The Primary Forms of Rental Subsidy in the United States
The primary forms of rental subsidy in the United States are low-income public housing, low-income housing tax credit, and housing choice vouchers. According to Rothstein in "The Making of Ferguson: Public Policies at the Root of its Troubles," these rental subsidies belonged to the African Americas. The US government contributed to the African Americans becoming poor by preventing them from moving to the middle-class communities, whereas they had been granted the permission. This led to increased racism in the country as the white homeowners completely segregated themselves from the African Americans as the associated them with massive poverty. The whites also feared that the African Americans would bring slum conditions to them.
The Settlement House Movement and Its Legacy
The Settlement House Movement was established to provide education and social services to the poor people who lived in the United States. The movement paved the way for the religious leaders as well as women missionaries to create settlements in the United States. The lasting legacy of the Settlement House Movement was that it most women leaders were brought up at the time when women were being excluded from taking leadership roles in the government and also the businesses. The settlement house movement also led to the development of the public health which included health, housing, and sanitation. Finally, the Settlement Housing Movement influenced the creation of social surveys. The social surveys were to make the needs of the poor known to the people (Von).
The Early Community Development Corporations (CDC) Movement
According to Von, the early Community Development Corporations (CDC) movement was characterized by several defining features. The first one was the unity council which mobilized against CA proposition. The other feature was that the movement could control the economic resources and capital for their communities. The CDC movement was trying to overcome the following market failures: profit maximization which prevented social investments, zoning laws and redlining which socially restricted investments. It also sought to overcome lack of potential investors to identify the available opportunities in the neighborhood (Von). The factors which led to the decline of a more resistance based form of community development were disagreements among the leaders and racism.
Market-Driven and Financed Interventions in Community Development Today
Community development today is characterized by market-driven and financed interventions. The strengths of this approach are that it expands the level of expertise in financing development to encourage investments. These investments then lead to revitalized distressed neighborhoods which are a positive effect. The weakness of this approach is that it could lead to gratification and displacement of people who end up becoming homeless (Ralph).
Funding for Community Development and its Positive Changes
Funding for community development has changed over time, and the changes have resulted in overall positive results. Initially, the significant forms of community development, grants, equity, and debt, required very long procedures before being processed. They were also very risky to the community developments (Family). Over time, the procedures have been simplified, and ways of risk reduction have been established.
The Risk of Lending or Investing in Community Development
Community development projects are often at a higher risk for lenders or even investors. This usually happens when the project manager decides to share the default risk with the lender at 100%. According to New Markets, the risk occurs because the lenders or the investors lack the incentive to underwrite the right loans. As a result, there is difficulty in finding the right balance.
Reducing the Risk of Lending or Investing in Community Development
Diversification and doing the due diligence can reduce the risk of lending or investing in community development. Diversification can be achieved through pooling of bank funds to enable the community development to offer loans and financial products at a lower interest rate. Due diligence is when assets and liabilities are established in the evaluation of the lenders and buyers (Rajabi).
Works Cited
Family, Hellman. "Faculty Fund."
Rajabi, Roshan. "Inside the New Markets Tax Credit Program: Who is the Real Winner?." (2017).
Ralph, Laurence. Renegade dreams: Living through injury in gangland Chicago. University of Chicago Press, 2014.
Rothstein, Richard. The making of Ferguson: Public policies at the root of its troubles. Economic Policy Institute, 2014.
Von Hoffman, Alexander. "House by house, block by block." (2003).
What 53 New Markets Tax Credit Projects Say About the Treasury Program. (n.d.). Retrieved from https://nextcity.org/daily/entry/new-markets-tax-credits-awards-work
