Affirmatively furthering fair housing: Considerations for the new geography of poverty

Alan Berube and
Alan Berube Interim Vice President and Director - Brookings Metro

Natalie Holmes
Natalie Holmes Former Brookings Expert

June 12, 2015

The U.S. Department of Housing and Urban Development (HUD) is preparing to issue new regulations intended to affirmatively further fair housing under the 1968 Fair Housing Act. In a piece for the Poverty and Race Research Action Council, Alan Berube and Natalie Holmes examined how HUD’s draft regulations would intersect with the new geography of poverty in U.S. metro areas.

Since 1968, the Fair Housing Act (Title VIII of the Civil Rights Act) has prohibited housing discrimination on the basis of race and has sought to address a legacy of racial segregation and housing inequities in the United States by affirmatively promoting integration and investment in housing. To date, the Department of Housing and Urban Development (HUD) has fulfilled this obligation by requiring its grantees to complete an Analysis of Impediments to Integration (AIs), which documents restrictive zoning laws and other local barriers to fair housing.

Given widespread acknowledgment that AIs fall short of their statutory obligation to affirmatively further fair housing (AFFH), in July of this year, HUD issued a Proposed Rule that would clarify and amend the AI process for Community Development Block Grants, HOME Investment Partnerships, Emergency Solutions Grants, Housing Opportunities for Persons with AIDS, and Public Housing Agencies. The Proposed Rule represents a renewed effort to implement the Fair Housing Act’s mandate to address the persistence of racially concentrated poverty in the United States.

One complicating factor is that the geographies of race and poverty have changed considerably since the Fair Housing Act became law 45 years ago. The country overall is much more racially and ethnically diverse, and poverty in metro areas has shifted well beyond its historical confines in inner-city neighborhoods. Given these significant contextual changes, how will HUD’s Proposed Rule affect its dual mandates to prevent discrimination and promote integration?

The AFFH Proposed Rule comes at a critical juncture in the evolution of U.S. regions. Between 2000 and 2010, racial and ethnic minorities accounted for 92 percent of total U.S. population growth. White Americans still comprise the majority of the overall population, but their share has fallen significantly in recent decades.

Moreover, although whites make up 63 percent of total population, they represent just 41 percent of people in poverty. In 2012, African Americans made up 13 percent of total population and their poverty rate was 27 percent, compared to 15 percent for the total population. The poverty rate among Hispanic Americans, who comprise nearly 17 percent of the population, was 26 percent. Relative to their share of the total population, racial and ethnic minorities remain disproportionately poor.

The location of racial and ethnic minorities in metro areas, including those below the poverty line, has changed markedly in the last couple of decades. Recent Brookings analysis indicates that in the nation’s major metropolitan areas, for the first time, a majority of all racial/ethnic groups, and a majority of all poor individuals, live in the suburbs. These two changes—but especially the latter— bear directly on the Proposed Rule’s implementation.

During the 2000s, the number of poor people in major metropolitan suburbs surpassed the number in cities. Between 2000 and 2011, the poor population in suburbs grew by 64 percent—more than twice the rate of growth in cities (29 percent). By 2011, almost 16.4 million residents in suburbia lived below the poverty line, outstripping the poor population in cities by almost 3 million people. Over the same period, poverty rates rose by nearly equal degrees in cities and suburbs (more than 3.5 percentage points). To be sure, the urban poverty rate remained almost 10 percentage points higher than the suburban rate on average (22 percent versus 12 percent, respectively). But the 55 percent of poor individuals in metro areas today who live in suburban communities represents a considerable shift from the minority of poor metropolitan individuals who lived in suburbs just a decade ago.

What is more, low-income suburban residents and communities today spread well beyond the inner-suburban jurisdictions, particularly in the Northeast and Midwest, whose struggles Myron Orfield and others began to chronicle in the 1990s. Especially in the wake of the home-building boom and bust of the 2000s, a large number of poor individuals and neighborhoods can be found in the mature and outer suburbs of the nation’s Sun Belt metro areas.

And while many of the suburban poor enjoy more access to higher-quality communities than their inner-city counterparts, others face obstacles to economic stability and success. These include: limited access to nearby transit; sparse and financially tenuous safety net services; a lack of philanthropic resources to support anti-poverty efforts; new stresses on schools under-equipped to respond to rapid demographic and economic changes among their student populations; and local perceptions about the magnitude or source of these new challenges that are out of step with reality.

Although anti-poverty policies and programs have proliferated in the decades since the War on Poverty, none of these types of programs was built with suburbs in mind. Poverty in suburbs tends to spread over larger areas that are a poor fit for neighborhood improvement programs, which often fail to encourage collaboration among fragmented suburban jurisdictions. Service delivery programs are also a poor match for dispersed suburban poverty, especially in small, resource-strapped municipalities. And many lower-income suburbs include residents who took advantage of programs to expand residential opportunity, but who now find themselves further isolated from social and economic opportunity. Finally, these approaches fail to confront the lack of capacity, fragmentation, and inefficient and inflexible funding sources that often characterize suburbia.

As HUD weighs public feedback on its Proposed Rule—over 1,000 comments in all—it is clear that how fair housing programs are implemented matters significantly. The distribution of fair housing opportunities within regions contributes importantly to low-income families’ access to the key supports for economic mobility—safe neighborhoods, quality schools, access to quality jobs and services. Although the geographies of poverty and race have both become increasingly suburban in recent decades, it is unclear whether the Proposed Rule, which is primarily intended to address a legacy of race-based housing inequities, will target poverty where it is, and where it is moving. Examining the Proposed Rule within the context of suburbanizing poverty, we see three important considerations for implementation.

First, by prioritizing the reduction of poverty and racial isolation in Racially Concentrated Areas of Poverty (RCAPs) among the Proposed Rule’s four goals, HUD may underemphasize the challenges posed by significant and growing rates of racial and ethnic poverty in suburbs. In the Proposed Rule, HUD defines RCAPs as census tracts that are at least 50 percent non-white and either have at least 40 percent poverty, or three times the average tract poverty rate within the same metropolitan area.

Importantly, as racial and ethnic poverty has increased in suburbs, it has not spread evenly across the landscape. Rather, it has tended to re-concentrate in certain communities, at levels below those in inner cities yet still high enough to elicit serious challenges. Extreme-poverty neighborhoods— those with poverty rates exceeding 40 percent, which aligns with HUD’s proposed definition of RCAPs—are still a predominantly urban phenomenon; 5.0 million of the 6.5 million people (78 percent) living in such neighborhoods in large metro areas are located in cities. Yet high-poverty neighborhoods (those with poverty rates between 20 and 40 percent) are much more evenly split; 16.4 million of their 40.6 million residents (40 percent) in large metro areas live in suburban communities. About one-third of the suburban poor today live in communities where the poverty rate exceeds 20 percent. As the work of George Galster and others has shown, many of the negative effects of neighborhood poverty begin to accumulate at rates exceeding 20 percent.

Racial and ethnic minorities predominate overall in suburban high-poverty neighborhoods, but not to the degree they do in urban high-poverty neighborhoods. Nonwhites and Hispanics make up 60 percent of the population in suburban communities with poverty rates exceeding 20 percent, compared to 75 percent of the population in urban high-poverty neighborhoods. The RCAP’s 50-percent minority threshold, like the 40-percent poverty threshold, may overlook areas of fast-growing poverty and minority concentration in suburban communities. Failing to grapple with the fair housing challenges posed by such communities now may eventually result in those places inheriting the racial and economic profile of their urban counterparts.

Second, it remains ambiguous as to whether the Proposed Rule would favor investment or mobility strategies to address racially concentrated poverty. The Proposed Rule currently specifies that “A program participant’s strategies and actions may include strategically enhancing neighborhood assets (e.g., through targeted investment in neighborhood revitalization or stabilization) or promoting greater mobility and access to areas offering vital assets such as quality schools, employment, and transportation, consistent with fair housing goals.” On the mobility front, research suggests that housing voucher families, particularly those receiving relocation counseling, fare better than average in measures of neighborhood quality.

Nevertheless, low-income families with housing vouchers may, and often do, move to suburban communities that face stark economic challenges. By 2008, nearly half of all voucher households in the 100 largest metro areas lived outside of big cities, and those households accounted for as much as 23 percent of the growth in the suburban poor population during that time. The foreclosure crisis of the mid- 2000s led many suburban homeowners (including absentee investors) to rent to Housing Choice Voucher recipients, subsequently drawing low-income families into financially struggling suburbs. In the mid-2000s, East Contra Costa County, 40 miles inland from Oakland, saw a rapid increase in residents with Housing Choice Vouchers. When the housing market crashed, these families were left at a far remove from economic opportunities, social supports, and labor market connections. In southern Cook County, Illinois, voucher residents increased rapidly during the same time period, particularly as many neighborhoods in the city of Chicago where public housing was redeveloped became relatively more expensive. But those suburban municipalities continue to suffer from a lack of jobs and services, and many are in very poor fiscal health. Residents of East Contra Costa and southern Cook counties may be better off than their counterparts in extremely poor urban neighborhoods in Oakland or Chicago—but they could be doing much better.

None of this means that mobility strategies—particularly in tandem with stepped-up mobility counseling— should not be a central part of local and regional efforts to further fair housing goals. However, investment strategies must be part and parcel of any region’s plan to further fair housing, and such investments are increasingly as critical across economically struggling suburban areas as in inner-city neighborhoods. And the sorts of investments needed in those places are explicitly not around affordable housing development, but rather around economic regeneration.

That economic imperative relates to a third consideration around how fair housing rules apply in suburbia, which goes to the question of regional capacity. Suburban communities are often too small to qualify as entitlement communities, so implementation of HUD’s Proposed Rule in such jurisdictions would likely fall to “qualified urban counties” via Community Development Block Grants or HOME Investment Partnerships; or to the small PHAs that tend to operate in those communities. Smaller municipalities typically have little capacity to tend to the needs of poor families, and when it comes to economic development, they often compete with one another for opportunities despite the fact that they inhabit part of a wider regional economy and labor market.

With the right incentives, however, suburbs could work together regionally and thereby provide poor families with access to a wider spectrum of employment, educational, and service opportunities. As written, the Proposed Rule encourages, but does not require, the participation of various local stakeholders—such as local departments of transportation, overlapping PHAs and municipal governments—in establishing goals for the new Assessments of Fair Housing. Bruce Katz and Margery Austin Turner argue that HUD should focus its efforts on providing regional solutions to low-income housing needs. They note that there are nearly 2,400 individual Public Housing Agencies nationally, with over 1,500 located in the largest metropolitan areas—often in overlapping housing markets and municipal jurisdictions. These PHAs may maintain different eligibility requirements, housing standards and waiting lists; as a result, it is difficult for low-income families to navigate across PHAs—even those that fall within the same geographic area.

Significant restructuring of PHAs would require Congressional approval. However, through HUD’s Proposed Rule, the Department could “vigorously encourage the formation of regional consortia,” as Katz and Turner suggest. There are several examples nationally of such regional housing models. The Chicago Regional Housing Choice Initiative is a collaboration of eight PHAs and housing organizations that have helped to sensibly streamline the voucher application process across multiple jurisdictions, while providing low-income families with relocation counseling. The effort has reduced administrative costs and improved the mobility of low-income families to areas of higher opportunity. More explicit guidelines for HUD grantees to engage in regional collaborations to meet fair housing goals would help ensure that well-intentioned investment and mobility strategies do not run aground on the shoals of suburban fragmentation and inter-jurisdictional competition.

HUD’s Proposed Rule promises to better fulfill its statutory obligation to affirmatively further fair housing by addressing a legacy of racial segregation and concentrated poverty in the United States. The Rule’s efficacy will depend, in large measure, on how successfully it promotes racial and economic integration in America’s suburbs, where more and more of its low-income minority populations live. Only by addressing growing concentrations of poverty in suburban and urban communities alike can we hope to avoid repeating the mistakes of the past, and to secure greater social and economic opportunities for low-income people and places in the future.

Originally published in November 2013.