Beginning in 2015, CDPS undertook an ambitious information gathering process as a first step in developing a five-year strategic plan. When the Fed’s Board of Governors first created the community development function in 1981 shortly after passage of the Community Reinvestment Act (CRA), its core mission was to help facilitate the flow of credit and financial services to places and people out of the economic mainstream. The mission has become more nuanced over time, but this fundamental aspect remains constant. Responding to the needs of a geographically and demographically diverse district is a challenge for the community development function at every Reserve Bank. This strategic plan ensures that CDPS’ efforts are aligned with and informed by direct feedback from our constituents and stakeholders.
Nine focus groups were conducted in cities around the Seventh District; also undertaken were numerous one-on-one interviews with key stakeholders, including senior Chicago Fed officials, nonprofit directors, CRA officers of large and small banking institutions, policy/advocacy organizations, and others. Further, CDPS undertook an extensive review of current conditions as documented in various policy and research publications. This process laid the groundwork for the plan, which incorporates both an updated statement of core functions, strategic priorities, and key findings from our information gathering process. This information is summarized in the strategic plan summary document linked below.
Key contacts expressed a lack of familiarity with our roles and functions and a desire to hear more from us. To this end, we began developing and implementing a communications strategy that will leverage digital tools such as converting ProfitWise News and Views to an e-publication and coding our past articles using Journal of Economic Literature – JEL– codes to make this content more searchable and accessible to researchers, practitioners, and policymakers, among others. We are also working to make our data tools more relevant and available, especially to smaller, remote places. Currently under development is the Peer Cities Identification Tool (PCIT), which derives from our Industrial Cities Initiative and much inquiry from more remote cities in the district as to how their economic fortunes compare to places with similar manufacturing legacies. The PCIT, previewed in the current edition of ProfitWise, allows users to compare a subject city across various parameters such as housing affordability and income inequality.
We learned more about the serious shortage of resources to bring about comprehensive community development, that is, efforts to coordinate strategies to link job creation, education, housing, and access to public transportation. As always, quality affordable rental housing is in short supply, but the situation is much worse post foreclosure crisis, as households with blemished credit are now essentially shut out of mortgage markets; the ratio of available units to households earning below 30 percent of area median income as defined by HUD is as low as 0.26 (the ratio in Wisconsin) in Seventh District states according to a recent report by the National Low Income Housing Coalition. Idiosyncratic and place-specific shortages deriving from various factors also present challenges, we heard. The current ProfitWise explores the case of Iowa City, where a very large student population competes with local residents for housing. This will be an area of renewed focus for CDPS for the foreseeable future with various CDPS partners, in addition to supporting efforts to promote affordable and responsible mortgage credit lending.
The small business lending landscape has also changed. While community banks historically have had an outsized share of this credit market, regulatory and supervisory changes and a generally cautious post-recession lending climate have constrained banks, while non-bank lenders have flourished, offering products with different underwriting standards, but often higher costs. CDPS is working with industry leaders, and the regulatory and advocacy communities to foster better understanding of this critically important emerging trend, which resonates across our district according to stakeholders.
Many longstanding community development issues, in both urban and rural areas, were intensified by the Great Recession, and have been exacerbated in the aftermath by reduced tax revenue resulting in part from the staggering foreclosure and financial crisis. Contacts reminded us of these conditions and the need to continue to explore and highlight strategies and solutions. Among the issues we have explored in both formal research and descriptive articles are the impacts of lack of employment opportunity, unsafe neighborhoods, and low educational attainment on physical health of large populations. We have explored the ramifications of bank branch closings and consolidations in our district, and will issue further and more expansive research on community banks serving LMI populations, in particular minority-owned institutions, in 2017.
The Strategic Plan overview captures the essence of our strategic direction.