An Unprecedented Opportunity for COVID Relief and Equitable Neighborhood Transformation

While the US is gaining ground in its fight against COVID-19, many communities are facing growing threats to neighborhood stability from its economic fallout. Unprecedented help is on the horizon for these communities, which could provide a momentous opportunity to spur equitable revitalization.  

Where we are today 

While the national unemployment rate has been dropping, [1] it belies two deeply concerning trends for community stability – long-term unemployment and job loss. Today’s long-term unemployment rate is near its peak during the Great Recession, [2] with around a quarter of all today’s unemployed having been without a job for over a year. [3] 

The US is still down 11 million jobs; and it could take more than a year to get back to ‘normal.’ [4] Though there is no returning to ‘normal’ for many. Those that have lost jobs – disproportionately women, people of color, and low-income individuals [5] – will continue to struggle to find work as many of those jobs may be permanently lost. [6] This paints a grim picture for family income stability.  

What this means for community stability and problem properties 

Sustained, wide-spread loss in business and family income triggers declines in property conditions, increases in vacancy, and subsequent erosion of neighborhood market stability. We saw this during the Great Recession. Unemployment peaked in 2009 and residential and business vacancy peaked a few years later. [7]

The nature of the economic declines we are experiencing now versus during the Great Recession are fundamentally different and today’s relatively rapid infusion of household and business support may help mitigate some community destabilization. [8] 

Despite this, we are starting to see early indications that property deterioration and vacancy may be on the horizon for many communities.  

Today, nearly 30% of households report that they are having difficulty paying for usual household expenses. [9]

Up to 9.4 million renters are behind on rent owing a combined $53 billion and local communities are struggling to get federal rental relief out to affected households. [10] With significantly reduced income from rental payments, landlords are not investing in property maintenance. One recent study found that landlords were deferring maintenance on 30% of their properties, with landlords more frequently deferring maintenance in lower-income neighborhoods. [11]

While moratoria and additional repayment options have forestalled a wave of mortgage foreclosures, [12] there will be a future increase in foreclosures, especially for low-income owners, as moratoria and economic supports expire. 

As household and business income continue to wane, communities can also anticipate seeing an increase in tax foreclosures, particularly for unmortgaged owners, who tend to be lower income. [13] 

While all communities may experience some post-COVID property deterioration, foreclosure, and vacancy, there is a graver concern for communities with larger low-income workforces, populations of color, and those that rely heavily on COVID-impacted economic sectors. [14] These communities, many of which already struggled with market instability, face the potential of widespread, sustained economic impacts as income and municipal revenue decline, eroding neighborhood stability.  

The critical opportunity for communities 

Facing growing threats to neighborhood health and stability, local, county, and state governments were provided a momentous opportunity to change their community’s future through the American Rescue Plan Act (ARPA). 

Amongst a number of essential relief programs, like unemployment benefits and renter and homeowner assistance, ARPA allocates $360 billion in direct relief payments to state, tribal, territorial, city, and county governments. [15]

Not only is this the first time the federal government has provided direct aid to all 19,000 local governments, [16] this will likely be the largest single infusion of flexible funding many communities have ever received and are likely to receive for the foreseeable future. It represents a once-in-a-lifetime opportunity for cities and counties to make truly transformative investments, if ever there was a time for bold, strategic action, this is it.  

Yes, some of this funding will be needed to shore up government budgets, as continued revenue decline threatens to seriously erode governmental services in a way that will harm community stability. However, local, county and state government officials should give serious thought to bolder investments that could shift the trajectory of their community’s future.  

ARPA set forth a broad range of eligible uses for the funding including responding to the negative economic consequences of COVID-19, assistance to households, small businesses, and nonprofits, providing government services or offsetting revenue losses, and allows local or state governments to transfer funding to nonprofit organizations or other special-purpose units of state or local government to carry out eligible activities. [17]

What communities should be thinking about now 

Government officials must think about how to use resources, like ARPA, to interrupt the economic consequences of COVID – how resources could be used to truly catalyze lasting economic recovery for individuals and their community.  

Providing Relief 

First, communities must examine who is being most harmed by examining employment, economic, income, market indicators and where those people and properties are located. COVID’s impacts are disproportionally harming Black and Brown individuals, women, low-income households, the hospitality sector, and small businesses. [18]

Relief and recovery measures must be tailored to reach those people and places being most harmed by COVID. Specific tools and tactics will vary based on a community’s unique needs. [19] General considerations for relief aimed at stabilizing communities through property improvement and vacancy mitigation could include: 

• Preventing involuntary displacement through local and county property tax reduction or forgiveness for lower-income or affected commercial and residential property owners, and expanded tenant support services like access to legal counsel, landlord-tenant mediation services, and housing search or relocation services to those in need. 

• Building government capacity to support community stabilization activities such as developing robust data systems to identify community instability and gauge the impact of interventions, investing in code compliance services, strengthening property tax support systems, and bolstering entities that hold public properties like land banks.  

• Repairing and improving property conditions by providing grants or loans to residential and commercial property owners.

• Bolstering local construction capacity through skilled trades training and recruitment programs and small business incentives. 

• Lowering barriers to business entry or expansion through property tax incentives, forgivable or low-interest loans, or by leveraging public properties through site clearance and preparation and rent or property sales discounts.  

• Expanding quality affordable homeownership and commercial property leases through property tax incentives or exemptions, down payment assistance, financing with softer terms, rehabilitation incentives, and reuse of public properties.  

Propelling Regeneration 

While the tactics above will provide meaningful relief for many individuals, communities must push themselves to think beyond those tactics. With ambitious, strategic, and coordinated investments, communities could not just regain ground lost over the past year, but emerge from this period stronger, more resilient and more equitable. 

The opportunity for state, county, and local ARPA aid amounts to coalesce in a community and the complementary relief provided by other federal aid packages, means that large-scale, transformative investments are possible in a totally unprecedented way for many communities. [20]

Community leaders should identify catalytic projects that will spur neighborhood revitalization – weaving together place-based investments in jobs, housing, mobility, open space, and education – and leverage their community’s assets – its people, culture, location, natural amenities, and economic opportunity. [21]

Critically, leaders must identify how any investment will propel, rather than undermine, their broader equity, health, and climate resiliency goals. [22]

If your community has not started identifying COVID-19’s far-reaching economic and neighborhood impacts and actions it could take to catalyze lasting recovery, the time is now. Be proactive. Be strategic. Be bold.  

The Center for Community Progress continues to be a resource and partner to local governments seeking to create equitable communities where unsafe properties and systemic vacancy no longer exist. If we can help your community, please email us at [email protected] or visit https://communityprogress.org/resources/arpa/.

---

Citing:

[1] Unemployment peaked at 14.8% in April 2020 and has since fallen to 6% as of March 2021, see https://data.bls.gov/timeseries/LNS14000000?years_option=all_years. Though the actual unemployment rate is closer to 11% (which includes those have stopped looking for work and those that have part-time work but want full-time work), see https://www.pgpf.org/blog/2021/04/march-showed-positive-signs-for-the-labor-market-recovery.

[2] The percent of unemployed that have been unemployed for a long term (unemployment lasting 27 weeks or longer) peaked at 45.5% of those unemployed in April 2010. Long-term unemployment has been growing since April 2020, with current long-term unemployment at 43.4%. See https://www.bls.gov/webapps/legacy/cpsatab12.htm. 

[3] https://www.bls.gov/web/empsit/cpseea35.htm    

[4] The estimated job loss figure takes into account both the drop since COVID and the loss of projected job growth over the past year, see https://www.epi.org/blog/strong-job-growth-in-march-as-vaccine-distribution-expands-and-the-american-rescue-plan-ramps-up/. Sheiner and Milesi-Ferretti offer a more nuanced analysis of job recovery offering a jobs recovery estimate as soon as 10 months. https://www.brookings.edu/blog/up-front/2021/03/22/how-many-jobs-is-the-u-s-likely-to-add-this-year/    

[5] Black unemployment is the highest at 9.6%, compared to 7.9% for Latinx, 6% for Asian, and 5.4% for white individuals, see https://www.bls.gov/news.release/pdf/empsit.pdf and https://www.pgpf.org/blog/2021/04/march-showed-positive-signs-for-the-labor-market-recovery.  

Women are disproportionately represented in low wage jobs and in those industries which have been hit hardest by COVID impacts; and they shoulder more family caregiving responsibilities leading to job loss, see https://www.brookings.edu/essay/why-has-covid-19-been-especially-harmful-for-working-women/  and https://www.epi.org/press/jobs-report-shows-more-than-25-million-workers-are-directly-harmed-by-the-covid-labor-market-congress-must-pass-the-full-1-9-trillion-relief-package-immediately/.  

Job loss has been greatest for low-wage jobs (those paying less than $15/hour), with a loss of 11.7% change in employment as of February 2021, compared to only a 5.4% loss for middle-wage jobs, see https://www.pewresearch.org/fact-tank/2021/04/14/u-s-labor-market-inches-back-from-the-covid-19-shock-but-recovery-is-far-from-complete/#:~:text=Workers%20in%20low%2Dwage%20jobs,5.5%20million%20over%20the%20period. Also see https://www.brookings.edu/blog/up-front/2021/02/04/the-critical-role-of-workforce-training-in-the-labor-market-recovery/.  

[6] Changes in consumer and business demands and the way employees work will likely have lasting impacts for job recovery in the sectors most deeply impacted by COVID job loss, like the leisure and hospitality sector and low-wage jobs, see https://www.brookings.edu/blog/up-front/2021/03/22/how-many-jobs-is-the-u-s-likely-to-add-this-year/ and https://www.mckinsey.com/featured-insights/future-of-work/the-future-of-work-after-covid-19 and https://www.cnbc.com/2021/03/22/how-low-wage-work-could-get-even-worse-in-post-pandemic-future.html.  

Also the longer a person is out of a job, the harder it is to get one, see https://www.marketplace.org/2021/02/05/jobs-report-reveals-alarming-level-long-term-unemployment/ and   https://hbr.org/2021/03/a-crisis-of-long-term-unemployment-is-looming-in-the-u-s.  

[7] CCP analysis of data from BLS https://data.bls.gov/timeseries/LNS14000000?years_option=all_years  and USPS address vacancy (collected in Q4 of each year) https://www.huduser.gov/portal/datasets/usps.html.  

[8] Examples of household and business supports include Paycheck Protection Program (PPP) loans, three rounds of stimulus checks, rental and mortgage foreclosure moratoria, mortgage forbearance programs, and emergency rental relief.  

[9] See https://www.census.gov/data-tools/demo/hhp/#/?measures=EXR.  

[10] Since there is no reliable national dataset on rental arrears, estimates for arrears vary based on methodology.  For a comparison of rental arrears estimates, see https://www.urban.org/urban-wire/many-people-are-behind-rent-how-much-do-they-owe.  

Congress approved a combined $46.5 billion in emergency rental aid, however, local communities are facing significant challenges trying to get rental relief out before federal eviction moratoriums expire in June 2021, see https://www.nytimes.com/2021/04/25/us/politics/rental-assistance-pandemic.html.  

[11]  See https://www.jchs.harvard.edu/sites/default/files/research/files/harvard_jchs_small_landlord_survey_de_la_campa_2021_0.pdf  

[12] See https://www.urban.org/urban-wire/predicted-foreclosure-surge-likely-wont-happen-even-among-financially-vulnerable-borrowers  

[13] The median household income for owners with no mortgage is $55,300, compared to $93,900 for owners with a mortgage. 45% of owners with no mortgage have a household income under $50,000, compared to 21% of owners with a mortgage. CCP analysis of American Community Survey, 2019 5-year data, see https://data.census.gov/cedsci/table?q=mortgage&tid=ACSST5Y2019.S2506 and https://data.census.gov/cedsci/table?q=mortgage&tid=ACSST5Y2019.S2507.  

[14] See sources in supra notes 5, 6, and 7. 

[15] For a map of estimated allocations see https://www.communityprogress.net/covid-19-resource-center-pages-577.php. For a full-sized map, see https://arcg.is/z8Lzz0.  

[16] See https://www.nlc.org/post/2021/03/10/national-league-of-cities-applauds-house-for-advancing-american-rescue-plan-to-president-bidens-desk/  

[17] For full text, see https://www.congress.gov/bill/117th-congress/house-bill/1319/text#HC028912924A04512A1F80BFA0F1C1051. While Treasury will provide additional guidance on the use of state and local ARPA funding in the coming weeks, the eligible uses communities could examine will still likely remain quite broad, enabling state and local governments to tailor their use to meet their local needs. Forthcoming guidance should be posted at this location https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-fund. 

[18] See supra note 6 

[19] Some communities have already started to generate ideas for how they could use this opportunity to address their local needs.  

Leaders in Toledo, OH are looking at using $30M for property demolition, construction, and small business investment,  and $30M for green and healthy housing investments.  https://www.13abc.com/2021/03/22/toledo-outlines-how-it-will-spend-188-million-from-american-rescue-plan/ 

Albany, NY is looking to invest in code compliance and beautification projects.  https://www.timesunion.com/news/article/Sheehan-Panel-will-weigh-how-to-spend-85M-in-16021303.php 

Akron, OH is looking at housing rehab grant programs and entrepreneur support, and a vacant building registry.  https://www.beaconjournal.com/story/news/2021/04/15/akron-mayor-dan-horrigan-plans-spend-153-million-american-rescue-plan/7240803002/ 

Cincinnati, OH is looking at home improvement grants, park and open space improvements, property clean-ups, and affordable housing creation.  https://www.wvxu.org/post/first-look-how-cincinnati-could-spend-290-million-stimulus#stream/0  

[20] The December 2020 COVID relief bill, combined with ARPA’s other provisions outside of the local and state aid, provides substantial relief and support to address many community needs. For example, there is more than $46 billion for emergency rental assistance; $25 billion for restaurants; $15 billion for music venues, theaters, and museums; $123 billion for K-12 education and another $40 billion to childcare providers; about $10 billion for homeowners; and more. These funds can be used to address critical local needs, providing more opportunity to use the $360 billion in state and local aid to spur bolder, transformational investments. This is particularly true when you consider the amount of funding through state, county, and local support that could land in a community. To identify the local, county, and state-level resources in your area, see supra note 15.  

[21] For a detailed look at how struggling communities can spur revitalization and regeneration, see https://www.communityprogress.net/regenerating-america-s-legacy-cities-resources-201.php.

For an overview of ways to cultivate neighborhood market change, see https://shelterforce.org/wp-content/uploads/2008/05/ManagingNeighborhoodChange.pdf.
For a high-level overview of city investments, see https://www.brookings.edu/articles/transformative-investments-remaking-american-cities-for-a-new-century/.

[22] For an outline of government strategies to advance equitable development, see https://www.racialequityalliance.org/resources/equitable-development-tool-advance-racial-equity/ and see https://www.racialequityalliance.org/tools-resources/ for additional equity tools aimed at government officials.

For an outline of equitable principles in COVID recovery, see https://www.policylink.org/covid19-and-race/principles.

For an overview of health, housing, and equity policy, see https://www.policylink.org/sites/default/files/HCO_Web_Only.pdf.

For a high-level overview of inclusive community development, see https://www.philadelphiafed.org/community-development/inclusive-growth/investing-in-transformative-systems-change-a-call-for-racial-equity#section9[/showhide].