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WINTER 2008Focus Issue: Community Development Policy
A PUBLICATION OF THE COMMUNITY DEVELOPMENT DEPARTMENT OF THE FEDERAL RESERVE BANK OF SAN FRANCISCO
VOLUME TWENTY NUMBER 3www.rbs.org/community
A New Safety Net forLow-Income FamiliesBeyond Shelter
Investing in Quality Aordable Housing
Supporting Young Childrenand Families
An Investment Strategy that Pays
Encouraging Entrepreneurship
A Microenterprise DevelopmentPolicy Agenda
Strengthening CommunityDevelopment Infrastructure
The Opportunities and Challengeso the Community DevelopmentBlock Grant Program
Return on Investment
The Mixed Balance Sheet o CommunityDevelopment Research
A New Look at theCommunity Reinvestment ActTwenty-First Century Ownership
Individual and Community Stakes
 
by Laura Choi
Editor
This publication is produced by the CommunityDevelopment Department o the Federal ReserveBank o San Francisco. The magazine serves asa orum to discuss issues relevant to commu-nity development in the Federal Reserve’s 12thDistrict, and to highlight innovative programs andideas that have the potential to improve the com-munities in which we work.
Community Development Department
Federal Reserve Bank o San Francisco101 Market Street, Mail Stop 640San Francisco, CA 94105www.rbs.org(415) 974-2765 / ax: (415)393-1920
 Joy Hofmann
Group Vice PresidentPublic Inormation and Community Development joy.k.hofmann@s.rb.org
Scott Turner
Director, Community Developmentscott.turner@s.rb.org
Lauren Mercado-Briosos
Administrative Analystlauren.mercado-briosos@s.rb.org
RESEARCH STAFF
David Erickson
Manager, Center or CommunityDevelopment Investmentsdavid.erickson@s.rb.org
Ian Galloway
Investment Associateian.galloway@s.rb.org
Carolina Reid
Manager, Research Groupcarolina.reid@s.rb.org
Naomi Cytron
Senior Research Associatenaomi.cytron@s.rb.org
Laura Choi
Research Associatelaura.choi@s.rb.org
Vivian Pacheco
Research Associatevivian.pacheco@s.rb.org
FIELD STAFF
 John Olson
District Manager john.olson@s.rb.org
 Jan Bontrager
Regional ManagerArizona, Nevada, Utah jan.bontrager@s.rb.org
Melody Winter Nava
Regional ManagerSouthern Caliorniamelody.nava@s.rb.org
Craig Nolte
Regional ManagerAlaska, Hawaii, Idaho, Oregon, Washingtoncraig.nolte@s.rb.org
Lena Robinson
Regional ManagerNorthern Caliornialena.robinson@s.rb.org
Darryl Rutherord
Regional ManagerSan Joaquin Valleydarryl.rutherord@s.rb.org
CI Notebook
Inside this Issue
A New Safety Net for Low-Income Families ...........................................................3Beyond Shelter: Investing in Quality Affordable Housing .......................................8Supporting Young Children and Families: An Investment Strategy that Pays ........12Encouraging Entrepreneurship:A Microenterprise Development Policy Agenda ....................................................15Strengthening Community Development Infrastructure:The Opportunities and Challenges of CDBG ........................................................20Return on Investment: The Mixed Balance Sheetof Community Development Research .................................................................22A New Look at the CRA ........................................................................................24Twenty-First Century Ownership: Individual and Community Stakes ...................26
A
s we planned this issue o
Community Investments,
the timing o a newyear and a new presidential administration inspired us to take a resh look atsome o the major policy issues aecting community development. This taskseemed especially important given the current economic crisis, which will nodoubt have a signifcant impact on low- and moderate-income communities. In addition,as the economy continues to tighten, unding shortalls threaten to hinder communitydevelopment eorts at a time when they are needed the most.We believe that the current crisis presents an opportunity to rethink existing policies andconsider how they might be improved. In that spirit, we highlight new ideas, innovations, andquestions in this issue, considering what it means to truly invest in our communities andwhat role public policy can play in supporting the well-being o vulnerable communities,through both direct public spending and the leveraging o private resources. The topicsrange rom established ederal policies, such as the Community Reinvestment Act andthe Community Development Block Grant program, to more recent movements such asstakeholder-driven community development and microenterprise. We hope the articles inthis issue spur an ongoing dialogue in the feld and push all o us to think critically abouthow to design policies that can address the challenges acing low- and moderate-incomecommunities.Happy New Year!Laura Choi
 
Winter 2008
3
D
uring the 1990s, the ederal government prom-ised low-income amilies that work would pay.Parents moved into jobs in droves in responseto new welare rules requiring work, tax credits,and other work supports that boosted take-home pay. Thesepolicy changes were enacted during one o the strongestlabor markets on record. A decade later, the labor market istepid, and policies have to be re-evaluated keeping in mindthe circumstances o today’s amilies.Low-income working amilies ace the greatest risks intoday’s unpredictable economy. The proverbial economicladder has largely disappeared: the wages o less-skilledworkers have on balance either stagnated or allen over thepast two decades, making it dicult or many amilies tomake ends meet. The loss o a job, a cut in work hours,a serious health problem, or an increase in housing costscan quickly push these amilies into greater debt, bank-ruptcy, or even homelessness. Most do not receive grouphealth insurance coverage rom their employers or qualiyor unemployment insurance i they lose their jobs. Neither the government nor employers give them much o a saetynet.With so many so vulnerable, the nation needs newpolicies that make work pay in today’s economy. This essaysynthesizes an integrated set o policy proposals designedto establish a new saety net or low-income amilies. Thepolicies are based on our principles:
•Workshouldpayenoughtocoverthebasiccostsof
everyday amily living. When ull-time work ails tocover these costs, basic needs should be subsidized inways that also promote greater work eort.
•Youngchildreninlow-incomeworkingfamilies
require quality day care and their parents must beable to combine a job with parenting so their childrendevelop ully.
A New Safety Net for Low-Income Families
By Sheila Zedlewski, Ajay Chaudry, and Margaret SimmsThe Urban Institute 
1
•Workersneedaccesstotrainingtomoveupthecareer
ladder. This should include access to specialized sup-ports when their underdeveloped or outdated skills,their health problems, or other actors put even the rstrung o the ladder out o reach.
•Workersshouldbeabletobridgeemploymentgaps
through unemployment insurance and accumulatedsavings.Policies built on these principles would enhance low-income amilies’ nancial stability, expand investment inchildren, and ulll the promise that earnings coupled withgovernment work supports would enable parents to pay or their amilies’ basic needs. Below, we prole specic policyrecommendations that would help to achieve these goals,each developed by authors o the “New Saety Net” paper series published by the Urban Institute.
Making Work Pay
For many workers, a living wage remains elusive. Thedisparity between minimum wage income and the ever in-creasing cost o basic needs places many amilies in nancial jeopardy. To help make work pay, Gregory Acs and MargeryAustin Turner recommend policies to enhance low-incomeamilies’ purchasing power and reduce household expenses,in particular unusually high housing costs.
2
 
With so many so vulnerable, the nationneeds new policies that make work pay intoday’s economy.
Box 1.1
Minimum wages and poverty
The ederal minimum wage increased to $6.55 per houron July 24, 2008. At this rate, a person working a 40-hourweek or all 52 weeks in a year would earn $13,624. Ac-cording to the Department o Health and Human Services,the 2008 poverty line or a single parent with one child was$14,000, and or a single parent with two children, it was$17,600. A single parent trying to support a amily on a ulltime minimum-wage job would qualiy as poor.The ederal minimum wage was constant or a decade,rom 1997 to 2007, at the rate o $5.15 per hour. Wagesincreased in 2007 to $5.85, then again to the current rateo $6.55 earlier this year. The minimum wage will increaseto $7.25 per hour eective July 24, 2009.
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