Rural Housing in the Time of COVID-19, Part 2: Recording and Transcript

Thank you to everyone who joined us for part 2 of our series on rural housing in the time of COVID-19: “Has the government’s response been adequate?” For those of you who could not join or who would like to revisit the conversation you can find the recording as well as the complete transcript below. 

If you joined us for the conversation, please take a few minutes to fill out the post-event survey. Your responses will help inform future events and conversations hosted by the Rural Assembly and Daily Yonder. Thank you for your time and reflections. 

Transcript: Rural Housing in the Time of COVID-19, Part 2

David Lipsetz: For those of you who don’t know my organization, Housing Assistance Council, also known as HAC, is the only national organization focused exclusively on housing in small towns and rural America. So we’ve been doing this work for 50 years, worked with hundreds of organizations across every rural region, we provide training, help answer technical questions, we lend money at below market rates in case you’re wondering and used to build quality affordable housing and apartments. Our goal every time we’re interacting with a local group is to help them grow and thrive.

Come take a look at us some more at ruralhome.org and if you are online today, watching on YouTube, you can also be tweeting and using the hashtags, rural conversation and hashtag rural housing. So we’ve brought together another great group, please take a look at last week’s stuff where we talked about what’s happening. Some on the ground. Today we’re going to concentrate more on the federal response and if it’s been adequate to address the concerns that have been raised by the pandemic. So after we’re done, there is a post event survey, please fill it out. We’d love to hear some more back from you. Thanks for a great reception last week.

No news to say that COVID-19 has turned everything upside down. We’ve been asked to shut down our daily lives, turn our homes into the places where we work and worship and conduct our business. So while Coronavirus may have been delayed in arriving to rural America, it is now in fact a nationwide problem and we really want to ask today, policy makers and the public recognize this is rural America being left behind when crafting solutions. We’ll look at across the community development spectrum with the experts we have today which will kick off with Samantha Booth, the Government Relations Manager for Housing Assistance Council. Hi Samantha.

Samantha Booth: Hi, everyone. Great, thank you David for that introduction. I am going to go ahead and share my screen briefly for this portion of the presentation.

David: Samantha, before you get going, I also want to make sure we introduce the other panelists so everybody knows what a great lineup we have coming. If Rural Assembly can flip back to the pictures, yeah, there we go. So to my right, I don’t know where he is on your screen, but he’s everywhere with policy knowledge, is the Policy Director of Local Initiative Support Corporation, Mark Kudlowitz. Hey Mark.

Mark Kudlowitz: Thanks David, pleasure to be here.

David: Yeah, you want to introduce your organization just a little?

Mark: Absolutely. Again, I’m Mark Kudlowitz, I work for the Local Initiative Support Corporation. We’re a national affordable housing and community development nonprofit intermediary. As the name suggests, we work to support local affordable housing and community development initiatives. We do that in 36 offices throughout the United States and through partnership with 89 community based organizations through our rural LISC team. They work across 45 different states and we also provide similar to HAC training, technical assistance, financing and do work here at the federal policy level to try to further federal housing assistance programs.

David: Mark, LISC is a fantastic partner to us and we’re thrilled to have you here today but also the work we get to do every other day of the year. So, Dave Castillo, the CEO for Native Community Capital, who’s focused exclusively on financing for Indian country, hey Dave. Why don’t you introduce your organization for us?

Dave Castillo: Yeah, thanks David. Thanks everyone for this session. Dave Castillo from Native Community Capital, I serve as the CEO. We are a native community development and financial institution working primarily in Arizona and New Mexico but other places in the West as well. We provide construction financing, mortgage lending, small business loans and consumer loans as well. We’re engaged at the policy level as well through our national association which is the Native CDFI Network and other Native organizations like NCAI, NAFOA and alike. So we’re really happy to work through this in partnership with HAC and LISC and Enterprise and all the partners. Thank you to this particular convening.

Funny thing is, I think we’re talking more, I think we’re growing closer together, I think there’s greater transparency and more opportunities for us to really address the issues that have been here for a very long time because of this COVID and George Floyd situation that really isn’t new. I think it’s just opening our eyes again. So thank you everyone for this session.

David: Yeah, thanks for being with us today, Dave. Turning to our third panelist, Bill Bynum, the CEO for Hope Credit Union. I think Bill, you’re down in Jackson, Mississippi?

Bill Bynum: I’m in Jackson, Mississippi Dave. Good afternoon everyone and thanks for organizing this Dave. I’m CEO of Hope. We are a family of organizations that exist to really combat the extent to which race, gender, birthplace, wealth limits one’s ability to prosper. We do that through with our primary tools of financial services. But that’s a means not an end. End is to really close these gaps that we obviously see are too wide and unsustainable and I think have contributed to a lot of the challenges that we’re facing and I will talk about it today. So again, we’re an Alabama, Arkansas, Louisiana, Mississippi and Tennessee. So, thanks David.

David: Yeah, Bill, it’s thrilled to have you on today. Your organization is extraordinary collection of entity and a leading light for so many of us in this field. I appreciate the work you do, excited about today’s conversation. So again, I’m David Lipsetz, Housing Assistance Council and with that Samantha.

Samantha: Great. Thank you. I apologize for jumping the gun on the PowerPoint. Let’s see. So thank you David, for the introduction and I also wanted to echo everyone’s appreciation for the team at Rural Assembly for all the work that they have done putting together this series of events. This is a really great panel of guests today. So I’m looking forward to hearing the conversation and everyone’s thoughts on the federal COVID response for rural areas thus far. To set up that conversation, I’m just going to give a quick overview of the federal response from March until present day.

A lot has gone on in the last three months. So thinking back to March may seem like a whole different lifetime. Congress has passed three larger COVID response bill thus far and all three of those were passed back in March. Since then a few smaller pieces of legislation have been passed but nothing on the scale of the CARES Act, which we saw at the end of March. Looking at this timeline, you can see that while these three bills were being negotiated, the World Health Organization declared COVID-19 being a global pandemic on March 11th and two days later on March 13th, the president declared a national state of emergency. I wanted to very briefly mention the first two COVID response bills though I doubt that much of our conversation will focus on these two today. The first COVID bill which was passed on March 6th was focused more narrowly on the public health response and the second bill passed on March 10th, allowed for paid sick leave for employees impacted by a COVID-19.

Now to focus on the CARES Act, this is the bill that the general public has likely heard the most about. It’s predicted to cost around $2 trillion making it the largest stimulus bill in US history. This is the bill that included the $1,200 direct payments to individuals as well as a host of other provisions. Because housing is the focus of today’s conversation, I wanted to walk through a few CARES Act provisions that both indirectly and directly are connected to housing. Most obviously the department of Housing and Urban Development or HUD was allocated over $12 billion in supplemental funding for existing programs under the CARES Act. The full list of programs is shown on this slide, but I would specifically like to lift up the $300 million allocated for Tribal Housing Programs in this bill as many of our rural partners are working in rural and underserved areas of Indian country. Some of HUD’s larger programs like CDBG received significant infusions of funding, though how this money will flow to the most rural corners of the country will depend on how States choose to direct those dollars.

Now to touch on USDA funding in the CARES Act, USDA rural development didn’t receive much funding at all just 145 million for telemedicine, broadband and rural business loan guarantees. The Rural Housing Service programs didn’t receive any supplemental funding despite the need for increased rural rental assistance to cover the gap created by job and income losses. But I do want to take a minute to note the critical nutrition funding that was included in the CARES Act since food insecurity has really been a top concern for a lot of low income families during this time. To address the COVID related loss of income that homeowners, renters and landlords are all experiencing right now, the CARES Act included several provisions that banned evictions and foreclosures in federally backed properties and also allowed for payment forbearance. This includes both the single family and the multifamily programs at USDA, but it’s important to note that unless they’re extended, many of these protections will wind down in the coming months.

Although it’s directly housing related, I wanted to touch briefly on the Paycheck Protection Program and also the beefed up Unemployment Assistance included in the CARES Act since both of these have really allowed families to maintain their income and thus to continue making their rent and mortgage payments. The PPP is a potentially forgivable SBA loan that helps businesses keep their workforce employed. The PPP was first funded as part of the CARES Act and that first round of funding was depleted in less than two weeks. A second round of funding was passed in late April. There were some concerns during the first round of funding that the bulk of the dollars were going to larger and less distressed businesses through the big banks.

So the second round of funding included requirements that some of the funds should be set aside for lending by smaller community financial institutions, including CDFIs specifically. On June 5th, Congress also passed a bill that loosened some of the PPP requirements. Loan forgiveness was expanded from eight weeks of eligible costs to 24 weeks and the percentage of funds that must be used for payroll was decreased from 75% to 60%. So these changes did allow for some increased flexibility but there’s still a lot of uncertainty remaining around eligibility for some types of organizations.

Just to touch quickly on Unemployment Assistance, an additional $600 a week in federal pandemic, unemployment compensation benefits are available to everyone receiving state unemployment benefits under the CARES Act. However, these funds are only available through the week ending July 31st. Some preliminary data has shown that many families have continued to pay their rents and mortgages during this time despite a historically high levels of unemployment and a big part of this is likely attributable to the benefits of the PPP and especially to these beefed up unemployment benefits both of which will end soon without congressional action.

There has been a lot of discussion in the last two months over what a fourth round of COVID stimulus could look like. Some politicians are calling for a larger package, perhaps including broader infrastructure investments to help stave off a longer term economic recession. Others are really only interested in considering something much more limited in scope and site concerns over the longterm national debt impacts. The democratic leadership in the house of representatives did put together a very large and aspirational package back in mid May called the Heroes Act, which passed in the house but is more or less dead on arrival in the republican controlled senate. On this slide, you can see some of the housing and access to capital provisions that were included in the Houses Heroes Act and we at HAC, we’re especially glad to see funding included for rural rental assistance and for the CDFI fund.

So with that I am looking forward to hearing the panelists thoughts on whether this response has been adequate thus far and what the federal government could do to improve the response going forward. For those of you who were able to join last week session Lance George from HAC gave a really great data presentation on the COVID impacts throughout rural areas. We are seeing pockets of high infection rates in persistently poor rural places, especially counties with meat packing plants, prisons and non-white populations. We have a page of resources and interactive maps on HAC’s website, as David mentioned. The link to that set of content is included on the bottom of this slide but you can also just visit our general website at ruralhome.org. It’s pretty easy to access. I would encourage folks to do that if they haven’t already. With that, I wanted to thank you for the opportunity to be here today and I will turn it back over to David and the rest of the panel.

David: Samantha, thank you. Fantastic run-through for anyone who’s watching, please start to send in your questions. If you have specifics for Sam, she’s going to be with us for the balance of the hour and can field some of those as well. Appreciate it and yeah, check out those maps on our website, ruralhome.org to be able to interact with the data in a way that shows you how the spread of COVID across rural places has occurred. So you heard the rundown of what happened on the Hill through the white house, Mark Kudlowitz, what was it as a policy community that at first we were feeling and then as this has progressed and the bills have passed, how are we reacting?

Mark: Yeah. Thanks David and thanks Rural Assembly, HAC, everybody else involved with today’s event. Yes, so I think Samantha did a nice job of queuing up the federal response today. We’ve had trillions of dollars spent today but I would argue that we’ve had very little that has been directed towards Housing Development Programs. As Samantha mentioned, only $12 billion going to HUD, no money to Rural Housing Programs. Some of the provisions that have been not housing specific such as the stimulus payments of $1,200 and I think most significantly the federal plus up on Unemployment Insurance have helped stave off some of the worries that we have currently as an affordable housing community. Those additional payments that additional $600 a week and Unemployment Insurance is a very significant increase. The average state Unemployment Insurance benefit is around 250 something dollars a week.

So that’s generally allowed some folks to be able to continue to pay rent or to pay their mortgage. But we know that we’re on the edge of a cliff since those expire in July, the end of July and there’s no certainty that Congress will continue its benefits. So I want to talk a little bit more about this. I think we believe at LISC that the COVID pandemic really poses an urgent threat to one of the most basic requisites of wellbeing in our life, the right to quality affordable housing and affordable housing organizations, especially community-based nonprofits that a lot of our organizations handle is support create and manage these affordable homes are facing an incredibly uphill battle right now against the economic impact of this crisis. I don’t think it can be overstated.

We’ve seen the stats that 45% of renters earning lower incomes work in the industries that have lost the most jobs in recent weeks. We know a lot of these are concentrated in rural communities and that the constraints of these nonprofit organizations are also more acute in nonprofit and in rural places where there’s less philanthropy and other local resources. So these unemployment workers can’t pay rent, which means housing providers are starting to experience any drop in rental income. Again, Unemployment Insurance has helped, but we have seen rent roll collections go down at both market rate and affordable but more pronounced at affordable properties, which makes sense because of job loss. So we know we’re at the edge of this housing cliff, but we must act now to really shore up the groups that make housing accessible for everyone but especially our most vulnerable residents. Like small businesses, affordable housing developers in a big bold infusion of support from the federal government.

We didn’t get an equivalent of the Paycheck Protection Program. In fact, the Paycheck Protection Program for all that it’s done well to support businesses has been hard to use for regulatory reasons for a lot of nonprofit owners and developers. So no amount of creativity on the part of these local nonprofit organizations will be able to remedy the loss of income from tenants which we expect to grow over time especially if Unemployment Insurance benefits are not sustained and if additional rental assistance is not made available. These organizations, these nonprofit groups that own housing are experiencing increased operating costs and development costs related to resident and worker safety delays, supply chain problems and sometimes damp in investor interest in financing repairs. We know that these needs are more severe in rural communities. Prior to COVID, the availability as we all know of affordable housing was in short supply, many communities particularly low income and communities of color relied on the scarce resource.

Currently housing providers across the country are stress testing their inventories. They’re especially concerned again about the impact of rent reductions on their bottom lines and how this will impact their ability to maintain buildings, provide adequate services and pay the bills. So I would say now it’s more important than ever to have a safe, affordable home. The shock affecting the entire industry will inevitably hurt community-based housing providers. Vulnerable populations, such as seniors with low incomes, people with disabilities, those without homes and citizens returning from incarceration are particularly endangered by the pandemic exposure to or infection from the virus, from living in crowded conditions, such as homeless shelters and coupled with negative social determinants of health is a recipe for disaster. In order to minimize COVID-19 transmission, people must have a safe, stable place to live, quarantine and recover. Affordable housing developers and organizations create these homes.

They are our community first responders. They work to maintain affordability while providing needed services from low cost childcare to transportation to food assistance. They’re integral to the supporting the well-beings of individuals and to creating strong, resilient, equitable communities and economies. Given the current situation, they’re also vital in helping to stem the pandemic and save lives and they need help right now. The federal government has not done enough to date to meet this challenge head on. Again, while the CARES Act provided some housing protections as of today, there was no comprehensive and funded plan for what happens to tenants and owners after the temporary forbearance and eviction moratoriums that Samantha described to end. As unemployment rates remain high, absent the support, we can only imagine that social inequality in this country will deepen.

LISC and our partners are pursuing strategies for an economic recovery focused on quality affordable housing. These must include the following policies and resources from the federal government. We did an additional affordable housing resources through the home investment partnership and the Community Development Block Grant Programs and we need improvements to the low income housing tax credit program, our nation’s most important affordable rental housing subsidy program to assist housing providers and tenants. We specifically need resources for rural housing and community development programs at USDA. As Samantha mentioned, these programs do not receive any funding in the CARES Act.

These resources should also cover the full array of housing needs. We need capacity building resources for nonprofit affordable housing developers so they can sustain their operations during the crisis and be positioned to lead longterm recovery efforts from the crisis of paints. LISC has surveyed our community based partners all of which are reporting a decline in revenue while most are reporting an increase in the amount of services that are being requested. This is not sustainable. Owners need mortgage forbearance by accruing and deferring debt service payments to the backend of deals, these restructuring or modifications of lease and mortgage terms we needed to be more flexible, including extensions or reductions of penalties should be done returned for owners extending the moratoriums on eviction.

Importantly, we need a new infusion of flexible rental assistance to reduce homelessness and housing instability. The programs that Samantha referenced, only assist currently how to assist the residents. We have not provided additive resources to address residents who essentially have not won the lottery and have housing assistance in this country. Tenants need financial assistance to pay their rent, not just forbearance, which will only push the crisis off a few months. The moratorium on evictions also needs to be extended and applied to more households. Without large scale financial assistance and eviction of protection, there will be a cascading impact of evictions and homelessness. We need to restructure the Paycheck Protection Program so the nonprofit affordable housing organizations can access forgivable loans to support their employees and operations.

As Samantha mentioned, we need an increase in resources for community development financial institutions which are mission-based lenders, which most of the panelists represent to support the patient finding financing options that are needed. So we are actively working with all of our panelists and partners on each of these federal strategies and welcome the input and the support of the folks on the call today. I really thank you for allowing me to participate and look forward to answering any questions you may have.

David: Mark. Thanks for that rundown. It’s really helpful to hear from a federal perspective. I know you guys have, pardon me, you have offices in 30 plus States, your rural programs, which I think you’re fantastic are all across the country, 40 plus States. To be able to summarize what folks here are trying to do for local partners is a big and important part of this. I think all of us, all the panelists and many of the folks tuning in today know that these were issues prior to the pandemic, that it was really the pandemic and the national protests that are laying bare the inequality built into the geography of America. We definitely don’t have to live like this going forward.

When we look at our maps, we can see hotspots around meat packing plants and communities of color. There are places on the maps, where if you look closely, you realize it’s a prison where a disproportionate number of African-Americans have been incarcerated and that prison is built in a rural place. The map and the geography of this is challenging and one of the hottest spots unfortunately in this, that appear on the maps is across Tribal land as well. Dave [inaudible 00:26:44] where are you today, New Mexico or Arizona?

Dave: I’m in Arizona today.

David: So today in Arizona, that the areas that you work out there show up bright red and a lot of the rural places because there has been a very particular experience on Tribal land for this pandemic. Can you walk us through a little bit about how the pandemic has brought attention to inequities that were already in place?

Dave: Right? Yeah. I mean, if you haven’t seen the headlines or watched some of the videos that some of the media put together and nonprofits and local organizations, there’s a lot out there it’s the impact on the health care system on Tribal lands is just overwhelmed. I mean, everyone knows about what New York looked like and they’ve come down and Navajo Nation, for example continues to rise. So I think Navajo Nation now probably has the highest numbers and they were trailing in New York for a little while but overtook them. So yeah, it’s just devastating. There’s still situations where a lot of folks don’t have running water or electricity. We’ve got families that are doubled up under one roof multigenerational housing, so that doesn’t help as well.

Then you’re far from the amenities, right? So if there’s a lockdown, my wife’s home, for example, 45 minutes one way to the nearest grocery store, if you could get to it. So yeah, it’s just exacerbated an already existing bad situation. The Indian Housing Block Grant, which is what most Tribes rely on for federal housing dollars, those funding levels have been frozen for over a decade. The legislation itself that authorizes those funds has not been reauthorized for almost as long. So any stimulus funds that come through at best help us catch up. Tribes and public sector employment or I should say employment through the Tribe or other public sector is the main source of employment for many people living on Tribal lands.

So as the COVID crisis continues or gets worse as it seems, we’re seeing certainly here in Arizona, the economic outlook becomes much more tenuous. So what Mark talked about and what you follow up with David, is spot on. What I heard is the pain train is coming and again, that’s the issue that train has been rolling through Indian country for decades and decades. So the question is, how do we prepare for that? We’ve had this initial COVID or this effort in terms of stimulus funds and in an attempt to address the health crisis in Indian country but it’s got a potential to get much worse. With regard to the CARES funding if you hadn’t seen this headline here’s one for you, Tribes had to sue to get access to that.

The details are really dissatisfying in terms of the basis of that lawsuit as they always are when it comes to details of federal funding or philanthropic funds. I’ll just say that try to repeat it against one another, again. Isn’t it funny, we don’t hear from the majority of corporations or banks that benefited from the PPP over the needs of small business owners so who should have had access to that and would that be nice for a change silence on the part of rural and economically distressed communities because we have enough or too much funding, right? It’s the exact opposite of what we see with PPP and who benefited most from that. But, there are some specifics that we can get to but before we get there, maybe further in this conversation.

I think the answer to so many of the questions that, I know David our moderator had identified, can be answered in a different way than just specific policy initiatives that we’ve been talking about, screaming about for a long time. It’s really less of a conversation prescriptions to benefit the Congress or foundations and really more a conversation for us and how we can be good allies to each other. When the federal money does come or the foundation money, when that money arrives in whatever quantities, I would say that in the midst of a crisis and again we’re there, when questions arise regarding if we must always follow a funder’s guidance to the T or how we should accommodate the needs on the ground, I would say that we must choose to support the needs on the ground. Because it’s easier to figure out an administrative solution to an incorrect filing of some paperwork than it is to rebuild a house that’s falling in on itself because of years and decades of deferred maintenance, because the funds weren’t there.

So, that’s a crisis situation. When we’re not in a crisis situation, I think it’s just this crisis has laid bare the fact that we must communicate and advocate with each other, for each other. I think we really need to ask ourselves, especially in the light of the George Floyd situation and all of the many people that have been devastated by brutality. We’ve got to ask ourselves, how does my organization look relative to who we serve or who we wish to serve? I can’t tell you how many times in my career I’ve had well-intentioned organizations say we really want to develop programs this year of Tribes, right? Then for some reason, it just doesn’t work out so well. So if your organization doesn’t look like the people that you’re serving, you want to serve, the least we can do is trust who we work alongside of, invest in those who would otherwise lead if not for systemic racism and oppression.

Go ahead and let them fail but also help them succeed. I think someone a long time ago said something about let the last be first and the first be last. I think that’s good advice. That’s what we want to see. People in economic issues, testimonies that have been last for too long and we’re in a position of privilege to be able to help them be first for once. I think this crisis provides us the opportunity to do that as new resources become available and we have a real leg to stand on from a policy perspective to make those funds flow. So thank you.

David: Yeah. Well said, Dave. We really appreciate that. As they’ve noticed, Tribes had to sue for access, Sam was talking about how USDA housing programs were left out of the appropriations. We have struggled in rural places with the vehicles by which we deliver credit. Those that are enhanced by this work, as you heard Mark talking about are flowing disproportionately across the geography. So many of our housing programs for those of you who may be a little less familiar with the housing work that we do, that the Community Reinvestment Act and the Mortgage Interest Deduction and the other big, big ticket items that public policy dictate, which communities grow and thrive in which do not get the resources and access to credit, have a suburban and urban outcome.

I highly doubt it was the reason that they were designed that way. But the reality is that there are large swaths of rural America that are not getting access to those programs. Bill Bynum and his group, Hope is right in the middle of one of those areas that your extraordinary work. I would like to get some thoughts from Bill on the programming that you’ve done to grow access to credit and to deliver that credit to those who have the least access. Has that changed during this period of time? Can you set us up a little bit about what we were doing beforehand and then walk us through how the policy response has been?

Bill: Thanks, David. Dave Castillo from your list to [inaudible 00:36:16] is right. Hopefully they are paying attention and following what you and Mark have recommended, but it’s been dramatic. In a normal year, we will do 40 to 50 business loans. We’ll do other large projects but 40, 50 business loans just keeps us busy. It’s a big impact, lot of jobs. Well in the last two and a half months, we’ve done over 1600 Paycheck Protection Loans, from 40-50 loans to 1600. I talked to my board last week and I joke we’ve gone from 0 to 1600 in 60 seconds flat because that’s what organizations like ours have to do in times of crisis. We’ve seen this movie before, we saw it after hurricane Katrina, we saw it after the financial crisis and it wasn’t accidental that the people in the lower ninth ward were the ones who were most exposed.

They were in the lower lying areas while the wealthier families were able to build on higher ground. After the financial crisis, most vulnerable were stuck in exploding loans not because banks made too many loans to poor people because they make crappy loans to poor people because policy let that happen. What now we see again, while policy is letting crappy things happen to the most vulnerable people with their Paycheck Protection loan in the first round, CDFIs, small lenders had to sit on the sideline. Largely even though we were reluctantly led in the program, the banks, big banks had free rein to put their priority customers at the front of the line while the small mom and pop businesses were at the back of the bus are not even on the bus.

So you have these stories of large businesses getting loans and then eventually turning them back once the light was shine on them and they were caught with their hand in the cookie jar. But they shouldn’t have been is they’ve said, wouldn’t it have been great that the program had really been designed to work for the most vulnerable and the businesses who needed it most, the businesses that are more likely to employ low income, low mobility people, people of color. I looked at Sam’s maps and I love the maps that HAC produces also the logo of map that really just it gives me chills because it says so much about why we are seeing what we’re seeing in Minneapolis and across the hall We saw Minneapolis and across the country, if you look at a map of where slaveholding was concentrated in the days or before the civil war, it’s across the deep South.

If you look today where there is greatest concentration of persistent poverty, where you see the worst education outcomes, the worst health outcomes, the largest concentration of food desert, the highest concentration of payday lenders, the lowest concentration of the highest concentration of people who are unbanked and those that are essentially the same places and disproportionately the conditions are much worse in areas where there are people of color. If you look at a map I think I was originally really introduced to this concept with some of HAC’s maps where we saw where persistent poverty is greatest in the country. That’s where counties are with 20% poverty, three decades in a row. But if you look at places where poverty has been over 20% for a half a century, it’s in the deep South, a third of the place that we work in Alabama, Louisiana, Mississippi now a third of the persistent poverty counties in the country and a third of counties that have had extreme poverty over half a century are in the deep South.

You look into the ’60’s when Martin Luther King was marching and you look at someone in Montgomery and what precipitated that Jimmy Lee Jackson was killed by Alabama state troopers peaceful march for voting rights, beaten by those who were sworn to uphold the law Alabama state troopers beat them and then shot him to death. That precipitated Bloody Sunday, which then precipitated the Selma to Montgomery March. In the memorial that Dr. King talks about how Jimmy Lee Jackson’s death hopefully will give people to enact policies that make the American dream a reality for everyone. Wasn’t a few weeks ago for $20 in Minneapolis, but this story has repeated itself too often.

Four years after, some of the Montgomery march that the King was killed and Memphis trying to shift the focus of the civil rights movement from voting rights to broaden it for economic opportunity to make sure people had the tools to support their families, to get these in home, to be treated fairly in the workplace. We don’t listen too well as a country and so fast forward to the CARES Act and the policies that are being implemented in Alabama and the Alabama black belt. The CAREs Act is being implemented so the counties, they can only act, they have to reimburse for accessing the CARES Act funds.

They’re controlled by the governors and so you’ve got to go out and find money to get your PPEs and to get your equipment, to get your economy back on start, to get your economy back on track. Who does that benefit? Who does that favor? Counties that are wealthy, not the Alabama black belt counties, not the Mississippi Delta counties, not rural counties in this country but it’s the house get at the front of the line, just like with the PPP program and everyone else has to wait their turn and hope that there’s crafts to pick up. That is why we have the divides that we’re seeing in this country, that’s why people are frustrated and are riding in the streets. If we paid attention centuries ago, 50 years ago, after Katrina, after the financial crisis and actually took the steps to close these gaps and make sure that people had equal opportunity to support their family and to contributed to the economy, then I suspect we wouldn’t see so much division and we’d have better health people.

People who were black and poor and people of color would not have preconditions that make them more susceptible to COVID. We do this to ourselves and there are certainly policies that we can adapt to do that in the Heroes Act which Sam said is probably DOA in the Senate. There was a billion dollars appropriation for a CDFI, who are all the frontline institutions, who are the institution that stepped in when banks didn’t make those loans to those small mom and pop businesses? It was CDFIs, it was minority depositories, it was minority banks. So after a lot of advocacy and standing on the table and a lot of… Even banks weighed in with Washington to say, look, we know this is not what we do best. CDFI do a better job of reaching underserved populations than we do, so get them, make sure they have access to the PPP. So eventually that was done and I’m glad that $10 billion was set aside.

But it was way late. It does represent a symbolic victory that initially CDFIs, weren’t going to be allowed to participate in the program. Then non-depository CDFIs, which loan funds are the vast majority of CDFIs in this country weren’t going to be allowed. Now they were in and so when the 10 billion set aside finally was made available, it did at least acknowledge the important role that CDFIs play as frontline institutions in these vulnerable communities. So hopefully as we move past PPP, which is important but it’s a thumb in the dyke in terms of what it’s going to take to rebuild this economy.

Ultimately there’s got to be serious resources put into giving businesses a flexible tool so that they can invest in getting their companies back up and operating and get people back to work in an upside down economy where as a lender, I cannot with any certainty make a loan because I don’t know what the market got to do in terms of generating those repayments, just like these businesses. So, we’ve got to have policies and resources that equip those businesses to get back on their feet. You can’t disconnect the housing stresses from what’s going on with the business sector. That’s obviously where people are generating their revenue, their income, so they can pay their mortgages, so they can pay their rent and you can’t disconnect them from that housing stresses from asset poverty when you’ve got half of the people in Mississippi who can’t make ends meet if they loose their jobs, if they don’t have income for three months.

That number rises to 70% for African-Americans, the black folks in Mississippi. I am most of those folks are in low wage service sector and retail jobs that are gone away and disproportionately people of color are employed by people of color in these small businesses. You saw the New York Times article that said 40% of black businesses are evaporating. We’ve got some serious crisis that is not going to be solved if you just put the big businesses, the people who can support themselves at the front of the line and leave everyone else behind.

David: Thank you Bill, that was fantastic and really weaves together a couple of the key elements here that post disaster time and again our responses have left an uneven recovery to be gentle about it. As we look at what was included in the CARES Act, what we hoped for in Heroes, if that doesn’t pass what happens, Mark? What happens Mark otherwise when Heroes doesn’t pass and we face that kind of uneven recovery stretching forward that Bill so eloquently describes?

Mark: Yeah, well, let’s hope it does or somehow it gets included in future legislation. But if it doesn’t, I think to everyone’s point this deepens social inequality in this country will have. It’s just the fact we will have rising evictions, we will have rising foreclosures, we will have wealth stripped from low income families who’ve been able to hold on to their houses today. Those will be bought out like they were by institutional investors and then rent it. These are very profound impacts on low income populations, communities of color who already disproportionately lack wealth and income. I think if we can’t get additional Housing Assistance provisions in the near term, I think we all have to keep in mind that the real cliff, which has already hit for some people, the next real cliff is the expiration of the increased Unemployment Insurance benefits at the end of July.

Something has to be done and I would argue, we need both additional Unemployment Insurance and more emergency rental assistance. We also need assistance for homeowners, something that approximates what we did after the 2008 crisis with the hardest hit fund. There’s been legislative proposals introduced in Congress to provide financial assistance so people can pay their mortgages. So we’re going to need that if we don’t get it, we need these indirect sources like continuing to increase this Unemployment Insurance.

We also have to think creatively, they’re existing monies at the federal facilities that could have been at loan servicers to make payments on behalf of eligible households. Those have not moved forward yet today. The federal reserve has shown little interest in that. But I think, if this continues to move forward without additional housing resources as an advocacy community, we are going to have to try to leverage every dollar that’s already been appropriated and try to get it for purposes that protect low income families.

David: Yeah. Thanks Mark. I’m reminded of a comment that I heard earlier in the conversation from Dave Castillo, that we have a ton of work to do on The Hill that we’re hopeful about a policy work moving forward, but there’s also a core element that can help us recover in a better way and that’s connectivity between rural organizations. That is a source of pride for Rural Assembly, our hosts today. They’re extraordinarily good at that. You guys have offered support as a community for housing and housing policy and thrilled to hear that. Thanks for the invite today and I know that a piece of what you do and a piece of what I think Dave was alluding to really is the way in which our rural organizations can connect advocate collectively and help support each other. Dave, can we return to that topic for just a minute?

Dave: Yeah, no, thank you. I think one way to look at it is a gentleman from Craft3 up in the Northwest said, they built this CDFI and spun off another new markets group and they’ve just done tremendous work over 35, 40 years. John Berdes, one of the co-founders has already passed away, but before he did I met with him and asked him, after all this time, all this tremendous work that you’ve done over the years, what keeps you up at night? He said something that really stuck with me and that I think really makes a lot of sense still now for a lot of us is he said, “We built this organization to be transformational. We want to be a transformational force for dairies, fisheries, timber industry in the Northwest and the communities that they serve and the more money that we’ve gotten, the more partnerships we’ve developed, the more investors we’ve gotten, we’ve become transactional.”

And he said, “What I’m really worried about is when me and Dick and Sue are gone, that we’ve incentivized our staff so much to focus on production, to focus on the margin, to focus on reducing losses, that we’ve forgotten about being a transformational force in finance and we’ve just become another bank.”

I had a Tribe who we were working with another regional CDFI to get them financed and the underwriter exclaimed to the Tribal finance director with glee as he was going through the underwrite that we don’t take losses here. So the finance director said, “Well, then how are you any better than a bank?” They’ve just forgotten the mission. So I think that’s a big part of what it means to partner and be allies to each other. That’s why I said, let the last be first. Go ahead and move the money. I mean, that’s really comes down, move the money. If it’s sitting in an investment account, if foundations in particular, if you’re looking to chase economic returns and have social impact. I had the chairman of impact investment committee asked me, why would I invest in your organization at 2% when I could generate 4% in more typical investments for the foundation and my answer was something like, “I have no idea,” but as the chairman of the Impact Investment Committee, if you want to chase returns, please go chase returns. But if you’re going to forget to talk about impact investments, let’s talk about impact.

I think it’s hard for us to divorce ourselves from being a good investment from being respectable. Someone wrote something recently that respect ability doesn’t mean being respected, right? So we’ve got to remind folks what the purposes here and be comfortable with being a little uncomfortable. That takes work. It takes time, but I think if, nothing else what this COVID experience and the social distancing has done for us is, it’s required us to connect more in forms like this and the communication that we have after this helps us do that. We don’t have to drive four hours or get on a plane, fly six hours to go be on the ground with someone. We can talk with someone every day and we’ll work through the problems and move the money and get the homes built. In effect, the issues that have been with us for far too long. So I know we’re getting close to our time-

David: Yeah, we’re hitting the top of the hour, but that was really well said. I do want to take a minute to talk about transformational organizations and CDFI with Bill before we go. We are hitting the top of the hour. I want to remind everybody if you’re tweeting this back out to hit hashtag rural communities and hashtag rural housing the organizations that you’ve heard from today are tremendous resources in their communities. If you were in the areas they serve, please reach out to them. They’re here to serve and done so for decades extraordinarily well. So, Bill, you heard, we just heard Dave doing a really good description of that tension between transformational and transactional. It was clear in the way you introduced the work of Hope that you have and aspire to maintain that transformational soul to the work that you do. Can you talk about the way being a CDFI and the support that we need for CDFIs helps you do so?

Bill: No, they feel very similar to the way that they’ve still described his work and talking about John Berdes and how he saw this work. Increasingly we talk about Hope as an organization that exists to get and make sure that race, gender, where you’re born well does not dictate one’s ability to prosper and to support their families and be a productive contributed to the economy and society and financing is one of our tools for doing that. Also advocacy is one of our tools for doing that. I think now advocacy is probably one of the most important tools that we need because as we taught how upside down some of the policies that are being put forward are in terms of their benefit to those who needed most. We work very closely.

You’re part of a network that we engage with on a regular basis, partners for rural transformation. CDFI in native communities and on the US Mexico border and Appalachia in the black belt, in the central Valley, across the country, very diverse, but share in a commitment to increasing investment in persistent poverty areas. Having that collective brain trust and those collective voices, engaging members of Congress from across the country, we have much stronger voice and influence than we would have separately. I just think the advocacy work, the policy work that we do as CDFI, if you’re not an advocacy organization, then you should not be a CDFI. You should just be a bank. You should be a community bank and that’s fine if that’s what you’re going to do, people need what community banks do. But the people who are most vulnerable need people who are going to advocate for them and go to the mat and because then take their voices to the halls of Congress, to the boardrooms of corporations and banks.

I think about policy as doctors, public policy is getting in front of whoever controls the resources that affects the lives of the communities that we’ve worked with and making sure they know that they’re extracting wealth. They’ve been extracting wealth from native communities since before my people were dragged over here on the slave boats and before people in Appalachia were put into the coal mines. I mean, these extract either they should not be extraction economies because certainly a lot of people are making money out of these economies and we need to hold them accountable. We can do that. We can do that best when we do it collectively, we a lot more in common. The true CDFIs understand that and we can make a difference again. In the Heroes Act, we’ll see how, where it goes, but there was not just the billion dollars for an emergency appropriation for CDFIs, but there was a $2 billion increase in the regular CDFI program that had 40% of it going to minority led CDFIs. That would close that gap.

Why that CDFIs have a two and a half time or assets then the CDFIs led by communities of color. So we get what we pay for when you have 40% for $40 per capita for philanthropic giving and the Delta in Appalachia compared to $450 per capita US, 4,000 in the Bay area. Almost 3000 in New York, $3,000 versus $40. If I can do the math, you’re not going to get the kind of benefits if you don’t invest in it. So I hope that policy makers, bankers, corporate leaders are really [inaudible 01:01:47] the business round tables, stigma of what the purpose of a foul of a cup corporation is an economy that works for all Americans. Let’s see if they put that to practice. I think there’s a lot of opportunity and hopefully a lot of focus is the tragic demise of George Floyd and so many others that are bringing us together and helping us see that we can’t do things the way we’ve done before. There’s a better way if we come together and act for change instead of just talk.

David: Well said, Bill, and there are definitely rural places that are thriving and surviving and doing well and looking good. We have talked a lot today about places of persistent poverty and want to make sure that the message gets out as Bill so eloquently was describing there, that the spending, the corporate, the policy, the federal programs do dictate which communities thrive and which win. I’m always saying that suburbs don’t magically spring from the earth complete with Amazon trucks and organic supermarkets, broadband and the ability to Zoom into work nor do rural places decline into poverty, unless the infrastructure is in disrepair, the family farms and shops and businesses and markets are squeezed out.

We are dictating a lot of what those results are through the spending, through the public policy work that we tried to call attention to today. I appreciate very much Rural Assembly lifting this conversation up. For those of you who’ve turned in, thank you very much. Please be in touch directly with any of us where we’re definitely here and enjoy working with the partners that do participate in Rural Assembly. To our guests and their home organizations Mark Kudlowitz, Bill Bynum, Dave Castillo, Sam Booth. Thank you guys. I really appreciate today’s conversation and I wish you all the success moving forward.

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