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URBAN AND REGIONAL POLICY AND ITS EFFECTS
Building Resilient Regions
BROOKINGS INSTITUTION PRESS
Copyright © 2012 THE BROOKINGS INSTITUTION
All right reserved.
ISBN: 978-0-8157-2285-4
Chapter One
Introduction MARGARET WEIR, NANCY PINDUS, HOWARD WIAL, AND HAROLD WOLMAN
Urban and regional policy debates are often long on rhetoric but short on evidence about policy impacts. To redress that imbalance, the Brookings Institution, the George Washington University Institute of Public Policy and the Trachtenberg School of Public Policy and Public Administration, and the Urban Institute held the fourth in a series of annual conferences entitled "Urban and Regional Policy and Its Effects" at the George Washington University in Washington, D.C., on May 20-21, 2010. They were joined by the Building Resilient Regions Network, an interdisciplinary research network sponsored by the John D. and Catherine T. MacArthur Foundation and housed at the University of California-Berkeley. The conference, whose participants included members of the network as well as practitioners from the federal government and nonprofit organizations concerned with urban policy, examined the question of how to build resilient regions. The conference sought to engage authors and discussants in a cross-disciplinary dialogue focused on the central theme of regional resilience. The chapters in this volume are revised versions of those commissioned papers. Our examination of regional resilience includes one conceptual chapter devoted to defining resilience and five chapters that address resilience with respect to a particular policy challenge that many metropolitan areas and local communities face. Each chapter, however, uses a different definition of resilience. The chapters cover the following challenges:
—Defining regional resilience, addressed by "In Search of Regional Resilience," by Kathryn Foster.
—Home mortgage foreclosures, addressed by "Resilience in the Face of Foreclosures: How National Actors Shape Local Responses," by Todd Swanstrom.
—Immigration, addressed by "Struggling over Strangers or Receiving Them with Resilience: The Metropolitics of Immigrant Integration," by Manuel Pastor and John Mollenkopf.
—Public transportation, addressed by "Bringing Equity to Transit-Oriented Development: Stations, Systems, and Regional Resilience," by Rolf Pendall, Juliet Gainsborough, Kate Lowe, and Mai Nguyen.
—Regional economic development, addressed by "Economic Shocks and Regional Economic Resilience," by Edward Hill, Travis St. Clair, Howard Wial, Harold Wolman, Patricia Atkins, Pamela Blumenthal, Sarah Ficenec, and Alec Friedhoff.
—Poverty, addressed by "Building a Resilient Social Safety Net," by Sarah Reckhow and Margaret Weir.
The goals of this volume are to introduce scholars, policymakers, and practitioners to the concept of regional resilience and to inform them about the state of knowledge on the effectiveness of regional characteristics and public policies in promoting or impeding the resilience of metropolitan areas. Authors were asked to explain the challenge that their chosen policy area poses for regions, define regional resilience with respect to that challenge, present the findings of their own research (qualitative and/or quantitative) on the nature of the challenge for metropolitan areas, and draw policy implications from their research.
Summary of Chapters
Kathryn Foster's chapter, "In Search of Regional Resilience," serves as a useful introduction and background for the other chapters in this volume. Foster begins by noting the range of definitions of resilience that have been used by different disciplines and observes that there is a basic conceptual divide between resilience as an outcome (is there a recovery from some stress?) and resilience as a capacity (does a person or place have the conditions and attributes that make it more likely to recover from stress?). In setting forth her definition of regional resilience, she incorporates both concepts, defining regional resilience as "the ability of a region to anticipate, prepare for, respond to, and recover from a disturbance." Elaborating, she notes that a region has a pre-stress capacity for resilience and that when it is confronted by a stress, it responds with a "resilience performance." The actual relationship between pre-stress capacity and resilience performance is an empirical question: does pre-stress capacity contribute to resilience performance?
Foster then turns to a conceptual elaboration of each of the three critical terms of the relationship. Capacity relates to a range of resources, characteristics, and attributes that regions possess and are at least hypothetically related to their ability to respond to stress. Stress consists of a negative disturbance and can be either acute or chronic. Stresses may vary in terms of both their duration and magnitude. Regional resilience refers to the actual performance of the region in response to stress: to what extent does the region recover from stress? Resilience can be either absolute (does the region regain its prior state?) or relative to that of other regions. Measuring resilience performance requires specifying exactly what to measure and over what time period, methodological challenges that, Foster notes, hamper comparative resilience assessment.
Foster's primary concern is to develop a "regional resilience index" that can reveal and compare regional resilience capacity and performance for U.S. metropolitan areas. For the regional capacity component, she identifies three subdimensions of the index: regional economic capacity, sociodemographic capacity, and community connection capacity. Regional economic capacity is measured by three variables: regional economic diversity, income, and income distribution. Sociodemographic capacity is measured by education, percentage of population of working age, percentage of population with disabilities, and poverty rate. Community connection capacity is measured by familiarity (percentage of population born in the state), linguistic connection (percentage not linguistically isolated), and age of housing in the region. Foster standardizes these ten variables and uses them to create a regional capacity index for each of the 360 U.S. metropolitan areas.
For the regional performance component, which proves more problematic, Foster examines the responses of gross metropolitan product and regional employment to the economic downturn at the beginning of the twenty-first century. For each of the two measures she develops a measure of stress (for example, increase in unemployment rate during the period) and a measure of recovery (for example, proportion of increase in unemployment rate that was recovered by the end of the period). She calculates a regional performance score for each of the two variables by dividing the measure of recovery by the measure of stress. Finally, she standardizes each of the two measures to create a regional performance index that incorporates both gross metropolitan product and regional employment. The resulting regional capacity and performance indexes enable researchers to relate capacity to performance and can help policymakers better understand their region's capacity for resilience, both in absolute terms and relative to other regions.
As the conference was being held, the nation was in the midst of a weak recovery from its longest recession since World War II. However, mortgage foreclosures, the ongoing result of the collapse of a housing bubble that helped precipitate that recession, continued at record-high levels. In "Resilience in the Face of Foreclosures: How National Actors Shape Local Responses," Todd Swanstrom examines the factors that shape the ability of local and regional actors to prevent foreclosures and mitigate their harmful effects on families, neighborhoods, and local governments. Swanstrom examines the constraints that local housing market conditions, federal and state policies, (un)availability of needed information, and lender incentives place on local and regional responses to the foreclosure crisis. His work is based on institutional analysis and interviews conducted in the St. Louis, Cleveland, Chicago, Atlanta, Riverside, and San Francisco metropolitan areas.
Swanstrom explains the spillover costs that foreclosures create for people other than the foreclosed homeowner. Property values decline and crime increases in the neighborhood where the foreclosure occurs. Declining property values place fiscal stress on local governments, which often curtail public services in response to the decline in their tax base. Involuntary displacement from their home harms children and other family members. These costs are especially severe in weak-market metropolitan areas. Because mortgage lenders do not take these costs into account when making foreclosure decisions, they carry out an excessive number of foreclosures.
In addition to noting general reasons for foreclosures, Swanstrom highlights the role that predatory lending (the making of overly risky loans) played in creating the foreclosure crisis that helped precipitate the Great Recession. He argues that predatory lending, rather than the collapse of the housing bubble, generally weak economic conditions, or federal policies to promote homeownership, was the root cause of the crisis. Federal policies since 1980, including those abolishing state usury laws and allowing lenders to opt for federal rather than more stringent state regulation, helped spur the growth of predatory lending, as did the absence of effective federal regulation of the mortgage market. Federal regulators preempted state attempts to restrict predatory lending and prevent foreclosures. State governments likewise preempted local attempts to do so.
The ideal market response to the problem of too many foreclosures is for lenders to modify mortgages to reduce the amount of principal that defaulting borrowers owe. Swanstrom explains the features of the contemporary mortgage market that give mortgage lenders and servicers an incentive to foreclose rather than to modify loans, even when modification would seem to be in the lender's interest. Chief among them are the pooling and securitization of mortgages, which increase the number of effective "creditors" for each loan and remove local lenders (who presumably understand local market conditions and are in a position to internalize some of the spillover costs of foreclosure) from the foreclosure decision.
On the borrower side of the market, foreclosure counseling can help borrowers avoid foreclosure, find new housing and needed social services, and facilitate short sales as an alternative to foreclosure. However, counseling prevents very few foreclosures, largely because lenders and loan servicers are reluctant to modify mortgages. Likewise, the federal Home Affordable Modification Program, begun in 2009, has helped avert very few foreclosures because it offers relatively small payments to lenders to induce them to modify mortgages and because lender participation in the program is voluntary.
Swanstrom then turns from the prevention of individual foreclosures to the stabilization of neighborhoods in the wake of foreclosures. The goal of neighborhood stabilization policies is to reduce the supply of and/or increase the demand for housing in neighborhoods where housing is underpriced as a result of a large number of foreclosures. Swanstrom notes that the need for such policies varies by metropolitan area and neighborhood. In weak-market metropolitan areas and especially in their typically depressed central city neighborhoods, the negative spillovers and consequent need for neighborhood stabilization policies are especially great. Even in strong-market metropolitan areas, similarly large neighborhood spillovers and needs for stabilization exist in overbuilt outer suburban neighborhoods. In strong-market neighborhoods within strong-market metropolitan areas, however, there is less need for neighborhood stabilization because spillover effects are smaller. Therefore, stabilization policies should be tailored to the market conditions of metropolitan areas and neighborhoods.
Stabilization policies, as well as policies to prevent foreclosures or mitigate their other spillover costs, must be carefully targeted to the right locations at the right times. Swanstrom argues that accurate, real-time, publicly available data on all stages of the lending process prior to, including, and following foreclosure are needed if these policies are to be properly targeted. However, such data are rarely available; instead, available data often are in the hands of private firms, not sensitive to variation in market conditions among neighborhoods, or outdated. In addition to appropriate data, local and regional organizations with the capacity to work together to analyze and act on the data are needed to help stabilize neighborhoods. Such organizations, which include local governments, community development corporations, and real estate brokerages, often lack the needed analytical capacity and rarely collaborate to help stabilize neighborhoods. Swanstrom concludes by recommending that the federal government mandate public disclosure of the necessary data, provide more funding for regional data gathering and analysis, and step up its efforts to promote collaboration among local and regional organizations.
Adding to the challenge of understanding and measuring resilience are changes that may be positive or negative, depending on a region's prior circumstances and response. In "Struggling over Strangers or Receiving Them with Resilience: The Metropolitics of Immigrant Integration," Manuel Pastor and John Mollenkopf conceive of immigration as a "shock" to urban and metropolitan areas that, while providing some immediate and obvious benefits, also may cause significant stress. The stresses may be immediate in terms of public service needs and intergroup tensions caused by competition in labor and housing markets with native-born minority groups. They may also be longer term with respect to the imperative of promoting intergenerational mobility in labor and housing markets.
The authors ask how regions respond to immigration-related shocks. Do regional leaders attempt to generate political support for policies that mitigate the shocks and attempt to incorporate immigrants into the area's social and political systems? Or do they rally public opposition to immigration and focus on enforcement-related measures? The chapter is concerned with factors that lead to positive (resilient) responses to immigration as opposed to negative (rigid) responses.
Pastor and Mollenkopf begin by reviewing national trends and legislation related to immigration. They observe that changes in federal legislation have resulted in a decline in immigration from Europe and an increase in immigration from Latin America and Asia. As a result, the ethnic character of immigrants in the United States has changed from nearly three-quarters non-Hispanic white in 1970 to 80 percent non-white in 2007. The location of new immigrants has also changed to include destinations in states such as Georgia, North Carolina, Arizona, and Nevada along with more traditional destinations in California, Texas, and Illinois. In addition, intra-metropolitan area destinations also have shifted, with immigrants increasingly settling in suburbs rather than in central cities.
The authors conduct case studies to examine the experience of six metropolitan areas: Los Angeles, Chicago, New York, San Jose, Phoenix, and Charlotte. They conclude that some of these areas have exhibited a resilient response while others have not. However, they also note that in nearly all cases the responses varied within the region. Central cities in general provided a more welcoming response than nearby suburbs, partly because cities have more established social service infrastructure, are generally more diverse, and have a larger first-and second-generation immigrant voting base, which can change the calculus for political candidates.
Pastor and Mollenkopf conclude from their case studies that a region's history matters: regions with a long history of immigration (for example, New York and Chicago) exhibit more resilient responses, while resilience is less frequently observed when the shock is newer and larger (Phoenix). They also observe that resilient responses are more likely when immigration is from diverse ethnic groups (as in New York and Los Angeles) or in regions where there are large numbers of "non-racialized" immigrants (Eastern Europeans in Chicago) or higher-skilled immigrants (Asians in San Jose). More rigid responses occur when immigration is "racialized" and seen to be from a single ethnic group (as with Phoenix and migrants from Mexico). Indeed, they observe that race matters in other ways as well. Chicago has traditionally incorporated immigrant groups into the political and social system through its machine politics, and Mexican immigrants have followed in that tradition. Charlotte's regional business elite's desire to present the region as the racially tolerant center of the "new South" has conditioned its response to recent Hispanic immigration. The authors also note that resilient responses are more difficult when political candidates find it advantageous to exploit resentments about the fiscal and social costs associated with immigration. That approach differed across regions but could be seen in at least some jurisdictions in each of the case study regions.
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Excerpted from URBAN AND REGIONAL POLICY AND ITS EFFECTS Copyright © 2012 by THE BROOKINGS INSTITUTION. Excerpted by permission of BROOKINGS INSTITUTION PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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