Designing the Next Generation of Place-Based Policies to Address Concentrated Poverty at the Neighborhood Level

May 16, 2022

On May 11, 2022, Brookings Metro Fellow Tracy Hadden Loh testified to the U.S. House Select Committee on Economic Disparity and Fairness in Growth, during a hearing titled Bringing Prosperity to Left-Behind Communities: Using Targeted Place-based Development to Expand Economic Opportunity.

Sharing insights gleaned from work at the Bass Center for Transformative Placemaking to create new knowledge, policies, investment strategies, practices, and tools to build more great places that work for more people, Loh’s testimony focused on assessing federal place-based policies that touch the lives of millions of Americans.

Tracy Loh

In her testimony, Loh presented a three-part critique of place-based policy design, noting:

  1. The mechanism of intervention (the “what”) is often not appropriately connected to the challenges facing structurally disadvantaged communities.
  2. Past place-based policies have often targeted the wrong places (the “where”) either by being too expansive and diffusing impact, or by over-weighting political priorities in their map.
  3. Many federal programs have either not prioritized community leadership and expertise (the “who”) or haven’t invested in building it.

Urging the committee to take the accumulated lessons of over a half-century of place-based policy, Loh recommended more targeted, next-generation approaches characterized by greater precision to the “what,” “where,” and “who” of place-based policy.

  • Get the “what” right
    • Provide a mix of sources of capital. Rather than relying solely on foregone tax revenue, consider direct seed funding in the form of revolving loan funds, an evergreen way to get working equity into places that struggle to access capital.
    • Clearly identify the intended resident benefit of the program, and the mechanism to achieve it. Waiting or wishing for impacts to ‘trickle down’ is a recipe for failure.
    • Do not rely a one-size-fits-all solution. Concentrated poverty in urban and rural areas require different approaches. And in urban areas, neighborhoods with the same poverty rates face different combinations of challenges (for example, one may be medically underserved and have a high percentage of uninsured children; another may have high commercial vacancy rates and proximity to a toxic release site). No one program can address all challenges, so allowing state and local organizations to coordinate targeting and implementation across programs enables them to create their own customized solutions.
  • Get the “where” right
    • The federal role is to set specific criteria to identify eligible places where a program will be deployed. These criteria should not be strictly deficit-based, i.e. focusing on great need such as low median income, but should also consider assets that can be catalysts or scaffolds for positive change, such as income density, and don’t leave the whole burden on the federal program alone.
    • These criteria should be consciously chosen with the understanding that a broad universe of eligibility means that funding will flow to the strongest places and leave many eligible places with no investment, while a very narrow universe is exclusive and risks either not helping enough places or limiting impact by pouring resources into very high-need places with limited capacity for absorption. Each place-based policy has a ‘Goldilocks’ level of targeting that can be approximated through thoughtful design.
    • There is also a necessary state/local role in place prioritization, because federal criteria are not a substitute for local data/knowledge about where the greatest potential for impact is, and because federal programs can be most impactful when they compliment, reinforce, or help implement existing state and/or local efforts.
  • Get the “who” right
    • Development without displacement is possible, and takes place through inclusive coalitions of local public, private, and nonprofit sector actors. As we imagine and observe how this works in practice, observers, funders, and practitioners should take the time to carefully differentiate between genuine disorder and our own discomfort with complexity. What may seem like fragmentation, duplication, or overlap can be necessary messiness, not inefficiency.
    • Federal place-based policies can and should include specific set-asides to invest in the capacity of these local actors. Capacity development is an extremely well-understood concept in the international development policy space. Our own home country is worth the same kind of investment.
    • A federal policy framework for place-based policies should include thoughtful guidelines for defining and assessing the capacity of local governance in addition to providing operating support. This will enable oversight of this spending and evaluation of any program that includes it.

To read Loh’s full testimony, click here. To watch the testimony video, click here.