WASHINGTON-The National League of Cities (NLC) has launched an innovative, two-year pilot program called Local Interventions for Financial Empowerment through Utility Payments (LIFT-UP) that seeks to help low-income families pay their utility bills and achieve financial stability.
In collaboration with a small group of cities, NLC will test a new model in which cities identify families who are in debt to city-owned utilities and offer them a restructured payment plan, payment incentives, and a variety of financial empowerment services. NLC's Institute for Youth, Education and Families will provide in-depth technical assistance to pilot project cities, which include Savannah, Ga.; St. Petersburg, Fla.; Newark, N.J.; and Houston, Texas.
"Too many families are struggling to make ends meet and pay for basic necessities like electricity, water, and heat," said Newark Mayor Cory Booker. "Connecting residents to financial coaching, while allowing for some restructuring of their utility debt, is a smart approach to financial empowerment. This effort has the added benefit of bringing in revenue we might not otherwise see. Privately-funded, publicly-run pilot programs like the LIFT-UP project are essential to innovation in municipalities across the country. I'm thankful to the National League of Cities for orchestrating this initiative and I look forward to working with my team to make it a success."
The LIFT-UP initiative is supported by grants from the Center for Financial Services Innovation (CFSI) Financial Capability Innovation Fund II, the Ford Foundation, and the Annie E. Casey Foundation. The Financial Capability Innovation Fund is supported by a collaborative of funders led by the Citi Foundation and also including Capital One Foundation, NYSE Euronext Foundation, Charles Schwab Bank, Charles Schwab Foundation, and Experian.
"When families cannot pay their utility bills, it is often a sign that they are in deep financial distress," said NLC President Marie Lopez Rogers, Mayor of Avondale, Ariz. "By connecting these residents with existing financial empowerment programs, LIFT-UP project cities will help them reduce debt and strengthen their ability to pay bills on time. The project will also provide cities with a sustainable way to increase revenues from utility payments."
"Houston is tremendously excited about LIFT-UP," says Ronald Green, City Controller of Houston. "This partnership of NLC, the City's utility department and our office's Bank on Houston initiative will greatly assist many families in eventually gaining financial independence. We will strive to be creative and supportive with families while we work to erase their debt and ensure a more stable financial future for them."
LIFT-UP builds on the recent emergence of sophisticated efforts by cities to help low- and moderate-income families stabilize their finances and begin to accumulate savings. Cities are increasingly taking steps to help residents increase their incomes, build financial assets, repair credit, receive financial coaching, and protect themselves from high-cost, predatory lenders.
At the same time, however, aggressive debt collection practices by city-owned utilities may inadvertently undermine these city-led efforts. LIFT-UP seeks to help cities overcome this "disconnect" within local government, which represents a missed opportunity to identify and assist struggling families. Through the LIFT-UP model, participating cities will:
1. Forge connections between utilities and financial empowerment agencies to identify eligible residents and refer them to financial counselors;
2. Offer these residents a mix of services that help them pay overdue bills and prevent future accumulation of debt; and
3. Restructure outstanding debt owed to city-owned utilities, using behavioral economic approaches to facilitate repayment.
Developed in collaboration with cities that are leaders in the financial empowerment field, the LIFT-UP program has the potential to create a "win-win" scenario that brings key services to struggling residents while bringing needed revenue to cities.
The National League of Cities is dedicated to helping city leaders build better communities. NLC is a resource and advocate for 19,000 cities, towns and villages, representing more than 218 million Americans.