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FEDERAL
RESERVE
BANK OF ATLANTA
VOLUME
....,
16,
NUMBER
1,
2006
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Eminent Domain and Economic
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Development: Striking a Balance
FRB tlanta Lib ry
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JUN ~ 6 tU06
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C:
Recefv
New Orleans
Welcomes
Visitors, but
Recovery is Slow
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Credit Card
Payments: Can
Consumers
Handle the
Minimum?
Alabama Lending
Coalition Boosts
Housing
Finances
Count in
Planning for
Disaster
part ners
in community and economic development
PAGE
10
Credit Card Payments: Can
Consumers Handle the Minimum?
.J oint guidance issued by the federal banking regulatory agencies required that lend ers rai se the m ini mum monthly payment requirements for cred it card
debt byyea~end2005.
PAGE
12
Alabama Lending Coalition Boosts Housing
An innovative join t venture formed between Alabama
banks and a nonprofit affiliate addresses U1e lack of quality housing for working families in greater Binningharn.
PAGE
15
Finances Count in Planning for Disaster
Families that have built an emergency savings fund
PA G E
2
or dc\'cloped forma l banking relationships arc better
Eminent Domain and Economic
Development: Striking a Balance
Although a long-standing tool for local governments, eminent domain can be dangerous
because of the potential for abuse. Conse-
equipped to weal her a tropical or financial storm.
PAGE
18
The Benefit Bank: An Asset Building Tool
The Benefit Bank is a techno logy-based program
th at he lps low- and moderate-i ncome individua ls
quently, it is important Lo strike a balance
and fa milies app ly for the benefits they arc eligible
between economic growth and the immediate
to receive.
impact on local residents.
PAGE
Spotlight on the District Mississippi and South Florida
FEATURES
PA G E
7
New Orleans Welcomes
Visitors, but Recovery is Slow
Post-Katrina recovery in
1cw
Orleans over the past six
months has been marked by milestones and cha!Jenges.
E,·ac-uecs living elsewhere arc watching the c-ity"s
progress closely.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
20
Clearing Hurdles to Mainstream Banking
Firsl -timP bankrrs sometimes mee t with unrxpec- lPcl
Prrsonal financial r ducalion
obstadrs wlwn they IIy to open an account. ThosP with
is cruc-ial fo r Ihos<' who ha\'e
a problematic c redit record may find it C'Sp<•c ially
fa llen out o f mainstream
cliffkult. Nrn'rthrl<•ss ac-c-ess l o a banking re lat ionship
banking, and it 's a c·e nl ra l
is im portant for finan cial succrss, and tlw Comm unity
co mponent of our work.
Affairs Of'licC' pmtnrrs with organizations !w ipi ng those
I lowen'r, financi al edu c·a-
wh o want l o enter or re-enter the linancial mainstream.
ti on alone dcwsn'l 1-,11.Ia.nmtee
n·connc•c-tio11 wil h a bank;
Evrn w ithout <-rr dil blem ishes, ii can be tough l o srl
11p
a first acc-ounl wi thout b,rnking hislOJy. Bui many hanks
a.re willing l o open w1 account for first-tim e cust onw rs
with relia ble i1ic-omr and a clran fina ncial slat<'.
<'w
accounl holdrrs can th rn build credit hist ory lh rough
ii l akes 1hr commi lmenl o f
our fin ancia l partners l o gel potrnt ial c·uslomers on
the ri ght track . One suc-h pa rtn er is Gel Clwck ing'"
(w ww.get c11C'cking.o rg), a progra m that helps indi vidua ls ga in ac-('ess to mains tream banking.
secured c-redit cards or ("O-sig,wcl loans.
Get Clw('king is a national ('Oliaboration of tllC' l ·ni\·erA strong hanking rPlationship offers many ad\',u1tagps
sit y o f Wisconsin, ils ext<'nsion senices ,md eF'unds.
that mak<' it \1·011h I he e!To1t, including a('c-ess 10 dir<'C'l
Th e orgm1izat ion not only pro\·idC's fmanc-iaJ educat ion
cleposit of payclwc-ks, ('hecking ac-coun l s, dPbit and
leading to a lnmk ac-eount, but it also cu ltin1trs a I1C't-
c redit cards, and on-line banking. Banks also help
work of financial institutions to provide banking f'or
famili C's build wealth through sm·ings and inn•stn1<·nt
its graduates.
products w1d reasonable t ransac-tion f<'C'S. Loan products
all ow familirs to o wn a home or makr othe r major
Since :2001, (;N Chee-king has helped llC'<u-ly f).000 people•
purchas<·s sooner. Plus, hm1ks pro\·id<' tlw sec-urity o f
bc•come nC'\I' deposit ac-c-ount holckrs, ancl llw number
FDIC' insuranc-c'.
of graduates is growing rapidly. Although Gel Chrc-king
is ju st o nC' or many ,·iabl e finan c- ial educ-at ion pro-
Whil <' es tab lishi ng a bank ing rela tion ship l ak<•s time ,
gra ms, it stancl s as a moclrl or dTrct iv<' eo llabora t ion
th e assoc- iat ion can be damaged qui c kl y: jusl a fpw
that achieves real result s.
mistakes like bounced checks or missed loan paynwn ts
financi al
can low<'r 0 1w's crPdit score. Once an indi\·idual has
Get Cheek ing can't promise to resoln'
bC'en ous t ed rrom mainst r eam ban kin g, it's often
prob lem, but it does prO\'ide criti ca l assistance for
ex l rrm ely clif'li c-ult l o retum-e\'en whrn the misstrps
those I ry ing to ent C'r mainst rC'am bank ing.
('\' NY
ha\'(' brPn co rrec tr d-because banks rrly on crc'clit
repo,ts. Fixing tlw problrm is incked a starti ng point,
but rest ii ul ion alom' is usually not rnough.
The Federal HrsC'IY<' understands that ac-crss lo banking
se 1Yices is important. Our Commun ity Affa irs office
works with partnr rs throughout our n'gion lo gel thC'
Juan C'. Sanc·llC'z
w1bank<'d on hmu-cl- both those who han• nC'\'C'r b,rnked
Community Affairs Orn e-er
and I hose \\·ho han• an impaired banking history.
RESERVE BANK OF ATLANTA
FEDERAL
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
one
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
EMINENT DOMAIN IS A LONG-STANDING AND POWERFUL TOOL OF
LOCAL GOVERNMENTS. IT IS ALSO ONE OF THE MOST CONTROVERSIAL,
PARTICULARLY IN MINORITY AND LOW-INCOME COMMUNITIES.
Sonlf' critics of em inent domain m·guC' that it allows
mcnl is usually designated for one of four PLUl)OSC'S: lo
local go\'cmrnents to ignore prin1IP propc11y tights, mid
cure blight ed cond itions; lo clear title of vacm1t propc11y;
others contend it prO\idcs an oppo rtun ity for gO\·ern -
to rC'soh·p compensal ion disputes; or as pru1 of a.ii o,·crall
menl 10 lake from those w ho hm·C' l llC' least and gi,·C' lo
redc,·C'lopmcnt plan for a.ii area. l\lost go\'emmcnts hm·e
lh osl' who have money and powN, all in th e name of
used C' minenl domain l o acquire land for eco nomic
economic development. A 2005 SuprPlllP Cowt decision
devC'lopmPnl purpose's as a last resort .
has made emin ent domain one o r I hp ho tt es t top i cs
across I he coun try, and one th al is o f parti cular importance' in th e current debate surro unding reb uild ing th e
Cil y of New Orleans.
Is economic development a sufficient public benefit?
N urn No us exam ples illustrate the use of c mi1wn1
domain ror econom ic dC'vc lopment, in cl uding lhc
re\'ilaliza l ion of Times Squa re in New York City, th e
The power of eminent domain:
redc,·C'lopmcnt of the Inner Harbor in Ball imore, and
what is it and how is it used
the const ru ct ion of Centenn ial Park in Al Ian ta. All of
Eminent domain is the power o f govern ment to take
these projects have mcl lhc "public use" test for eminent
p1inil c prope1iy fo r public use. TllC' l·' ifth Amendment to
domain and arc co nsidered successfu l rc,·italization
th e l ·.s. Constitution grants gowmnlf'nt the authoi-ily lo
projects from the pcrspccti\T of increasing tourism lo
tak e pri\·ate property for a public use', prO\ided thal the
the area and spru·king new development. I l owe,·er, these'
propP11 y owners receive just compPnsation. The debate
redevelop ments also rrquircd the displacement o f exist -
arises m ·er the diffcrC'nt intcrprelal ions of "public use'"
ing rcsidC'nls or businesses.
I hat justify recourse to eminent domain. The co Luts h,l\'C'
These' projrcts raise llw question of wlwlhcr econom ic
lw ld t hal "publi c use'" should be dPfin Pd broadly Io
de\'c lopmenl is a sufTici C'nt p ubli c bC'nC' fil , and if it is,
in c lude' imp rovPmPn ts thal ar c pub licly owned, usC'd
how can I his benefit lJC' quantifi ed? Such quesl ions an•
by Ill<' public or fo r public benefit.
pa rti cul arl y rc lern nl if the benefit is dPrin'd al llw
Ellli1wn t domain has most frC'quP nlly been used by
ex pC'nse o f lower-incomC' or min ority proprrly owners
local govc rru1ients 10 acquire land fo r such puqJoses as
who IC'nd lo have fC'wC'r rC'so urces and lrss po liti cal
1ww roads, in frastructure improvc•n1c•nl s, civic buildings
capi tal lh an the new pri valr owners w ho sland l o gain
o r sc hoo ls. GO\·crnm en t has also usC'cl the powPr o r
fro m deve lop ing the proprrty.
e111i1wn1 domain lo cure bli ght and ror other econo mic
Thus tlw question surrounding emi1wnt domain is
de\'C'lopment pwl)osrs, including llw l ransfrr of propc11y
not whether ii can be applied for a clea rl y pub lic usC',
l o prin1l c owners l o encourage revitalization. The use' of
such as a nC'w roadway or ai1-port, or for I he purposr
eminent domain for economic dcvC'lopmcnt puqJoses
of C'li minaling a dilap iclatC'd structure. Inst C'ad, it arisrs
relics on lhe broadest definition of public use. This intcr-
in thC' significant gray area bet ,Yeen explicit appli-
prelali on argues that new im·cstmcnt, while possib ly
ca tions thal meet the narrowest an d most ob,·ious
bP1wliting ptivatr inl C'rcsts, proviclPs a public benclil by
defin it ions o f public us<', an d uses for econo mi c
imprO\i ng the economic conditions in a ci ty.
Accord ing to the'
1ational
League' of Cities. lane!
acquirrd through eminent domain for C'Conomic de,·C'lop-
FEDERAL
RESERVE
BANK
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
OF
ATLANTA
de,·c lopmc nt that meet the broadest definition of
pub li c benPfil . The lal tcr justificatio n for eminent
domain can be ,·ery con I rO\·ersial.
th re e
The Keio case
Tl1C' :200.J Suprcnw C'ou11 ruling in Keio\·. Nc\1· London
and prmiding for pub l ic input on reasonable li111 it s for
the use of eminent clo111ain arc options that could be
has ign it ed an in te nse pu blic dcbalC' abo ut the use of
considered to reform eminen t domain. I lowevcr, states
em in ent domain fo r eco nomi c cleve lop nwnt puqJOSC'S.
across tlw count 1y are bypassing I he discussion of 1do m1
In thC' Ke io casC', th l' Sup rC'nlC' Cou rt ru led that th C' City
in a r ush t o adop t new leg islati on t hat si gnifica ntly
of N<·w London, Co nn., could invokl' eminent dom ain
r estricts th e use o f e111inen t d omain for econo mi c
to takC' private properly currently occ up ic'ci by homC'-
develop m ent purposes.
m,·nl'rS to make way for a nC'w watC'rfront cle\·C'lopmC'nt,
The lcgisl at ion p roposed by the states varies w id ely.
C'n'n though tlw propC'11il's in question would bC' trans-
Some states arr considering IC'gislat ion that only allm1·s
fCITC'd to a new prin1IC' owner.
eminent domain for a recognized public use or to acquire
ThC' public purpose stated for reco urse to eminent
blighted prop<'11y. Other states would like to require' 111orc
domain ll'as increa.sed ta,..., revenues that would be grn-
public iJ1,·ol\·cmcnt in rcde\·clopmcnt plan ning and in the
erat <'cl by I he proj ect. Thr city had rxpcri<'nced decades
decision to us<' Pmi nent domai n. St ill other states arc pro-
of disinvestment and its fi scaJ healt h was in jeopardy. It
posing a ban on emin ent domain for ce rt ain purposes,
despcral cly ncccl ccl new clcvclopmcnl to grnerate fum ling
in cluding residential, retail or com mercial cl cvclopmcnl,
for basic public services.
Thr Supreme' Cou11 ruling in fa\·or of the city sparked
when the primmy pu qJosc fo r th e projec t is to generate
tax re\·enues.
an immediate backlash from a wide range of groups. Antigo\·crnmenl forces who want to lim it all gon'rnmC'nt
Response at the state and federal level
powrrs \ie\1· tlw ruling as a direct at tack on personal
In the SLxth District, constitutionaJ amendments and
propc1ty rights. Adrncatcs for low-income and minority
legislation arr nuwntly being considered in aJI states to
com muniti es arc also co ncerned IH'ca usc Ll1C'y have
address th e use of eminent domain. Alabam a and Georgia
seen the damage' t o thesr comm un iti es throug h usr of
havC' already passed legislati on t o res tri ct the us<' of
cm i1w nt domain fo r urba n renewal proj rc ts i n the past.
emi nent domain, and lawmakers in TC'nncssec, Flor ida
TlwsC' groups fear that the Supreme Court's dec ision
and Miss issippi arc also cons idering li mits to app li ca-
wil l give local government s the ·'grer n li ght" to pursue
1ions of emi nent do main.
nell' dr\·clopment for economic de\·rlopmenl puqJoscs
at tlw cxprnsr of poor and minority communities.
Supportcrs of tlw Court's decision bclirw it on ly confimwd th at economic development is a \'alid p ublic usr
The l '.S. Congress is also considering legislation to
rcst1ict emi110nt do111ain for economic dc\·clopment. One
b i ll proposes to de ny federa l economic clevclopnwnt
fu nding Io any jurisdi ction that invokes eminent domain
for C'mincnt domain, and thus protect rd a critical tool
for economic development p urposes. E\·cn financial insti-
for thr rC'\~ l al iza ti on of blighted co mmu ni ties.
tutions have r<'actc• d to the KC' lo dec ision: BB&T Corp
stal('d it would no longer providr fi nancing to conrn1c•1·ciaJ
In the aftermath of Keio
Alt hough em inent domain is ,m essential tool for gm·-
developers for prqjccts that have used eminent domain.
Proponents of eminent domain for economic de,·r lop-
rmnwnts, it can be dangrrous because of thr potential
mcnt arc concerned that the publ ic outc1y m ·cr acqui-
for ab use. Conseq urntly I here is an ongoing rffo r t to
sition of p1ivat<' propc tty is dri ven by a lack of knowledge
delinr thr limits of its usr. The Keio casr was seen by
about the USC' of em inent domain. They fear that in the
som<' as an oppo1iLmity to set those limits, but the lcgis-
111sh to respond to the \·ocaJ critics, legislators l1iU enact
lativr an d publ ic responsr to tlw Suprcnw C'orn1 decision
LU11H'Cesscu·ily SC'\·crc restrictions on one of the few I ools
has stymiC'd mu ch th ough I ful discourse'.
avai labl e' to citirs to draw pri va te investm ent to economi-
Develop ing a cl ear er dr linition of "blight," evaluating
cal ly distressed communities. Propone nts believe iJ cities
the nw th odology for determining j ust compe nsation,
employ this power judiciously, they c,m encow-age private
setting u11 ifor111 standards for assess ing pub li c benefit ,
acti\·ity that will generate substantial pu blic bcndits.
fouFRASER
r
Digitized for
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
VOLUME
16,
NUMBER
1
Nowhere is this balan cing act bclween priva te investm cnt and publi c benefit going to be more impmtant than
in rebuilding the deva-;ta1cd city or New Orl eans.
commercial space for small business owners displaced
by th e hurricane.
l l owever, th e use of emincn1 domain in rebui lding the
ci1 y has already become controversia l. Because i1 is
Rebuilding New Orleans in a post-Keio environment
Ilurrica ne Katrina ex posed the trem endous soc ial
mos1 li ke ly to be applied in 1he flooclccl areas, it would
have a dispropor1ionatc impact on 1he city's poor and
and eco nomi c probl ems th at ex ist in neighb orhoo ds
minori1 y comrnunilies and those n·siclcnls who have
with concentrated poverty. Th e flooding disproportion-
already been disp laced. There i s w idrspr ead concern
at Ply affec ted neighborhoods wlwrr th e cit y's poores t
that th e city will not use emin ent domain to prom ote
and most vulnerable residents livccl. The llooclcd neighbor-
a more integra1ccl ci ly, but wi ll instead use it to separate
hoods were home t o over 80 pe rce nt of the c ity's
poo r res idents fro m th eir property in order t o focus
m inolity population. As the city begins 1hc process of
resources on highc1°end development 1ha1 will increase
rebuild ing, it has a tremendous opportunity to address
the cit y's tax base. Many a.re concerned that because the
1he problems associa1ed with concentrated pover1y by
need 10 rebuild is so m gen1, govemmcn1 \Vill be tempted
c reati ng more diverse, sustain able and econom ical ly
lo use eminent domain to draw priva1c inves1 ors with-
vibrant co mmuniti es.
out rcqu i1ing th a1 new clcvclopmcnl provide housing or
co mm erc ial space th at is a fford ab le for the c i1y's
ex istin g res id ents.
PUBLIC-PRIVATE PARTNERSHIPS WILL
Thu s, in t he afterm ath of th e Keio decis ion, New
Orleans is likely to become a critical testing ground for
BE CRITICAL TO AUGMENT THE CllY'S
whether emin ent domain can be used judiciously in the
reb uildi ng of a cit y. Given the widespread cle\·astation ,
RESOURCES FOR REBUILDING.
the c it y w ill need all of th e' tool s legally availabl e to
gcnC'rate sorel y needed economic development acti vity.
1-lowC'\'er, with so many urgent and conl1icting interests,
Th e Brookings In stitut e, the U rban Land inst itute
the c it y must be he ld accou ntable to ensure that poor
and many o th er nati ona l organizations i nvol ved in
and minority com muniti es a.re not furth er marginalize d
red evelopment planning are enco uraging th e city to
in th e name of economic growth .
♦
create eco nomically, racially an d soci ally int egrated
'' nei ghborh oods of choice." They bel ie\·c the city has
th e oppo rtunity to pl an for n ew nei ghborhoods w ith
Th is art ic lp ww, written by .kssica Le\'Pl'll Farr, rC'gio nal
co mmunity de\·C' loprnC'nt rnanagC'r in thr A tl anta FPd's
Nasli v i llC' Branch.
affordable housing options for different income leve ls
located near jobs and pub li c transportat ion. Publicpri vate paJ·tnerships will be critical to augment the cit y's
resources for rebui ldi ng.
Most of t he redeve lopment p lans proposed to elate
suggest that altho ugh eminent domain is a tool availabl e to th e city for rebui lding, it should on ly be used as
a last r eso rt. Eminent domain can be used to get clear
titl e on land targe ted for recl ev0lopment and lo acquire
b l ighted properti es. The city cou ld theoret ically use
property acquired thrnugh eminen t domain to encou rage
the development or neighborhoods of choice, using the
land fo r the constru ction of affo rdabl e housing o r
FEDERAL
RESERVE BANK OF ATLANTA
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ii v e
Nonprofits Use Eminent Domain to
Develop Affordable Housing in Georgia
Much has been written about the use of eminent domain
by cities for the benefit of private investors to encourage
development in struggling communities. However it
is less well known that eminent domain is also an
important tool for nonprofit organizations working to
build affordable housing and revitalize economically
depressed communities.
The use of eminent domain by nonprofit organizations
has been recently documented by the Georgia State Trade
Association of Nonprofit Developers (GSTAND). The
study was commissioned to inform state legislators in
the policy debate surrounding the use of eminent domain
for economic development purposes.
The study surveyed GSTAND members and found that
eminent domain was an essential tool for neighborhood
revitalization as well as for tl1e creation and preservation
of affordable housing in urban areas across the state.
In this context, eminent domain has primarily been
employed to acquire vacant or dilapidated structures or
to obtain clear title on property. Without the opportunity
to work with local housing authorities to acquire land
through eminent domain, nonprofits would have a difficult time obtaining the critical mass of land needed to
revitalize a distressed community, the report states.
Macon, Ga., is one of three cities recognized in the
GSTAND report for effective use of eminent domain in
neighborhood revitalization and affordable hous ing
development. The Macon Housing Authority partnered
with In-Fill Housing Inc. and several other nonprofit
organizations to develop a neighborhood-based, inner-city redevelopment strategy. The plan increased singlefanuly homeownership in targeted urban neighborhoods
and created new affordable housing opportunities for
low- and moderate-income homebuyers. This innovative
project received the Georgia Department of Conununity
Affairs Magnolia Award for Excellence in Affordable
Housing in 2004.
The city targeted for redevelopment its worst communities, where the housing stock was dilapidated and
crime was rampant. Eminent domain was required to
acquire some of tl1e properties identified for redevelopment. Surprisingly, Macon's use of eminent domain not
only benefited the city's redevelopment efforts, but it
also proved beneficial to some existing property owners.
Owners of dilapidated structures or of property enctm1bered by many heirs were able to tum a low-value asset
into one of substantially higher value. The city and nonprofit organizations thus invoked the power of eminent
domain to address a problem the private market was
unable to solve.
Bruce Gerwig, executive director of In-Fill Housing,
is a strong proponent for protecting the use of eminent
domain. According to Mr. Gerwig, "The Macon Housing
Authority and In-Fill have been able to btlild more than
40 houses in inner-city Macon tlu·ough a partnership with
the City of Macon and the Macon-Bibb County Land
Bank. That's at least $3.5 million in new investment in
the inner city. None of this-none of it-would have
happened without the use of eminent domain. In a city
that is competing with suburban growth and growth
headed toward other counties, we need all the redevelopment help we can get for our inner-city areas."
For more information on tl1e GSTAND report, see the
website at http://affordablehousingvenue.gstand.org/
Library/Em.inent_Domain-Report.pdf. ♦
The City of Maco n, the Macon Housing Au thority, t he Macon-B ibb County Land Ban k and In-Fill Ho using In c. used em inent
doma in to turn di lapid ated stru ct ures into an awa rd-winning developme nt.
sixFRASER
Digitized for
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
VOLUME
1 6,
NUMBER
1
New Orleans Welcomes Visitors,
but Recovery is Slow
DEBRIS REMOVAL AND INFRASTRUCTURE REPAIRS STILL DOMINATE RECONSTRUCTION ACTIVITY ON THE GULF COAST. BEYOND THE FESTIVE FRENCH QUARTER AND
RESPLENDENT UPTOWN GARDEN DISTRICT, THE PHENOMENON OF FLOOD DAMAGE,
DEPOPULATION, DELAYED RECONSTRUCTION AND POLICY UNCERTAINTY HAS TRANSFORMED MUCH OF RESIDENTIAL NEW ORLEANS INTO A DISMAL PLACE.
Altho ugh locals continu e to deal w ith th e dai ly inconveni ences of' early store closures and abandonPd nei gh-
expects to complete a rna-;sive $2 billion emergency levee
rl'pair project by Party summer- a requireme nt f'o r
borh oods, visitors can still fine! spi cy food and hot
this year's hurri ca.Jw season and an i.nit ial step towards
ent ert ainm C' nt in th C' shrunk en c ity. Po li cymakers
fulfill ing the President's pledge to protect th e cit y.
are ve ry con cP rn ed th at res id en ts no w work i ng and
Th e projPct underway wi ll b1i.ng federal and 1mmicipal
sc hoo l i ng th eir children else w he re will no t rC' tu rn .
k,·ees up to pre-Kat rina design specifications, whi ch wen'
Uncertainty about federal levee protection
design flaws, and other issues. Moreowr, l 1SAC E released
not in effect at the tim e Kat rin a hi t because of se tt li ng,
Flooding caused by levee failmes accOLmt s for roughly
90 percent o f destroyed homes in metro
ew Orl eans. If"
a repm1 recommending subst:mtial upgrades to the system because pre-Katrin a speci ti cations did not pro\'i dp
the len·es had held (pai1icul arly federal flood walls inside
adequat e prot ec-tion to meet st andards for le,·ee pro-
the city), Kat1ina would haw been j ust ai1other close call
tecti on under th e :--;ati onal Flood Insurance Program.
fo r New Orl eai1s, a tragic- i\lississippi sl orn1-surge story,
The Corps is required to "certi fy'" that le,·ees meet Federal
ancl a typical Florid a hurricai1e. No wonder Louisiana
Emergency i\la.J1agement Agency (FEi\lA) standards.
homeown ers have deposited their insurance checks ,md
waited . The U.S. Army Corps of Enginee rs (l lSAC E )
FEDERAL
RESERVE
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BANK
OF
ATLANTA
Congress app rove d o nly a porti on o f th e$ I I billi on
pri ce tag submit te d by th e Corps fo r bePfing up levee
seven
protN·tion in tlw f'our worst-affected parishes. 1-lowc\'cr,
the cost of prevent ion is t 1ivial comp,u·ccl to the payout
Unprecedented Destruction of Homes·
of $14.7 billion in nati ona l flood insurance claims ancl at
least $50 billion in emergency assistanc<' to clisp laced
resiclcn ts and floodPd communi ties. Pri vate' insurers
275,000
300,000
250,000
paid cla ims o f $22.G billion in Louisiana.
Many analysts say that FEMA has lost its focus and
status after bein g placPd under the DPpa11mcnt of Homeland Sec urity ( DI IS). Accorcling to a .July :2005 report
from thP l ·.s. Go\'crnmcnt Accountability Office (GAO),
DIIS has channe led clisa-;tcr planning resou1-c-0s to preparations for terrorist att acks using chemical, biological
200,000
150,000
100,000
50,000
28,000
27,500
Andrew (199 2)
Charley, Frances, Ivan,
Jeanne (2004)
and nuclear weapons. N<'w•r1h ekss, the most common
national disaster is fl ooding.
Katrina (2005)
* Destruct ion is defin ed as rendering a structure uninh ab ·
itab le or damaging it beyond eco nomi c repa ir.
Good news in New Orleans
Source: Insurance Information In stitute, National Association
N0w Orleans has Pxpcrienc0d sc\·cral lllil0stoncs in its
of Home Build ers, National Red Cross (as of 9/ 15/ 05 ).
ll'Co\·01y owr the past six months. The cit y \\·as ab le to
throw a scaled-back 1ardi Gras fcte in Fcbru,uy. The p01i
Housing shortage
is ope ratin g at roughly 70 percent capacity and cruise
I-l ousing loss0s and a large r enter population pose
sh ips arc return ing to llw cit y. The com Tntion indust1y
unique rP CO\'cry cha ll enges to th e New Orleans nwtro-
is grad uall y recm·cring; an d tlw com·<,ntion center
politan area. In total , Katrina destroyed ten times more
has parti ally reop ened.
homes than cit h<'r huni ca.ne Andrew or th e fom major
Federal mortgages rn·c available. Owners o f' damagPd
storn1s that battered Florida in 2004. Katrina rn1cl Rita
ho mes arc able l o obtain co nstru ction loans th at are
resu lted in majo r or se\'er c dam age to a t ota l of
rollccl int o pcrrn anPn t f'inancing aft er repai rs arc com-
:2(i6,000 homcs- 61,000 in Mississippi and :205,000 in
pletcd and inspected. The c it y is iss uing pe rmits b ut
Louisiana, includi ng 77,000 rental units.
requires that su bstantially damaged honH'S he dcmolishcd or rebui lt to lll<' sa fe fl ood clc\·at ions establi shed
The Nc \1· Orl<'ans I SA l os t m ·cr :200,000 jobs and
•I0:3,000 residents. This populati on loss equals the entire
by F'EMA. The agency iss u('(I l ong-awaited adv isory
city of' Atlant a or 1u lsa-or the combined population of
bui ldin g gu iclc lin es in early April. F'EMA guid elin es
Orl ando and HiC"h mond. The ro llout o r FEM.A tra ilers
ass ume partial lcvct' flood protPction in Or lea ns and
has so fa r barely made a den t in thi s f'igure. Thousands
SI. Berna.rd, based on progress made so rar and expected
remai n doubl ed-up w ith nearby l'ri cncls and rcla t ives.
C"ongress ional fundin g.
Shmtly after Uie sto1rn th ere were predictions that
More than 200,000 displaced Louisirn1ans reside in 1ie,U"by
cw
southeastern sta tes and Texas.
Orkru1s wou.Jcl be inundated with flooclwatcrs contam i-
Catastrophi c cbrn1age along the th.I·ee-cmmt y Missis-
nated by toxic waste. The "to xic soup bowl" hypothesis
sipp i coast initially clisp lacc cl 48,000 resid en ts, ancl
has been proven false by th e U.S. En\'ironmcntal Prot ec-
-12 perce nt had sl il l not returned by January 2006.
tion Agency ( EPA). The EPA's fm al repo11 states that the
O\'er :26,000 ow ne1~occupied Mississippi homes were
levels of' pollutants in the worst-a ffectecl paris hes have
dcst raye d or rende red un inhabil ab le.
not changed and rema in on par with oth er urban areas
(except lhe area in St. Be rn ard Paris h afTcc tecl by th e
Mmphy Oil Spill). Most loxjns carried in the floodwat<'l'S
appear to have washed out to sea or cvapora1ed.
eight
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Rebuilding a low-wage economy
Judging by the number of elosccl restaurants, a lot of
C"rawlish have escaped Big Easy kitchens-less than half
VOLUME
16 ,
NUMBER
1
tlw city's restaurant s have r eopened . Th e loss o f jobs
A substantial num ber o f llooclecl housing unit s (6-1,000)
ancl income has severely eroded pub lic fi nances as well
w ere outside the 100-yccu- lloodplain, where fl ood insur-
as cl emancl fo r goods and sen iccs. Many businPsscs,
aJlCl '
is required fo r borrowe rs obtain ing mort gages fro m
inclucli ng th e city's lllc\ jor hospitals, have parcel staJfi ng
f ed erall y rcg ulal eel fin ancial in stil ul io ns. Lo ui siana
ancl hours or cl osccl clown.
account eel for 90 pe rcent o f m,vner-occ-upiecl homes I hat
1-k c-m·e rin g the large num ber o f low- w age sc' 1Y icc
wor kers ( wh o o rt cn rent) is a maj or plan ning pro blem .
suffered severe damage' in the 100-ycar fl oodp lain ancl
59 p ercent o f th ose outside th e floodplain.
Unl ess wages in crease signifi cant ly, the state may have
to subsid ize new affo rd abl e housing uni ts for a large
Consumer issues and prices
low-wage w orkforce made up prccl orni mrn tly by renters.
Unl i ke fecl era lly sponso red fl oo cl insurance, w hi ch
A long with th e school district ru1cl th e police clepai1nlC'nl ,
remains readily avai labl e, private honlC'ow11ers insunrn c-e
I he loca l housing au! ho ri Ly has a poo r I rac k reco rd fo r
has bcco nH' scarce- a p rob lem being faced by many
managing fund s ancl avoiding co rrup ti on scancl als.
c oastal arr'as. Th is is hurl ing l ocal housing m ark ets.
So far th e wo r k er shortage has led to modest wage
Many printte insurers hm·e stopped writ ing new policies
increases. Ilourly wages in the restaurant indust Iy han'
in Louisiana. Policies an ' now more p;,qw nsivc and also
r isen 10 to 30 percent; a worker w ho formerl y rn acle
typ ical ly include veIy high cl cductiblcs fo r w ine! damage>.
$8 per hour no w ('arn s about 2G'Y<, morc' and overt inlC'
Even ! lw insurer o f last resort, th e sta!P-sponsorccl "F'air
is pl Pn l iful acco rclin g to local t racl c associal ions.
Plan," is orten pro hib it in' iy expensi\·c for prospec ti ve
buyers. Katr ina ancl Hil a produ ced more th an $1 billi on
Housing policy
in losses fo r Louisiana's F'a ir Plan.
Mos! recent data for the fourth quarter of 200G show
Some rc'cllt ors in New Orl cm1s now n 'quirP borrowr'rs
alarmin gly high mort gage delinquPncy rates o f 20.8 per-
Lo fin d insurm1ce shm1ly aft er signing the contract becatLSC'
cent in Louisiana ancl 16.9 percent in Mississipp i, corn -
acquiring insuraJlC'P can no longer be taken for grru1 tPd.
parcel to tlw national ratP of 5. l pprc·Pnt. Deferrals hm·e
D arn age-aclju stcd p roperty p rices app ear t o be
thus far helped keep foreclosure ra te's low, b ut as thPy
ho lding up in m os t areas, b ut l o t va lu es in som e low--
expire, th e ratP or forPclosm es is cx pPctecl to ri sr>, Pspe-
and rn ocl era tc-in co nw arPas have alrPacl y fa ll en be low
cially since th ese states had \·e1-y high fo rec losurP rai l's
p re- Katrin a leve ls. In t he mos t severely damaged areas,
br,fort• Katrina. Many lenders arc PXIPncling initi al six-
hom e sak s arP few ,rnd cl omi natecl by cash transac ti ons,
nwnt h derc r rals
which w ill lower cornparablP sale pric-('s. Ge1w ra.l con ct'rn
011
a case-by-case bas is bcca us(' c- on -
sunw rs m ay lac k th e m eans t o l)('c- om c c u1n ' 11t on
exi sts about downw arcl pressure on pr ices th at co uld
m o r tgage paym Pnl s.
res ul t fro m an excess supply of lo ts, forPc- los ures ancl
l ' nlikC' Fannie Mal' and Fredd iP Mac-, Fl IA guru-ant ees
o nly th e c- reclit o r th e bor row er and stipu lates Iha! a
lenck r must convey a "marketab lP" house to F'II A. T his
oth er fo re-Pel sales.
A lth ough extreme povp r ty exists in New Orleans,
ph o t os I hat appea red i n th e medi a gro ss ly d ist ort I lw
requ irPrn cnt would compel f orecl osing lenders to makP
o\·era ll c-o ndit ion o f ho usi ng stock prio r to Ka trin a in
costl y rppai rs t o fl oocl cd homes. Th e sa me is gP nera l ly
many of tlw city's sc'verPly lloodecl areas, whi ch ineluck cl
tru e ro r p ri vate m ort gage insurance. Wi ll lenders steer
vi brant w orkin g- and miclcl lP-cl ass 1w ighborhoocl s. Orw
borrowe rs away fro111 FI IA finru1c ing in fl ood-prone cm'as
can onl y hope fo r a br ight futur e fo r the Big Easy. ♦
nati onwide'? If so, I his could affect housi ng afTorcl abili ly
Thi s ar lich· was wril l<' n by Brya n Gobin, fi nancial anal.vs! in
Sup<'IYision and Regula1ion Di,·ision at thl' A ll anla Fl'd.
throughout the District.
In th e case o f a p rol onged recovery peri od follo w ing
a nat u ra l disas ter, w ill lenders choose no t t o rPpo r t
adn'rse nccl it e\·cnt s associated w i th t he di sas t er to
c-rcclit bureaus·/
FEDERAL
RESERVE
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BANK
OF
ATLANTA
nine
Credit Card Payments:
Can Consumers Handle the Minimum?
CONSUMERS MAY BE FACING HIGHER MINIMUM PAYMENTS ON THEIR CREDIT
CARD BALANCES. THE FEDERAL BANKING REGULATORY AGENCIES ISSUED JOINT
GUIDANCE IN JANUARY 2003 THAT CALLED FOR LENDERS TO RAISE MINIMUM
MONTHLY PAYMENT REQUIREMENTS FOR CREDIT CARD DEBT BY YEAR-END 2005.
In the past min imum paym ents requ ired by incl 11st 1y
;3-to-4 percent or more to cover fees, finance charges ,md
stancla rcl s typica ll y clid no t cover monthly inte rest
a paitiaJ reclu ction in th e principal. The min im um mont h.ly
charges and fees, and thus cou ld create negative amorti-
payment may have cloubl ed for some ca. rel holders.
zation. Rather th,ln reducing t 11 (' debt, negative amorti-
In dustry es ti m ates vary, but st ucl ies by Cambridge
zation actually causes it to build over a prolonged period
Consume r Credit Ind ex and Carclweb ( resp ective ly)
with no de['"tnile repayment schedule.
indi cate that aiwwhere from approximately 11 to 16 pcr-
From a regulato1y perspec-t ive, this type of fu1a.ncing is
bad for both consumers a.ncl lenclers: it not only increa-;es
n 'nl of cred it card ho ld ers macle only the minimum
required payment.
and prolongs the debt liabilit y or the consumer, but it also
Accord ing to Ban k rale.com's October 19, 2005 week ly
leads to higher cred it 1isk for th e lende r. To a.clclress this
survey of large bank a.11cl tluift. procluct rates, the average
problem, lende rs have been required to raise minimum
annual pe rcentage rat e on cre cl it cards was approx i-
paymen t require ments to cover finance charges, fees
mately 13 percent. A t th at rate, a consumer making th e
and some portion o f th e principal balance to assure the
average minim um pay ment requirement or 2 percent on
debt wi ll be repaicl in a reasonable time pcriocl.
a $ 10,000 balance would n eecl
33 years to pay off Lhe
Impact on consumers
debt, and the total
The new guiclelines are clesi gned to benefit consumers
payment s
in the long run by helping recluce the ir clebt bu rd en.
However, the change comes at a lime wlwn consumers
are ecu-iying reco rcl levels o f clcbl, bankruptcy fi ling crite1ia have been ti ght cnecl, ancl energy costs and interest
rates are 1ising. These circumstances coulcl make th e
transit ion difficult for consumers whose dcbL b urden
is exccssi\'e relat ive to thei r income.
Consumers who fomerly paid only the minimwn monthly amount a.re most heavily impacted
by the new pol icy. Minimu m payments would
have increased from the former rate or 1-to-2 percent or th e outstanding
balance to a rate o f
ten
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
VOLUME
16,
NUMBER
1
would include more than $11,000 in int eres t. Un der
the new guide lin es, a ..J per('en t minim um payment
Higher Interest Rates Halt Growth in Consumer Debt
requirement would reduce the payba('k period to less
th an 1:3 years and would low<'f interest payments to
350
less than $4,000, a('corcling to an Associated Press article
300
by Eilee n Alt Powell in July 2005.
C:
"'
.:!
:.;;;;
Impact on lenders
C:
.,.,.
250
200
150
Bank of Ame ri ca was on(' of the first to raise the
100
minimum payment in 200..J, and the bank experiPnced
50
0
a ('OtT<'sponding increase in cred it card (' harge-offs
7/00
7/01
7/02
7/03
7/04
7/ 05
7/06
as a res ult.
Note: Credit cards and related plans (inc ludin g check credit
and other revo lving cred it plan s). Exclud es in stallm ent debt .
The Ratio of Debt to Income is Rising'
Source: Fede ral Re se rve Board (Flow of Funds).
75
70
65
60
55
50
45
In addition , som0 ai1alysts belkw l0nders could experic' nce slower growth in cr0d it c,u-d 1w·0i\·ab les as consumers shy away from building add iti onal debt in light
o f Uw higl10r minimum payments.
Conclusion
The maj ority
1970
1980
1990
2000
or co nsumers, who
alr0ady pay mor0
than 1110 monthly minimums on thei r outstai1cling c-r0dil
ca rd debts, should not be sign ifican tly affected by this
* Debt as a percentage of income, 1970-2 005
chrn1ge. O\·er time 0\'0ll heavily incleb tecl consLm1Crs w ill
Source: Federal Rese rve Board (Flow of Funds ).
be nefit fro m less n0gati ve amort izati on and fast0 r prinOU1er companies like IBNA (recently acquirPd by Bank
cipal repaynwnt.
1
one t he less, some borrowers may b0
of Anwrica), which sen ices receirnbles for SunTrust,
finding it difficult to make minimum payments that
AmSout h, and Regions Banks, hm·e phased in the new
lwca m e signifi can tl y higlw r in 2006, and banks may
r<:'quin' ments by establi sh ing n<:'w c-lient s \,vit h the hig!l('r
fe<' I th e
fa ll o ut. ♦
payment stru cture wlwn tlwy become ('ard memlwrs
and applying the changPs to Pxisting custonwrs at yeai 0
'!'Iii~ arlic-l e was wrillen by Lisa East erwood, financ ial analyst
in the Supe rYision and Regul ation Di,·ision al th e Atlant a Frd.
end . Compass Bai1k, which already requir0cl borrowers
to pay 2 perc·Pnt of th e balaiice plus outst,:rndi ng int 0rest
ai1d feps <'ach month , did not n0ed to mak0 any chai1ges
to its minimum payment requiren10nts.
Although th e guidelin0 w0re CT<:'at0d to serve consumers, th0 timing of tll(' de('ision may present problems for sonl(' borrow<:'rs, particularly if emp loymen t
and wage growth remain lack luster. A.c, a r0sult, banks
co uld SP(' higher delinquency and loss rates on cre dit
card po rt fo l ios in I he com ing mon ths as co nsun10rs
try to juggle higher debt paymen ts and higher cos ts
of living.
FEDERAL
RESERVE
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BANK
OF
ATLANTA
eleven
Alabama Lending Coalition Boosts Housing
MICHELE JENKINS-UTOMI IS A CEO ON A MISSION: HER GOAL IS TO PRODUCE A
PIPELINE OF NEW AND RENOVATED HOMES AND APARTMENTS FOR LOW- AND
MODERATE-INCOME FAMILIES THROUGH A UNIQUE JOINT VENTURE SHE HEADS ,
THE HOUSING ENTERPRISE OF CENTRAL ALABAMA, LLC, OR HECA.
I IECA, a community cle\"C·lopnl('nt lender, 11·as fotmclPcl
tailor im·est n1Pnts in 11 ECA to meet financial and
in :200:3 by four Alabama b,mks: ArnSout h Bank, Regions
regulatory goals. and m atc h<'d funding soun·ps 11·ith
Bank, Compass Bank and New South FedPral Sa,·ings
int C'nd<'d uses. "
Bank. First AmPriean Bank in Birmi ngham has now
IIEC'A has already made a positil'e diffrn'n<·e in th e
joi,wd as a firth inn·sto r bank. Through IIECA lh<'se
m·ailabi lit y of housing. A,<; of April I , :2000, tlw organiza-
banks maintain a $-"i-1 million loan fund for qualif"il>d
tion had prmicled approximately$\) mill ion in loans for
pri1·at.e and nonprofit cle1-e lopers to bu il d and rP nm ·ate
single-family mid multifamily housing. Anot her $ 10 mil-
workforce hous ing. The loan rund is one of tlw lwst-
li on in loa ns is slated for co nsid <'ral io n in the next
capita li zed of its kind in the llnit<'d Stat<'s.
th ree mon th s.
But the founde rs or IIEC'A didn't slop l llC'r<': th<'y also
The com pany began offe1ing construct ion ,md perma-
estab lished a nonprofit affi liat e', I Ill' I lousing Fund of
nent loan produc-ts in 200-1. Last year 11 ECA added a sub-
('pntral Alabama Inc. (the Pund ). IIEC'A and the l·'und
ordinat eel debt product dpsigned to make -I pe1Tent
11·ork togetlwr to pro1·icle gap financing and mon' acc-Ps-
bond dPals mon' feasiblP.
siblP construe-lion and acqu isition loans or im·est men ts
on qualified projl'C'IS.
The F'und also awards grants to nonpro li ts ,md communit y devC'lopmC' nt corpo rati o ns w hosl' miss ion is to
"\\'e do not offpr concessiona1y financing, but 1ve do
offrr nich<' products that ar!' unique in the markPt ,"
Ms. Utomi said. " For instance, I IECA does not require that
its dcvel o pl'rs pledge thC'i r balance shee ts. Also, we
del'l• lo p hous in g ror peop le or modest nwans. Tlwse
und erwrite rigorous ly. But ultim ate ly, i f th e projec-t
gnmts unden-11il l' corp-operating suppo11, tedm.ical assis-
cloPsn 't se ll ,
tance, and programs related to capadty-bui lding. OnC' of
iimmcial pa11 nC'r 11it h tlw cle1·clopPr. Our prinllP cle1·C'l-
thl' major projects of the Fund is a two-year incubator
opC'r custonwrs tell us that is a major inc-enti1·e for them
\\'l'
011·n it. So
W('
wind up Sl'IYing as a
program for community de1·elopnwnt organizations. The
lo consider l>uilcling a product at I IECA's pric-P point -
Fund's $ 1.5 million grant poo l is maintained by IIEC'A
generally in tlw $09, 000 to $170,000 range. "
membt'I' banks and area commun it y founda ti ons.
Other at t rac-tivP terms incl ude lmms th at
(',Ul
be st ruc-
tured to provide up to 100 percent financ ing w ith limi ted
personal recourse. Typically, th e reco urse cons ists of a
Paul ( ·ompt on .Jr. , 11 EC /\s legal couns('I and a prn1 npr
completion guarantee that makes the dPl'eloper n'spon-
at Bradley Arant Hose & \\'hit e, LLP, pointed out that
sible fo r cost m ·prruns ancl marketing. In rC't urn, 11 ECA
th<' twin st rue-tun• 11·hic-h combim•s a for-pro fit and a
negotiates a "pm1icipating share" of the project's profit.
nonprofit affil iate ·'rPinforced tlw nature or IIEC'A as
W. Neill Fox, executi1·e ,·ice president of real estate
an ongo ing part of the nwmbers' busin<'sses, helped to
banking at ( 'om pass Bm1k and chair of l l EC'A's loan and
twelve
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
VOLUME
16,
NUMBER
1
inwstmrnt committC'l\ said IIECA dorsn't compPle \\'ith
conn•nt ional lrnders for loans, and its nwmbrr hanks
ar<'n't c·omp0titors. HathC'r, IIEC'A 'sC'C'ks to fill m•c•ds that
are unnwt in thC' rC'gul ar mar ket, acting in many cases as
a c·omplC'nlC'nt to otlwr convent ional financing.
·'Prod ding 100 pC'rcC'n t fin anc ing and o ffC'rin g f'inancing tC'rms 11·ith limit C'd "comp lC'tion-only" guarantees ,U"e
the l'und,rn1ental di!Ten>nces bet ween 11 FX'A's financing
program ancl thosC' typically ofl'C'l'ed by comnwl'(' ial
HECA provided $1.2 million in permanent financing for the
banks , inc-luding II ECA's ownC'r banks," i\lr. Fox sa icl.
Avondale Gardens affordable housing development in
Doug .Jackson, director of community a ffairs at
Birmingham , Ala . (above). The photo below shows the Oak
AmSouth Bank ancl a IIECA exC'c·util'e comm itl PP and
Park Vill as, a 40-unit apar tm ent com pl ex for se niors in
bmml rnC'mbC'r, said IIEC'A is the perfect c·omplC'nwnl to
Lipscomb, Ala. HECA provided construction and first mortgage fi nancing fo r the proj ect.
AmSou th 's existi ng community c!C'n'lopmC'nt program s.
"This f'it likC' a glm ·C' with wh at 11•p alrC'a dy ha1·p,''
i\lr. .Jackson notccl.
Tlw paitners fornwd this innon1ti1·C' joint 1·C'ntLtrC' t o
address the lack o f quality housing for working famil ies
in tlw 12-count y area comprising greatC'I' Birm ingham.
"Tlw trC'mcnclous neecls of the c·ommunit ics in the
region rC'quirc d a coa l it ion of banks to pro1·ick t hC'
II EC'A and th e Fund grC'w out of a 2002 rC'gional hc)Us-
l'unding and im·C's tm C'nt dollars to make a rea l impac t,"
ing initi ati1·C' th at i111"oil·c•d communit y and corpo ra te'
sai d .1Prry W. Powe ll, Compass Bank's gcnC'ral counsel
IC'adl'rs ancl c itize ns. To assess nC'ecl and dC'termilw
and sec-rctary, ancl IIEC'A's acting board chair.
ho w lwst to tackle tlw prob lem . tlw group conducted
"The pa1tnership al1011·s thC' region to hm·e a dC'ari ng-
I O da~·s of hC'arings 11·ith rC'presentatiws of thC' afford-
housc' of ic!C'as and a centra l rcsourc·e to C'\'a luatP th e
ab le housing de1·C' lopment commun it y; stud ied loan
capahilit iC's of c·ommunity developnwnt orgai 1izat ions so
fu ncls and ('])F'l s; l'isited initiati\'C's in ot lwr l .S. ci ti es
th at arni lablC' funding can makC' a difTC'rC'nCC' . Without
to lc•arn lws t practic-es; ancl set up a pil ot projC'ct in
the lw1wf'it of a cooperati1·C' effort, the identif'ic-ation of
Woodl aw n, an under-s<'JYC'cl neighbo rh ood near
oppo11unitiC'S to make wise i.t11·cstments would lw dilutecl ,
downtown Birmingham .
and suppo r t f'or i nd ivi dual projl'c l s would be more
difficu lt to obta in. "
According to a 200:3 state11·idC' housing rC'port tit led
Th e• fundC'l's agree that strong IC'adershi p at the board
"SwePt I lome AJab,m1a," affordablC' housing rC'ma.ins an
and staff lr1·els ha<, cont 1ibut0cl to IIECA's success. lIE('A
"e lusil'C' targC't for significant SC'Clors of th C' population.''
and the Fund are OVC'l'SP<'n by th e sa nw board , and tlw
ThC' rC'porl indicatC's that morC' than a third of all
majorily o r the board's members arC' not afli li atc cl 11·ith
A labama householcls had income's IC'ss than $2:"i,000,
IIEC'A:s fimmcmg sources. l lECA and th<' l•\md also Shell'('
"making it hard-if not impossible- for many indi1·i-
a thn'P-pC'l'son staff. Other senices such m, unc!C'nniting
duals to bu y th C' ir own homes." It nol<'s that "you ngC'I'
and c·omm un ications ar<' hw1cl lecl by consult,mts.
pprsons, rC'nt ers, ancl som e segment s of thC' mino rity
Ms ..1P11kins-l1torni, a lluntsvi!J e native, c-m11C' to l lE:CA
populal ion arc more' prone to suhstanclarcl housing ancl
from LoC"al Initiati1·es Suppott Coqiorat ion, the nation's
lack of afTorcl ab ilit y. "
largest community building organizat ion.
FEDERAL
RESERVE
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BANK
OF
ATLANTA
th irteen
"We're fortunate to have someone with Mic hel e's
to trans f"orm di s tressed neig hborhoods into healthy
na tional cred e ntial s leading IIE CA," Mr. Jackson said.
communiti es - that is really wha t we 're s tri vin g to
"As an Alabama na ti ve, she understa nds the challenges
accompli s h everyday."
♦
w1ique to the state. But she also has brought a willingness
to take a fresh look at the afford able housing need. "
Ms. Jenkins-Utom i is dete rmined to produce that pipeline of hous ing. But she says there is sornet hing much
Thi s artic le was written by Tabitha J. Lacy, communi ca tions
co nsu lt ant fo r ll ECA and th e Fun d . To lea rn m ore abo ut
l l ECA, plPase contact l\'I s..JPnkins-l ltorni at 205-32:3-9888 or
mu tom i(a housin g(' nterpr isC'. co m. \'isit HECA's webs ite' at
www.ho usin gentC'rp ri sr.com.
more fu ndame nta l about ll ECA's miss ion: "We want
T
•
,
?
•
Why Banks Participate in HECA
For financial institutions in the region, the
benefits of joining the Housing Enterprise of
Central Alabama and its nonprofit affiliate, the
Housing Fund of Central Alabama, are many:
• Resources necessary to meet the task:
HECA is an affordable housing lender c01mni tted
to working in 12 Alabama counties, an d it has
resources commensurate with the tas k. Investor
institutions have committed $54 million in loan
dollars to I-IE CA. The I-lousing Flmd of Central
Alabama (the Fund) has secured nearly $3.6 million
from foundations and HECA's investor institutions.
• High-impact, results-oriented strategy:
HECA and the Fund have a resuJts-01iented strategy focused on identifying market-savvy loan products that fill niches in the afford ab le housing
le nding industry and thus have the capacity to
substantially increase the supply of quality housing
choices for people of moderate means in Central
Alabama.
• More effective use of resources: The opening
of HECA and the Fund in 2003 enables fman cial
institutions in the region to work co llectively,
bringing to bear greate r, more focused resomces
without fragmentation or duplication. This ab ility
to leverage fw1ds enables HECA to address more
fu lly the afford able hous ing needs of low- and
moderate-income residents in Alaba ma.
• Expertise to access governmental programs:
By supporting HECA, financial institutions are
fourteen
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Federal Reserve Bank of St. Louis
foste1ing an organization with tremendous expertise
and t he a bility to take advantage of- and help
others take advantage of-govenu11ental programs
that have long been under-utilized in the region.
• Focus on economic development: I-IECA's
focus is to serve as a powerful advocate and
voice for affordable housing. HECA believes
accessible housing can become an eco nomic
development driver for the region.
• Support of the Community Reinvestment
Act: I-IECA provides financial institutions with an
innovative and effective tool to improve the region
while also addressing Conummity Re investment
Act issues.
• Risk mitigation: HECA all ows opportunities
for institutions to improve th eir communities by
strategically collaborating with other prominent
finan cial institutions, conmrnnity fow1dations and
civic leaders to move the region forward in a way
that minimizes the overall risk.
• Independe nce: Since HECA is an independent
body with flexibility to adapt to the market, it can
more effectively insist on accountability for the
use of funds .
• Expansion of private capital sources:
I-IECA and the Fw1d also help to leverage conventional lending opportunities by spurring a nd
in creasing local capacity for development.
VOLUME
16,
NUMBER
1
Finances Count in Planning for Disaster
THOUGH IT'S THE LAST THING WE
WANT TO THINK ABOUT, BEING
FINANCIALLY PREPARED FOR A
DISASTER CAN LITERALLY MEAN
THE DIFFERENCE BETWEEN LIFE
AND DEATH.
Acco rdin g to a s urvey of evac uees in the Ho us to n
or cash from ATMs ... . Even fo r the ro ughly 33 percent of
Astrodome, the majority remained in the Ne w Orleans
lower-income 'ban ked' evacuees ... any personal budget
area because they lacked transportation to get out or
tightness, p ossibly coupled wi th no savings or line of
because lodging or shelter elsewhere was not available.
credi t to tap into, wo uld have exacerbated their fma.ncial
The smvey, conducted by the Washington Post, Kaiser
circumstances in the hurricane's afte rmath."
Family Foundation and Harvard University, implies
We can and should use the lessons of Katrina to help
that lack of reso urces to own a car or pay for shelter
ourselves and our most vulnerable families prepar e fman-
away fro m their homes prompted Astrodome evacuees
cially for disaster. Aside from basic surv ival needs such
to remain in high-ris k situations where their lives were
as fo od, wate r, clothin g, a nd fu el, families will need
at stake.
s ufficient cash to tide them over. Because communications and utilities often do not fun ction in t he wake
Keeping adequate cash on hand
of disasters, storm victims cannot rely on debit cards
Help in g low-income families build asse ts not only
moves them out of poverty but also paves the way fo r a
or ATM machines for money.
How much is enough? Some experts reconm1end cash
healthy, resilient financial future. Families that have built
to cover a fam ilies' basic needs for three to fi ve clays.
an emergency savings fu nd, established a home equity
This amount will clearly vary from family to family: hotel
line of credit or developed fo rmal banking relationships
rooms are more expensive than staying at a fri end's or
a re better equipped to weather either a tropical or a
relative's home, and larger families are more expensive
fin ancial storm.
to feed than smaller ones.
A Federal Reserve Bank of Philadelphia analysis of
the financial services industry's effectiveness responding
to Katrina states, "without deposit accounts unbankecl
Organizing an "evacuation box"
In addition to keeping cash on hand, it's important to
individuals could not benefit from direct deposit of pay-
make copies of c1itical docmnents and store them in a
roll or other sources of income, electronic bill payment
fire and wateqJroof container that can be located quickly
FEDERAL
RESERVE
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BANK
OF ATLANTA
fifteen
and Laken in the event of an emergency. This important
really understand what they will (and will not) cover in
step will go a long way in helping families recover from
the event of a disaster? Many people affected by recent
a disaster. Put irnpmta.nt papers into a lockable, durable
disasters were underinsured, or worse, not insured at all.
"evac uation box," in sealed waterproof plas ti c bags.
If you 0W11 a home, buy full replacement or
Store the box where you can get to it easily. lf yo u must
replacement cost cove rage-at a minimum. This am ount
evacuate, keep the box with you at all times; don't leave
of coverage allows for the structure to be replaced up to
it in your w1attended car.
the limi ts specified in the po li cy. Investigate buying a
What should go into the box?
guaranteed replacement cost policy that will pay to
• A s mall amo unt of traveler's c hecks or cas h.
• Negati ves for irrep laceable personal photographs,
protected in plastic sleeves.
• A list of emergency co ntacts including doc tors,
MAINTAINING SUFFICIENT
financial advisors, clergy, reputable repair contractors and family members who live outs ide yo ur area.
EMERGENCY FUNDS TO COVER
• Copi es of important prescriptions for med ic ines
and eyeglasses, and copies of children's immuni-
ANY DEDUCTIBLES TO YOUR
zation records.
• Copies of yo ur a uto, flood , renters or homeowners
INSURANCE WILL HELP YOU
insurance policies (or at least policy numbers) and
a list of insurance company telephone numbers.
REBUILD AFTER AN EMERGENCY.
• Copies of o ther impo rtant financial and fam ily
records ( or at least a list of their locations) including deeds, titles, wills, a letter of ins tructions, birth
a nd ma rriage certifica tes, passports, relevant
rebuild your house, including improvements, at today's
employee benefits documents, the first two pages
prices, regardless of the limi ts of the policy. Yo u will
of the previous year's federal and state income tax
need to have your home periodi cally reappraised to be
returns, etc. Originals, oth er than wills, should be
sure the policy re fl ects the real replacement cost.
kept in a safe deposit box or at another location.
• Backups of computerized financial records.
You should also buy a policy that covers the replacement cost of your possessions. Standard coverage only
• A list of bank account, loan , credit card, dri ve r's
pays fo r the actual cash value, that is, the replacemen t
license, investment acco unts (brokerage and mutual
cost discounted for age or use. Use your home inven-
funds) and Social Security numbers.
tory list to check Lhal your policy's coverage matches
• Safe deposit box key. (ff yo u're in a flo od zone you
the valu e of your possess ions. An up-to-elate video
may want to make sure that your ba nk's boxes are
inventory also helps. Big-ticket items such as specific
well above flood level. Res idents of the Gulf Coast
je welry, collectib les, artwork , or furs may require
are still trying to recover important documents and
additional coverage.
valuables fro m flo oded bank vaul ts.)
Maintai ning sufficient emergency funds to cover any
deductibles to your insurance will help you rebui ld after
Is your insurance adequate?
Insurance provides crucial protection fro m loss. Even
with time to prepare for a disaster, yo u s t.ill may suffer
an emergency. Some homeowners policies may have a
2-to-4 percent hurricane ded uctibl e requirement built
in to the poli cy.
significant, unavoidable damage to yo ur properly. That's
If you find it difficul t to obtain private coverage
when insurance for renters or homeoW11ers can be a big
because of a recent disaster, c heck state or federally
help. But how many of us have read our policies and
operated insurance pools. Their premiums often run
sixteen
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Federal Reserve Bank of St. Louis
VOLUME
16,
NUMBER
1
highC'r than markC't ratC's, but highC'r prC'IlUW11S ar<' bC'ttC'r
ach·a nc(' of a disastn---policies go into C'ffC'Cl 30 clays
th<rn no cm·erag<'.
aftC' r th e policy is purchaspcl.
If you rC'nt, considf'r locating ou tsid C' a high-1isk flood
area or away from a fault !inf' . Regardless of your loca-
Being prepared calls for planning
lion , rC'lllC'rs insurance can pay for damaged, dC'slroyecl ,
RemembC'r that not all financial C'me rgenciC's arC' thC'
or st olC'n personal propC'rty- liabilit iC's that won't be
res ult of natural disasters. Tlw tlu·E'C' 1mtjor factors contri-
cm·C'rNI by your lan cllorcrs insuranc-C'.
but ing to fmnilif's filing b<rnkruptcy arC': clC'ath , di\·orc·p
A<, \1·ith any insurm1ce, it's important to be clear about
ancl a nu,jor illness. BC' prepared to se(·un' your financial
what a policy will cm·Pr. Sonw policil's c·o1·cr more than
f11tttr(' by hming quality pC'rsonal il1Surancl', which should
otlwrs. F'or exa mp le, \1·ill the policy pay for li1·ing
inc l ud (' adPquate hC'alth , lifC', ancl disability in urance
<'XP<'llSC'S if yo u ha,·C' lo li,·C' sonww lwre elsC' l C' mpo-
co,·eragP. I f you are responsible fo r parents or o t hC'I"
raril y o r for damagC' from SC'WC'r backup?
lovC'cl 0IH'S as lhC'y age yo u may want t o loo k into
WhC'thcr buying homeo wners or rentC'rs insurance,
thosC' wi th home offi ces should ta l k to their agC'nls to
long-l (• rm care ins urancC'.
Th e sayi ng goes that being p reparC'cl is "80% planning
det er111 il1e what items in the offic(• wi ll be covered or not
and 20(¼, exC'cution. ·• AccC'ss to cash reSC' IYC'S , a good
coverC'd. Some polici<'s automatically C'xtC'ncl covnage l o
ban k i ng rC'l at ionsh ip, wC'll -organizC'cl clo cu mC'nts, ancl
computn equipment and a few othC'r itC'ms of businC'ss
adC'quate homC'ownC'1s (or renters) ancl pe1sonal insur-
propC'rty. If necessaiy, acquil'e aclcl il ional businC'ss co1·er-
ai1C'e will hC'ip fai11iliC's wC'ather thC' storm .
♦
age or buy a sepai·atC' small business policy.
l\lakC' sm e you buy the msmai1c·C' you need to protC'ct
This a11ic-lP ll"aS ,nillC'll by :-,;,rnc-y ~lontoya, rpgional community
dC',·r lopnwnt managrr in thr Atlanta FC'cl"s NP\\" OrlNrns branc-h.
ag<unst lhc perils you face. For examplC', ho meowners
insurance doesn't cover floods and some othe r
major disasters. It's important lo IJC' 1·e1y clear about
More on Disaster Planning
what the policy will and will not co,·<'r, ancl how the
The following websites were an invaluable resource
dC'cluct ib les work. READ YOUR POLICY! Pri cC's for
for th is article and provide important information on
insurai1ce ,·aiy ai1d it's i111p01iai1t to compaiison-shop for
disaster plann ing.
t lw IJC'st cm·eragC' at the best pricC'.
Financial Preparation for a Disaster:
Flood insurance isn't only for high-risk areas
It 's not just high-ri sk ar eas that expC'riC'nce fl ooding:
www.sqvallPyrPd<·1·oss.01·g/tv.11/finm1<·Ps. l1tn1
bC'I WC'C'n 20 and 2!'i percent of Jloocl insurance elaims
Preparing for Financial Disaster,
Illinois CPA Society:
come from m edi um or low fl ood-risk arC'as. Affordab le
hllp://www.c•maxh mlth.<·o m/4fl/4180.htn1l
i nsurance for noocl clarnag<' , whic h is not covC'recl by
yo ur homeowne rs policy, can bC' acquirC'd through the
National Flood fnsurai1CC' Prognrn1 (NFIP) , regard less of
t hC' 1isk. Coverag<' abo,·C' the $2!'i0,000 Ii nut for propC'rty
Financial Planning: A Guide
for Disaster Preparedness:
http://v.'WW.rPd<T<1ss.org/sPrvicPs/disastpr/lwpn•1iarPd/
i"inHP<'OVPry/FinPlmi/
ancl $fi0,000 lim it for content s stipul ated in th C' NF'I P
in surancC' is arn il abl e on thl' prin1le market.
Th<' t.\1Jical flood il1Smai1ce prC'mium is approxm1ately
Emergency Preparedness Toolkit:
l1ttp://www.opPratio1l110pP.o1"g
!ii-100 a y<'ar for an al'erage of $100,000 of co,·erag<'. This
expC'nSC' is modest compared to paying back a $!'i0,000
cli S,L'>IC' 1· home loan , for C'xamplC', which wou ld cost an
Free Home lnventol}' Software:
http://www.iii .orW
a1·<'ragC' of $240 a month for a rC' payment period of
:JO years. But yo u hm ·C' lo acqui rC' insura nce WE'ii in
FEDERAL
RESER VE
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BANK
OF
ATLANTA
se ve ntee n
The Benefit Bank: An Asset Building Tool
CURRENT CENSUS DATA SHOW THAT 34.8 MILLION PEOPLE IN THE UNITED STATES12.2 MILLION OF THEM CHILDREN-ARE LIVING BELOW THE FEDERAL POVERTY LEVEL.
A lt hough programs exist to help I lwm raise I heir
incomes, most serve far fewer th an the 1111111lwr w ho arc
eligible and in ncecl or assistaiwc'.
Acco rdin g lo estimates, more than $:3!:i b illion in
public f'und s arc unclaimed by low-income peop le in
the LT.S. each ycai·. Deterred by a cumbrrsome enrollment process that requires polrntial recipients to
interact with mu ltiple age ncies in diff'crrnt locati ons
using dil'frrcnt application processes, many simply
fail to requ est bc nef'i ts. T hus th ey re main in poverty,
unab le to acc umu late asse ts.
Access through technology
The 13rncfil Bai1krn is a technology -based too l that
hC'lps low- and moderate-income incl i,icluals and fai11ilies
app ly for the benrfi ts and ta x credits tlwy are eli gibl e
to receive. Asse t building, w id rly recog ni zed as th e key
t o eco nom ic rm powerme nl f'or low- and moclrrateinconw households, is the goa l of' t lw program.
Crcal t'ci by Solutions for Progn'ss, a pu blic policy consult ing linn working for soc ial change, TIH' Bendi t Bai1k
Simplifying the application process
Thr lk,wfit Bank cuts through applica ti on obstacles.
st rrnglhens pa rti cipants' economic circumstances by
This intPrn<'l -based , cmmsclor-assistC'd so rtwai·p prograi11
helping them overcome ba1·1iers to programs that cou ld
seIYes low- mHI modC'rate-incomr working families by
increase I hdr incomes.
rrsrai·ching, finding and automatically applying for bcne-
"Thesr arc tough times for all of' us, but many fam-
f'il s to wh ich thry may be ent itl ed . The program pro-
ili es arr struggling m ore than othe rs sim ply because
ccssC's f'edrral and slat e tax returns ai1cl SL11vrys a range
they're not receiving the benefits that they shou ld ," says
of f'Pdera l, publ ic heal I h ai1d social services beneli ts .
Solu ti ons f'or Prog ress CEO , Robert ,l. 13rand. "Some
Partic ipants wo rk side-by-side with counselors w ho
individuals think they are nol eligible for cr rtain
assist w ith rnlering in formation int o an intrrnrt -bascd
bcnrf'ils , othrrs get lost in the c·omp lrx app li cation
system. Th<' us<'t 0 1'rirndly questi onnaire is also m·ailable
procrss or thry are simply unawarr I he brndits e\'en
in Spanish. As the client enters the data, th e program
r x ist. Thr Brne f'it Bank provides an ('asy an d effi-
aulomal ica lly I rans f'rrs informal ion into brnr fit appl i-
cir nl way lo grt the benef'its to thost' who nrrd
cations. One<' the client prov ides all the n<'C'('ssary
th r m the m ost. "
in formal ion , The Benefit Bank fill s ou t t lw applical ion
eighteen
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Federal Reserve Bank of St. Louis
VOLUME
16,
NUMBER
1
or tax reLLu11 and prints il on the approp1iaLe forms. lt
This artic-lP was writ tr n by Janrt Han1Pr, rrgional community
dewlopmrnt managrr at the Atlanta Fed 's Jac-ksonvil lr Branch.
can even fil e rC't urns and applications electroni cally.
lnf"om1alion is saved in the system and protected by a
passwo rd , so clients can r eturn Lo make updat cs and
Fo r morr in fo rm ati on on Thr Benefit Bank, visit thr wrhsi tr
al www.t hr br nr lilbank. com.
fil e th eir annual tax r eturns.
Partnerships extend program's reach
alional spo nso rs for The Bendit Bank inc-ludc I he
ational Coun cil of Churches, the African Method ist
Episcopa l Church, Salvati on Army, United Church of
Christ, Christian Meth odist Episcopal Church, AA RP,
and Lhe Child re n's Defense Fund .
Fi·ec to all users and host organ izati ons, The Benefit
Bank se rves social service agencies, job training pro-
A GUIDE TO YOUR
FIRST BANK ACCOUNT
FEDERAL RESERVE BAN
K Of ATLANTA
grams, advocacy groups, public sec tor o ffi ces, unions,
pri vate employers, faith- and community-based organizations. In U1e workplace the program enhances prod uctivity by dec reasing empl oyee tu rnover; il can provide
substan ti al wage and benefit increases al no cost 10
th e emp loyer and poLcnLia.!Jy increase employee pension
plan paiticipalion.
The Benefit Bank is up and rwming in several southeast em stales and nationwide. An in tegral part of
Florida's Prospe rity Campai gns in 1iam i-Dade, Palm
Beach , Ilillsborough and Pinellas Counties (Tampa. Bay
ai·ca), it w ill soon be implemented in Jacksonville through
the
mtheast Florida Prospe1ity Campaign. The sc1vice
is avai lable in Mississippi, and development is underway
in Louisiana and Georgia. Pennsylvania, Kansas, Ohio
and Wash ington D. C. use the program, ai1cl Ca lifornia,
Maiyla.nd and Texas a.re working Lo develop it. The goal
of The Benelil Bank is Lo be operati onal in all 50 states
by 20 10.
Because thi s asset-bu ilding tool is useful for a w ide
range of organizal ions, The Benefit Bank cai1 become a
cru cial pa.rt o f a community-wide response Io povert y.
In add ition, the program buil ds relationships between
counselors and clients, host si tes and the co mmun i ty,
and t he co mmunity and pol i cy makers. The Bene fit
Bank not only o ffers an opportun ity to help neighbors,
but it also provides info rmation that can help organizations advocate more effectively for th e communiti es
th ey SC'tve.
♦
FEDERAL
RESERVE BANK OF ATLANTA
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
nineteen
MISSISSIPPI
STRATEGY FOR REBOUND
Damage f'rom ll urri-
Noth ing in the repo rt is mandated; incl iviclual conmw-
cane Ka t rina in M issis-
nities m ust cons id er the repo r t 's reco mm endat ions
sippi alone was worse than
and dec id e how t o act on them . Already towns are
that in any natural disaster in U.S. histmy.
More than six months after the dcvastat ing hurri cane
coming together to rebuild, m aking the most of this
unique situ ation.
and fl ood surge, dam age rem ains. Dl'bris st i ll stands in
the milli ons of metric tons. An estimated 7G,000 homes
were cl cstroyccl, and rebuilding decis ions still hcrng in the
balance waiting on word fro m insuranc<' companiC's and
governm ent oflic ials.
Yet in the f'acc of' unprecedented di sastPr, M ississip-
Recommendations for rebuilding
171e Governor's Conunission offers several imporlcrnl
recomnwndal ions f'o r cconomk recovery:
• New building and zoning codes to produce safer
structures a nd desirable develo pme n t. Towns
pians have shown th eir determination to recove r as
want the option to use tim e-tested ideas like mi.,"Xecl-
quickly as possib le and to rebuild be tl <' r than before.
us<' , higlwr-d<' nsil y devel op ment and pedest r ian-
Mississippi Governor Ilaley Ba.rbom has IC'd the rebuilding
effort, and com munities have followed his exm11ple.
frie nd ly st ree l s to reduce bl ight and aci d val ue.
• Regio nal approaches t o transportatio n, public
services and tow·ism development efforts. More
The Commission
Within hours of Katrina's lm1dfall , Gon'rnor Barbom
create d t he Governor's Co mm issio n f'or Rcc-O\'cr y,
Rebuild ing and Renewal. Chaired by M ississipp ian .Jim
Barksdale, forme r CEO of Netscape, and led by a di verse
group o f' Soul h M ississippi ans, the Com missio n assemb led peop le fro m across th e storm-ravaged rPg ion to
effic ient use o f waler and sewer resources, mul t imocl al I ransportati on and mass trm1sit arc just some
of' I he ideas that can help rcgionalize the recove ry.
• I-lousing. The rep01i prom otes asset buil ding in lowincome comm unities and encourages pilot housing
prqjeets l o help th e worst hit areas recover qu ick ly.
• Eme rgency preparedness. The state lcgislat urc has
add ress the state's short-term prob lems and lo ng-term
createcl an Office of Long Term Recovery and
neecl s. ln dozens of town hall meet ings, citize ns voiced
Renl'wal to assist st01111-damagecl areas micl formul ate
their conccnis on topics rm1ging from education to agricuJ-
clisastn policy for the state. Comm un ication systems
lme to cl ef'ensc contracting lo touris m to urban planning.
and evaeuation plm1s arc also targeted in the report.
Gove rn or Barbo ur also assembled a team o f urban
• Payi ng for it. The final report identifies stale and
plan ning profess ionals. Dw·ing six clays in October, more
fede ral financi ng somces such as bonds and other
than 200 local ancl national p lanners drew reb uil ding
exis ting financing progran1s. Federal appropriation s
blueprints for 11 devastated cities.
a.ncl legislal ion will be critical to the rebui lding effmt.
The Conrnii ssion's fi.nal report, "Arter Katrina: Bui lding
You ean f'in cl the Governor's Commission Pinal Report
Back Better than Ever," was the procl uc-t of' over 50,000
and more informatio n on Mississippi's re bui lding process
work-hours by more than 500 voluntee rs. It catalogs the
at v.·ww.governorsc-ommission.com.
hurri cane's damage to the state and recommen ds O\·er
200 ways to meet long term challenges and bu ild back
"better I han eve r."
twenty
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Federal Reserve Bank of St. Louis
♦
T hi s art ic- lP was writ tl'n by Will Longwitz, rorllll'r colll!llllnications clirl'ctor for t he (;(n-C'rnor's Comlllissio n on RN·O\'C'ry,
RC'IJuildi n g ancl R<'nl'wa l.
VOLUME
16,
NUMBER
1
SOUTH FLORIDA
ACCESS MIAMI RESPONDS TO CllY'S POVERlY CHALLENGE
When tlw City o r 1iami was ranked the poorest large
ACCESS 1iami partners w ith
city in the l ·.s. by the 2000 Census, 1ayor Manny Diaz
pm·ticip,mts one-on-one to prmicl c
rcsponclccl quickly with an anti-pO\'C'rt y init iat ive, clecli-
customi zed programs that meet th e needs or
eating substantial resources 10 improving quality of life
individual residents. Opportw1itics include fin mwiaJ scmi-
ancl fam ily fin anc ial stability for tlw cit y's resid ent s.
nars, workshops, free tax sites, counse ling and more.
With it s sc1vicc-clrivcn economy, Mim11 i has historically
Il&R 131ock, for example, agreed to lower significantly
reg istered nwdi an in come levels IJC'low the nati onal
it s charge for tax preparation at offices licensed t o cl o
average.
busin ess in Miami, and city-affili ated tax prepara ti on
c·vcrthclcss the 2000 Census ranki ng su rprised
mm1y in tlw cit y and underscored the urgency conveyed
effo rt s last year yie ld ed impressi\·e res ult s: more than
by numerous nonprofit groups working with the area's
9,000 r eside nt s partic ipated , saving ove r $800,000 in
growing low-income populat ion.
combined fees. In aclcl it ion , more than 300 city residents
ope ned IRA savings accounts as part of an ACC ESS
Miami effo rt. And micro-lom1s wmih more than $700,000
wen' ex1enclecl l o small business owne rs throughout
the city.
Thi s year's goals includ(' bri nging more n•sidents into
the mainstre am banking sys t em , partn ering w ith th e
Mia mi Dacie Coun ty School Board Parent Acade my,
arran ging a co l lection or pa r enti ng and mentor in g
ccluc-alion workshops, and increasing employe1°based edu-
To coordinate and target its anti-pove 1ty campaign th e
city launc hed ACCESS (Assets, Capit al, Co m mun it y,
cation and oulrC'ach- inclucling to city m1cl count y staff.
Th e n•cenl Sout h Flori da real estate boom has heigh l-
1':ducalion, Savings, m1cl Success) l\founi in 200 1. ACCESS
rnecl concern al>oul affordable housing, m1d gentrifi cation
j oins city resources with ex isting publi c, pri vatC' and
in the area, including th e Ci ty of l\li ami , has !eel to a
nonpro fit capac it y to maximize th e benrfit of ser-
housing crisis for mmw. But without Mi ami·s ant i-povcr1y
vices available to Mia.mi residents through a vari ety or
effort s, it's certain that even m ore families wo ul d br
assistance program s.
pushed o ut or the city by the hi gh cos t or li v ing. As
ACCESS Miam i is based on four founding prin-
rcdrvelopnw nt and revit alization projects move forward ,
c i p les: providing access to ex istin g bene fits ; fac ili -
commit men t lo nweting the needs of low- and moclera1e-
tating access 10 capit al; building wealt h; ancl increasing
income rarn ili c-s may cletermjnc th e success of Miami's
fin ancia l lit eracy.
rfTo rt s 1o adclr('SS the challenge of poverty w ithout dis-
The program has estab li shed numerous co llabora-
placing its 1wedicst rc-sidents.
t ions fo r it s partic ipants with such organiza ti ons as 1he
Small Business A.-;socia1 ion , the Int ernal Rc-n'nu(' Ser-
This a1ticle W,L'> writtPn by Ana Cruz-Taura, n•gional community
affairs director in tlw At lanla Fcd ·s i\Jiam i Branch.
vice, th(' Mortgage Bankers Assoc ia1 ion , ll&R Block ,
Miami Dade Coll egr , and m any local banks ancl non-
Pholo eourlPsy or i\Jiarni Offi ce or Communications.
profi t orga ni za 1ion s.
FEDERAL RESERVE BANK OF ATLANTA
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lwenly • one
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