TODD SWANSTROMDES LEE PROFESSOR OF COMMUNITY COLLABORATION AND PUBLIC POLICY

ADMINISTRATIONUNIVERSITY OF MISSOURI – ST. LOUIS

MARCH 2 , 2010

Reducing Poverty:Place Matters

Opportunity Dividend SummitDetroit, Michigan

Todd: Mr. President, I have good news: we can reduce the number of poor people significantly without spending a nickel of taxpayers’ money.

President Obama: Todd, this is change I can believe in! What is it?

Todd: All we need to do is change where poor people live.

Why Place Matters for Poor People

Income Place of Residence

Our income influences where we live but where we live also strongly influences our income.

Income Place of Residence

•Purchasing Power

•Quality of Life

Our ability to use our incomes to purchase valuable goods and services and achieve a high quality of life is influenced by our place of residence.

Many Poor People Live in Neighborhoods of Concentrated Poverty

The Concentrated Poverty “Tax”

HIGH-POVERTY CENTRAL CITY AREA VS. LOW-POVERTY SUBURB

Loss of wages .................................................$3,000Cost of cashing payroll checks .......................$340More expensive groceries ............................... $453More expensive homeowner’s insurance …....$200Higher property taxes .......................................$600

TOTAL ...............................................................$4,593

Inclusionary Zoning as an Anti-Poverty Strategy

Instead of excluding poor people by minimum-lot zoning and outlawing apartments, cities can enact zoning laws that require a certain number of units be set aside for affordable housing.

•Exclusionary zoning laws in 100 largest metropolitan areas, 1980-2000

•15 percent set-aside

•Result: 2.6 million additional affordable units

•37 percent reduction in economic segregation

•Dramatic reductions in poverty, crime, and other social problems without any new taxes or spending programs.

Right-Sizing as an Anti-Poverty Strategy

CityPop. decline 1960-2000 (%)

Vacant units (% of total units)

St. Louis 53.6 16.6

Youngstown 51.6 13.4

Cleveland, OH 45.4 11.7

Buffalo, NY 45.1 15.7

Pittsburgh, PA 44.6 12.0

Detroit, MI 43.0 10.3

Utica, NY 39.6 14.0

Harrisburg 38.6 15.4

Huntington, WV 38.4 11.4

Binghamton, NY 37.6 12.0

Table 1. Top 10 older industrial cities in population loss and their 2000 residential vacancy characteristics.

Inclusionary Zoning Will Not Work in Weak Market Areas

Like Detroit

Small is beautiful…..But Bigger is Better!

The Options1. Ignore shrinking city.2. Fight shrinkage: demolitions, tax abatements, anti-flipping laws, etc.

3. Embrace shrinkage: decommissioned infrastructure, re-greening large parts of the city, targeted investments, relocations to urban villages.

Public Transit as an Anti-Poverty

Strategy

Investments in Regional Systems of Public Transit Can Be an Effective Anti-

Poverty Strategy

Low-Income people are more dependent on public transit

• Families making less than $20,000 in 2001 represented 14% of population but 38 percent of all transit riders. (Poor people are green!)

• Cost of owning an auto: $9,498 in 2007Average American family spends 19 percent of household income on transportationPoorest households spend 55 percent

• Job-Housing Mismatches : Poor People Have Not Been Able to Follow Jobs out to the Suburbs

• Moving from a transit-poor to a transit-rich neighborhood in Minneapolis-St. Paul would save the average household $5,940 per year.

• Light rail creates enhanced land values around stations

• Inclusionary zoning can be applied to these transit villages

• TOD residents can reduce transportation costs and access jobs

Mixed-Income TOD As an Anti-Poverty Strategy