Urban Asset Initiatives
Please click the headlines below to read more about NJISJ’s Urban Asset initiatives.
Anchor Institutions InitiativeIn addition to our efforts to increase the ‘supply’ of prepared and accredited individuals who are ready to be employed, NJISJ is seeking to increase the ‘demand’ by promoting the creation of living-wage jobs in our urban areas. In 2011, with a generous and innovative grant from the children of our founder AlanV. Lowenstein, we commissioned a research paper and began working with a diverse group of partners to assess the possibility of incorporating community benefit terms into bond covenants for large-scale facilities construction by anchor institutions including colleges and universities served by a state bonding authority. These social covenant bonds will increase the number of construction as well as service and maintenance positions available to urban residents and can be achieved without administrative delay or increased costs. We are also exploring ways to attract social impact investors to these market competitive investment opportunities using bonds that have social justice impact.
Labor Market Study
“Newark, the largest city in the state, with a population of more than 280,000, reportedly has the highest per capita number of parolees of any U.S. city.”
Akil S. Roper, “Prisoner Re-entry in Newark: It Takes a Community” (Star Ledger)
The inordinate number of parolees in Newark reflects the increased concentration of economic challenges in this area. The legal barriers and stigma that follow people returning home to New Jersey neighborhoods from incarceration leads to a cycle of poverty, recidivism and lack of economic opportunity for individuals and their communities as a whole. To better understand how to address these economic barriers, NJISJ has initiated a study of the impact of a concentrated population of ex-offenders on the labor market and economic growth in Newark. The project activities fall into two categories: a labor market study and an investigation into the location decisions of employers.
Fair HousingPlease click the headlines below to read more about NJISJ’s Fair Housing initiatives.
Subprime Mortgages, Foreclosures and Predatory LendingThe year 2007 saw the explosion of the ticking time bomb of concentrated subprime and predatory lending in New Jersey’s urban communities, as New Jersey and the rest of the country began to experience skyrocketing foreclosure rates. In 2008 there were more than 53,000 foreclosure filings in New Jersey. Just under one in every 100 New Jersey households were affected. That’s the highest foreclosure start rate the state has seen since the industry began tracking data in 1979. The foreclosure crisis affects all New Jersey residents, by destabilizing neighborhoods, lowering property values and increasing the pressure on public services. As one measure of the costs, the state is expected to lose $99 million per year in property tax revenue as a result of the crisis.
While every county in New Jersey is affected, our cities are particularly hard hit due to a history of disinvestment, redlining and predatory lending practices. The Newark metro area accounted for more than 35% of the state’s foreclosure filings in the most recent quarter. The Institute believes that the response to the crisis should recognize and address the history of racial and economic disparities in lending.
The Institute’s engagement on this issue is a natural outgrowth of our long-term work on predatory lending, sustainable homeownership and other issues around access to affordable and appropriate credit in New Jersey communities.
The Institute has engaged the issue on multiple levels:
• At the statewide level, the Institute partnered with New Jersey Citizen Action and the Housing and Community Development Network of New Jersey to draft the “New Jersey Homeownership Preservation Act.”. In December of 2008, the New Jersey Legislature passed a modified version of the legislation called the “Mortgage Stabilization and Relief Act,” which was signed by the Governor on January 9, 2009.
• At the local level, the Institute joined the City of Newark and the Essex County Division of Housing and Community Development to convene a working group of experts and advocates to address the problem of subprime mortgage foreclosures in Newark and surrounding areas. The Newark/Essex Foreclosure Taskforce immediately attracted widespread and enthusiastic interest from community groups and local and regional government and continues to meet monthly. Activities include research, public education and outreach, counseling, financial product development and legal advocacy.
New Jersey Homeownership Preservation Act
The Institute partnered with New Jersey Citizen Action and the Housing and Community Development Network of New Jersey to draft the “New Jersey Homeownership Preservation Act.” It was introduced in March, 2008 by Senator Ronald L. Rice and Assembly Majority Leader Bonnie Watson Coleman. As originally drafted, the bill contained an innovative scheme which created a financial incentive for subprime lenders and servicers to negotiate with borrowers before initiating foreclosure proceedings. The bill also contained several other provisions designed to protect homeowners and reduce the impact of foreclosures on communities.
In December of 2008, the New Jersey Legislature passed a modified version of the legislation called the “Mortgage Stabilization and Relief Act,” which was signed by the Governor on January 9, 2009.
While the Mortgage Stabilization and Relief Act did not include the incentive mechanism, almost all of the other protections survived, a significant victory in the legislative process.
Two of the important protections surviving from the original bill are a provision giving homeowners with adjusting interest rates the option of a 6-month forbearance period and a provision which makes it easier for municipalities to hold lenders responsible for abandoned properties creating health and safety dangers.
The Act also includes two new programs advocated by the administration that provide funds to support reductions in principal balance for some loans and support to non-profit organizations engaged in homeownership preservation activities. These programs are part of a concerted effort by the legislature and the administration to address the foreclosure crisis.
Foreclosure Prevention Task ForceAt the local level, the Institute joined the City of Newark and the Essex County Division of Housing and Community Development to convene a working group of experts and advocates to address the problem of subprime mortgage foreclosures in Newark and surrounding areas.
Foreclosures, concentrated in particular neighborhoods in urban Essex County, lead to rippling negative consequences impacting not only the individuals facing the loss of their homes, but also other residents facing declining property values and problems associated with the presence of foreclosed and vacant buildings. The Newark/Urban Essex Foreclosure Prevention Taskforce immediately attracted widespread and enthusiastic interest from community groups and local and regional government and focused on research, public education and outreach, counseling, financial product development and legal advocacy.
Abandoned Property ActNew Jersey’s Abandoned Property Act remains largely untested. The Act holds promise to both increase the stock of affordable housing and reduce urban blight by giving municipalities stronger tools to identify abandoned properties and transfer them to appropriate non-profit community development organizations.
The Act applies to residential properties that have not been legally occupied for at least 6 months and are in need of rehabilitation, nuisance remediation, or have failed to pay property taxes. Once properties are identified and placed on the abandoned properties list, municipalities can use two important tools to return the properties to productive use: (1) they may hold an expedited tax sale in which purchase of the building is conditioned on criteria such as an agreement to use the building for affordable housing; or (2) they may use spot blight eminent domain power to take possession of the building.
Important eminent domain and due process concerns could be raised by the utilization of the statute. The Institute solicited from the Gibbons Fellowship Program a thoroughgoing memo on the substantive and procedural due process questions that are not addressed by the statute. The memo is now a resource for municipalities interested in utilizing the statute.
Urban Home Ownership Preservation (East Orange Initiative)One of the primary reasons that predatory lending flourishes in urban areas is the absence of affordable financing for major home repairs. In the city of East Orange, the Institute has worked together with the municipal government’s office of Housing and Economic Development and Hudson City Savings Bank to develop a multifaceted home repair package for city residents including an affordable 30-year loan; a professional review of construction needs and associated cost estimate; qualified contractors; oversight of the construction process; and homeowner maintenance and financial education for loan recipients. The program allows the City of East Orange to offer services that preserve and stabilize aging housing stock in neighborhoods throughout the city and provides residents with an affordable source of financing. The first loans are expected to be issued early in 2008. These loans will respond to the needs of East Orange residents who have been on the city’s waitlist for assistance to stabilize or address safety issues. The Institute will document the program for potential expansion and duplication in other communities throughout the County and the state.
Low Income Housing Tax Credit AllocationsThrough its advocacy on Mount Laurel and Low Income Housing Tax Credit allocations, the Institute seeks to influence government policy around the placement of housing and other development, to ensure that affordable housing is built in areas of economic opportunity and racial and economic integration.
Asset Building and Financial Services
Access to fairly-priced financial services, such as a basic checking account, savings account, or other investment opportunities, plays an important role in facilitating asset-building in low-income urban communities. By contrast, costly alternative financial institutions and services often deplete the financial assets of urban residents in communities where these institutions are concentrated.
This initiative examines existing barriers to asset building in urban communities to improve wealth building opportunities available to urban residents. Activities to date have included:
• Reporting on the geographic distribution of financial institutions in Essex County comparing the distribution of the branches of mainstream banks with the distribution of check cashing outlets.
• Supporting a local coalition of community groups that provide free tax preparation assistance to local Newark residents through the federal VITA program and facilitating partnerships with local banks offering financial services to VITA clients.