Addressing Equity in the Capital Planning Process

Urban infrastructure projects have often come at significant cost to low-income communities, particularly people of color. Equitable planning includes diverse voices and considers development’s impacts on all city residents.

Infrastructure projects have great potential to increase the value of land and once completed, to improve the quality of life for those with access to the development. However, that very increase in value can also threaten the existing residents of the areas in which these projects are built. Agencies may successfully deliver a capital project, but the value of that success is often diminished without an early analysis of the ways in which the infrastructure project could potentially create displacement or disadvantages for residents. Addressing equity requires extending the analysis even further, to include the participation/voices of the people who will be affected by the project in the early stages, and considering how income level, race, and geography might affect outcomes and impact for residents nearby.

Inequitable Development: The History of Infrastructure and Credit Policy as a Tool of Inequity

Many of the highway projects constructed in the 1960s created enormous benefits for suburban commuters—at the cost of displacing residents and putting in physical barriers that broke apart thriving urban neighborhoods. The projects were successful, but not for the people in the communities where they were constructed. Suburban residents were able to save time on their commutes and freight was able to move faster through the interstate highway system, but at significant cost to many low-income communities, primarily occupied by people of color. Research shows that some projects were intentionally designed to maintain or enhance barriers between residents of color and predominantly white communities, or between wealthier and lower-income communities. For example, as mentioned in the “The Power Broker,” Robert Moses intentionally had the Southern State Parkway designed with lower overpass clearances, to make it harder for buses of low-income New Yorkers to reach Jones Beach in Long Island.

Beyond these infrastructural inequities, research shows us that neighborhoods with high proportions of non-white, low-income, and immigrant populations have historically been disadvantaged by federal lending policies. Some examples include recently discovered maps from the Home Owners’ Loan Corporation that demonstrate a ranking system offering significantly decreased lending based on the racial and socioeconomic makeup of neighborhoods, and later by the Veteran’s Administration and Federal Housing Administration. This in turn led to redlining that created disparities that continue to this day. According to Thomas Sugrue, a historian at NYU, this lack of credit impacted “every dimension of neighborhood life, in terms of the quality of real estate, the willingness of investors to come in, the prices of property, the emergence of predatory practices…These are all direct consequences of the lack of affordable loans and affordable mortgages.” Since homes are typically a family’s most valuable asset, the barriers to homeownership increased the already-significant disparities in wealth between poorer and wealthier neighborhoods.

This map of Brooklyn is part of “Mapping Inequality: Redlining in New Deal America,” a four-university collaborative project illustrating the classification system that reduced lending in neighborhoods based on racial composition.

Differential Impacts of Infrastructure on Marginalized Communities

The assumption of equality in infrastructure development is detrimental to a comprehensive analysis of the scope and possible impact because effects like job growth and income vary greatly per individual. Agencies need to measure how infrastructure projects affect low-income residents differently. Project benefits are often assessed on a macro level, often eclipsing impacts that may fall more heavily on low-income individuals and people of color.

Residents without cars, for example, are more dependent on the reliability of transit and pedestrian infrastructure. Therefore, increasing transit access to hundreds of thousands of job sites in a low-income neighborhood is going to make a huge impact on daily lives, income, resources and opportunity. In traditional infrastructure studies, a project that saves suburban commuters 10 minutes on their existing daily commute could be considered equally impactful, in terms of measured dollars of economic benefits, as a project that provided transit access for thousands of low-income commuters. Without an equity lens that accounts for these disparities, the two projects could appear identical.

Another example is residential energy efficiency programs, which historically targeted single-family residences because that’s where utilities could get the highest level of improvements for their investment in reduced energy use. From the utilities’ perspective, that made sense. An NRDC report found that energy bills for lower income individuals represented an average of 7.2% of total income, compared to 2.3% for non-low-income individuals. Energy efficiency improvements could make a much larger relative difference for lower-income individuals, yet that differential benefit often doesn’t get measured by traditional approaches.

Negative impacts are also experienced differently. Small business owners who lack capital often run their business on a cash basis. If infrastructure construction or service interruptions disrupt their customer base, they will have more difficulty proving that they’ve lost money, and claiming any compensation for it. These differences are highlighted even more during extreme weather events and infrastructure failures. Higher-income residents can self-evacuate, and have savings to tide them over during periods of disruption. Lower-income residents are more affected by service disruptions that can be exacerbated by limited digital access to information.

Multisolving: A Tool for Holistic, Equity-Based Project Analysis

Multisolving is one approach for ensuring that a project includes consideration of diverse impacts, and that it is not narrowly defined by one infrastructure mode or discipline. The process involves bringing multiple stakeholders to the table, and identifying the goals they could accomplish with the project. For a transit oriented development project, stakeholders could include the local transit agency, nearby business owners and developers, residents and prospective residents of all income levels and races. For a green infrastructure project, the stakeholders might be the local water agency, the local parks agency, federal regulators, housing advocates, prospective residents of all races and income levels, and private landowners.

Tools for Addressing Long-Term Economic and Racial Equity

Economic and racial equity have not historically been part of developing a financial strategy for infrastructure projects. Yet projects that fail to do this have faced delays or cancellation due to failure to adequately consider community impacts. Using tools like FLOWER to engage the community early and consider how the project may differentially impact economically and socially disadvantaged groups can turn a potential roadblock into a positive feature.

Other tools, like King County’s Equity Impact Review Tool, can help cities identify potential differential impacts of a project (as well as ways in which it may be able to reduce inequity). The Equity Impact Review tool begins by listing the potential determinants of equity, such as equitable access to job training, community economic development, housing, education, transportation, etc. Then for capital projects, sponsors are asked to map out demographic groups by income level, race, and other pertinent factors, and identify differential impacts on each. The City of Seattle has also developed a racial equity toolkit, which assists in identifying differential impacts of government programs and budgets. Another tool is the Natural Resources Defense Council’s Equity Toolkit, which includes a framework for assessing equity impacts of environmental projects.

The team developing the financial strategy doesn’t necessarily need to lead this process, but should be actively participating and cognizant of the results, which need to inform the financing strategy.

For example, workforce development is an obvious area for focus, and many project plans have included hiring goals that provide preferences for local residents. In some cases, federal grants or financing may preclude use of local hiring preferences. If a new tax or fee is proposed as a revenue source, its impact on low-income residents has to be part of the evaluation. If a public-private partnership with a long-term concession contract is chosen as the delivery model, agencies need to ensure that equity is considered in the performance standards for the private partner. These considerations need to be added to the criteria used to select and implement a financing strategy.
The features built into the project to reduce inequity also have to be financed, and may require innovative finance tools of their own. If affordable housing or community land trusts are contemplated, it is easier to build them into the strategy at the front end than to paste them in on the back end. Mobilization funds and other ways of providing capital to disadvantaged and minority-owned businesses also may require upfront financing.

Workforce Development Plans

Workforce development plans are intended to help local communities benefit from construction and operation of infrastructure projects. Going beyond simple hiring targets, workforce development focuses on preparing residents for the jobs to be created, and ensuring that they overcome any skill-based, informational, or other barriers to employment.

Mobilization Funds

Mobilization funds can assist in helping small businesses get prepared for winning government contracts for infrastructure projects. These funds provide upfront capital that may be needed to purchase equipment, meet payroll, staff up, obtain training, or otherwise prepare to respond to public sector procurements.

Community Land Trusts (CLTs)

A community land trust helps control rapidly increasing land values in areas that are being revitalized. The trust, which is a nonprofit controlled by residents, community members, and experts, owns the land underneath housing developments. Residents own their own houses, but lease the land from the CLT. If a resident wishes to sell, the CLT sets the rate. Usually resale prices provide some financial equity to residents, but not at the same level as the private market. The advantage is that residents are protected from massive increases in costs, and affordable neighborhood housing is preserved in perpetuity.

New Markets Tax Credits: Equity Financing in Low Income Areas

These tax credits are competitively allocated to Community Development Entities (CDEs), who can use them only in areas that qualify as low income (primarily those with poverty rates of greater than 20 percent or income levels at or less than 60 percent). The CDEs then select eligible projects for investment. In 2016, CDEs invested $1.9B of NMTCs in projects that involved $3B in total investment. While NMTCs do not generally fund infrastructure directly, they fund many other community facilities, such as medical and health enters. NMTCs have also funded transit-oriented development around a station area; supported development of recreational and retail amenities near an urban park; and enabled workforce development by supporting local entrepreneurs who could work on infrastructure projects.

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