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Issue 4 | 2016 Introducing, understanding, and using the ICI 300 Peer Cities Identification Tool ALSO IN THIS ISSUE Maintaining housing affordability: The role of university partnerships in Iowa City and other communities Published by the Community Development and Policy Studies Division of the Federal Reserve Bank of Chicago ProfitWise News and Views welcomes article proposals and comments from bankers, community organizations, and other readers. It is available digitally on the Internet, as well as at www.chicagofed.org/publications/profitwise-news-and-views/index. You may submit comments or proposals, or request a subscription by writing to: ProfitWise News and Views Community Development and Policy Studies Federal Reserve Bank of Chicago 230 South LaSalle Street Chicago, IL 60604-1413 or request at CDPS-PUBS@chi.frb.org The material in ProfitWise News and Views is not necessarily endorsed by and does not necessarily represent views of the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of Chicago. ©2016 Federal Reserve Bank of Chicago ProfitWise News and Views articles may be reproduced in whole or in part, provided the articles are not reproduced or distributed for commercial gain and provided the source is appropriately credited. Prior written permission must be obtained for any other reproduction, distribution, republication, or creation of derivative works of ProfitWise News and Views articles. To request permission, please email or write to the address indicated above. Advisor Alicia Williams Managing Editor Michael V. Berry Assistant Editor Mary Jo Cannistra Contributing Editors Jeremiah Boyle Emily Engel Steven W. Kuehl Susan Longworth Robin Newberger Senior Designer Brian Walker Web Content Specialist Britt Oliver Issue 4 | 2016 In the final edition of 2016, Susan Longworth, Taz George, and Mark O’Dell introduce the Peer Cities Identification Tool, or PCIT. The PCIT, once live in the first quarter of 2017, will allow city leaders, researchers, policymakers, and others to compare cities regionally or nationally along various criteria, including housing affordability, income inequality, and some indicators of future prospects. We provide a brief case study of housing conditions in Iowa City with the PCIT article. Marva Williams and Taz George provide a more in-depth look at the housing situation in Iowa City from a practitioner’s standpoint, in “Measuring housing affordability: The role of university partnerships in Iowa City and other communities.” The Federal Reserve Bank of Chicago The Federal Reserve Bank of Chicagoand its branch in Detroit serve the Seventh Federal Reserve District, which IOWA encompasses southern W isconsin, Iowa, northern Illinois, northern Indiana, and southern Michigan. As a part of the FederalReserve System, the Bank participates in setting national monetary policy, supervising banks and bank holding companies, and providing check processing and other services to depository institutions. WISCONSIN MICHIGAN ILLINOIS INDIANA Introducing, understanding, and using the ICI 300 Peer Cities Identification Tool by Taz George, Susan Longworth, and Mark O’Dell Municipalities, especially those that are mid-sized or smaller, often face significant challenges in providing services and amenities to meet the needs of their diverse and changing populations. Solutions are usually contextspecific and must factor in larger demographic and economic trends, in order to be effective. And, yet, in spite of contextual differences, cities frequently have meaningful similarities. However, identifying peer cities is often informed more by conversation than by data or evidence. The Peer Cities Identification Tool (PCIT) developed by the Community Development and Policy Studies (CDPS) Division of the Federal Reserve Bank of Chicago is a data comparison and visualization instrument that can help policymakers and practitioners understand a municipality in the context of peer cities. The tool stems from the Industrial Cities Initiative (ICI), a study that originally profiled ten midwestern cities with manufacturing legacies, at least 50,000 population and at least 25 percent employed in manufacturing in 1960, and how they have fared in socioeconomic terms over time.1 The original study generated a great deal of attention among leaders of cities with comparable histories. The PCIT is in part a response to inquiries from these leaders as to how they “compare” to similar cities both within the region and in other regions of the country, as well as in response to a stated need/desire to share and learn from best practices to address entrenched municipal challenges. The PCIT is different from other “city-data” tools in that it is not a ranking, but a comparison tool that provides the user with a baseline of data from which to ask questions and interpret and apply the answers. This approach is based on a fundamental belief that every city is different, possessing its own assets and liabilities. Usually no one is more aware of the “municipal balance sheet” than the people who live in and lead a city. The PCIT allows city leaders concerned with community and economic development issues to identify groups of cities experiencing similar trends, challenges, and opportunities along economic, demographic, social, and housing dimensions. Using data on 300 cities from the 2010-2014 American Community Survey, as well as longitudinal historical census data, the PCIT performs a cluster analysis to identify similar cities. The 300 cities located nationwide have a common baseline: a population of at least 50,000 in 1960. Today, the 300 cities have a median population of just over 100,000. Understanding the themes Peer cities are grouped along four key themes (others may be added at a later time), which are essentially ‘portals’ to the data. These themes are designed in response to key areas of concern voiced by city leaders following more than 200 interviews across almost a dozen cities as part of the ICI and other place-based research. • Equity addresses questions regarding inclusion, access, and diversity using wage-based Gini coefficient, race and ethnicity-based dissimilarity indices, changes in poverty levels, and educational attainment. City leaders cited challenges of creating and implementing inclusive growth strategies that attract new businesses and jobs to their cities, while creating policies that allow marginalized populations to benefit from these new opportunities. The PCIT uses the wage-based Gini coefficient (as opposed to the income-based coefficient more frequently used) ProfitWise News and Views Issue 4 | 2016 — 4— How it works From the PCIT website, users enter a city and select one of four themes off which to base their analysis: ‘Equity, Affordability, Resilience, and Outlook.’ Users first see a map of the United States highlighting the identified peer cities – usually between five and 15 cities. While often peers are geographically proximate (i.e., within the same general region of the country), sometimes a peer search can yield surprising results. The PCIT will also present the user with data from the peer cities and a table of key variables that were used to identify the group. In addition, the tool generates peer median, minimum, and maximum for each variable, as well as the ICI 300 median for the selected variable enabling comparison across and within the cities, in addition to the (full) dataset. This perspective can provide further context, especially in identifying areas in which the subject city might deviate from its peers, which can serve to highlight particular challenges or opportunities. Users can also select variables to graph or chart, providing a useful visual. All data and images can be exported. Peer City Identification Tool Equity Equity Resilience NextGen Housing Affordability Cedar Rapids Peer City Results Housing Affordability NextGen Resilience Peer City Identification Tool Percent of jobs in manufacturing Total population Labor force participation Change in labor force participation, 1970-2010 Aurora, IL Change in manufacturing jobs, 1970-2010 16.1% 199,878 Change in real household income, 2000-2010 Berwyn, IL Cedar Rapids, IA 73.1% 14.5% 8.0% 56,762 68.9% -63.0% 10.6% -15.7% 16.2% 128,009 -59.6% 15.6% 6.9% -9.7% Royal Oak, MI 70.9% 58,382 74.7% -53.8% 12.1% -9.4% -50.6% -9.7% Wauwatosa, WI 12.9% 46,838 Peer average 71.4% 15.1% 12.4% 97,974 71.8% -51.1% 10.3% 10.0% -7.3% ICI 300 average 222,117 64.1% -55.6% 4.5% -10.4% -57.0% -10.1% GINI Cedar Rapids Education Household Income Gini coefficient of wage inequality 0.5 0.4 0.3 0.2 0.1 0 Aurora Illiniois Change in labor force participation, 1970-2010 Change in manufacturing jobs, 1970-2010 Change in real household income, 2000-2010 73.1% 8.0% -63.0% -15.7% 68.9% 10.6% -59.6% -9.7% 6.9% -53.8% -9.4% 74.7% 12.1% -50.6% -9.7% 71.4% -51.1% -7.3% 46,838 12.4% 10.0% -55.6% -10.4% 4.5% -57.0% -10.1% Labor force participation Percent of jobs in manufacturing Total population Aurora, IL 16.1% 199,878 Berwyn, IL Cedar Rapids, IA 14.5% 56,762 16.2% 128,009 70.9% 15.6% 58,382 12.9% Peer City Results Royal Oak, MI Wauwatosa, WI Peer average 15.1% 97,974 71.8% ICI 300 average 10.3% 222,117 64.1% Education GINI Berwyn Illiniois Cedar Rapids Iowa Royal Oak Michigan Wauwatosa Wisconsin Household Income Gini coefficient of wage inequality The images presented here are samples of PCIT maps and charts. 0.5 0.4 0.3 0.2 0.1 0 Aurora Illiniois Berwyn Illiniois Cedar Rapids Iowa Royal Oak Michigan Wauwatosa Wisconsin Peer Average ICI 300 Average ProfitWise News and Views Issue 4 | 2016 — 5— Peer Average ICI 300 Average to focus in on wage-earning workers who have been employed for the full year. • Housing speaks to issues of affordability by incorporating data relating to homeownership (income-to-home value ratio) and renting (rent burden), the quality and competitiveness of housing stock by using the age of housing as a proxy, and monthly living costs. Providing competitive housing affordable and attractive to both renters and buyers was a primary discussion point among leaders. • Resilience speaks to issues related to economic diversification in terms of changes in manufacturing employment, existing levels of manufacturing employment, labor force participation, and unemployment. Many cities experienced economic shocks during the Great Recession, but had experienced decline along these measures during the preceding decades. Economic diversification and labor force conditions provide broad insights into areas of vulnerability and strength. • The Outlook theme explores signs of a city’s demographic and economic future by incorporating changes in the working age population, family composition, and mobility (over time). Changes in the age distribution of a population, net migration, and household size and composition, can all provide clues about a city’s future. Cities experiencing unusual demographic shifts may look to peers undergoing similar shifts, and to (non-demographic) factors, such as employment and educational opportunities, that may be drivers. Methodology The tool works by performing a hierarchical cluster analysis on all 300 cities, using the variables included in the selected theme. A cluster analysis is a way of grouping data based on the similarity of responses to several variables. A cluster analysis treats the subject city data as a “case” and will find “similar” or “peer” cases based on several variables. The clustering method used is Ward’s method, which minimizes the variance across all variables in a given group.2 If a cluster produces only a small number of results, the program has the option of using the ranked values instead of the normalized values, which tends to produce more evenly distributed groups, but does not allow for easy distinction between extreme outliers and more typical cities. The cluster containing the focus city is squared off for ease of explanation and verification, by looking at the maximum and minimum values for each variable within the cluster and including all cities within the given range for each variable as peer cities for the focus city. Finally, the program produces a table of all the included variables for all peer cities in the cluster. As mentioned above, the PCIT has several potential uses. For many municipal planners, comparison cities are often, for practical reasons, limited to those that are geographically proximate, subject to similar regional trends, and to the planner’s personal knowledge and familiarity. Sometimes, this is satisfactory, for example, when planners may want to understand cities subject to similar statewide policies or conditions. However, at other times this purview is limiting and frustrating to planners and other practitioners who wish to go outside of their ‘familiarity zone’ to interact with other places that may be experiencing similar challenges or changes. In particular, cities that have experienced changes in their economy, with respect to manufacturing employment, for example, may find it useful to learn about cities outside of their specific region. To this end, the PCIT will return cities that may not initially appear to be peers – the most evident difference is often that the peers are in very different regions of the country – but that upon closer look are experiencing similar conditions, at least along one of the variable clusters. Different variable clusters will return different sets of peers – occasionally there will be common cities across the theme-based peer groups – and additional data exploration can often shed light on similarities and differences. Usually, however, the PCIT peer group will include regionally proximate cities, as the methodology used specifically seeks to minimize variance across clusters. While the PCIT can be a useful comparison tool from which to initiate planning discussions, it is not a planning tool per se. Users are cautioned against taking high level, longitudinal data as a directive or prescription in any way: each of these cities is unique, with its own distinct characteristics. However, as the case study (see page 7) illustrates, it can be helpful in answering a specific question (about housing, for example). It can be especially useful in informing, without judgment or qualification, broader discussions. Note: We expect to bring the PCIT online in the first quarter of 2017, and will provide an update in the next edition of ProfitWise News and Views. ProfitWise News and Views Issue 4 | 2016 — 6— The Peer City Identification Tool sheds light on Iowa City’s housing affordability challenges by Taz George Iowa City, Iowa, is home to the University of Iowa main campus and is the principal city of a metropolitan area with a population of 166,498,3 located in eastern Iowa about 30 miles south of Cedar Rapids. Iowa City faces acute affordable housing challenges, with a majority of rental households spending over 30 percent of income on rent. Adding to the challenge, the quantity of universityowned (and developed) student housing has not kept pace with the growth of the student population, leading students to seek housing in the private market and pressuring the supply of affordable housing for the general population, roughly 14 percent of whom (metro area-wide) are employed by the university. For more indepth information about Iowa City's housing issues, see article on page 9. In June 2016, the Housing Trust Fund of Johnson County in Iowa City hosted a local housing affordability conference, with CDPS as an organizing partner. The Fund asked CDPS to quantify the severity of Johnson County’s affordability challenges relative to otherwise comparable areas, to explore potential factors impacting these challenges, and to present those findings at the conference. Using the Peer City Identification Tool (PCIT), we were able to provide context to Iowa City’s (the city represents roughly 52 percent of the county population) affordability challenges and identify possible factors underlying the area’s rising cost of rent relative to income. The PCIT allows users to select a set of variables (relating to housing, equity, resilience, and others) from the ICI dataset, which are used to identify peers from among roughly 300 cities. For this analysis, a mix of general economic and demographic variables, including employment rate, labor force participation rate, total population size and growth, educational attainment, race and ethnicity, and geographic region, were used. Housing-related variables were omitted from the peer selection process, in order to identify otherwise similar cities, as a comparison for Iowa City’s affordability issues. While Iowa City is not among the cities included in the PCIT (its population in 1960 was too low to meet the 50,000 threshold), it was added to a custom dataset for the purposes of this analysis, and supplemented with about 20 additional data points gathered from the American Community Survey. The PCIT identified five peer cities to Iowa City: Topeka, Kansas; Duluth, Minnesota; Springfield, Missouri; Asheville, North Carolina; and San Angelo, Texas. These cities were included in a comparison sample along with Ames and Cedar Rapids (Iowa) due to the local audience’s familiarity with these places. We then collected and visualized a variety of housing data on the sample group at the county level,4 including the cost of rent from 1980 to 2014, the rate of high and severe rental cost burden, the rental and overall vacancy rate, the share of the population enrolled in a university, housing tenure and structure composition, and the homeownership rate. Among other findings, the data showed that Johnson County’s cost of rent grew more rapidly than its peers, that its level of rental cost burden is comparatively high, and that its students account for a much larger share of its population than all but one of its peers. Johnson County’s housing stock also stood out for being dominated by small multifamily rental structures. An overall takeaway was that Johnson County’s housing challenges shared some common ground with Story County, where Iowa State University is located, in Ames. The conference organizers hoped to use this data as a basis for greater collaboration and information sharing between the two areas. Conference attendees were intrigued by the comparison across peers, and several expressed desire to see different comparison samples. For example, it was suggested to compare only to other cities where a large university is located, as that proved to be a key distinguishing factor for Iowa City among its peers. By identifying cities that were not ‘natural’ peers, for example Asheville, North Carolina, participants were able to broaden their frame of reference. The PCIT was useful in identifying baseline areas of commonality between places, which laid the foundation for further data collection, analysis, and collaboration. The PCIT empowers policymakers, researchers, and practitioners from cities large and small to conduct customizable analyses for their own purposes. CDPS’ experience in Iowa City demonstrates the ability of this tool to better inform community development practices by facilitating access to data across geographies to address timely policy questions. ProfitWise News and Views Issue 4 | 2016 — 7— Notes Biographies 1. For more information on the Industrial Cities Initiative, please visit https:// www.chicagofed.org/region/community-development/community-economicdevelopment/ici/index. 2. For more information regarding Ward’s Method, the original article detailing the method is publicly available at http://homes.mpimf-heidelberg.mpg. de/~mhelmsta/pdf/1963%20Ward%20JASA.pdf. 3. According to American Community Survey 2015 1-Year Estimates. 4. PCIT matches based on city-level data. For the presentation, county data was used as conference attendees were interested in affordability challenges throughout Johnson County, not just in Iowa City. Susan Longworth is a senior business economist in the Community Development and Policy Studies Division of the Federal Reserve Bank of Chicago. Taz George is a research analyst in the Community Development and Policy Studies Division of the Federal Reserve Bank of Chicago. Mark O’Dell is a research analyst in the Community Development and Policy Studies Division of the Federal Reserve Bank of Chicago. Tenth Biennial Federal Reserve System Community Development Research Conference Registration is open! To register, please visit the conference website at www.minneapolisfed.org/2017CDResearchConference. Registration for the conference will remain open until February 24, 2017, or until capacity is reached. The Federal Reserve System Community Development Research Conference is a unique event that convenes researchers, policymakers, and practitioners across sectors to consider important issues that low- to moderate-income people and communities face. The 2017 conference will explore the interplay between the development of kids and their communities, with an understanding that “development” factors into key economic and social aspects of kids’ lives. High-quality and emerging research from multiple disciplines will be presented in a dialogue with policymakers and community practitioners who can utilize the lessons gleaned from the research. This event will spotlight research that can inform questions about key drivers to success, differences across subpopulations, scalable intervention strategies, and policy considerations. The conference will also feature remarks by Federal Reserve leaders, including Federal Reserve Chair Janet Yellen. This conference is open to the public. Attendance by academic, government, nonprofit, and foundation employees is strongly encouraged. If you have questions about the conference or registration, please email CDConference@mpls.frb.org. ProfitWise News and Views Issue 4 | 2016 — 8— Maintaining housing affordability: The role of university partnerships in Iowa City and other communities by Taz George and Marva Williams The Community Development and Policy Studies (CDPS) Division of the Federal Reserve Bank of Chicago works across the Seventh District1 to improve the socioeconomic prospects of low- and moderate-income people, in addition to working with community leaders to bring development and reinvestment opportunities to underserved communities. Our district comprises urban centers, suburban, exurban, and large rural areas, and the issues facing these areas vary widely. This article explores the significant rental housing shortage in Iowa City (Iowa’s fifth largest city and the county seat of Johnson County) stemming mostly from the large University of Iowa (UI) student population, of which the school houses less than 20 percent. Accordingly, local residents must contend with a large population of students vying for the same, limited supply of rental units. The student population has contributed to increasing rents and a deeper deficit of affordable housing. CDPS began working this year with the Place-Based Inclusion Working Group, a group of university professionals and affordable housing advocates that organized to formulate strategies and encourage UI administrators to work in partnership with community groups to address the city’s housing shortage. In early May 2016, CDPS facilitated a meeting with UI administrators, local government leaders, and housing advocates with university professionals who have entered partnerships to improve local communities. A separate, public meeting with (other) affordable housing advocates, residents, and students provided a means to share best practices and findings from the first meeting more broadly. This article comprises two main elements; the first is a review of this process and those meetings. It begins with an overview of how UI policies have impacted affordable housing markets in Johnson County, the county home of Iowa City. The second section describes university partnerships that involve institutional engagement to address local housing issues and other local needs, shared by three university professionals from Drexel University, the University of Minnesota, and the University of Illinois at Chicago. The conclusion is a short description of next steps. Affordable rental housing in Iowa City and Johnson County Iowa City is the home of the University of Iowa. Demographic data from Decennial Census and American Community Survey estimates show that the population of Johnson County, where Iowa City is located, is undergoing significant changes. The county is growing rapidly, with a population of 144,251 in 2015, an increase of almost 30 percent from 2000. Johnson County is the third largest county in Iowa, after Polk (Des Moines) and Linn (Cedar Rapids) counties. The diversity of Johnson County has also grown. Blacks were 2.9 percent and Latinos were 2.5 percent of the population in 2000. By 2015, the percent of blacks and Latinos doubled and the percent of whites decreased from 90 percent to 85 percent. Further, the percent of foreign-born residents increased from 6.4 percent in 2000 to almost 10 percent in 2015. The percent of people living in poverty decreased slightly from 15.9 percent in 2000 to 15 percent in 2015. With an enrollment of over 32,000 students, UI is the largest university in the region,2 offering wide-ranging undergraduate and graduate courses of study. Enrollment at UI has increased significantly over time, from less than ProfitWise News and Views Issue 4 | 2016 — 9— 20,000 students in the late 1960s (see chart 1) to over 30,000 students in 2006.3 Students comprise 23 percent of the county’s population; in contrast, the statewide (and national) proportion is about 8 percent of the population.4 Like most large universities, UI is an economic anchor of Iowa City. It employs almost 23,000 people,5 and its hospital system has over 12,000 health care practitioners and support staff.6 In fact, UI is aware of the challenges it presents in terms of the local housing supply. The staff is so large that, to ease the strain in Iowa City and disperse employees, UI has moved some of its operations to Coralville and North Liberty, two suburbs of Iowa City. Chart 2 shows the ratio of UI dorm capacity to students. The rate has declined from over .20, or one dorm space per five students, in the early 1990s to .17 in 2016 because UI did not add new dormitories for its growing student population. From 1968 to 2014, no new dorms were constructed, although the student population grew by 60 percent. Further, although one new dorm was established in 2015, and another is projected to open 2017, the ratio of dorm capacity to students is expected to still be roughly .20 in 2017.7 There are few studies of UI student satisfaction that inquire about student views on housing at UI. However, there are a few examples of dissatisfaction with the status quo. Graduate students expressed concerns about an increase in rent at a private student development, which rose by 10-12 percent from 2014 to 2016. In the spring of 2016, students from a communications class documented the views of 200 students living in off-campus housing through small group discussions. Although the results may not be generalizable to the entire student body, several trends emerged. First, security is a major concern. Students provided examples of apartment buildings with no locks on exterior doors, broken door handles, and broken windows that made their residences vulnerable to burglars. Second, students complained about the high cost of their housing. Many spoke about having to take jobs to pay for housing and the stress they felt due to high rent. Third, students felt that large leasing companies that manage student off-campus housing are difficult to reach and unresponsive to complaints from renters. Last, students complained about living conditions. They described broken appliances that were not repaired or replaced for several months.8 UI students seeking housing have a deleterious impact on the cost of housing in several respects. First, income- Chart 1. UI fall student enrollment, 1968-2015 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1970 1975 1980 1985 1990 1995 Source: Hawkinson and Garza (ND). ProfitWise News and Views Issue 4 | 2016 — 10 — 2000 2005 2010 2015 as chart 3 illustrates. Since 1980, median gross rent in Johnson County has increased by 35 percent after inflation, while median household income has increased by 29 percent after inflation. Among renter households, however, the income picture is more concerning; real income in 2014 dollars has actually declined by 13 percent over this period, from $30,186 in 1980 to $26,262 in 2014. Not surprisingly, rental households with annual income of less than $20,000 experienced the highest cost burden of all income groups, with almost 100 percent, spending 30 percent or more of income on rent. Yet even among rental households with more typical income of $20,000 to $35,000 (the county’s median renter income is $26,262), 82 percent experience cost burden. Rental cost burden is also elevated across multiple age groups. Almost 80 percent of very young households (age 15 to 24) are cost burdened. Many of these households are likely UI students and are unable to work full time or are out of the labor force all together, leaving their income low enough to necessitate spending over 30 percent of it on rent. But even among working age households, the rate of cost burden is over 40 percent, and for senior renter households age 65 and older, the rate of cost burden is an even higher 59 percent. constrained students compete with lower-income (non-student) households. According to Iowa City and affordable housing advocates, multiple students living in remodeled single family homes often pay in total more than a single family would pay for the entire structure. The demand inelasticity resulting from such a large student body and relatively little campus housing has contributed to a very low average vacancy rate of 2.1 percent among rental housing units in Johnson County from 2010 to 2014; across the state, the rental vacancy rate over the same period was about three times higher at 6.2 percent.9 Second, as reflected in the focus groups of students, disinvestment in student leased units has led to decay and problematic property management. The result is of these factors is high rent cost burdens, according to American Community Survey estimates.10 As of 2014, 57 percent of Johnson County renters experienced high housing cost burden, meaning they spend 30 percent or more of income on rent. Rental households facing high housing cost burden have less resources for cost of living expenses like food and transportation, and may find it more difficult to save for future investments such as a mortgage down payment or retirement fund. The problem has worsened over time as rental costs have outpaced renter household income, Chart 2. Ratio of UI dorm rooms to students, 1963-2017 .25 .20 Projections 2016 & 2017 .15 1965 1970 1975 1980 1985 1990 1995 Source: Hawkinson and Garza (ND). ProfitWise News and Views Issue 4 | 2016 — 11 — 2000 2005 2010 2015 of limited credit access, especially for lower-cost homes. For example, while roughly 16 percent of owner-occupied homes in the county are worth less than $100,000, according to American Community Survey estimates, only 12 percent of new purchase mortgages had an origination balance of under $100,000 in 2014, based on an analysis of Home Mortgage Disclosure Act records. In other words, a disproportionately small number of mortgages were made for purchasing low-cost homes, which could be driven by weak buyer demand for these properties, as well as tightened credit standards. Chart 3. Johnson County rent and income comparisons, 1980-2014 $35,000 Annual median renter household income $30,000 $25,000 $20,000 $15,000 Profiles of university anchor participants $10,000 Annual median gross rent $5,000 0 1980 1990 2000 2010 2014 Source: American Community Survey data and census data. Anchor institutions are organizations that cannot easily move to another location. They are ‘anchored’ to the community. Generally nonprofit organizations, they include museums, hospitals, libraries, churches, and universities. Due in part to the decline in manufacturing employment, anchor institutions are sometimes the largest employer in a community or region. Moreover, notwithstanding significant demand, there has been limited growth in the rental housing stock in Johnson County after the 2007 recession. Despite low vacancy rates, growth in multifamily housing, which accounts for 61 percent of Johnson County’s rental housing stock,11 has only recently begun to recover from the Great Recession. From 2007 through 2010, permits were issued for the construction of fewer than 200 units of multifamily housing in each year, compared to over 500 units per year from 2000 through 2003, according to the US Census Building Permits Survey reports. More recent data indicate an increased rate of construction; permits issued from 2011 to 2014 allowed for the construction of an average of 358 multifamily units per year. In 2015, permits were issued for 675 multifamily units. Expanding the supply of housing may help bring vacancy rates up and prevent gains in rents from significantly outpacing income. Some anchor institutions do a better job of community engagement and partnership than others. Increasingly, they are vested to their community and invested in their development and growth. Examples include purchasing services and goods from local small businesses, training and hiring local residents, providing technical assistance and low interest rate loans to nonprofit organizations, and investing in affordable housing loan funds or community development financial institutions (CDFIs). Though Johnson County’s homeownership rate is low relative to Iowa as a whole, homeownership is an important part of the county’s affordability challenges. Renters facing high housing cost burden may struggle to save for a down payment and to build up a strong credit score. In addition, Johnson County exhibits some signs • Craig Taylor, the director of the Community Planning & Economic Development (CPED) Department at the city of Minneapolis, and the former executive director of the Office for Business & Community Economic Development and the Business and Technology Center at the University of Minnesota The meeting organized by the Place-Based Inclusion Working Group with administrators at UI and led by CDPS staff focused on university-community partnerships in urban communities. Three representatives from universities participated in the meeting: • Lucy Kerman, vice provost for University and Community Partnerships at Drexel University ProfitWise News and Views Issue 4 | 2016 — 12 — • David C. Perry, professor of urban planning and policy in the College of Urban Planning and Public Affairs at the University of Illinois at Chicago Kerman and Taylor presented information on their experiences with anchor activities. Perry presented his research on university partnerships across the country. Drexel University Drexel University (DU) is located in West Philadelphia, a community with a population of 243,459 in 2014, which decreased by over 5 percent from 2000. The community is majority white with 15 percent Asian, 20 percent black, and 3 percent Latino residents. Poverty rates in the community are very high, ranging from 24 percent to 53 percent in the community’s zip codes.12 DU is a private university founded in 1891. The school has 26,000 students, 2,168 faculty, over 200 degree programs, and 15 colleges and schools. As one of Philadelphia’s top 10 private employers, DU has significant economic impacts on the community.13 Kerman began her talk by describing how all universities are ‘agents of gentrification’ due to the number of people they attract to their communities, including students, university staff, and faculty. These groups raise demand for housing and offer a ready market for retail stores and restaurants. Kerman further characterized universities as placed-based institutions that have made a long-term investment in a community – moving large academic institutions is usually beyond practical consideration – and therefore the university’s future hinges in part on the success of the surrounding community. Kerman also talked about the benefits of anchor partnerships for local communities. Universities have tremendous academic and professional expertise, student energy, and local economic (development) potential. Kerman stated that DU administrators are well aware of the pressure that its student body has on the local real estate market. Because the university is predominantly a commuter institution, it has little experience in developing dormitories. The result has been a proliferation of apartments developed by speculators near the campus, as well as quasi-legal or illegal rooming house arrangements. As an alternative, in 2012, DU leased a portion of its property to American Campus Communities, a developer and manager of dormitories, to create a mixed use project. The result is an increase of 2,000 student beds.14 This partnership allowed for increased housing for DU students without a financial commitment from the university. The upshot is that DU can now house all freshmen and sophomores, and requires them to live on campus. DU is considering other ways to preserve and develop affordable housing. Kerman is working with two community development corporations to promote efforts to preserve homeownership and rental housing for lower-income households near the campus. Further, she works with a local intermediary, the Philadelphia office of the Local Initiatives Support Corporation (LISC Philadelphia), which advocated a designation of the community as a Federal Promise Zone. The Federal Promise Zone Program, which does not provide direct funding, will make West Philadelphia more competitive for an array of grant opportunities from federal agencies, including the U.S. Department of Housing and Urban Development, U.S. Department of Agriculture, U.S. Department of Justice, and U.S. Department of Education. The goals of the Promise Zone are to create jobs, improve educational opportunities, and reduce crime. Further, the city has collected about $575 million in financial commitments projects in the Zone. Kerman’s view is that universities can partner with neighborhood groups who address different areas of need, depending on the challenges of the community. Much of this work is accomplished at DU’s Lindy Center for Civic Engagement and the Dornsife Center for Neighborhood Partnerships, both overseen by Kerman’s office. The Lindy Center coordinates community service opportunities for students and provides mathematics, writing, and literacy enhancement programs for neighborhood youth. It also provides volunteers opportunities in community projects. The Dornsife Center for Neighborhood Partnerships provides resources and information for community residents, including adult education and workforce development, health and wellness services, and tutoring and homework support for youth. The Center is also a hub for nonprofit agencies that provide services to local individuals and families. DU strives to hire local residents and support local businesses. Over 10 percent of DU staff are local residents. Many of them were hired through Philadelphia job training programs. DU has also established Economic Opportunity Plans that maximize contracts with local businesses. This includes a construction partnership as well as economic inclusion language in all requests for ProfitWise News and Views Issue 4 | 2016 — 13 — proposals. Last, Kerman’s office works to sustain local small businesses by building a bloc of local vendors that provide services and products to the university community. Much of the leadership for community engagement originates with the president of DU, Dr. John A. Fry. In his convocation address in 2010, Fry stated that he wants the DU to become the most civically engaged university in the country. In addition, the provost hired by Fry is committed to developing community engagement and foster a culture of local engagement throughout the administrative and academic departments of the university. Kerman identified several benefits to DU of community engagement. It helps to substantiate the school’s nonprofit status and meets the expectations of the city government by, in short, providing community development services in lieu of paying taxes. Community engagement has also created a safer environment for students and staff. Last, these strategies are also supported by alumni, who want the school to be relevant and progressive. University of Minnesota The University of Minnesota (UM), the state’s largest university, has its main campus in Minneapolis. This campus, located in the University Community neighborhood, has almost 50,000 students and nearly 20,000 employees at the Twin Cities campuses in Minneapolis and St. Paul. The University Community had a population of 39,400 in 2014, an increase of 18 percent from 2010. The community is 65 percent white, 15 percent black, 13 percent Asian, and 3 percent Latino. The University Community reflects the demographics of UM. Almost 80 percent of the housing is renter occupied, nearly 20 percent of the residents are foreign-born, and over half of the population are between ages 18 and 24. The University Community is very disadvantaged – approximately half of the households have incomes below the poverty line and only 60 percent of adults between 18 and 64 are employed. Further, the median income is about $30,000, compared to a median income of nearly $55,000 in the city of Minneapolis.15 Most of the anchor activities at UM occur through the Office for Business and Community Economic Development (BCED), which was formed in 1999 to support the economic growth of local communities. BCED, which is a part of the University’s outreach mission, provides technical assistance to small businesses, computer classes for community residents, financial and organizational capacity conferences for nonprofit organizations, and a supplier diversity program. In addition, BCED oversees student internships in community development organizations. Craig Taylor was the executive director of BCED from 2002 to 2014. He described how UM created economic and community development strategies through collaborations with nonprofit, corporate, and public sector partners that focus on enhancing the quality of life of underserved communities. This activity was catalyzed at a community meeting where residents and owners of local firms criticized UM for turning its back on the community. In direct response, BCED formed the Business and Technology Center (BTC), which provides technical services for small businesses. BTC has evolved into an information clearinghouse, trainer and locus for networking, and a resource for innovation, technology, and research. The Community Health Initiative (CHI), a project of BCED, provides supervised services by students at UM Schools of Medicine, Public Health, and Social Work programs to participants of community-based organizations in the interest of improving public health, social services, or medical technology. CHI also administers community internships and student consultations for public and community health agencies, and provides funding for public health challenges. Another program begun by BCED is the Robert J. Jones Urban Research and Outreach-Engagement Center (UROC), which partners with urban communities in the region. Examples of its projects include the African American Leadership Forum, which was formed to reduce disparities in black communities; the Hmong Mothers and Daughters Club that develops leaders and serves as a showcase for cultural food and dance; and the Expanded Food and Nutrition Education Program, which delivers health and nutrition information to low-income families. UROC has made $10 million in investments since its founding in 2006. Case studies of university partnerships Perry maintains that universities have significant impacts on local communities due to their economic influence and ability to attract tens of thousands of students, staff, and visitors. He asserts that no one organization or institution can revitalize a community. It is essential to reduce risks created by the high costs of land and the construction ProfitWise News and Views Issue 4 | 2016 — 14 — and challenges of housing and commercial projects. Each university has a unique ability to influence neighborhoods depending on their size, the local environment, and leadership at the institution. Perry’s research on university partnerships has led to these classifications: Universities as anchor collaborators: These universities engage in partnerships with other urban partners, including local government and private firms to develop mixed use projects. Two examples occurred in downtown Chicago, which faced severe disinvestment in the 1990s and early 2000s. One, DePaul University, purchased a disused building, moved its offices to the upper floors, and allowed for a book store and other retailers on the first floor. Second, the University Center of Chicago is a student housing complex that serves as a home to 6,000 students from three universities and has restaurants and other retail uses of its first floor. These developments are creating a 24/7 atmosphere in downtown Chicago. University as a neighbor: These institutions work with other partners to rehabilitate the community as well as the campus. They include Morehouse College (MC) in Atlanta. Located in a deteriorated city community, MC participated with a neighborhood community development corporation (CDC) to develop new affordable housing. It also participated in a land swap that provided property for a mixed use university/community development. Another example is Ohio State University in Columbus, which redeveloped over 1,300 distressed housing units. Many of these units are subsidized by the U.S. Department of Housing and Urban Development (HUD), thus offering affordable housing for lowerincome households. Universities as community-based institutions: These schools provide housing, public safety, and education services for their local community. Due to lack of affordable housing for university staff, Case Western Reserve in Cleveland connects staff to community organizations and city home buying programs to enable them to purchase local homes. The University of California institutions provide loans with flexible underwriting and a salary differential housing allowance for staff to purchase homes near campuses. Perry also noted the higher level of engagement of universities that have community-based police forces, and education for early childhood classes to high school for local residents. Perry concluded that committed leadership at the university is essential for these partnerships. He posits that in order for this work to be taken seriously by employees, a commitment of the university administrators is crucial. This means that the university must recognize that there is an enlightened self-interest in improving the community surrounding the institution, such as enhancing public safety and providing affordable decent housing for students and staff; reassuring parents their children are living in well managed housing, and developing community-based learning and research opportunities for university faculty and students. Conclusion The members of the Place-Based Inclusion Working Group hope to work with university administrators to develop a strategy to improve opportunities for affordable housing in Johnson County. They have several arguments in their favor. Providing additional dorms for undergraduate and graduate students can improve the ‘brand’ of IU. Dorms are viewed by students, and importantly, by their parents, as safer than off-campus housing. Dorms are monitored by resident assistants and many campuses have security phones and security staff. Living in dormitories is often more affordable, and eliminates worries such as collecting rent from roommates, and dealing with landlords. Dorms are also convenient – they provide food services, are close to classrooms, and include services such as cleaning and trash removal. Dorm life can lead to better academic performance, and provide a network of friends and acquaintances that could not otherwise occur. Relations with alumnae may also improve due to their interest in public perception of the university as a thought leader. In addition, community partnerships and relations with private developers are a way to reduce the risk and cost of dorm development, as exemplified by Drexel and other universities. However, there are additional options to developing dormitories. UI may choose to also enter the affordable housing field by providing incentives to staff, donating properties, or developing relationships with agencies like HUD that can provide housing subsidies. Last, there are many alternatives for UI in the economic development field. It is a local powerhouse, and its contracts with local businesses and unemployed can improve the lives of countless lower-income households. ProfitWise News and Views Issue 4 | 2016 — 15 — Notes Biographies 1. The Seventh District comprises Iowa, roughly the northern two-thirds of Illinois and Indiana and southern two thirds of Wisconsin, and the lower peninsula of Michigan. 2. University of Iowa, 2016, About the University, retrieved October 14 from https:// uiowa.edu/homepage/about-university. Marva Williams is the community development and Iowa state director in the Community Development and Policy Studies Division of the Federal Reserve Bank of Chicago. 3. Hawkinson, Eric, and Kevin Garza (ND), Housing and Equity in Iowa City: Investigating Trends of Housing Inequality in the Iowa City Metropolitan Area, Iowa City: The University of Iowa School of Urban and Regional Planning, available at https:// www.urban.uiowa.edu/system/files/Iowa_City_Housing_Final%20Report.pdf. Taz George is a research analyst in the Community Development and Policy Studies Division of the Federal Reserve Bank of Chicago. 4. US Census Bureau American Community Survey, 2015; Demographic and Housing Estimates; Washington, DC: American Community Survey. 5. University of Iowa, 2016, Employment, retrieved October 14 from https://uiowa.edu/ homepage/about-university/employment. 6. University of Iowa Hospitals & Clinics (ND), 2016, Basic Facts, retrieved October 14 from https://uihc.org/basic-facts. 7. Hawkinson, Eric, and Kevin Garza (ND), Housing and Equity in Iowa City: Investigating Trends of Housing Inequality in the Iowa City Metropolitan Area, Iowa City: The University of Iowa School of Urban and Regional Planning, available at https:// www.urban.uiowa.edu/system/files/Iowa_City_Housing_Final%20Report.pdf. 8. Students of Communications, 2016, Discussion Report: Student Off-Campus Housing Concerns, Iowa City: Iowa Program for Public Life. 9. US Census Bureau American Community Survey, 2015; Demographic and Housing Estimates; Washington, DC: American Community Survey. 10. Ibid. 11. Ibid. 12. Ibid. 13. College Factual (ND), 2016, Drexel University, retrieved October 13 from http:// www.collegefactual.com/colleges/drexel-university/academic-life/facultycomposition/#; Drexel University (ND), 2016, Drexel University at a Glance, retrieved October 13 from http://drexel.edu/about/glance. 14. Kerman, Lucy, 2016, interview with vice provost, Drexel University, by Marva Williams, August 5. 15. Minnesota Compass, 2016, University Community, retrieved October 17 from http:// www.mncompass.org/profiles/communities/minneapolis/university. ProfitWise News and Views Issue 4 | 2016 — 16 —
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