Working Papers

Community Development Working Papers

Working papers provide in-depth analysis of new community development issues from practitioners and scholars.

2013

Lessons on Cross-Sector Community Development: The Las Vegas Healthy Communities Coalition - Volume 2013, Issue 7

Posted December 2013

The Federal Reserve Bank of San Francisco, in partnership with the Robert Wood Johnson Foundation, launched the “Healthy Communities” initiative in 2010 to explore how the health and community development sectors can collaborate. A regional meeting took place in Las Vegas in January 2012, which led to the formation of the Las Vegas Healthy Communities Coalition (LVHCC), a collective impact initiative with a mission to “foster collaboration and coordination across multiple sectors and stakeholders, to generate healthy outcomes for all Southern Nevadans.” This report details the formation and progress of LVHCC, which is still in the early stages of development. Unlike other case studies, which often report on an initiative’s success after many years of careful planning and implementation, this study aims to provide a candid look at the challenging and emergent nature of cross-sector collaboration in progress. It is meant to shed light on specific challenges and lessons that have been learned in Las Vegas thus far in order to help other communities that have embarked on their own community collaboratives.

CRA Collaboratives and the San Joaquin Valley - Volume 2013, Issue 6

Posted November 2013

California’s San Joaquin Valley is one of the nation’s most impoverished areas. Recent developments such as the foreclosure crisis and the Matosantos decision have heightened the Valley’s needs, and there is also evidence that the Valley is beginning to garner more attention from financial institutions and federal regulators. These developments create an opportunity for community-based organizations (CBOs) and financial institutions to work together in a mutually beneficial way. This paper describes how stakeholders have successfully collaborated to increase reinvestment in other locales, with lessons learned for the San Joaquin Valley. The results show that CBOs and financial institutions can improve conditions in the region and banks can still make a profit.

Comparative Advantages: Creating Synergy in Community Development - Volume 2013, Issue 05

Posted September 2013

The goal of this paper is to provide insights and tools to help community development practitioners, policymakers, funders, and other stakeholders better understand how to maximize the effectiveness and impact of different types of organizations at the local and regional level. Understanding your comparative advantages is critical to addressing complex community development initiatives from foreclosure prevention, to sustainable energy, to urban education, to job creation.

The New Family Philanthropy: Investing for Social and Environmental Change - Volume 2013, Issue 04

Posted August 2013

The impact investing marketplace is gaining traction—investment vehicles now span asset classes, infrastructural improvements are enhancing transparency and investor confidence, and social enterprise is maturing with a new generation of entrepreneurs. On the investor side, industry growth is being driven by large institutional investors such as public sector pension funds, banks, and private foundations. Today, we are also seeing a growing movement by families who seek to realize their core values, and effect societal change, through their family assets.

Increasing Financial Capability among Economically Vulnerable Youth: MY Path - Volume 2013, Issue 03

Posted March 2013

This report provides research findings from two different phases of “MY Path,” a financial capability initiative that provides employed disadvantaged youth with peer-led financial education trainings, a savings account at a mainstream financial institution and incentives to set and meet savings goals. The initiative is operated by Mission SF Community Financial Center (Mission SF), a nonprofit that strives to promote financial security and catalyze economic mobility for lower-income households. In 2011-12, Mission SF began testing MY Path by delivering its suite of services to ten youth development agencies participating in San Francisco’s largest youth employment program, the Mayor’s Youth Employment and Education Program (MYEEP). Based on lessons learned from the MY Path pilot, Mission SF implemented program adjustments for the second iteration of the program (MY Path Year Two) and conducted further research to understand the impact of these changes. By the end of MY Path Year Two, the 197 participants had saved a total of $134,323 in their restricted MY Path savings accounts. The individual amounts saved over the course of MY Path ranged from $5 to $1,590, with an average of $682 (SD = $321). The median amount saved was $679. This is a significant increase over the average of $507 saved by participants in MY Path Year One (t(196) = 7.64, p < .001).

The Subprime Crisis in Suburbia: Exploring the Links Between Foreclosures and Suburban Poverty - Volume 2013, Issue 02

Posted February 2013

In this brief, we provide an overview of patterns of subprime lending, as well as trends in foreclosures and REOs, in suburban communities compared to inner-cities. We also explore the relationship between foreclosures in suburban areas and the increased suburbanization of poverty. We find that the vast majority of foreclosures–nearly three out of four (73.1 percent)—have been in suburban areas, and that suburban neighborhoods with higher rates of poverty are more likely to experience higher foreclosure rates. This is of concern because the mechanisms for addressing the challenges associated with concentrated foreclosures can be more difficult to implement in suburban areas; suburbs may have smaller local governments, fewer nonprofits, and a more dispersed urban form, making it difficult for cities or nonprofits to administer programs or for residents to access them. Because the distribution of foreclosed homes has significant implications for the long-term stability of suburban neighborhoods, increased resources and attention should be devoted to developing foreclosure responses that take into account the capacity and access challenges that are unique to suburban neighborhoods.

From Cashing Checks to Building Assets: A Case Study of the Check Cashing/Credit Union Hybrid Service Model - Volume 2013, Issue 01

Posted January 2013

This case study examines the pilot effort of Community Trust Prospera (CT Prospera), a division of Self-Help Federal Credit Union, to combine the accessible services of a check-casher with the longer-term depository and lending relationship opportunities of a mainstream financial institution.

2012

Navigating Uncertainty and Growing Jobs: Considering Small Employer Firm Resilience During Challenging Economic Times - Volume 2012, Issue 06

Posted December 2012

How have certain small employer firms demonstrated resiliency despite ongoing economic uncertainty? This study considers the organizational capabilities of small employer firms operating in low- and moderate-income (LMI) census tract areas.

Impact Investing for Small, Place-Based Fiduciaries: The Research Study Initiated by the United Way of the Bay Area - Volume 2012, Issue 05

Posted December 2012

Most fiduciaries of institutional funds (public-defined benefit plans, endowment funds, and quasi-private/public foundations) for many reasons have been reluctant to adopt Impact Investing, Social Responsible Investing (SRI), or Environmental, Social and Governance (ESG) factors in their investment policies and philosophies. Primarily, such social impact factors are deemed to be limiting to the opportunity set of investments and therefore imply a financial return that is potentially substandard. This paper is the result of a challenge to identify if and how a model portfolio could be built for a small, place-based endowment fund, like that of the United Way of the Bay Area (UWBA), and whether our stock and bond investments could be aligned with the mission to reduce poverty in the San Francisco Bay Area without deviating from our fiduciary responsibilities.

Building a Robust Anti-Poverty Network in the Bay Area - Volume 2012, Issue 03

Posted September 2012

The geography of race and class in the San Francisco Bay Area has shifted dramatically over the last decade, and suburban poverty is on the rise. The need for social services has grown in communities outside of the urban core, outpacing the abilities of anti-poverty organizations to provide assistance. Using eastern Contra Costa County as a case study, this paper outlines some of the challenges for the current anti-poverty network in suburban locales, and lays out a framework for building capacity to better meet the needs in these urban fringe areas.

Money Savvy Youth: Evaluating the Effectiveness of Financial Education for Fourth and Fifth Graders - Volume 2012, Issue 02

Posted July 2012

While there are studies on the impact of financial education on teens, there is a lack of research on programs targeted at elementary school-aged youth. To address this gap, we evaluated the effectiveness of Money Savvy Youth (MSY), a financial education program for fourth and fifth graders, developed by the East Bay Asian Local Development Corporation. MSY training was delivered in the classroom once a week over the course of five weeks during the 2011-2012 school year, and targeted a diverse and primarily low-income student population attending public schools in the Oakland Unified School District in Oakland, California. Based on pre-test, posttest, and follow-up test analyses, we found that students who participated in the MSY program demonstrated an increase in financial knowledge and self-reported positive financial behaviors.

Credit Unions, Community Development Finance, and The Great Recession - Volume 2012, Issue 01

Posted February 2012

Community development credit unions (CDCUs) have a long history of serving low-income and minority markets. They played an important role in the founding and leadership of the Community Development Financial Institutions (CDFI) Coalition, which successfully advocated for the establishment of the CDFI Fund and has monitored and supported the CDFI Fund throughout its history. Yet, the role of credit unions in the CDFI movement is often overlooked. The term, “CDFI” is frequently understood by researchers and policymakers to mean CDFI loan funds, the unregulated institutions that dominate the ranks of institutions certified by the CDFI Fund. This working paper explains the critical role that CDCUs play in community development and examines their financial performance through the Great Recession.

2011

Improving Evaluation and Metrics in Youth Financial Education - Volume 2011, Issue Special Report

Posted July 2011

The Federal Reserve Bank of San Francisco, the Take Charge America Institute at the University of Arizona, and the Federal Reserve Bank of Minneapolis invited a small group of researchers and practitioners to discuss how to improve the evaluation and metrics of youth financial education programs. The meeting focused specifically on youth — which we defined as individuals under the age of 25 – in an effort to distinguish this effort from others that have discussed financial education research more broadly. The goal for the meeting was to help create a research agenda that would move the field towards the development of clearly defined outcomes for youth financial education, metrics for capturing ROI, and quality standards for curriculum and delivery that would serve as “best practices” for educators seeking to offer effective financial education interventions.

A New Way to Talk About Small Business: The Time Has Come for a Common Language - Volume 2011, Issue 02

Posted February 2011

There is a steady call for policies and programs to help small business lead the charge in hiring more workers and helping to restore prosperity to areas that have been hurt by the recession. To be successful, however, it is time for academics, policymakers, investors, community leaders, and business owners to have a more fruitful discussion about what small business actually needs. Such a discussion is imperative now, during a time of financial crisis, but it is also necessary if we are to help move the sector forward in the coming years. In this paper, we are proposing that we adopt a common language based on a new small business taxonomy that can make this conversation more productive by bridging the communication gaps between various stakeholders. In an effort to create that common language, support policy creation, and enhance future discussions, this paper lays out a a system of policies and programs – a support structure – for small business using a simple taxonomy of small-business categories based on revenue. Ideally, this will lead to more efficient models for small business growth, including much needed job growth as the nation emerges from the recession.

Urban Sustainability and Community Development: Creating Healthy Sustainable Urban Communities - Volume 2011, Issue Special Report

Posted February 2011

Increased urbanization has also led to many challenges for urban residents. In the United States, land use and zoning, transportation and infrastructure, lack of affordable housing, and disinvestment have severely affected the quality of life of poor urban populations. Despite these challenges, opportunities do exist to make economically disadvantaged urban communities more sustainable, livable, and healthy. This working paper discusses the challenges facing urban communities and then considers the opportunities that exist to develop sustainable urban communities given our current economic climate.

The New Way Forward: Using Collaborations and Partnerships for Greater Efficiency and Impact - Volume 2011 , Issue 01

Posted January 2011

This paper uses seven short case studies of nonprofit housing and community development organizations to explore three different collaborative strategies that increase their efficiency and impact. These case studies include both recent and long-standing partnerships in affordable housing, community development finance, neighborhood stabilization, and transit-oriented development. It concludes with recommendations based on the examples, including effective strategies for successful innovation, collaboration, and partnership formation.

2010

Health-Care Policy as Urban Policy: Hospitals and Community Development in the Postindustrial City - Volume 2010, Issue 10

Posted December 2010

This paper seeks to explore urban hospital policy, its history, and, in particular, the contradictions, challenges, and opportunities that it poses for community development in U.S. cities. Are urban hospitals a largely overlooked resource for urban economic development that can provide a ladder of long-term upward mobility for impoverished inner-city communities? Or are urban hospitals an anchor that has been dropped into sand, and that may be swept away by the winds of the healthcare crisis that has begun to storm across the United States?

Sought or Sold? Social Embeddedness and Consumer Decisions in the Mortgage Market - Volume 2010, Issue 09

Posted December 2010

This research paper explores how mortgage market channels interacted with localized social networks to shape loan outcomes for historically disadvantaged borrowers. How did borrowers decide on their choice of lender? What loan products were they offered, and how knowledgeable were they about their loan terms? Were loans in lower-income and minority communities “sold or sought?” To answer these questions, the paper relies on in-depth interviews, local data on mortgage lending and foreclosures, and analysis of the institutions and marketing practices in two communities that represent the two faces of the mortgage crisis in California: an older, predominantly minority neighborhood with an older housing stock (Oakland), and a fast growing suburban area characterized by new construction (Stockton). This research can inform the policy debate around consumer protection regulations and fair lending laws, as well as help local practitioners such as homeownership counselors understand how borrowers access and make decisions about mortgage credit.

Who Receives a Mortgage Modification? Race and Income Differentials in Loan Workouts - Volume 2010, Issue 07

Posted December 2010

Loan modifications offer one strategy to prevent mortgage foreclosures by lowering interest rates, extending loan terms and/or reducing principal balance owed. Yet we know very little about who receives loan modifications and/or the terms of the modification. This paper uses data from a sample of subprime loans made in 2005 to examine the incidence of loan modifications among borrowers in California, Oregon and Washington. The results suggest although loan modifications remain a rarely used option among the servicers in these data, there is no evidence that minority borrowers are less likely to receive a modification or less aggressive modification than white borrowers. Most modifications involve reductions in the loan’s interest rate, and an increase in principal balance. We also find that modifications reduce the likelihood of subsequent default, particularly for minority borrowers.

Charter School Tax Credit: Investing in Human Capital - Volume 2010, Issue 08

Posted December 2010

This working paper considers how two existing policy tools–investment tax credits and charter schools–could be combined to raise operating funds for charter schools that successfully close the poverty-related academic achievement gap. Some charter schools have succeeded in dramatically improving low-income student performance (those run by KIPP, Achievement First, and the Harlem Children’s Zone, for example). However, these successful schools differ significantly in type and approach. As a result, it is difficult to identify a single, or combination of variables in any one charter that, if replicated, would produce the same results across the public school system. This working paper acknowledges the difficulty of so-called “silver bullet” school reform replication and considers an alternative: cultivating a diverse array of education approaches using tools developed by the community development finance industry over the last 30 years.

The Community Reinvestment Act and Small Business Lending in Low- and Moderate-Income Neighborhoods during the Financial Crisis - Volume 2010, Issue 05

Posted October 2010

Over the last three years, the financial crisis and ensuing recession have led to tectonic shifts in the availability of credit, especially for small businesses. Data show that the number of loans to small businesses has dropped from 5.2 million loans in 2007 to 1.6 million in 2009. This trend is of significant concern to policy-makers, particularly given the important role that small businesses play in the US economy. Making credit accessible to small businesses, therefore, is seen as a critical component of economic recovery. Despite this policy focus, however, few studies have documented recent trends in small business lending, and even fewer have focused attention on the implications of the reduction in credit for small businesses in low- and moderate-income neighborhoods.

In this paper, we seek to address this gap by examining trends in small business lending in low- and moderate-income (LMI) neighborhoods by large banks regulated under the Community Reinvestment Act (CRA). We find that there is a strong relationship between the boom and bust housing market cycle and patterns in small business lending, both over time and over space. While small business lending expanded rapidly between 2003 and 2007, this expansion was uneven, and neither LMI communities nor neighborhoods with a high percentage of African American residents appear to have benefited as much as other areas from the boom. Since 2007, small business lending has contracted significantly, particularly in areas that have also seen contractions in the housing sector. Our results show significant spillover effects of the mortgage crisis into small business lending—for the economy as a whole as well as for LMI areas in particular. Our findings suggest that in order to reverse the cycle of disinvestment in neighborhoods hit hard by foreclosures, we need to address the small business sector as well as housing.

Enhancing New Markets Tax Credit Pipeline Flow - Volume 2010, Issue 06

Posted October 2010

In a new Community Development Working Paper from the Federal Reserve Bank of San Francisco, author Kevin Leichner examines New Markets Tax Credit (NMTC) performance during the Great Recession and provides recommendations for maintaining deal flow to support the NMTC project pipeline and overcome financing gaps. Between 2002 and 2009, the Federal government allocated $26 billion worth of NMTC to support community development projects. Based on new data from the respondents to a Winter 2010 Center for Community Development Investments survey as well as three case studies, NMTC stakeholders are finding their NMTC portfolios are outperforming other investments. At the same time, however, their responses also indicate that the Congressional expansion of the program, with larger annual allocations, may exceed the ability of the NMTC industry to provide high-quality investor-backed projects. As a consequence, investor demand for the tax credits has been falling, resulting in lower investor pay-ins and reduced impact in low-income communities. Based on survey responses, case studies, and industry literature, the paper concludes with recommendations for strengthening the program and stimulating demand.

The Current Landscape of the California Housing Market - Volume 2010, Issue 03

Posted September 2010

California’s housing market has been severely affected by the foreclosure crisis. The state’s high foreclosure rate has also contributed to neighborhood destabilization in many communities, resulting in negative spillover effects such as price declines and increased crime and blight. In light of these rapid changes in the housing landscape, this report provides a current “snapshot” of California’s housing market in the wake of the foreclosure crisis. It presents historical trends as well as current data on foreclosures, home prices, and affordability, and also considers the state’s future housing needs. Given the state’s sheer size and dramatic regional variation, the report also digs down into conditions at the regional and county level. The study hopes to inform stakeholders from across the state and help in the development of a strategic response to the drastic changes that have taken place in California’s housing market over the past few years.

Strengthening Financial Education in California: Expanding Personal Finance Training among Youth - Volume 2010, Issue 02

Posted May 2010

The Effects of the Real Estate Bust on Renter Perceptions of Homeownership - Volume 2010, Issue 01

Posted April 2010

After almost a decade of strong price appreciation, the housing market fell into a steep decline in 2007. By 2008, foreclosure filings on owner-occupied homes were surpassing record levels. Due to the housing downturn, fewer renters may aspire to own a home, which could have lasting implications for neighborhoods and household asset building. This study analyzes the impact of the housing downturn on renters’ intent to purchase a home, their perceptions of the risks and benefits of homeownership, and their interest in information and advice concerning homeownership.

2009

2008

Lending in Low- and Moderate-Income Neighborhoods in California: The Performance of CRA Lending During the Subprime Meltdown - Volume 2008, Issue 05

Posted November 2008

The current scale of mortgage delinquencies and foreclosures—particularly in the subprime market—has sparked a renewed debate over the Community Reinvestment Act (CRA) and the regulations governing home mortgage lending.

Addressing the Prevalence of Real Estate Investments in the New Markets Tax Credit Program - Volume 2008, Issue 04

Posted September 2008

The New Markets Tax Credit (NMTC) program was created by Congress in December 2000, at the end of the Clinton administration. When initially passed, the program was to provide a total of $15 billion in tax credits between 2001 and 2007 to subsidize investments in businesses and real estate developments serving low-income communities.

Charter School Facilities Finance: How CDFIs Created the Market, and How to Stimulate Future Growth - Volume 2008, Issue 2

Posted July 2008

This working paper examines the role that Community Development Financial Institutions (CDFIs) play in supporting the successful growth of public charter schools.

Paying For School: An Overview of Charter School Finance - Volume 2008, Issue 3

Posted June 2008

This paper examines the current state of the market for charter school finance and will focus specifically on programs and financing structures for school facilities.

Going “De Novo:” Tapping into Emerging Markets at the Branch Level - Volume 2008, Issue 1

Posted May 2008

The financial services landscape of low-income communities is often dominated by “fringe” financial services, including check cashers, payday lenders and pawn shops. However, mainstream financial institutions are increasingly learning that there are “emerging markets” in low-income neighborhoods, and that opening a bank branch in an underserved area can translate into profitable business, not just Community Reinvestment Act (CRA) credit.

2007

The Portfolios and Wealth of Low-Income Homeowners and Renters: Findings from an Evaluation of Self-Help Ventures Fund’s Community Advantage Program - Volume 2007, Issue 02

Posted October 2007

The distribution of wealth in the United States is more highly skewed than the distribution of income. Nowhere is this clearer than in the case of homeowners and renters.

Creating a Marketplace: Information Exchange and the Secondary Market for Community Development Loans - Volume 2007, Issue 01

Posted July 2007

There is a lack of information exchange between community development lenders and capital investors that limits the growth of a secondary market for community development assets. This obstacle limits the ability of community development lenders to tap into the virtually endless capital resources of the secondary market, thereby limiting the valuable services these organizations provide to underserved communities.

2006

Homeownership at High Cost: Foreclosure Risk and High Cost Loans in California - Volume 2006, Issue 1

Posted July 2006

The relatively low rate of mortgage default and foreclosure in California in recent years obscures the fact that many Californians have high-cost home loans that they cannot afford. High cost loans are particularly common in low-income and minority communities, suggesting that those who can least afford it are paying the most for credit.