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Linking

Lenders

And

Communities

FALL 2013

P U BL I S H E D Q UA RT E R LY
BY T H E C O M MU N I T Y
De v elopment

Bridges

DE PA RTM E N T OF
T H E F E D E R A L R E S E RV E
B A N K O F S T. L O U I S

INDEX

Women Helping Women:
Healing Hearts Bank
at Redevelopment
Opportunities for Women

Finding Ways to Help
Individuals Achieve
Financial Well-Being

Increasing Density:

uch has been written
recently about the
decline in population
in rural areas of the United
States. About 83 percent of
U.S. residents now live in
metropolitan areas, and this
trend is expected to continue
to increase into the future. By
2030, about 14 percent of the
U.S. population will live in
rural areas, and by 2050 the
rural population will be down
to only 11 percent, according
to the United Nations Department of Economic and Social
Affairs.1 Some of this decline is
due to nonmetropolitan areas
becoming newly urbanized by
increasing their populations
above 50,000 people. Such
was the case in 2010 when
the census identified 36 newly
urbanized areas. (See Figure 1
on Page 2.)

The

Is all lost for small-town
America? Should we all just
pack up and move to the
city? Not only is population
decline itself negatively affecting many small towns, but
associated issues exacerbate
the impact. With population
decline comes decreased tax
revenue and often less money
from state and federal sources,
especially in times of budget
cuts and a shifting global
economy. If the population of
nonmetropolitan areas continues to decline and urban areas
continue to gain population,
how will small towns compete
for jobs and residents in the
future? Certainly, reversing
negative population trends is
one of the keys to continued
economic growth, but it can
be an overwhelming task.
One possible strategy: Focus
on increasing population density in small towns.

Federal

Reserve

Bank

St .

Central

America’s

TABLE 1

State

Population Density
(per sq. mile)

4,634

Lititz

4,056

Glenwood Springs

1,692

Flagler Beach

1,225

Watkins Glen

1,720

Traveler’s Rest

1,012

Camden

949

Greenville

932

Mount Carroll

851

Le Claire

806

Elkhart Lake

758

Bay St. Louis

630

Gulf Shores

421

Quincy

408

Put-in-Bay

305

Town

Why density? As people
and talent are attracted to the
economic opportunities, accessibility to work and entertainment, and other lifestyle factors
offered by many urban areas,
smaller towns may benefit by
incorporating some of these
same factors into their community and economic development
strategies. Even some suburbs
are starting to incorporate
higher densities and more urban
principles into their designs. As
Steve Yoder wrote in The Fiscal
Times regarding the growth
of Bellevue, Wash., “Not long
ago, density, walkability and
access to public transit were
more associated with cities than
suburbs. But as more people
flock to the cities, and many
outer suburbs struggle, some
suburbs have found a formula
that’s helped them grow as fast
as their urban siblings—create
a downtown core that lets them

Louis:

Fresh Perspectives in
Community Development:
A Survey of LIHTC and the
Eighth Federal Reserve District

Budget Travel’s “America’s
Coolest Small Towns 2013”

A Small-Town Approach to New Urbanism
By Andrew A. Pack

w w w. s t lo ui sfed . or g

Ec o n o m y

Shepherdstown

Average density:
1,325
SOURCES: Budget Travel, U.S. Census Bureau

combine the city’s culture,
street life and walkability with
their own lower crime rates and
good public services.” Creating
continued on Page 2

™

Increasing Density
continued from Page 1

a higher population density in
a small town can help create a
stronger and more competitive
downtown core.
Increased density has also
been linked to increased
productivity. The Federal
Reserve Bank of New York’s
2010 report, “Productivity and
the Density of Human Capital,”
reviewed 363 metropolitan
areas in the U.S. from 2001
to 2005 to better understand
how density affects an area’s
productivity. Although this
report reviewed metropolitan
areas, many of the findings
may be applicable to small
towns, especially those with
higher-than-average densities. The New York Fed found
that if a metropolitan area
doubled its population density,
its human capital increased,
leading to an average 2 to 4
percent increase in productivity. Depending on whether an
area had low or high human
capital, the gains in productivFIGURE 1

U.S. Census Bureau’s Newly
Urbanized Areas, 2010

Follow the link below to view the map full-size.
SOURCE: U.S. Census Bureau. http://
www.census.gov/geo/maps-data/maps/
pdfs/thematic/2010ua/UA2010_
NewUAs_Map.pdf

ity were lower or higher than
the net average. The sectors
most dramatically affected by
increases in density were more
knowledge-based, relying on
an educated workforce where
sharing ideas is important to
productivity. Sectors with the
highest productivity gains were
professional services, arts and
entertainment, information,
and finance. Although the
study used metropolitan areas
as the sample, it demonstrates
that increasing density can lead
to positive economic gains.
Infrastructure and other
resource costs are also important reasons that small towns
might benefit from increasing density. As a community expands outward, more
infrastructure has to be put in
place and maintained over the
long term (e.g., roads, water,
sewer, electricity, broadband,
etc.). If budget issues continue to impact states and
cities, the ability to fund new
infrastructure projects could
be a roadblock to growing
a community. Choosing to
focus on increasing density in
an area where infrastructure
already exists may be quicker,
easier and more cost-effective,
especially considering the
limited resources available to
many communities. Additionally, when trying to maintain
and manage resources more
diligently, focusing funds or
projects in a particular area
of high density should create
more impact than in an area
where less people or businesses
may benefit.

LINKING

LENDERS

FIGURE 2

Small Towns in Missouri
POPULATION DENSITY
(PER SQ. MILE)
>1,200
850–1,199
500–849

SOURCE: U.S. Census Bureau, American Fact Finder. Map created using Esri ArcGIS.

Breakdown of Missouri Places
•• 132 places in Missouri have populations between 2,500 and 10,000 with a density of 500 or
more people per square mile (~13 percent of places in Missouri).
•• Of these 132 small towns, 22 have a density between 500 and 849, 46 have a density between
850 and 1,199, and 64 have a density above 1,200 people per square mile.
•• For comparison of the densities of small towns and cities in Missouri, below is information on
the top five metros by population:
City

Population (2010)

Density Per Square Mile

Kansas City

459,787

1,460

St. Louis

319,294

5,158

Springfield

159,498

1,952

Independence

116,830

1,506

Columbia

108,500

1,720

SOURCE: U.S. Census Bureau

How realistic is it that a
small town could have a small
population but a higher-thanaverage population density?
Where are these types of small
towns located? To better
understand the number and
geographic distribution of
small towns in a state, let’s look
at Missouri as an example.
There are multiple definitions
of “rural,” “urban” and “small
town.” Using the Census
Bureau’s definition of urban
clusters, the USDA’s Economic

AND

COMMUNITIES

Research Service defines rural
as any place with a population
of fewer than 2,500 and a density of less than 500 people per
square mile. According to the
North Carolina Rural Economic
Development Center, small
towns are generally defined as
having populations of less than
10,000 people. Using these
definitions to best identify the
true “small towns” in Missouri,
towns with less than 2,500
people and/or less than 500
people per square mile were

excluded because they are
considered rural; places with
more than 10,000 people were
also excluded. The map of Missouri shows that there is a fairly
even geographic distribution of
small towns with high densities
across the state. The exception
is a cluster of small towns with
population densities of more
than 1,200 people per square
mile located in and around St.
Louis County. The results can
be seen in Figure 2 on Page 2.
What other impact does
density have on small towns
across the United States? Budget Travel conducts an annual
poll, inviting readers to vote
on nominations for “America’s
Coolest Small Towns.” In
2013, almost 100,000 people
nominated and voted on 924
small towns. (See Table 1
on Page 1.) All but three of

many of the towns on Budget
Travel’s list have done.
As the world continues to
become more urbanized, it’s
important that small towns
keep up with these changes.
Increasing a small town’s
density to reflect some of the
positives of a more urbanized
lifestyle may be important to
its future success. For many
towns, population decline will
continue to be a problem. But
if increasing density in the core
of the town becomes a priority of the community’s growth
plan, the town may be able to
decrease some of these negative
effects of population loss by
building up what already exists.
Population density is not just
an urban measurement; it is
also important to the growth of
many small towns. Density can
help create a stronger and more

Increasing a small town’s density to reflect
some of the positives of a more urbanized
lifestyle may be important to its future
success.
these towns had a population
density above 500 people per
square mile; 12 had population
densities above 500 and six had
populations of approximately
1,000. Many people choose to
visit, live, work and retire in
these popular and vibrant small
towns with higher population
densities. Increasing density
may help a small town create a
sense of place and quality of life
that people desire. Even highdensity small towns can retain
their charm, as voters believe

accessible downtown core,
increase economic productivity,
lower infrastructure costs and
help create a lifestyle that many
people believe only urban areas
can provide.

BIBLIOGRAPHY
American Planning Association. Great
Places in America: Public Spaces.
http://www.planning.org/greatplaces/
spaces/characteristics.htm
Budget Travel. America’s Coolest
Small Towns 2013. http://www.
budgettravel.com/contest/americascoolest-small-towns-2013,14/
Census Bureau. 2010 Newly Urbanized Areas. http://www.census.
gov/geo/maps-data/maps/pdfs/
thematic/2010ua/UA2010_NewUAs_
Map.pdf
Census Bureau. Missouri Small Town
Data & Budget Travel Small Town
Density. http://factfinder2.census.
gov/faces/tableservices/jsf/pages/productview.xhtml?pid=DEC_10_SF1_
GCTPH1.ST13&prodType=table
Federal Reserve Bank of New York. “Productivity and the Density of Human
Capital.” http://www.newyorkfed.org/
research/staff_reports/sr440.pdf
North Carolina Rural Economic Development Center. Small Towns Trends
and Issues. http://www.ncruralcenter.
org/index.php?option=com_content&
view=article&id=231%3Asmall-towntrends&catid=48&Itemid=229
United Nations. On-line Data: Urban
and Rural Population. http://esa.
un.org/unup/unup/index_panel1.html
United States Department of Agriculture
Economic Research Service. “What is
Rural?” http://www.ers.usda.gov/topics/rural-economy-population/ruralclassifications/what-is-rural.aspx
Yoder, Steve. The Fiscal Times. The New
Boom Towns: Suburbs Get City Makeovers. http://www.thefiscaltimes.com/
Articles/2012/07/17/The-New-BoomTowns-Suburbs-Get-City-Makeovers.
aspx#3KpTGYrtTBoWAjxG.99.

Andrew A. Pack is a community
development specialist at the
Little Rock Branch of the Federal
Reserve Bank of St. Louis.
1 Source: United Nations.

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internet

Here are a few strategies towns can
implement to improve density:
•• Create planning and zoning that specifically targets particular areas of a town
for population, housing and/or business
growth (and/or change ordinances to allow
higher-density structures).
•• Locate new or existing community services
or institutions in a certain geographic area
(schools, libraries, health care clinics,
post offices, utility companies, other
governmental institutions or services that
people need access to).
•• Offer housing options of different sizes
and prices, a mix between ownership and
rentals, and variances in styles that will
appeal to a large cross-section of people
(singles, young families, retirees, etc.).
•• Types of housing to consider could
include condominiums, cottages, town
homes, single-family houses, cooperative housing, senior living facilities and
other types that appeal to multiple
generations and incomes.
•• Utilize tax incentives to develop, redevelop
or improve a specific geographic area of
a community to entice more people to
live there.
•• Create shared amenities and public
spaces for common use. These spaces
should:
1. promote human contact and social
activities;
2. be safe, welcoming and accommodating for all users;
3. have design and architectural features
that are visually interesting;
4. promote community involvement;
5. reflect the local culture or history;
6. relate well to bordering uses;
7. be well maintained; and
8. have a unique or special character.
•• Ensure connectivity and accessibility
to population center (walking, biking,
driving).

ENDNOTES

Increasing Population
Density

www.stlouisfed.org

Women Helping Women:

Healing Hearts Bank at Redevelopment Opportunities for Women
By Angela Schultz

urrent and former
participants in Redevelopment Opportunities
for Women’s (ROW) Economic
Action Program (REAP) are volunteering their time, knowledge
and energy to help other women
improve their economic stability. All eight participants—
women who are survivors of
intimate partner violence—are
volunteer “bankers” at the third
branch of Healing Hearts Bank,
a microlending program sponsored by the National Council
of Jewish Women, St. Louis Section, and offered in partnership
with ROW.

opportunity to “return” knowledge and wisdom to other
survivors of intimate partner
violence.
The mission of Healing
Hearts Bank is “to build a
community of women assisting
women through connection to
assets not normally available.”
The bank provides access to
small-dollar loans to stabilize
the lives of women impacted by
intimate partner violence, with
a goal of providing nontraditional loans for survivors of
domestic violence who may
not be able to access traditional
banking for emergency and
other identifiable needs. All
loan recipients will be either

Loan recipients will all be survivors of
intimate partner violence, experiencing
financial hardship as a result of economic
abuse, an often unacknowledged form of
power and control over a woman by an
abusive partner.
These volunteer bankers
have communicated their
enthusiasm to help other
women who have been in situations similar to their own. One
banker shared that she is “feeling empowered” and positive
about “helping other women.”
Another stated that she looks
forward to gaining a “deeper
understanding of the needs of
my community,” as well as the

past or current participants
in REAP, so they are already
actively working to build and
repair credit and attain assets.
The microlending program
will provide another avenue
to attain economic and family
stability. Of the program and
the opportunities it affords, one
banker stated, “I am excited for
the [program] and look forward
to being a help.”

LINKING

LENDERS

Volunteer “bankers” at Healing Hearts Bank discuss small-dollar loans for survivors of
intimate partner violence at their monthly meeting.

The mission and goals of
Healing Hearts Bank complement ROW’s programs and
serve as a mechanism for
realizing ROW’s mission of
“empowering women to build
safety, skills, economic security
and hope for the future.”
ROW has been providing
advocacy services and innovative programs to women
impacted by intimate partner violence, poverty and
homelessness for more than
30 years. The organization’s
REAP program offers financial
literacy classes, individual
economic advocacy for credit
repair and matched savings
to participants. REAP serves
more than 300 women annually, and has assisted countless
women to build assets, reduce
debt, build credit and stabilize their lives. In addition to

AND

COMMUNITIES

REAP, ROW offers an array of
programs and services to help
women and their children,
including Family Strengths, a
self-development and parenting
program; Family Literacy, an
educational program offered in
partnership with the St. Louis
Public Schools Adult Education
and Literacy Program; and the
Multi-Lingual Access Project
(MAP), offering language advocacy and interpretation services
to domestic violence partner
organizations and the women
they serve.
As a testament to the quality and innovation of ROW’s
services, the organization’s
executive director, Meg Schnabel, was awarded the Champions of Change Award from the
White House in October 2011.
Schnabel developed the REAP
program before assuming

her current position at ROW,
which she has held for more
than 10 years.
It is anticipated that the
third branch of Healing Hearts
Bank at ROW will be making small-dollar loans of up to
$500 by the fall of 2013. Loan
recipients will all be survivors
of intimate partner violence,
experiencing financial hardship as a result of economic
abuse, an often unacknowledged form of power and
control over a woman by an
abusive partner. Volunteer
bankers will analyze loan
applications, select recipients
and ensure that loans are
repaid in order to make future
loans available to more women.
Bankers will continue to be
comprised of past and current
REAP participants, providing
an opportunity for them to use
the financial literacy information learned as a result of
participating in the program.
Banker meetings are held
monthly and run by the volunteers. Employing the model of
empowerment, this program’s
infrastructure allows women
to help other women, ensuring
the realization of its mission.
For updates on ROW’s microlending and other programs,
please visit www.row-stl.org or
ROW’s Facebook page.
Angela Schultz is the program
director at Redevelopment Opportunities for Women.

Finding Ways to Help
Individuals Achieve
Financial Well-Being
By Keith Turbett

hroughout the past
century of SunTrust’s
operations, the U.S.
economy has been through
ups and downs, communities have grown and adapted
to changing times, and the
financial needs of individuals
and businesses—along with
the banking services to meet
those needs—have evolved. As
a response, banks—including
SunTrust—are finding new
ways of putting clients first and
helping them achieve financial
well-being.
One way to further achieve
broader prosperity is to help
individuals without a banking
relationship move from highcost financial relationships to
more traditional financial products. Bank On Memphis is a
good example of this type of
assistance. In partnership with
the city of Memphis and Shelby
County, SunTrust and other
financial services institutions
will introduce an estimated
96,000 households—who
currently only use high-cost
financial services or do not
have banking relationships at
all—to lower-cost financial
services. In a city with high
poverty and bankruptcy rates,
this means more money for

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internet

low- and moderate-income
individuals and families to
use on household expenses,
education, health care or other
necessities.
A C Wharton, Jr., the mayor
of Memphis, summed it up
well when he said, “Those who
have the least pay the most for
financial services. We’re not
really poor in Memphis; we just
spend poorly.”
Banks can be part of the
solution, but must not be
naive to the challenges ahead.
Many people are comfortable
transacting financial business
in a certain way—even if they
might benefit from lower costs
or a broader range of services.
Changing habits can be difficult—even if it saves money.
That is why SunTrust is partnering with community organizations to increase awareness
of financial solutions that can
help improve lives.
SunTrust’s work with PorterLeath, a large family and children’s services organization,
is an example of a community
partnership that has yielded
tremendous results. Through
the Family Rewards program,
financial incentives are earned
for efforts in three main areas:
education, health and work.
This conditional cash transfer
continued on Page 11

www.stlouisfed.org

CDAC Member Spotlight
Keith D. Turbett
started his career
at the Federal
Reserve Bank of
St. Louis—Memphis
Branch, moving
from the Cash and
Securities area to
supervise Securities operations. He also
established a Community Affairs office
at the Branch, providing banks and bank
holding companies in West Tennessee,
Eastern Arkansas and North Mississippi
with information on appropriate programs
to meet community development needs.
Turbett later worked as the community
development manager for Union Planters
Corp.; corporate CRA officer at National
Commerce Financial; and regional community development manager for SunTrust
Bank. Currently, Turbett serves as first
vice president and community development manager for SunTrust. He earned an
associate’s degree in mid-management
technology from State Technical Institute
of Memphis and a banking diploma from
the American Institute of Banking. He has
also received training at the Community
Development Finance School with the
Federal Reserve Bank of Dallas and examiner training with the Federal Financial
Institutions Examination Council. Turbett
serves on the boards of Memphis Housing
Resource Center, Fair Housing Alliance
of Greater Memphis and United Housing
Inc. He is a member of the Community
Development Advisory Council (CDAC) for
the Federal Reserve Bank of St. Louis.
CDAC members are experts in community
and economic development and financial
education. They complement the
information developed through outreach
by the District’s Community Development staff and suggest ways that the
Bank might support local efforts. A list
of current members is available at www.
stlouisfed.org/community_development.

The Graying of America:
Preparing for What Comes Next
By Kathy Moore Cowan

y now, we all know we
are in the midst of a
tsunami. In just seven
short years, the number of
Americans age 65 and older
will increase by 65 percent,
from 35 million to 55 million. By 2050, there will be
88 million Americans in this
age group, representing one in
every five Americans.
Baby boomers have significantly impacted every institution and stage of life they have
encountered. We can blame
them for this massive aging
of the American populace
as well. This demographic
shift will cause a tremendous
change in the demand for
housing, and will exponentially increase the need for
services to help older adults
age in place. Yet, many communities are not prepared—
or preparing—to negotiate the
profound effect of this transition on our communities.
Recognizing an increase in
the number of grant requests
for aging-related issues and
media attention on the impact

of the baby boomers, the
Plough Foundation decided
to dive deeper into this issue.
Plough is an independent, private, philanthropic foundation
that provides grants to address
social and economic issues
exclusively in Memphis and
Shelby County, Tenn. Mike
Carpenter, executive director of
the foundation, says, “As grantmakers, we want to find good
ideas and solutions to deal
with the challenges of aging
in place. We want to uncover
those organizations with capacity to deliver solutions.”
Plough hired a program
associate, Katie Midgley, to
research the scope of services available to the elderly
in Shelby County. Midgley
began by gathering local
and regional demographics to understand what was
happening in the Memphis
community. A review of the
demographic data confirmed
that the tsunami had not
skipped Memphis. The aging
population in the region was
growing rapidly, increasing
by more than 55,000 between
2000 and 2010.

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LENDERS

Midgley next completed
an internal scan of Plough’s
funding related to aging; consulted with local and national
grantmakers and experts in
aging; determined the existing
status of programs and funding
sources for local aging programs; reviewed information
and literature on aging issues
and trends; and identified and
reviewed comprehensive programs nationwide. Out of this
process and through conversations with more than 70 major
players with expertise in all
aspects of aging, seven important issues for Memphis and
Shelby County emerged:
• Caregiver support and
respite
• Transportation
• Basic needs (food, utilities)
• Home repair and modifications
• Elder maltreatment
• End-of-life care plans,
advanced directives, etc.
• Opportunities for community engagement
But before any priorities were
established, Midgley realized
that one important voice was

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COMMUNITIES

missing … that of the elderly.
So Plough commissioned the
AdvantAge Initiative to conduct a survey of more than 500
adults ages 65 and older. The
survey results are delivered
in Report to the Community on
Older Adults in Shelby County:
Results from the 2012 AdvantAge
Initiative Survey. The survey
revealed that in the Memphis
area, people want to stay in
their own homes as they age;
however, the existing housing
stock is not suitable—without
modifications and maintenance—for aging in place.
Primary modifications needed
include exterior wheelchairaccessible ramps; wider doorways, halls and bathrooms;
and grab rails in bathrooms.
Roof and heat/air-conditioning
improvements are the biggest
maintenance needs. Regardless
of income level, there is a need
for accessibility and homerepair modifications. However,
many seniors cannot afford to
make these modifications to
their homes. Armed with this
data, the Plough Foundation
has decided to select this issue
as a priority.
MetLife City Leaders Institute on
Aging in Place
To help cities figure out how
to improve the quality of life of
seniors who remain at home as
they age, in 2012 the MetLife
Foundation launched the City
Leaders Institute on Aging in
Place. This one-year pilot program is funded by the MetLife
Foundation and implemented
by Partners for Livable Com-

munities. The pilot focuses on
making local-level changes to
facilitate aging in place.
Memphis was one of 10 cities
selected in 2013 for the second
pilot, working with national
leaders to implement new ways
to improve the lives of seniors
who remain at home as they
age. Other cities included
in the second pilot are San
Diego, Calif.; Washington,
D.C.; Chicago, Ill.; Louisville,
Ky.; Kansas City, Mo.; Asheville, N.C.; Oklahoma City,
Okla.; Salt Lake City, Utah;

This demographic
shift will cause a
tremendous change
in the demand
for housing, and
will exponentially
increase the need
for services to help
older adults age
in place.
and Alexandria, Va. The city
teams traveled to Washington,
D.C., earlier in the year with
projects that addressed arts,
culture and civic engagement
or mobility and transportation
issues. Each city team was
provided with issue experts
and a facilitator to assist them
in brainstorming, planning and
developing their road map to
action for the year.
Building on the work and
leadership of the Plough
Foundation, the Memphis pilot

is a collaborative effort led by
the foundation, along with the
Aging Commission of the MidSouth, Tennessee Housing and
Development Agency, Shelby
County Government, and the
Community Development
Council of Greater Memphis.
The goals of the Memphis
pilot include identifying viable
funding and volunteer sources;
developing a set of criteria for
determining necessary home
modifications; and creating
an implementation plan for a
kickoff event in March 2014.
The team will develop a centralized system that determines
the home modification needs
of older adults, directs them to
services and provides funding
for those who cannot afford
to make such changes themselves. By the end of the year,
the foundation plans to have
an opportunity fund to help
implement the strategies.
Louisville—another city in
the Fed’s Eighth District—
is addressing mobility and
transportation issues. The
Louisville pilot will bring the
city’s Complete Streets policy
from concept to action. During
the next 12 months, Louisville
will engage in a three-pronged
effort of engaging, raising
awareness and celebrating successes. Specifically, they will
create a Photovoice initiative
with older adults. Photovoice
provides cameras to people
with least access to those who
make decisions affecting their
lives, blending a grass-roots
approach to photography and
social action. This initiative

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will determine and document
barriers to access; identifying
and executing at least two (one
urban, one suburban) publicly
visible demonstration projects
that respond to such barriers; and sharing their findings
through a high-profile, communitywide celebration.
The dramatic rise in the
number of older Americans
will have an impact on every
aspect of life in U.S. communities. The entire social, physical
and fiscal fabric of this country
will be affected by the coming
age wave. To ensure that older
Americans add more than years
to their lives, communities
must start now to plan for successful aging—because we’re
not getting any younger.
Kathy Moore Cowan is a senior
community development specialist at the Memphis Branch of the
Federal Reserve Bank of St. Louis.

THE GRAYING OF
AMERICA: RESOURCES
MetLife Foundation
https://www.metlife.com/metlifefoundation/what-we-do/healthy-aging/
index.html
MetLife Mature Market Institute
https://www.metlife.com/mmi/index.html
National Association of Area Agencies
on Aging
http://www.n4a.org/
National Housing Conference + Center
for Housing Policy
http://www.nhc.org/
Partners for Livable Communities
http://www.livable.org/program-areas/
livable-communities-for-all-ages-a-agingin-place/overview
Photovoice
http://www.comminit.com/?q=mediadevelopment/content/photovoicemethodology
Plough Foundation
http://ploughfoundation.org/
Report to the Community on Older Adults
in Shelby County: Results from the 2012
AdvantAge Initiative Survey, The Plough
Foundation
http://www.vnsny.org/advantage/
plough.pdf
Pilot Program Helps Seniors Maintain
Independence; Press release—The Plough
Foundation / MetLife project
http://www.memphisdailynews.com/
editorial/ArticleEmail.aspx?id=75267
Grantmakers in Aging: Member Spotlight
on The Plough Foundation
http://www.giaging.org/membership/
member-spotlight/plough-foundation
Housing an Aging Population: Are We
Prepared? National Housing Conference
+ Center for Housing Policy
http://www.nhc.org/media/files/
AgingReport2012.pdf
Exploring New Strategic Priorities,
Interchange, Southeastern Council of
Foundations
http://c.ymcdn.com/sites/www.secf.org/
resource/resmgr/interchange/
interchange_mayjune2013_fina.pdf

w w w . stlouis f ed . org

FRESH PERSPECTIVES IN COMMUNIT Y DEVELOPMENT

A Survey of LIHTC and the Eighth Federal
Reserve District
By Brandon Farber

nacted by Congress in
1986, the Low-Income
Housing Tax Credit
(LIHTC) Program is the largest
and most successful federal
subsidy to promote affordable
rental housing in the United
States. Leveraging nearly
$100 billion in private investments and developing more
than 2.6 million affordable
rental units since its creation,
the LIHTC Program encourages private equity infusions
to construct, preserve and
rehabilitate affordable homes
for low-income renters. In
return for private investments
that help finance construction
costs and lower debt burdens,

FROM THE SURVEY:

We really, really
need to broaden the
base of investors.
CRA is a blessing,
but it is also focusing the money too
much on urban
areas and it is hard
to get funding for
rural projects.
–Kentucky Housing Developer

which allow developers to
operate properties at affordable rents, investors receive a
dollar-for-dollar credit against
their federal tax liability over a
period of 10 years.
The Survey
In an effort to measure current conditions of the LIHTC
market, a survey study was
conducted for the Federal
Reserve Bank’s Eighth District.
From July 8 through July 24,
2013, survey responses were
collected from four state housing finance agencies (Arkansas,
Indiana, Kentucky and Tennessee). A total of 54 completed
surveys were also collected
from housing developers who
are actively participating in
the LIHTC Program within
the Eighth District, but also in
states that included Alabama,
Georgia, Louisiana, Florida,
Michigan and Ohio.
LIHTC and the State
Data collected for reporting
year 2012 from the participating housing finance agencies
indicate that 55 percent of
projects that were allocated
credits in 2012 were located
in metropolitan areas. The
balance between rural and
metropolitan developments
depends largely on the state, as

LINKING

LENDERS

nearly 69 percent of projects
in Indiana were identified as
metropolitan while 71 percent
of the projects in Arkansas
were identified as rural-based
for the year. Families were also
reported as the tenants most
targeted for LIHTC developments, followed by the elderly.
Approximately 68 percent of
combined projects in Arkansas, Indiana and Tennessee
primarily served as hous-

ing for families, while only
Indiana identified two projects
intended to serve the homeless. Among these three states,
47 percent of projects were
awarded credits to fund new
construction, while 37 percent were awarded credits for
acquisition and rehabilitation
purposes. Again, states differ
largely in this category—67
percent of projects in Tennessee were new construction

FIGURE 1

FIGURE 2

Compared with the past 5 years,
how would you characterize current investor demand for LIHTCs
(rural and/or urban)? (n=40)

How would you characterize current investor demand for LIHTCs
(rural vs. urban)? (n=41)

40 TOTAL
RESPONSES

41 TOTAL
RESPONSES

Much stronger

Much stronger in urban areas

Somewhat stronger

Somewhat stronger in urban areas

No change

About the same in rural and
urban areas

Somewhat weaker

Somewhat stronger in rural areas

Much weaker

Much stronger in rural areas

Don’t know

NOTE: All figures are sourced from the Eighth District's 2013 LIHTC survey.

AND

COMMUNITIES

ABOUT THE AUTHOR
FIGURE 3

In the state in which you most actively participate in the LIHTC
Program, how would you describe the demand for affordable rental
housing for each of the following tenant populations?
40

Don’t know

Number of responses

Very high

30
25

Somewhat
high

Average

Somewhat
low

Very low

Ot
he
r

d
ble
sa

gr
mi

me
Ho

Sp
ne ecia
ed l
s

t
an

s
les

ly
er
Eld

lie

FIGURE 4

Affordable Housing—Demand vs. Supply
35

Demand is
somewhat /
very high

Number of responses

30
25

Demand is
somewhat /
largely
unmet

20
15
10
5

but 71 percent of projects in
Arkansas were acquisition and
rehabilitation properties.
Market Conditions
Approximately 52 percent of
developers report that current
investor demand for tax credits
is somewhat strong or very
strong. When compared to
the past five years, 68 percent
report current demand as

Sp
ne ecia
ed l
s

led
sa
b
Di

gr
an
t
mi
Im

les
s
Ho
me

er
ly
Eld

Fa
mi

lie
s

somewhat stronger or much
stronger. (See Figure 1 on Page
8.) However, when geography
is examined, more than half
of developers report investor
demand as much stronger in
urban areas. (See Figure 2 on
Page 8.) Compared with the
past five years, the data show
increased investor demand for
tax credits in urban areas but
decreased demand in rural

the

internet

locations. Developers estimate
the average amount received
per dollar tax credit in 2013 at
85 cents.
The Community Reinvestment Act (CRA), the 1977
regulation encouraging depository institutions to invest in
and meet the credit needs
of their low- and moderateincome neighborhoods, is
reported by housing developers as both a benefit and a
liability to the LIHTC market.
While 83 percent of developers strongly agree or agree that
a more diversified investor
pool is needed, which would
likely include CRA-indifferent
investors, developers also agree
that requiring banks to meet
CRA obligations increases the
demand for and pricing of tax
credits. However, when asked
about the geographic assessment areas in which banks
are obligated to meet CRA
criteria, 71 percent of developers responded that uneven
geographic coverage makes it
difficult for rural areas to attract
LIHTC investors; 76 percent
believe demand would be
greater in rural areas if LIHTC
investments outside assessment
areas were scored more favorably. Again, while CRA gives
leverage to developers who
want to sell tax credits, large
geographic disparities persist.
Tenant Populations
Developers agree that the
demand for affordable rental

w w w . stlouis f ed . org

Brandon Farber is a
graduate student in the
George Warren Brown
School of Social Work at
Washington University
in St. Louis and a
practicum student in
the Community Development Department of the
Federal Reserve Bank of
St. Louis.

housing for families and the
elderly is high. (See Figure 3.)
On the other hand, 56 percent
of developers did not know
enough to comment on the
level of demand for the immigrant population. With regard
to the supply of affordable
housing, the general consensus among developers is that
supply fails to meet demand
regardless of tenant type. (See
Figure 4.) Immigrants, however, were again the exception,
with 68 percent of developers
not knowing enough about
the needs of this population to
comment.
At Year 15 of the LIHTC Program, investors are allowed to
exit partnerships and owners
must decide how to continue
operating their properties. Of
the challenges that can occur
at the onset of Year 15, applying for new tax credits ranked
the highest, followed closely by
funding repairs. (See Figure
5 on Page 10.) Furthermore,
of those developers who had
1-3 properties reach Year 15 in
2012, 84 percent report that
they continued to operate those
continued on Page 10

the Region

Spanning

The region served by the Federal Reserve Bank of

Results of 2013 Community
Development Outlook Survey
Available
The 2013 edition of the
annual Community Development Outlook Survey of
low- and moderate-income
(LMI) communities across the
states that comprise the Eighth
Federal Reserve District has
been released on the St. Louis
Fed’s web site. The survey
informs the St. Louis Fed and
its branches in Little Rock,
Louisville and Memphis about
the current conditions of the
District’s LMI communities and
is shared with policymakers

at the Federal
Reserve Board of
Governors in Washington, D.C. If you
don’t already participate in the
survey but would like your
voice to be heard in future
rounds, send us an e-mail at
communitydevelopment@stls.
frb.org.

FIGURE 5

A Survey of LIHTC

In your opinion, what is most challenging at the onset of Year 15?

45 TOTAL
RESPONSES

Applying for new tax credits
Funding repairs and rehabilitation
Restructuring partnerships
Paying exit taxes
Restructuring existing debt
A general lack of preparedness
Obtaining capital
Other

Read the
survey at www.
stlouisfed.org/
community_
development/
communityoutlook-survey/

continued from Page 9

properties as affordable housing; only 15 percent repositioned their developments to
market rate.
Looking Ahead
The architects of the LIHTC
Program have left an enduring
mark on the affordable housing
debate. A massive undertaking, this initiative has matured
into an efficient and valuable
resource; a true testament to
its resilience is now unfolding.
Longstanding as the program
may be, the market for tax
credits was not immune to the
financial crisis. As Fannie Mae
and Freddie Mac exited the
marketplace in 2008, leaving
behind a small investor pool

LINKING

LENDERS

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

Third Quarter Housing Market
Conditions Report
House prices rose and
mortgage delinquencies fell
across all seven states that
comprise the Federal Reserve’s
Eighth District during the third
quarter of 2013, according to
the St. Louis Fed’s latest Housing Market Conditions report.
The quarterly report provides
a snapshot of housing market
conditions in the U.S. and the
Eighth District, which covers
the states of Arkansas, Illinois,

Indiana, Kentucky, Mississippi,
Missouri and Tennessee.

of CRA-regulated banks, the
demand for tax credits plummeted. How the program
responds and the market
recovers in this postrecession
era will be critical to the affordable housing landscape. Data
collected from this survey are
encouraging. Market conditions in the region have greatly
improved and demand for tax
credits is strong. Properties
are remaining affordable and
prices paid for credits have
increased. However, while
market conditions appear to
be on par with the economic
recovery, disparities still exist
in the geography of investments, a challenge that must be
addressed moving forward.
While this survey highlights
some important quantitative

and qualitative data for the
region, further research is
required to build and improve
on its methods, design and
results. As the nation emerges
from the Great Recession and
the LIHTC Program continues to display its proficiency
for community development,
greater research is needed to
harness the full potential of
this important initiative.

AND

COMMUNITIES

View the most
recent report, as
well as archives of
previous reports,
at www.stlouisfed.
org/community_
development/
HMC/.

Financial Well-Being
continued from Page 5

program is designed to help
low-income families reach their
full potential and break the
cycle of intergenerational poverty. Through this program,
SunTrust opened accounts
for 600 households who were
previously without a banking
relationship.
The bank is also bringing
financial education resources
into its branches. Operation
HOPE is a global nonprofit
leader for financial dignity
focused on providing financial education resources to
the underserved, which has
proven to be effective in
advancing financial literacy.
SunTrust introduced Operation HOPE counselors to a
branch in Memphis as part of
the HOPE Inside pilot program. The counselors offer
services tailored to the specific
needs of an individual or business owner, including credit
repair counseling, business
entrepreneurship training,
earned income tax credit
eligibility and financial literacy
education. These services are
free and available to anyone in
the community.
In an effort to be responsive
to the needs of specific neighborhoods, SunTrust realizes
that it takes more than tellers,
branch managers and other
teammates to provide the indepth financial counseling to
help individuals make more
informed financial decisions.
The bank’s partnerships with
many agencies—such as

Have you

Heard

Bridges

CFPB Accepting Payday Loan Complaints
applied for a loan. The CFPB requests
that companies respond to complaints
within 15 days and describe the steps
they have taken or plan to take. To submit a complaint, consumers can:

The Consumer Financial Protection
Bureau (CFPB) is now accepting complaints from borrowers with payday loans.
Also known as “cash advances” or “check
loans,” many of these loans are for smalldollar amounts that must be repaid
in a short period of time. Payment is
generally due the next time the borrower
gets paid—meaning the loan may require
repayment in only a few weeks. Payday
products can lead to a cycle of indebtedness for many consumers.
Consumers can submit payday loan
complaints to the Bureau about unexpected fees or interest; unauthorized or
incorrect charges to their bank account;
payments not being credited to their
loan; problems contacting the lender;
receiving a loan they did not apply for;
and not receiving money after they

United Housing, Memphis
Housing Resource Center, RISE
and other organizations across
our footprint—aim to provide
one-on-one financial counseling covering homeownership,
credit counseling, budgeting
and other topics.
These initiatives are not limited to individuals. The bank’s
business clients are taking
advantage of a program called
SunTrust at Work. Employees
of these clients benefit from
classes taught by SunTrust
bankers on a variety of financial subjects, such as “Five
Steps of Debt-Free Living,”
which covers topics including
setting a budget, talking with
lenders, evaluating spending,
and saving and prioritizing
debt payments.

the

internet

•• Go online at www.consumerfinance.
gov/complaint
•• Call the CFPB at 1-855-411-CFPB
(2372) or 1-855-729-CFPB (2372)
(TTY/TDD)
•• Fax the CFPB at 1-855-237-2392
•• Mail a letter to: Consumer Financial
Protection Bureau, P.O. Box 4503,
Iowa City, Iowa 52244
Consumers can also get answers
to their questions about payday loans
through AskCFPB at consumerfinance.
gov/askcfpb or by calling 1-855-411CFPB (2372).

The benefits of these partnerships have a ripple effect
through communities. An
informed homebuyer who
has participated in financial
counseling is a better prepared
homeowner, which decreases
the likelihood of default.
It’s important for banks
to know that financial pressures affect a person’s overall
well-being, including health,
family relationships and even
the quality of sleep. By finding ways to help individuals
achieve financial well-being,
banks can bolster the overall
strength and resolve of their
communities for years to come.

w w w . stlouis f ed . org

Bridges is a publication of the Community Development Office of the Federal
Reserve Bank of St. Louis. It is intended
to inform bankers, community development organizations, representatives of
state and local government agencies and
others in the Eighth District about current
issues and initiatives in community and
economic development. The Eighth
District includes the state of Arkansas and
parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.
Yvonne Sparks
Community Development Officer
and Executive Editor
314-444-8650
Daniel Davis
Community Development Manager
and Managing Editor
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
Brandon Farber
314-444-7439
Memphis:

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

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

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

The views expressed in Bridges are not
necessarily those of the Federal Reserve
Bank of 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 of
any reprinted articles.
Free subscriptions are available by
calling 314-444-8761, by e-mail to
communitydevelopment@stls.frb.org or
online at www.stlouisfed.org/br/subscribe.

International Diversity
and Entrepreneurship
in Louisville
By Maude Toussaint-Comeau

hrough small-business
creation, immigrants
foster job growth in our
economy. Ethnic economies
are important to the health
of the regional economy as a
whole. By forming clusters of
services, sometimes in declining
areas, immigrants create vibrant
commercial corridors that
strengthen and revitalize distressed communities, helping to
spur overall economic growth.
Louisville, Ky., is one
example of a city that is
increasing in diversity due
to international immigration, where ethnic minority or
immigrant-owned businesses
are profoundly affecting the
area’s social and commercial
vibrancy. Changes are noticeable in the cultural landscape,
with new restaurants, houses
of worship and a diverse range
of goods in groceries that serve
both immigrants and nativeborn residents. According to
the most recent data available
on the characteristics of businesses and their owners, in
2007 there were 52,778 firms
in Jefferson County alone; 14
percent of those enterprises
were ethnic/minority-owned.
In the state of Kentucky, 5,559
Asian-owned businesses
generated sales and receipts

TABLE 1

Foreign-Born Population in the Louisville MSA
County

LINKING

LENDERS

Foreign-Born
Population 2000
(Share)

Population 2010
(Total)

Foreign-Born
Population
2007–2011
(Share)

693,600

3.4%

741,096

6.1%

Jefferson

of $2.1 billion and employed
16,941 people; 3,663 firms
were Latino-owned, with sales
and receipts of $906.9 million, employing 6,705 people.1
There are major implications of
this growing ethnic diversity
and entrepreneurship in the
Louisville area; discussions are
needed regarding sustainability and encouragement of this
growing business sector.
The Foreign-Born and the
Self-Employed
International migration to
Louisville began in the 1800s,
when what is now the ScotchIrish majority first established
its roots. With regard to the
more recent migration flows,
the Japanese have the longest
tenure in Louisville, with
many arriving in the 1980s. In
general, Asian groups migrated
in the early 1990s and the
years just prior. The next wave
was made up of refugees from
Bosnia to Somalia. Bosnians
arrived after 1995, during
and after the regime of ethnic
cleansing in the former Yugoslavia. The typical Mexican
immigrant worked as a laborer
in the agricultural industries
of local surrounding counties
before moving into the city.
Louisville’s foreign-born
population is still very far
below the national average, but

Population 2000
(Total)

Clark

96,500

1.8%

35,613

1.5%

Shelby

33,300

3.9%

42,074

5.8%

Floyd

70,800

1.1%

39,451

0.4%

Meade

26,300

1.9%

28,597

1.6%

Nelson

37,500

1.3%

43,437

1.5%

Bullitt

61,200

0.7%

74,319

1.1%

Harrison

34,300

0.9%

18,849

1.3%

Henry

15,100

1.3%

15,416

1.4%

Oldham

46,200

1.5%

60,316

4.0%

Spencer

11,800

0.8%

17,061

1.1%

Trimble

8,100

1.2%

8,809

1.6%

10,900

0.9%

11,717

1.7%

Washington
SOURCE: U.S. Census

it has been growing rapidly.
The city is part of a new group
of places (which also includes
Indianapolis, Ind.; Birmingham, Ala.; Knoxville, Tenn.;
and Nashville, Tenn.) that are
seeing bursts of foreign arrivals
despite a history of not receiving many immigrants. These
cities experienced a doubling
of their immigrant population
during the first decade of the
21st century. According to
the U.S. Census, Louisville’s
overall population increased
by 10.5 percent during the
last decade. Almost half of
that increase is due to immigration; between 2000 and
2010, the immigrant population increased from 30,600 to
61,615. All of the 13 counties
in the Louisville Metropolitan
Statistical Area (MSA) experienced this demographic shift,

AND

COMMUNITIES

with Jefferson County receiving the highest share of foreign
nationals. More than twothirds of immigrants in the
Louisville MSA now reside in
Jefferson County. (See Table 1.)
Close to half of the immigrant self-employed businesses
in Kentucky are located in the
Louisville metropolitan area
and surrounding counties.2
Table 2 (see Page 13) compares
the characteristics of selfemployed individuals in the
state who are foreign-born versus native-born. Immigrants
are 22 times more likely to be
self-employed than are nativeborn workers—close to 40
percent of immigrants are selfemployed compared with just
above 30 percent of the nativeborn population, although the
latter are more likely to have
incorporated businesses. The

TABLE 2

FIGURE 1

Characteristics of Self-Employed in Kentucky

Industry Distribution of Self-Employed Foreign-Born

7.62%

—

Oceania

0.49%

—

Less than high school diploma

21.60%

17.24%

High school diploma

21.87%

32.54%

College and above

56.51%

43.44%

e
ur
ult
ric

Fin

SOURCE: Author’s calculations based on 2005-2009 ACS; figures are for the state
of Kentucky.

Educational Attainment

Other Demographics
Average age

Female

38.57%

33.71%

Married

71.99%

71.89%

Speak English well / very well

79.36%

—

Speak English not well / not at all

20.65%

—

1970s or earlier

30.22%

—

1980s

19.16%

—

1990s

33.17%

—

2000 or later

17.44%

—

Language Proficiency

Period of Entry to the U.S.

SOURCE: Author’s calculations based on 2005-2009 ACS; figures are for the state
of Kentucky.

highest proportion of Kentucky’s immigrants comes
from Asia, followed by Latin
America, Europe, North
America and Africa. Immigrants who are self-employed
tend to be younger than their

native-born counterparts, and
include a higher proportion
of females. More than twothirds speak English well or
very well. A good portion of
immigrants from the last two
decades have assimilated into

the

internet

—

North America

Ot
h

—

2.95%

tio
orm n
at
i
/r
ea on
le
sta
Pr
ofe te
ss
ion
Ed al
He ucat
io
alt
hs n
erv
En
ter ices
ta
inm
en
Se t
rvi
ce
s

22.60%

Africa

Inf

Europe

—

37.10%

rta

29.24%

Asia

Latin America

0.10%

99.38%

—

Re
ta

—

Puerto Rico (U.S. territory)

Tra

U.S.

Country of Origin

tio

3.58%

2.95%

Ma
n

30.06%

Work unpaid / family member

str

66.36%

42.01%

Co
n

55.04%

Percent

Work in incorporated businesses
Work in unincorporated businesses

31.00%

rin

38.00%

Self-employed (out of those working)

Employment

20
18
16
14
12
10
8
6
4
2
0

Native-Born

Foreign-Born

the economy through selfemployment. A dichotomy
is observed at both ends of
the educational attainment
spectrum for self-employed
immigrants with low educational attainment (less than
a high school diploma) and
high educational attainment
(a college degree or more), with
both well represented.
The industries that attract
the most self-employed immigrants are health services,
entertainment, construction
and professional services.
(See Figure 1.) Among those
working in the health services industry, 67 percent are
employed in medical offices
and/or as physicians. In the
entertainment category, 66 percent work in eating and drinking establishments. The most
common businesses in the
professional services category
include management and technical consulting (17 percent);

w w w . stlouis f ed . org

landscaping (10.4 percent);
and services to buildings and
dwellings, cleaning and maintenance (17 percent). Also
included in this category are
nail salons (29 percent); private
household service (24 percent);
personal and household goods
repairs (15 percent); and automotive repair and maintenance
(10 percent).
Conclusion
With a high propensity to
choose self-employment, and
spanning both ends of the
educational and skills spectrums, immigrant entrepreneurs
are making their mark in a
full range of businesses and
industries in the Louisville area.
And with a fast pace of assimilation into self-employment—
some are business owners just
a decade after arrival in the
U.S.—new immigrants and
their businesses seem poised
continued on Page 15

Helping Low-Income
Families at Tax Time
By Vena Stevens

ateway EITC Community Coalition (GECC)
is a group of partner
agencies dedicated to serving
low- and moderate-income
(LMI) families in the St. Louis
area. Since 2002, GECC has
provided free tax preparation
services to LMI households,
making sure that these taxpayers take advantage of all
the tax credits for which they
are eligible.
Asset building plays an
integral part in GECC’s efforts
to financially empower LMI
workers. Tax time is a unique
opportunity to help lowincome families move toward
financial stability. To that
end, GECC offers supportive
services at tax sites designed
to help clients make informed
decisions to maximize the use
of tax refunds for saving and
asset building. The coalition
helps low-income taxpayers
take advantage of the oncea-year boost to their income
by providing financial educa-

tion and access to mainstream
financial products. GECC
partners with local banks and
credit unions to offer traditional checking and savings
accounts, as well as fresh-start
accounts for people who have
had banking challenges in the
past and may not qualify for
a traditional account. Other
on-site services include credit
counseling, financial education, promotion of savings
bonds, low-cost debit cards,
help filling out FAFSA forms,
as well as information on college savings plans, individual
development accounts (IDAs)
and predatory lending.
Earned Income Tax Credit (EITC)
Education about the Earned
Income Tax Credit (EITC)
is a very important service
provided by GECC. A refundable federal tax credit for LMI
working families, the EITC is
intended to encourage work
and help parents meet their
financial needs. It is widely
viewed as a key support in welfare-to-work and is regarded

LINKING

LENDERS

not only as an income supplement, but also as a resource
that might be directed toward
asset-building strategies for
LMI families. Some full-time
minimum-wage workers can
receive tax refunds that equal a
quarter of their yearly earnings.
According to the Brookings Institution, the EITC has
a positive impact on local,
regional and state economies
by generating an estimated
$1.50 to $2.00 in economic
activity for every $1.00 in EITC
refunds. For tax year 2012,
67 percent of GECC clients
reported that they planned to
use their refund money to pay
for food and catch up on rent,
mortgage, utility and medical
bills. This translates into more
than $6.3 million infused into
the St. Louis community.

bility for other benefits, and so
they do not file.
Paid Tax Preparers
Complex forms, fear of mistakes and the hope of receiving refunds faster keep many
EITC recipients from preparing
their own returns. Recent IRS
data show that of those who
claim the EITC, 70 percent
file their returns using a paid
preparer, paying an estimated
average fee of $260. For the
St. Louis area, this represents
a drain of $11 million from
the pockets of taxpayers who
are most in need. In addition
to helping taxpayers save this
money, GECC also helps clients
avoid check-cashing fees and
the high-cost loan products
offered by many commercial
paid preparers by offering

No federal program lifts more children and
families above the poverty line than the
EITC; yet, just last year, an estimated $34
million in EITC monies went unclaimed in
the St. Louis metropolitan area.
No federal program lifts
more children and families
above the poverty line than
the EITC; yet, just last year, an
estimated $34 million in EITC
monies went unclaimed in the
St. Louis metropolitan area.
Often those eligible for this tax
benefit do not claim it simply
because they are not aware that
it exists, or they do not realize
that they qualify for the credit.
Some eligible families fear that
they’ll owe taxes or lose eligi-

AND

COMMUNITIES

free, fast, direct deposits into
their checking or savings
accounts. Refunds received by
direct deposit can be split and
deposited in up to three different accounts. This encourages
savings, and refunds that are
directly deposited cannot be
stolen or lost in the mail.
Alternative Banking Services
Because LMI families are
more likely to be unbanked,
they are forced to rely on

alternative banking services.
These services can cost $100 a
month or more, further depleting already limited financial
resources. The families served
by GECC face challenges accessing low-cost, low-risk financial
services. These same families
frequently have poor financial management skills and/or
credit histories, and they need
assistance with asset-building
strategies. Since the EITC can
be the single-largest boost to a
family’s yearly income, linking
the credit to affordable banking services and asset-building
options is critical.
EITC and Employment
The EITC has also been
shown to have a positive
impact on local communities
by increasing employment.
Families who take advantage
of GECC services keep more of

International Diversity
continued from Page 13

to bring value to the region
and help solidify its economic
health.
Opportunities exist to help
strengthen and support immigrant entrepreneurs. Many of
these entrepreneurs havw low
educational attainment and do
not speak English. They can
be expected to find it more
difficult to navigate the requirements of business ownership,
which in turn might undermine
the viability of their business
ventures. Also, refugees (who
often abruptly leave their native

their money and are most likely
to spend it at the local level,
patronizing neighborhood
stores and other businesses.
This, in turn, prevents layoffs
and even creates jobs. The
EITC also increases employment by encouraging LMI families to work. Local economies
experience a decrease in overall
poverty and in the number of
single parents receiving public
assistance.
GECC’s Impact
Every year GECC provides
free income tax preparation from the end of January
through the middle of April.
For the 2013 tax season, LMI
families in the St. Louis area
were able to have their state
and federal tax returns prepared for free at one of 28
sponsored sites. All of these
sites are located in ZIP codes
countries) are likely to be less
connected to a network than
other immigrant groups. Programs such as RISE (Refugees
and Immigrants Succeeding
in Entrepreneurship) that help
economic development among
refugees and immigrants may
provide the support these individuals need.
On the whole, more questions
remain than answers. More
data are needed to measure
the full scope of immigrant
businesses and their economic
impact. Equally important
is understanding the extent
to which immigrant business
owners are accessing financial

the

internet

where the IRS has identified
large numbers of individuals
currently claiming the EITC, as
well as large numbers of people
who are eligible to claim the
credit but do not. The average
adjusted gross income of clients served by GECC in 2013
was $19,456.
Over the past 11 years,
GECC has prepared more than
41,450 federal returns at no
charge and brought more than
$49 million in refunds to the
community. The coalition’s
success can be largely attributed to its ability to leverage
partnerships with a wide range
of organizations. Collaboration with partner organizations
allows GECC to pool resources,
take advantage of widespread
marketing of the EITC and free
tax preparation, and prevent
duplication of outreach efforts.
In many cases, GECC’s services

are directly marketed to the
target population through
those partners.
Volunteers are what make
GECC’s free tax preparation
program possible. In 2013,
volunteers prepared 7,912 tax
returns (an increase of more
than 13 percent over 2012),
resulting in more than $9.5
million in refunds and saving
clients more than $2 million in tax-preparation fees.
GECC is constantly recruiting
volunteers to keep up with the
growing need for services. No
experience is necessary to volunteer. For more information
on how to become a volunteer
or to make a donation, please
visit www.gatewayEITC.org.

institutions, which is key to
sustaining their businesses.
The more recent flow of immigration into Louisville presents
an unfolding case for understanding through analysis the
opportunities and challenges
faced by immigrants nationally,
as well as the value they bring
as entrepreneurs to emerging
immigrant-receiving places in
the U.S.

ENDNOTES

Maude Toussaint-Comeau is a
senior business economist in the
community development and
policy studies division of the economic research department of the
Federal Reserve Bank of Chicago.

w w w . stlouis f ed . org

Vena Stevens is the asset builder
for Gateway EITC Community
Coalition (GECC).

1 U.S. Census Bureau, Survey of Business Owners.
2 The data used for the analysis in this
section are the American Community
Survey (ACS), 2005-2009 five-year
estimates. The data are available only
at the state level and PUMA (Public
Use Micro Areas). Slightly more than
half of the immigrant self-employed/
businesses in the state are in the
PUMAs that are included in the Louisville metropolitan area and surrounding counties.

Accelerating the
Growth of Small
African-AmericanOwned Businesses
By Neelu Panth

n January 2006 the St.
Louis Black Leadership
Roundtable (BLR) launched
the Center for the Acceleration
of African-American Business
(CAAAB) as a major initiative
under its Economic Development Committee. CAAAB
was established to support the
growth and development of
African-American-owned businesses in the metro St. Louis
region. In May 2010, CAAAB
branched out as an independent nonprofit. However, BLR
and CAAAB continue to maintain their strategic partnership.
Mission and Operational
Philosophy
CAAAB’s primary mission is to elevate the status of
resource-strapped AfricanAmerican-owned businesses
and level the playing field for
them to compete in the local,
national and global marketplace. It operates using a
membership and community
business development model.
CAAAB also strives to foster
economic independence among
the “unemployable” population.
CAAAB is the only capacitybuilding and community
business support organiza-

FIGURE 1

CAAAB System Dynamics Model
DYSFUNCTIONAL
FAMILY
STRUCTURE

Services
At present, CAAAB has 22
business members from the
service, retail, information
technology (IT) and green
energy/sustainability sectors.
The key services provided to
CAAAB members include:
a. One-on-one technical assistance based on the business’
leadership and organizational life cycle and the
associated needs and gaps
that, if not addressed, could
deter growth
b. Identification of and linking
to sources of capital and
other support services that

LINKING

LENDERS

BAD
CREDIT /
DEFAULT
HISTORY

BEHAVIORAL
MENTAL
HEALTH
ISSUES

tion in the St. Louis region
specifically targeting small
and disadvantaged AfricanAmerican entrepreneurs. Its
programs and services integrate best practices, cultural
competency and participatory
methods. In order to facilitate leadership development,
as well as successful business
startup, growth and sustainability, CAAAB seeks out and
collaborates with other social,
financial and educational institutions. The System Dynamics
model shown in Figure 1 provides a visual map of CAAAB’s
mission/vision, service delivery
method and potential impacts.

INCARCERATION

ACCESS TO
LOANS FROM
BANKS
SUCCESS OF
BUSINESSES

EMPLOYMENT

SOCIAL
CAPITAL /
NETWORKING

UNDEREMPLOYED

POVERTY

JOB SKILLS

ACCUMULATION OF
WEALTH

EDUCATION

Intervention /
Outcome

1. Behavioral case
management
2. Access to
affordable
childcare
3. Free / subsidized
healthcare
4. Individual
counseling

1. Partnership with
Better Family Life
2. Workforce
Development
Board
3. Educational
institutions for
job skills training

1. Asset
management
training
2. Development of
microfinance
loan funds
3. Credit counseling
4. Financial
education /
management

Intervention /
Outcome
1. Professional
training
workshops
2. Development of
acceleration
center
3. Professional
mentoring

SOURCE: Nischesh Chalice, Ph.D. Candidate, Brown School of Social Work, Washington
University, and Neelu Panth, Director of Social and Economic Development, Center for the
Acceleration of African-American Business (CAAAB)

are critical for growth and
sustainability
c. Partnering with local
corporations, faith-based
organizations and financial institutions to develop
mentoring programs that
will enhance the professional, organizational and
financial skills of minority
business owners
Additionally, CAAAB
develops and implements
entrepreneurship programs
in partnership with schools

AND

COMMUNITIES

and grass-roots organizations
to foster social and economic
development of disenfranchised communities and their
residents.
Results
CAAAB’s services have
yielded successful business
growth, leadership recognition and access to capital for its
members, as exemplified by the
following achievements:
• An information technology
company was named the

Minority Business of the Year
by the city of St. Louis.
• A project management firm
specializing in enterprise
resource planning was
awarded a contract to manage a $6 million construction
project. Besides increasing
the company’s annual revenue, it also resulted in the
creation of eight new jobs.
The company was named
Minority Business of the Year
by the state of Missouri.
• A construction management
firm was awarded a $12 million open contract with the
U.S. Army Corp of Engineers. In addition to adding
to the company’s annual
revenue, the contract directly
resulted in the creation of 12
new jobs.
Although it does not have inhouse lending capacity, CAAAB
helps its members secure capital
through financial partners.
While banks have expressed

“CAAAB has been the crutch which has
enabled Andrew’s Bayou Ribs to remain
a viable business. Without CAAAB’s
assistance, Andrew’s Bayou Ribs would
have been forced to not exist at its current
capacity or possibly cease to exist. We are
proud to be a member.”
—Andrew Simpson, Owner, Andrew’s
Bayou Ribs, CAAAB Member

support for CAAAB’s work, the
organization’s major lending
partner is Justine PETERSEN,
the country’s third-largest
microfinance institution. In the
last three years, CAAAB’s efforts
have resulted in $348,000
in microloans for its clients
through Justine PETERSEN.
CAAAB recently became a
trustee organization for Kiva
Zip, a program launched by
Kiva—a multinational online
microlending platform—to
provide interest-free loans to
microbusinesses in the United
States. So far, three CAAAB
clients have received Kiva loans
of up to $5,000 each, which
helped these businesses meet
immediate capital needs. The
loan ceiling is scheduled to rise
with CAAAB’s continued good
standing with Kiva, which is
measured in terms of the borrowers’ repayment history.
Catch the CAAAB
In 2012, CAAAB launched
“Catch the CAAAB to Accelerate
Your Business’ Success” (Catch
the CAAAB), a small-business
capacity-building program that
provides targeted consulting
services to its member businesses. The goal of this program is to assess and strengthen
critical business functions
of new and developing small
businesses ($100,000 or less in
annual revenue) using transferof-knowledge methodology.
CAAAB and its consultants will
provide businesses with the
knowledge and tools necessary
to build a strong foundation for
viability and sustainability.

the

internet

CAAAB’s assessment of its
member businesses through
focus groups, surveys, oneon-one interviews and regular
interactions clearly identified
gaps in business planning,
informed decision-making
and accessing professional
help. These are all indicators
that researchers have used
in measuring success rates
in small businesses. Oftentimes, during crises, these
gaps led member businesses
to seek CAAAB’s help at the
last minute, when it was too
late for any intervention. With
appropriate experience and
resources, most of these lastminute intervention requests
could have been avoided,
allowing businesses to focus
on growth and sustainability.
Catch the CAAAB is a
one-year program comprised
of a seven-step process that
includes:
1. client recruitment and
orientation;
2. one-on-one diagnostic
assessment;
3. data reporting/feedback;
4. individualized goal setting
and planning;
5. implementing plan/changes;
6. attending group trainings
and networking events; and
7. reassessment and evaluation.
Commitment from both
consultants and participants is
critical for the success of Catch
the CAAAB. Outcome research
for these volunteer-based
programs has been limited
due to inconsistency in service
delivery. Catch the CAAAB is

w w w . stlouis f ed . org

unique because it is incentivebased. The consultants or
coaches/mentors are compensated for their time and service
and are therefore required to
perform in a timely and professional manner. The participating businesses are also required
to sign a commitment contract
and pay a small commitment
fee to ensure their active participation in the program.
Additionally, Catch the
CAAAB is accommodating of
its clients’ schedules. The time
commitment of the consultants
is flexible because they realize
that the clients’ skills, resources
and experience greatly influence their ability to fulfill their
tasks and goals.
Because of limited funding, implementing Catch the
CAAAB has been very challenging. CAAAB’s immediate
focus is on securing funds
for the program by forming
strategic partnerships with
social service organizations. In
spite of scarce funding, CAAAB
is committed to uplifting
small, disadvantaged AfricanAmerican-owned businesses,
and helping them fulfill their
entrepreneurial dreams.
For more information on
CAAAB and Catch the CAAAB,
visit www.caaab.org, or contact
Neelu Panth or Eddie Davis
at info@caaab.org or 314-5332411, ext. 109.
Neelu Panth is the director of
social and economic development
at the Center for the Acceleration
of African-American Business
(CAAAB).

BRIDGES RESOURCES
CFSI Report—Why Consumers
Turn to Small-Dollar Credit
Approximately 15 million people access
high-cost small-dollar credit products every
year, including payday loans, auto title loans
and deposit advance loans. This report
explores the reasons behind this behavior.
“Know Your Borrower: The Four Need Cases
of Small-Dollar Credit Consumers” can be
read at www.cfsinnovation.com/content/
know-your-borrower-four-need-cases-smalldollar-credit-consumers.

U.S. Financial Diaries Project
More than three-quarters of participants
(77 percent) in the U.S. Financial Diaries
(USFD) research project indicated that
“financial stability” is more important than
“moving up the income ladder.” USFD’s first
issue brief looks at the implications of this
response. “Spikes and Dips: How Income
Uncertainty Affects Households” can be read
at www.usfinancialdiaries.org/sites/default/
files/publications/Uncertainty_12.2%20
for%20web%20print.pdf.

CALENDAR
January
15

February
5–7

Regional Investors Breakfast—
St. Charles, MO
Sponsor: Economic Development
Department, City of St. Charles
Contact: 636-949-3231

MEDC 2014 Winter Conference: Meet the
Consultants—Jackson, Miss.
Sponsor: Mississippi Economic
Development Council (MEDC)
http://medc.ms/index.
php/2014winterconference

22–23
Delta Ag Expo—Cleveland, Miss.
Sponsor: Bolivar County Extension Service
Contact: 662-843-8361

23
Workforce Development Seminar—
Little Rock, Ark.
Sponsor: Institute for Economic
Advancement, University of Arkansas at
Little Rock
http://iea.ualr.edu/component/content/
article/25-news-events-and-publications/
center-for-economic-developmenteducation-news/876-workforcedevelopment-seminar.html

8
Funding Your Neighborhood Project—
St. Louis, Mo.
Sponsor: University of Missouri—St. Louis
Community Partnership Project
http://umsl.edu/~pcs/academic-units/
cpp.html#Events

13
2014 Race and Relations Conference—
Louisville, Ky.
Sponsor: Louisville Metro Human Relations
Commission
www.louisvilleky.gov/HumanRelations/
Race+and+Relations+Conference.htm

24–MARCH 1
America Saves Week—National
Sponsor: America Saves and American
Savings Education Council
www.americasavesweek.org/about/aboutamerica-saves-week

26–28
Mississippi’s Annual Affordable Housing
Conference 2014: Get in Position for the
Rebound—Biloxi, Miss.
Sponsor: Mississippi Home Corporation
www.cvent.com/events/mississippis-annual-affordable-housingconference-2014/event-summary-9951ce6
4f9304f8c81e4637d11d0b68d.aspx

27
Exploring Innovation in Community
Development Audioconference: Pay for
Success Models and Social Innovation
Finance—Audioconference
Sponsor: Federal Reserve Bank of St. Louis
Contact: Faith.E.Weekly@stls.frb.org

Small Businesses, Big Effects:
Investing in Microenterprises
Microenterprise development initiatives
can help to create and grow businesses
and, in many cases, much needed jobs.
Experts from the Aspen Institute discuss their
proposal for encouraging microenterprise
investment as a job creation strategy. View
the transcript or play the audio MP3 files at
www.frbatlanta.org/podcasts/
economicdevelopment/.

Program for International
Student Assessment (PISA):
2012 Results
The results of the latest PISA survey from
the Organisation for Economic Co-operation
and Development (OECD) are now available
at www.oecd.org/pisa/keyfindings/pisa2012-results.htm. More than 510,000
students in 65 participating economies took
part in this latest survey, which focused on
mathematics, representing about 28 million
15-year-olds globally. Discover which education systems have improved over time, how
equitable they are and how boys compare
to girls, both in performance and attitude
toward learning math.

Full text of Bridges (Federal Reserve Bank of St. Louis) : Bridges, Fall 2013

FRASER