Place is all of the things that make somewhere have the same characteristics year after year. These maps illustrate some financial elements of place that constitute the local framework for wealth, poverty, and the segregation of the two.
Michael Stumpf B’13 used data from a 2006 affordable housing bond to map federal low-income housing subsidies. He found discouraging patterns in their dispersion across the city. Low-income housing tax credits provide developers with a subsidy for offering housing to people earning under 50 or 60 percent of a county’s average income. These different thresholds correspond to different fractions of the available housing units: a development where 20 percent of residents make less than half of the area median income would be eligible for tax credits for each of those units. These thresholds suggest an agenda of promoting mixed income levels among residents of the same place.
However, that’s not how the program plays out in Providence. Most developments getting credits are 100 percent low-income, and receive credits for every unit. Since low-income eligibility is based on the county average, there are individual neighborhoods where most residents are below the low-income line. That’s where the affordable housing ends up. Describing his findings, Stumpf wrote in an email, “Rhode Island’s Five Year Strategic Housing Plan has contributed to an increased concentration of affordable housing within poorer neighborhoods.” Subsidies, then, aren’t accomplishing something qualitatively different from the market, just making it more extreme.
Elmwood (shown in the southern detail) is one such neighborhood, and, sure enough, it is home to several developments receiving credits for all units. Yet housing in Elmwood is largely affordable even without the subsidy, since most of the people living there earn low incomes. Figuring out how to promote low-income housing outside of predominantly low-income areas remains a challenge.
The maps also show that the tax credits are more dispersed in poor neighborhoods than in wealthier ones. Using a “spatial clustering” metric, Stumpf quantified the points’ spread within each neighborhood and found a direct correlation between concentration and land value. The cause of the clustering, Stumpf writes, is that in wealthier neighborhoods “developers constructed large apartment complexes with a minimum number of affordable units in order to qualify for LIHTCs.”
What’s more, Stumpf explains, the credits “tended to be in neighborhoods with already low amounts of residential zoning.” That is, the housing credits provided affordable housing not only where land prices were already low but also where residential areas most abutted commercial and industrial uses.
Comparing traditional banks to alternative financial services like check-cashers and payday loans, Ian Trupin B’13 realized how little overlap there is between each banking type’s territories. “AFS [Alternative Financial Services] is a blanket term including money orders, check cashing, payday lending, tax-refund anticipation lending, pawnshop lending, and rent-to-own programs,” Trupin explained. Takes on AFS tend to fall in one of two camps: consumer advocates point out exorbitant fees without any path to financial stability, while others (including some economists) argue that AFS provide a valuable service for emergency situations.
The question of why people turn to AFS is not entirely speculative, though. A 2009 survey found that physical convenience was the number one reason that “underbanked” people—those who use AFS despite having bank accounts—turned to these businesses. This question of convenience led Trupin to analyze the ways that banks and AFS fit into the Providence landscape, mapping the institutions’ immediate surrounding areas before turning to the city’s street network. In the street map, each bit of road is shaded according to whether a bank or an AFS is the shortest driving distance; the broken-up lines, where an AFS is closest, cover most of the city.
According to Trupin, the maps show that “the areas of the city which are most conspicuously dominated by AFS are characterized by lower income and minority-majority neighborhoods.” But a comparison with Newport News, VA—where underbanking rates are nearly twice as high—showed that street convenience doesn’t explain differences in underbanking rates. In Newport News, 44 percent of streets are closer to banks than AFS, while the figure in Providence is only 37 percent.
The issue, then, goes deeper than geography. On its website, AFS industry leader Ace Cash Express gives some other reasons why their customers choose them: “For [many] Americans, the business model of the traditional bank does not work....The lack of a nearby branch, or multi-lingual tellers and limited hours of operation, further contribute to the disenfranchisement of these Americans. Some simply do not feel welcome or comfortable inside a bank.” For a real understanding of AFS, we should also examine how banks might be keeping people out.
In Roman Polanski’s 1974 film Chinatown, a cop recounts his days working in Chinatown. When trouble broke out, they would sit on their hands, unable to say for sure who were the heroes and who were the villains. The complicated questions of affordable housing and AFS risk leaving us similarly confused, complicity washing through the whole process. The better lesson might be that institutions aren’t good or bad based on their mission statements so much as through their role within larger systems.
Benson Tucker B’13 is lost in space.