Municipalities across the country are committed to increasing the upward economic mobility of residents and reducing the racial wealth divide. By allocating funds to address these goals, the municipalities can also lessen the impact of any coming downturn on families and their municipal budget.
One unique opportunity to do both is to improve the ability of communities of color to become homeowners. A lack of equitable access to homeownership has consistently been a key driver of the racial wealth divide. Homeownership offers a consistent, predictable housing payment that can serve as a buffer against rising housing costs, the chance to build equity, and a potential asset that can be passed down to future generations. For most families in America, owning a home represents the most significant potential for transferring wealth between generations and a meaningful step toward economic stability and upward mobility.
Municipalities are utilizing many strategies to increase homeownership and housing affordability. However, to impact racial wealth inequities, it is crucial to consider the root causes of homeownership inequities. Some city leaders are considering how they can address historical injustice—specifically, righting the denied payment of wages to enslaved Black people for their labor, acknowledging local governments’ role in this practice, and acting to change institutions and restore justice to individuals harmed. These practices are often known as reparations and can be connected to a city’s homeownership strategy.
Reparations for African Americans are not a new idea; the legendary Detroit Congressman John Conyers introduced legislation over and over again to create a commission to study the effects of slavery and racial discrimination in the United States with the goal of developing remedies based on the findings.
But cities are now taking the lead in planning or implementing reparations policies that increase access to wealth-building opportunities for communities of color. Municipalities are leveraging general funds, cannabis taxes, or those made possible through the American Rescue Plan Act (ARPA), to invest in reparations strategies that can have a long-term impact on families of color in their communities.
Leading the Way
In November 2019, the City of Evanston, Illinois, established a reparations fund of $10 million from the city’s tax on the sale of recreational marijuana. Through a community process, the city concluded that the strongest case for reparations came from evidence showing the most significant harm to African Americans was the role the city played in housing discrimination resulting from zoning ordinances in place from 1919 till 1969.
The City of Evanston created the Restorative Housing Fund in 2021 as the first initiative of their reparations work. The fund received an initial budget of $400,000 to support down payment/closing costs assistance to purchase property, repair, improve or modernize the property, or funds to pay down mortgage principal, interest, or late penalties for real property located within the city. Sixteen eligible Black residents were selected to receive $25,000 via a local non-profit facilitating the payments and providing free housing counseling services. The city plans to continue to work through the list of eligible residents that have already been vetted to receive additional funds.
More Moving to Action
Other cities, including St. Louis, MO; Providence, RI; St. Paul, MN; Asheville, NC; Boston, MA; Tullahassee, OK; and Berkeley, CA, are also considering reparations strategies and are all in different phases of these efforts. Some are in the process of studying their municipality’s history to better understand what reparations are needed. Others are selecting residents that will serve on commissions, determining where to start, determining who should receive funds, securing a source of funds to act, and dispensing funds to impact their targeted population.
Advancing a reparations strategy offers an opportunity for municipalities of all sizes to address essential parts of homeownership, from purchasing a home to maintenance and repairs to the economic uncertainty on a family budget and being able to pay a mortgage on time. It also importantly allows municipalities to formally acknowledge their roles in an unfortunate history that secured wealth for some while others suffered. And finally, it offers a way to help build the wealth of those descendants, thereby increasing their economic mobility and that of future generations. To learn about more city strategies to narrow the racial wealth divide, download NLC’s new report, Municipal Strategies to Narrow the Racial Wealth Divide.