How can cities find money to help the homeless?

An officer from the Sheriff's Department and a social worker walk the homeless encampment in Anaheim, California in February 2018. Image: Getty.

Seattle’s city council has voted unanimously to levy a tax on big businesses, equivalent to $275 for each full-time worker, starting from 2019. The increased tax rate will apply to businesses earning more than $20m in gross annual revenue. It is forecast to raise roughly $48m each year, which the city council intends to spend on affordable housing projects and services for the homeless.

Councillors have lauded the tax as a way to offset Washington state’s “regressive” tax system, address homelessness and provide some affordable homes in city where the median house price has risen to $820,000. But many locals and activists were frustrated that the council did not bring in a higher charge of $500 per employee, which would have raised upwards of $75m.

As expected, the business community reacted by threatening to terminate key investment plans and look elsewhere for opportunities. When the $500 per employee levy was proposed, Amazon put its plans for expansion – which would add a further 7,000 people to it’s 45,000-strong workforce in the city – on hold. This is no small threat, at a time when the retail giant is considering 20 other American cities to host the company’s second headquarters.

The vehement objections from both sides have caused something of a global stir over the tax, with some holding Seattle up as an example for other cities to follow. But these posturings mask the fact that Seattle City Council’s tax on big businesses is not actually a particularly radical policy. A more cynical reading of this story is that the rationale behind the tax hike is entirely political, in a city where progressive policies win votes.

A better way

The reality is that the extra charge being imposing on companies such as Amazon will not directly fund homelessness programmes. As with other corporate taxes, revenues will be pooled with other receipts to fund an array of public services such as police, fire, roads and infrastructure.

But there are more effective market-based mechanisms than taxes if the aim is to fund affordable housing programmes (homelessness initiatives included). In America, corporate linkage fees are a popular way of ensuring that affordable housing is made available as a part of new developments or other for-profit ventures that are not necessarily property related.

Linkage fees work on the premise that certain business activity can have harmful social impacts, such as displacement or overcrowded schools. As such, if a business wants to undertake that activity, it should expect to pay a fee to offset the damage caused. These funds are then siphoned to a trust, typically dedicated to subsidising affordable housing projects.

“In-lieu-of” fees operate in a similar way to facilitate inclusive zoning – in other words, a mix of affordable and luxury housing. These fees require for-profit developers to set aside a certain proportion of units as affordable housing, or to pay the cash equivalent of such to the housing trust. A similar mechanism exists in the UK, in the form of planning gain.

One benefit of funding public services with a fee – as opposed to a tax – is that there is clear legal precedent to do so, minimising the risk of a lawsuit against the city by a company with deep coffers and a strong vested interest. Fees also provide transparency and accountability, because there is a direct connection between the cost to society, and the amount which must be spent.

Taxes, by contrast, expose local governments to legal action. And there is less transparency about the way taxes are spent, with no legal requirement for a proportionate investment in affected areas. In practice, this means that badly affected areas can suffer neglect, if there’s no political incentive for the council to spend there.

Facing the fallout

If Seattle City Council had opted to apply corporate linkage fees to non-real estate ventures, such as Amazon, the case would have become more interesting, because corporate linkage fees are premised on legally establishing a causal link, or “nexus”, between the business activity and the negative impact it has on society.

It is very easy to see the connection between a large residential development and its impact on the local school system, or a large retail development and rising land values. But it’s much more dubious to establish a nexus between the operations of a large employer, such as Amazon, and the gentrification which arises when a large, well-paid labour force is attracted to an area – even though councils have recognised that gentrification can entail rising land values, displacement and in its most extreme cases, homelessness.

Formally establishing such a connection would set a radical new precedent for local authorities around the world. But the legal quagmire involved in satisfying a nexus test in such cases would send most public officials running for the hills. Besides, there are other mechanisms available to planners and city managers to leverage resources to fund social initiatives, which are not so fraught with controversy.

Social impact bonds, benefit corporations, tax increment financing, and Business Improvement Districts (BIDs) are more palatable options, being more compatible with a free-market ideology. In fact, social impact bonds are a British invention, and BIDs are already being used in city centres across the UK, US and Canada, with some success. For example, in Scotland, Essential Edinburgh BID has established a partnership with local homelessness charity Cyrenians to support rough sleepers.

These planning innovations, as well as linkage or in-lieu-of fees, could be effectively used to fund homelessness programmes. These mechanisms provide a voluntary vehicle – not compulsory, as in a tax – to facilitate private investment in social good, while minimising the risk to local government. The alternative is simply to increase local corporation taxes and face the political fallout – as Seattle City Council has demonstrated.

Regina Serpa, Lecturer in Housing Studies, University of Stirling.

This article was originally published on The Conversation. Read the original article.


Urgently needed: Timely, more detailed standardized data on US evictions

Graffiti asking for rent forgiveness is seen on a wall on La Brea Ave amid the Covid-19 pandemic in Los Angeles, California. (Valerie Macon/AFP via Getty Images)

Last week the Eviction Lab, a team of eviction and housing policy researchers at Princeton University, released a new dashboard that provides timely, city-level US eviction data for use in monitoring eviction spikes and other trends as Covid restrictions ease. 

In 2018, Eviction Lab released the first national database of evictions in the US. The nationwide data are granular, going down to the level of a few city blocks in some places, but lagged by several years, so their use is more geared toward understanding the scope of the problem across the US, rather than making timely decisions to help city residents now. 

Eviction Lab’s new Eviction Tracking System, however, provides weekly updates on evictions by city and compares them to baseline data from past years. The researchers hope that the timeliness of this new data will allow for quicker action in the event that the US begins to see a wave of evictions once Covid eviction moratoriums are phased out.

But, due to a lack of standardization in eviction filings across the US, the Eviction Tracking System is currently available for only 11 cities, leaving many more places facing a high risk of eviction spikes out of the loop.

Each city included in the Eviction Tracking System shows rolling weekly and monthly eviction filing counts. A percent change is calculated by comparing current eviction filings to baseline eviction filings for a quick look at whether a city might be experiencing an uptick.

Timely US eviction data for a handful of cities is now available from the Eviction Lab. (Courtesy Eviction Lab)

The tracking system also provides a more detailed report on each city’s Covid eviction moratorium efforts and more granular geographic and demographic information on the city’s evictions.

Click to the above image to see a city-level eviction map, in this case for Pittsburgh. (Courtesy Eviction Lab)

As part of their Covid Resource, the Eviction Lab together with Columbia Law School professor Emily Benfer also compiled a scorecard for each US state that ranks Covid-related tenant protection measures. A total of 15 of the 50 US states plus Washington DC received a score of zero because those states provided little if any protections.

CityMetric talked with Peter Hepburn, an assistant professor at Rutgers who just finished a two-year postdoc at the Eviction Lab, and Jeff Reichman, principal at the data science research firm January Advisors, about the struggles involved in collecting and analysing eviction data across the US.

Perhaps the most notable hurdle both researchers addressed is that there’s no standardized reporting of evictions across jurisdictions. Most evictions are reported to county-level governments, however what “reporting” means differs among and even within each county. 

In Texas, evictions go through the Justice of the Peace Courts. In Virginia they’re processed by General District Courts. Judges in Milwaukee are sealing more eviction case documents that come through their courtroom. In Austin, Pittsburgh and Richmond, eviction addresses aren’t available online but ZIP codes are. In Denver you have to pay about $7 to access a single eviction filing. In Alabama*, it’s $10 per eviction filing. 

Once the filings are acquired, the next barrier is normalizing them. While some jurisdictions share reporting systems, many have different fields and formats. Some are digital, but many are images of text or handwritten documents that require optical character recognition programs and natural language processors in order to translate them into data. That, or the filings would have to be processed by hand. 

“There's not enough interns in the world to do that work,” says Hepburn.

Aggregating data from all of these sources and normalizing them requires knowledge of the nuances in each jurisdiction. “It would be nice if, for every region, we were looking for the exact same things,” says Reichman. “Instead, depending on the vendor that they use, and depending on how the data is made available, it's a puzzle for each one.”

In December of 2019, US Senators Michael Bennet of Colorado and Rob Portman of Ohio introduced a bill that would set up state and local grants aimed at reducing low-income evictions. Included in the bill is a measure to enhance data collection. Hepburn is hopeful that the bill could one day mean an easier job for those trying to analyse eviction data.

That said, Hepburn and Reichman caution against the public release of granular eviction data. 

“In a lot of cases, what this gets used for is for tenant screening services,” says Hepburn. “There are companies that go and collect these data and make them available to landlords to try to check and see if their potential tenants have been previously evicted, or even just filed against for eviction, without any sort of judgement.”

According to research by Eviction Lab principal Matthew Desmond and Tracey Shollenberger, who is now vice president of science at Harvard’s Center for Policing Equity, residents who have been evicted or even just filed against for eviction often have a much harder time finding equal-quality housing in the future. That coupled with evidence that evictions affect minority populations at disproportionate rates can lead to widening racial and economic gaps in neighborhoods.

While opening up raw data on evictions to the public would not be the best option, making timely, granular data available to researchers and government officials can improve the system’s ability to respond to potential eviction crises.

Data on current and historical evictions can help city officials spot trends in who is getting evicted and who is doing the evicting. It can help inform new housing policy and reform old housing policies that may put more vulnerable citizens at undue risk.

Hepburn says that the Eviction Lab is currently working, in part with the ACLU, on research that shows the extent to which Black renters are disproportionately affected by the eviction crisis.

More broadly, says Hepburn, better data can help provide some oversight for a system which is largely unregulated.

“It's the Wild West, right? There's no right to representation. Defendants have no right to counsel. They're on their own here,” says Hepburn. “I mean, this is people losing their homes, and they're being processed in bulk very quickly by the system that has very little oversight, and that we know very little about.”

A 2018 report by the Philadelphia Mayor’s Taskforce on Eviction Prevention and Response found that of Philadelphia’s 22,500 eviction cases in 2016, tenants had legal representation in only 9% of them.

Included in Hepburn’s eviction data wishlist is an additional ask, something that is rarely included in any of the filings that the Eviction Lab and January Advisors have been poring over for years. He wants to know the relationship between money owed and monthly rent.

“At the individual level, if you were found to owe $1,500, was that on an apartment that's $1,500 a month? Or was it an apartment that's $500 a month? Because that makes a big difference in the story you're telling about the nature of the crisis, right? If you're letting somebody get three months behind that's different than evicting them immediately once they fall behind,” Hepburn says.

Now that the Eviction Tracking System has been out for a week, Hepburn says one of the next steps is to start reaching out to state and local governments to see if they can garner interest in the project. While he’s not ready to name any names just yet, he says that they’re already involved in talks with some interested parties.

*Correction: This story initially misidentified a jurisdiction that charges $10 to access an eviction filing. It is the state of Alabama, not the city of Atlanta. Also, at the time of publication, Peter Hepburn was an assistant professor at Rutgers, not an associate professor.

Alexandra Kanik is a data reporter at CityMetric.