The Federal Reserve presents a tale of two Texas poverty neighborhoods

The Community Affairs Offices of the Federal Reserve System and the Brookings Institution have issued a report, “The Enduring Challenge of Concentrated Poverty in America: Case Studies from Communities Across the U.S.” that profiles 16 high poverty communities in the US, including two in Texas.

The two Texas poverty communities profiled are East Austin and the Chamizal neighborhood in El Paso.

The purpose of the report is to understand “the dynamics of poor people living in poor communities and the policies that will be needed to bring both into the economic mainstream.”

The profiles of these neighborhoods presented in the report is shocking.  The combination of sky high poverty rates, low levels of education, high unemployment and unaffordable housing cripples both communities. Yet in another important way both of the communities are quite different.  The poverty in the Chamizal neighborhood is entrenched and unchanging, while the East Austin neighborhood is undergoing rapid change and loss of its low income population through gentrification.

Consider the demographics of the El Paso Chamizal neighborhood:

  • the poverty rate is 58.7%
  • 71% of adults lack a high school diploma
  • the unemployment rate is 18%
  • 55% of the rental units are HUD subsidized — 47% of renters have a high cost burden.

The report concludes:

“Lack of education, economic and social isolation, and obstacles to quality housing are major contributors to the perpetuation of poverty in Chamizal. Resources to address chronic issues are expensive, especially amid recent pressure in El Paso to reduce the tax rate in response to increases in property assessments.”

In the East Austin neighborhood:

  • the poverty rate is 46%
  • 54% of adults lack a high school diploma
  • 50% of the rental units are HUD subsidized — 41% of renters have a high cost burden.

Regarding East Austin the report concludes:

“As the volume of investment in East Austin climbs, however, a growing number of low- and moderate-income households are dispersed outside the city limits, farther from the service providers and social networks they have relied on for their quality of life. For elderly and disabled individuals on fixed incomes and households that do not want to leave their family homes, gentrification has been an unwelcome change. At the same time, residents who are dispersing to the suburbs have access to other community assets, such as new schools and more vibrant employment opportunities. For East Austin, the question remains: Will government, the private sector, and community leaders be able to manage the community’s changes in a way that gets the “balancing act” right?”

I came away from reading this report frustrated that it did not present a clear blueprint for improving the quality of life in these neighborhoods. Nonetheless, the report does shine a light on these two Texas neighborhoods that desperately need solutions to their poverty problems.

The report can be downloaded at: http://www.frbsf.org/cpreport/docs/cp_fullreport.pdf .

One thought on “The Federal Reserve presents a tale of two Texas poverty neighborhoods

  1. As an investor in the East Austin neighborhood, It is really hard to keep the housing affordable. Its a neighborhood where the appreciation rates have been in excess of 13% per year for the last 4 years. We have to increase the rents because our taxes are going up just as fast as health care premiums. A lot of my clients wanted to buy and hold in this area and rehab the property later.

    They would have been happy to keep old tenants in place. But soon between the mortgage payments and the taxes– the rents had to go up. That means that improvements had to be made to the property in order to “fetch” the higher rent.

    Then the investors are faced with recouping mortgage payments, taxes and improvements.

    This is a neighborhood where a 3 bedroom house can now rent between 1200.00 to 1500.00. I the the answer is a freeze in the property taxes in the areas where the landlord could provide proof of occupancy by a low income resident.

    How to administrate such a program?? I will leave that to you.

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