2017 Symposium Industry Report: Pay for Success

inequality, due to stagnating wages and loss of industrial work from urban cit- ies, then later from non-urban areas in the United States, have stranded working class African Americans on an “economic island” devoid of opportunity and far removed from affluent, predominantly white suburbs. 60 In turn, black and white socioeconomic disparities are reinforced by residential segregation, with mea- sures such as unemployment, labor market performance, education, and family structure all attributed to housing segregation. 61 Some studies find that African Americans reside in neighborhoods of similar racial composition regardless of income, while others find that high-income African Americans are more likely to live in whiter neighborhoods. 62 For most of the twentieth century, widespread efforts have been made to deliberately segregate neighborhoods by race. With the tacit approval of the federal government, landlords, banks, and sellers actively prevented African Americans from entering white neighborhoods. When such efforts failed against pioneer black families, neighborhoods used violence and intimidation tactics to further discourage more integration. When even violence failed, white families moved en masse out of neighborhoods, leading to high levels of residential segre- gation. 63 Despite the dismantling of discriminatory policies and tactics through the Civil Rights movement and other efforts to promote racial equality, infor- mal discriminatory practices against African American families persist today. Match-pair audit studies that use black and white names have found evidence of discrimination by real estate agents and renters alike. 64 Through experimental studies, scholars find significant discriminatory behavior against minority renters and homebuyers, such as showing fewer units, responding less frequently to inquiries, and denying that available units are still on the market. Audit studies demonstrate that cities with high levels of discrim- ination are more segregated, thus demonstrating that discriminatory practices have notable ramifications on neighborhood diversity. However, the degree to which discrimination affects segregation is debated. Subsequent studies using different model specifications provide varying results, although housing dis- crimination never accounts for more than half of total residential segregation. 65 Affordable housing providers must work to actively combat residen- tial segregation and discrimination of African Americans and Latin Americans in neighborhoods and communities. Despite the Department of Housing and Urban Development’s commitment to “affirmatively further fair housing” there are few mechanisms in place to proactively fight racism. Ambiguity in rules gov- erning racial concentration for public housing programs like LIHTC and HOPE VI developments leads to litigation that has weakened interpretations of the rules. For example, the LIHTC program has been instrumental in financing construc- tion of thousands of affordable housing units in the United States. However, it contains specific contradictory incentives that prohibit low-income housing construction in racially concentrated neighborhoods, yet makes exceptions for

Pay for Success & Affordable Housing | Stefano Rumi 23

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