rounds, send us an e-mail at communitydevelopment@stls. rb.org. New 1:1 Fund Will Boost College Savings or Low-Income Mississippi Kids

The 1:1 Fund, launched in November, is an innovative new program that matches lowincome students in Mississippi with donors who help them maintain and build college savings accounts. In its rst year, 1:1 1: 1 aims to provide matching unds or nearly 9,000 children in two test markets—Mississippi and San Francisco—with plans to expand nationally

and reach as many as 100,000 100 ,000 chilch ildren by 2015. Mississippi ranks second to last in the percentage o residents with a our-year college degree (19.5 percent) and 47th in those with two-year degrees (2 (27 7.9 percent), according according to CF ED’s  2012 Assets & Opportunity Scorecard.. The 1:1 Scorecard 1:1 Fund will match donors with nearly 700 children already saving or college through the Mississippi College Savings Account Program. For more inormation, visit www.1to1und.org. New St. Louis Fund Pairs Community Investment with Engagement

 A new grassroots charitable ch aritable und dedicated to community development in the St. Louis region gives individual donors a say in which organizations to support. The und—inveSTL—raises money through donations and event proceeds to build a oundation ocused on neighborhood development. developm ent. When the und reaches specic undraising goals, it will grant 25 percent to an organization and retain 75 percent to build up the endowment. Donations are accepted in all amounts, and donors who contribute $100 or more in a given unding cycle are able to vote on the organizations that receive unding.

St.. Louis encompasses all of Arkansas and parts of Illinois, St Indiana, Kentucky, Mississippi, Missouri and Tennessee.

To learn more, contact Karl Guenther at guentherk@umsl. edu or ww w. w.invest.org. invest.org. Save the Date! Resilience and Rebuilding or Low-Income Communities Conerence

The Federal Reserve System will host its eighth biennial community development conerence on April 11–12, 2013, in Washington, D.C. This event will eature multidisciplinary, action-oriented research to inorm strategies and policies that orge vibrant and resilient communities. To learn more, visit www.rbatlanta.org/news/  conerences/13resilience_ rebuilding.cm. Glenda Wilson Retires

 Ater 36 years at the Federal Reserve Bank o  St. Louis, Glenda Wilson retired Wilson on Nov. 30.  Wilson,, the Bank’s assistant  Wilson vice president o Community Development, Developm ent, was hired at the St. Louis Fed in 1976 as an assistant bank examiner. She worked worked in various departments throughout the Bank beore landing in

0

Community Development in 1990, when the department’s ocus was on assisting communities with issues related to the Community Reinvestment  Act (CRA). (CRA). Altho Although ugh today’s Community Development department still provides CRA inormation as part o its mission, that mission has expanded expa nded to also ocus on areas such as community and a nd economic development as well as access to credit—with a goal o helping to improve communities and the lives o their residents. “Over time, we have evolved into looking more closely at community issues such as aordable housing, and taking more o a holistic approach to community and economic development,”” Wilson development, Wil son says. Such an approach, which oten involves working directly with community organizations and neighborhoods, has made  Wilson’s winding career path especially rewarding, she says. “We get to work with all o  these people and organizations who do such good work and who are trying so hard to make lie better or their communities,” she says. “It’s been really rewarding to play a part in helping to make those eorts successul.”

College Attainment continued rom Page 9

is a ree  ree college resource center designed to increase postsecondary attainment att ainment among adults. Funded by a $1.7 million grant rom the Plough Foundation, it is staed by a coordinator, three sta college advisors, and college advisors on loan to the center by local colleges and universities. Counselors meet one-on-one with prospective students, and telephone counselors are available. Workshops on relevant topics are held monthly, and a web site provides links to resources ocused on the needs o adults returning to school. Since its opening in July, Graduate Memphis has reached more

than 400 potential students, and 20 participants have enrolled in a local college. MTD is also attempting to win $1 million or the t he metropolitan area as part o the National Talent Dividend contest sponsored by CEOs or Cities and the Kresge and Lumina oundations. More than 50 cities have registered or the competition, including three additional cities in the Federal Reserve’s Eighth District—St. Louis, Louisville and Little Rock. The prize will be awarded in September 2014 to the metropolitan area with the greatest increase in the number o postsecondary degrees granted per capita over a threeyear period. I all registered cities are successul in raising

RESOURCES New Scorecard Data on the Strength o State Policies CFED has released new data on the strength o 12 state policies (http://scorecard.assetsandopportunity.org/2012/ policychange.php) that help amilies create fnancial security and opportunity. T hese data capture policy changes that  occurred in the 2012 state legislative session, or or which data became available available ater all 2011. For more inormation, visit http://assetsandopportunity.org/scorecard/.

Kathy Moore Cowan is a senior  community development specialist at the Memphis Branch o the Federal Reserve Bank o St. Louis.

New Podcast Series on Workorce Development How might we rethink workorce development to best respond to current and uture economies? economies? Experts rom industry and academia provide their thoughts on this and other related topics in Economic Development podcasts. Recent podcasts ocus ocus on  jobs and unem unemplo ployment yment,, and eatu eature re speake speakers rs rom rom the nati national onal conerence, Future o Workorce Develop Development: ment: Where Research Meets Practice, co-sponsored by the Federal Reserve Banks o  Kansas City and Atlanta.  •

Bank Branches rom the FDIC Visualize the location o bank branches across the nation, overlay them on top o market indicators like income, households, racial composition and more. Learn about each bank’s assets and total deposits and see how bank branch locations compare rom one part o the country to another.  This public public dataset dataset is now now available available on PolicyMap PolicyMap under  “Banking” in the “Add Sites” menu (let navigation bar) or  ree (www.policymap.com/maps).

college attainment by 1 percent, CEOs or Cities calculates a $124 $1 24 billion increase in national earnings per year. Other programs are helping Memphis reach the collegeattainment goal goa l (e.g., (e.g., Memphis/  Shelby Achieves). Achieves). The area is preparing or its uture and by all indications the uture is here. It will take the collective work o all communities across the country to create the “talent” that is required to meet the challenging and ever-changing needs o the t he global economy.

 •

Metrics or Success: Critical Elements or Workorce Development Programs Elizabeth Weigensberg, Weigensberg, University o Chicago, discusses recent research on key components o the most successul workorce development programs and provides recommendations or how existing programs can be more eective. Collaborative Eorts: Colleges and Nonprofts Partner to Enhance Workers’ Skills Maureen Conway, Aspen Institute, discusses the results o the Courses to Employment project, which analyzed how community colleges and nonprofts worked together to help lowincome adults succeed in the classroom and labor market.

 To view transcripts or play play the audio MP3 fles, visit  www.rbatlanta.org/podcasts/economicdevelopment/

 #

BRIDGES Bridges is a publication o the Community Development Oce o the Federal Reserve Bank o St. Louis. Louis. It is intended to inorm bankers, community development organizations, representatives o  state and local government agencies and others in the Eighth District about current issues and initiatives in community and economic development. development. The Eighth District includes the state o Arkansas and parts o Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee. Glenda Wilson  Assistant Vice President and Managing Editor 314-444-8317  Yvonne Sparks Community Development Ocer 314-444-8650 Daniel Davis Manager 314-444-8308 Maureen Slaten Senior Editor 314-444-8732 Community Development Staff  St. Louis: Matthew Ashby 314-444-8891 Jeanne Marra 314-444-6146 Ross Clarke 314-444-6148 Memphis:

Kathy Moore Cowan 901-579-4103 Teresa Cheeks Wilson 901-579-4101

Little Rock: Drew Pack Pack 501-324-8268 Louisville:

Lisa Locke 502-568-9292 Faith Weekly 502-568-9216

The views expressed in Bridges are not necessarily those o the Federal Reserve Bank o St. Louis or the Federal Reserve System. Material herein may be reprinted or abstracted as long as Bridges is credited. Please provide the editor with a copy o  any reprinted articles. Free subscriptions and additional copies are available by calling 314-444-8761 or by e-mail to communitydevelopment@ stls.rb.org.

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ST. LOUIS, MO PERMIT NO. 444

CALENDAR DECEMBER 4  What Works Works or Job Creators? Experimenting with Integrated Delivery  Systems or Microenterprise Services— Services — Online Webinar  Sponsors: CFED, NeighborWorks America, NYSE Foundation www1.gotomeeting.com/ register/683696128

JANUARY 15 CRA Roundtable—St. Louis Sponsors: Federal Reserve Bank o  St. Louis, OCC, FDIC Contact Matt Ashby at Matthew.W.Ashby@ stls.rb.org 

FEBRUARY

APRIL

5–7

11–12

Research Symposium—Restoring  Household Financial Stability Ater the Great Recession: Why Household Balance Sheets Matter—St. Louis Sponsors: Federal Reserve Bank o  St. Louis, Center or Social Development at  Washington University in St. Louis www.stlouised.org/event/46CA

SAVE THE DATE! Resilience and Rebuilding or Low-Income Communities Conerence— Conerence—  Washington, D.C. Sponsor: Federal Reserve System www.rbatlanta.org/news/ conerences/13resilience_rebuilding.cm

19–20 Mississippi Annual Aordable Housing  Conerence—Biloxi, Miss. Sponsor: Mississippi Home Corporation www.acebook.com/mshomecorp

21 Bank-On Save-Up St. Louis Launch— St. Louis Sponsor: St. Louis Regional Unbanked  Task Force www.stlunbanked.com/index.php/allabout-us/initatives/itemlist/category/97bank-on-save-up-st-louis

ONLINE ONLY www.stlouisfed.org/  publications/br In addition to the print version, each issue of Bridges offers information that is exclusively online. This content content expands on topics in the current or a past issue. For this this issue: issue: Underwater Mortgages in the Eighth District By Julia Maués 

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