FACT SHEET: Biden-Harris Administration Announces New Actions to Build Black Wealth and Narrow the Racial Wealth Gap
One hundred years ago, the thriving Black community of Greenwood in Tulsa, Oklahoma, known as "Black Wall Street," was ruthlessly attacked by a violent white supremacist mob. An estimated 300 Black Americans were killed and another 10,000 were left destitute and homeless.
The destruction wrought on the Greenwood neighborhood and its families was followed by laws and policies that made recovery nearly impossible. The streets were redlined, locking Black Tulsans out of homeownership and access to credit. Federal highways built through the heart of Greenwood cut off families and businesses from economic opportunity. And chronic disinvestment by the federal government in Black entrepreneurs and small businesses denied Black Wall Street a fair shot at rebuilding. These are the stories of Greenwood, but they have echoes in countless Black communities across the country.
Because disparities in wealth compound like an interest rate, the disinvestment in Black families in Tulsa and across the country throughout our history is still felt sharply today. The median Black American family has thirteen cents for every one dollar in wealth held by White families.
Today, on the centennial of the Tulsa Race Massacre, the Biden-Harris Administration is announcing new steps to help narrow the racial wealth gap and reinvest in communities that have been left behind by failed policies. Specifically, the Administration is expanding access to two key wealth-creators – homeownership and small business ownership – in communities of color and disadvantaged communities.
The Administration will:
- Take action to address racial discrimination in the housing market, including by launching a first-of-its-kind interagency effort to address inequity in home appraisals, and conducting rulemaking to aggressively combat housing discrimination.
- Use the federal government's purchasing power to grow federal contracting with small disadvantaged businesses by 50 percent, translating to an additional $100 billion over five years, and helping more Americans realize their entrepreneurial dreams.
The Administration is also releasing new information regarding President Biden's American Jobs Plan proposals to create jobs and build wealth in communities of color:
- A new $10 billion Community Revitalization Fund to support community-led civic infrastructure projects that create innovative shared amenities, spark new local economic activity, provide services, build community wealth, and strengthen social cohesion.
- $15 billion for new grants and technical assistance to support the planning, removal, or retrofitting of existing transportation infrastructure that creates a barrier to community connectivity, including barriers to mobility, access, or economic development.
- A new Neighborhood Homes Tax Credit to attract private investment in the development and rehabilitation of affordable homes for low- and moderate-income homebuyers and homeowners.
- $5 billion for the Unlocking Possibilities Program, an innovative new grant program that awards flexible and attractive funding to jurisdictions that take steps to reduce needless barriers to producing affordable housing and expand housing choices for people with low or moderate incomes.
- $31 billion in small business programs that will increase access to capital for small businesses and provide mentoring, networking, and other forms of technical assistance to socially and economically disadvantaged businesses seeking to access federal contracts and participate in federal research and development investments.
Taking Action to End Racial Discrimination in the Housing Market. The Biden-Harris Administration is announcing additional steps to end discrimination and bias in the housing market. More than 50 years since the Fair Housing Act's passage, access to wealth through homeownership remains persistently unequal. In his first week in office, President Biden issued a memorandum directing the U.S. Department of Housing and Urban Development (HUD) to address discrimination in our housing market. Today, the Administration is announcing that it is taking critical steps towards realizing the President's directive. HUD has now sent both its proposed rule on countering housing practices with discriminatory effects and its proposed interim final rule on the legal duty to Affirmatively Further Fair Housing to HUD's Congressional authorizing committee in the Senate and the House of Representatives for review and will publish them in the Federal Register next week. These proposed rules will align federal enforcement practice with the congressional promise in the Fair Housing Act to end discrimination in housing and will collectively provide the legal framework for HUD to require private and public entities alike to rethink established practices that contribute to or perpetuate inequities.
Additionally, the Biden-Harris Administration is taking on discrimination in home appraisals. A 2018 Brookings study found that homes in majority-Black neighborhoods are often valued at tens of thousands of dollars less than comparable homes in similar—but majority-White—communities. And the crisis is worsening: a recent study found that the gap between the appraised value of homes in predominantly White neighborhoods compared to comparable homes in predominantly Black and Latino neighborhoods nearly doubled between 1980 and 2015. The impact of these disparities in home appraisals can be sweeping, limiting homeowners' ability to properly benefit from refinancing or re-selling their homes at higher valuations and thereby contributing to the already-sprawling racial wealth gap.
President Biden is charging Secretary of Housing and Urban Development Marcia Fudge with leading a first-of-its-kind interagency initiative to address inequity in home appraisals. The effort will seek to utilize, quickly, the many levers at the federal government's disposal, including potential enforcement under fair housing laws, regulatory action, and development of standards and guidance in close partnership with industry and state and local governments, to root out discrimination in the appraisal and homebuying process. These are the kinds of policies and practices that keep Black families in Greenwood and across the nation from building generational wealth through homeownership.
Using the Government's Purchasing Power to Drive an Additional $100 Billion to Small Disadvantaged Business Owners. The federal government is the largest consumer of goods in the world, buying everything from software to elevator services to financial and asset management, Federal procurement is one of our most powerful tools to advance equity and build wealth in underserved communities. And yet, just roughly 10 percent of federal agencies' total eligible contracting dollars typically go to small disadvantaged businesses (SDB), a category under federal law for which Black-owned, Latino-owned, and other minority-owned businesses are presumed to qualify. Increasing federal spending with these businesses will help more Americans realize their entrepreneurial dreams and help narrow racial wealth gaps. In 2019, for instance, the gap in business ownership between Black and Latino households, relative to White households, accounted for 25 percent of the overall racial wealth gap between these groups.
Today, the Biden-Harris Administration is launching an all-of-government effort to expand contracting opportunities for underserved small businesses across the country. At its center is a new goal: increasing the share of contracts going to small disadvantaged businesses by 50 percent by 2026—translating to an additional $100 billion to SDBs over the 5-year period. To achieve this goal, agencies will assess every available tool to lower barriers to entry and increase opportunities for small businesses and traditionally-underserved entrepreneurs to compete for federal contracts. The impact could be historic: all told, attainment of the new goal will represent the biggest increase in SDB contracting since data was first collected more than 30 years ago.
Detailing the President's Proposal for Historic Investments to Build Wealth and Opportunity More Equitably, Including in Communities of Color. Today the Biden-Harris Administration is also releasing new details of President Biden's American Jobs Plan, which will make historic investments in building wealth and opportunity in Black and other communities of color. The American Jobs Plan will:
- Create a Community Revitalization Fund to Support Community-Led Civic Infrastructure. The American Jobs Plan calls for a new $10 billion Community Revitalization Fund based at the Department of Housing and Urban Development to support community-led civic infrastructure projects in urban, suburban, and rural areas that create innovative shared amenities, spark new local economic activity, provide services, build community wealth, and strengthen social cohesion. The Fund would be targeted to economically underdeveloped and underserved communities, including those, like Greenwood, that suffer from the effects of persistent poverty, historic economic disinvestment, and ongoing displacement of longtime residents.
The Community Revitalization Fund will:
- Invest directly in community-led projects that benefit residents. The Community Revitalization Fund will provide $500 million in planning grants and $9.5 billion in implementation funds to community-based organizations, non-profits, community development corporations (CDCs), and their partners, centering the community as direct beneficiaries and drivers of project outcomes. These grants will flow to persistent poverty counties, high-poverty census tracts, and areas both at risk of or rapidly gentrifying. Recognizing that a legacy of underinvestment may mean some communities lack capacity to build complex projects or apply for federal grants, the Fund will seek partnerships with philanthropy, community development financial institutions (CDFIs), and local government to provide technical assistance and capacity-building support.
- Activate vacant land and buildings to create community amenities. The Community Revitalization Fund will support a wide range of projects, including: upgrading access to natural areas, adaptive reuse of vacant buildings and storefronts to provide low-cost space for services and community entrepreneurs (such as health centers, arts and cultural spaces, job training programs, business incubators, and community marketplaces), and removing toxic waste to create new parks, greenways, urban agriculture, and community gardens. The Fund will promote the best of American equitable and resilient design, advancing the Biden-Harris Administration's Justice40 climate goals and building a strong link between past and future. This includes in-fill development that reknits areas damaged by urban renewal and the revitalization of commercial corridors with locally-owned businesses and services.
- Strengthen social cohesion and build community wealth. The Community Revitalization Fund will prioritize projects that strengthen social cohesion through shared use and civic engagement, and build community wealth and equity for existing residents. The Fund will encourage innovative approaches to achieve those goals, including land acquisition, creation of new businesses and stronger connections to existing employment centers, establishment of community investment trusts and similar wealth-building models, and projects that provide for intercultural and intergenerational mixing.
- Spark new local economic activity and unlock private capital. The Community Revitalization Fund will support projects that show potential to spark new local commercial activity and unlock private investment for further equitable development, with a strong vision of continued community benefit. The Fund will encourage collaboration with CDFIs to leverage additional resources, and integration with existing federal economic development resources and tax credits to drive upward community mobility. The Fund will also support pilot projects, tactical urbanism projects, pop-up spaces for local retail, and other smaller-scale interventions that build activity and opportunity for residents.
- Retrofit Transportation Infrastructure to Reconnect Neighborhoods.Too often, past transportation investments meant to provide greater access instead divided low-income communities, displacing and disconnecting people from their homes, work, and families. Recognizing this history and committed to redressing it, President Biden proposes funding specifically for neighborhoods where historic transportation investments cut people off from jobs, schools, and businesses. This proposal will support the planning, removal, or retrofitting of existing transportation infrastructure that creates a barrier to community connectivity, including barriers to mobility, access, or economic development.
Specifically, the Reconnecting Neighborhoods Program will provide $15 billion in new competitive grants for planning, technical assistance (TA) and capital investments:
- Planning and TA grants. These can be used for planning studies and public engagement activities to evaluate the feasibility of infrastructure removal or retrofitting, building organizational or community capacity, transportation planning, and identifying innovative solutions to infrastructure challenges, including reconnecting communities impacted by disruptive infrastructure or those lacking safe, reliable, and affordable transportation choices. It will prioritize grantmaking to historically disadvantaged, underserved and overburdened communities.
- Capital grants. These may be used to support infrastructure construction, demolition, and all necessary feasibility and related planning activities, community partnerships, and anti-displacement and equitable neighborhood revitalization strategies including land banking and equitable transit-oriented development. The minimum grant size will be $5 million and will prioritize communities most impacted by past inequitable infrastructure development.
The program will begin to correct past harms and reduce pollution, create more public and green spaces, support local businesses, increase job opportunities, and lay the groundwork for more equitable transit systems and affordable housing solutions. The "Highway to Boulevards" movement has already seen 18 U.S. cities either replace or commit to replace a freeway with more urban and accessible streets. Cities like Rochester, NY, have chosen to remove dividing highways and replace the highway with infrastructure that has revived and reconciled neighborhoods decades later. President Biden's proposed investment will fund and accelerate reconnecting neighborhoods across the country.
In addition, the Department of Transportation will establish a new Thriving Communities program to support communities with eliminating persistent transportation barriers and increasing access to jobs, school, and businesses. This initiative seeks to invest $5 billion in historically marginalized communities and bring everyone to the table to ensure that more communities have clean, robust, and affordable transportation options, including high-quality transit, equitable neighborhood revitalization, and other enhancements to improve neighborhood quality of life and address climate change.
- Enact a New Neighborhood Homes Tax Credit. The American Jobs Plan calls for a new Neighborhood Homes Tax Credit to attract private investment in the development and rehabilitation of affordable homes for low- and moderate-income homebuyers and homeowners. These tax credits will increase homeownership opportunities and asset-building for underserved communities, reduce blight and vacant properties, and create thousands of good-paying jobs. The Neighborhood Homes Tax Credit will:
- Encourage investment in homes that cost more to redevelop than they can sell for on the open market. Across the country, millions of homes are in poor condition with property values that are too low to support new construction or substantial renovation. Approximately 40 percent of U.S. housing stock is at least 50 years old and more than 15 million properties are vacant even as families struggle to find affordable housing. In many neighborhoods, these properties make it difficult to attract or retain local homebuyers, reducing property values and community wealth. Modeled after the Low-Income Housing Tax Credit and the New Markets Tax Credit, state housing finance agencies would receive an annual allocation of Neighborhood Homes Tax Credits based on population. Each state's housing finance agency would then award tax credits to project sponsors—developers, lenders, or local governments—through a competitive application process. Sponsors would use the credits to raise investment capital for their projects, and the investors could claim the credits against their federal income tax when the homes are sold and occupied by eligible homebuyers. These tax credits would cover the difference between total development costs (including acquisition, rehabilitation, demolition, and construction) and the sales price. This would, for example, make it financially viable to spend $120,000 acquiring and rehabilitating a vacant property that would only sell for $100,000 on the open market by offering a $20,000 tax credit to cover the difference.
- Bolster homeownership rates for low- and moderate-income homebuyers in underserved communities, while protecting against gentrification. The U.S. is home to stark and persistent disparities in homeownership and wealth. Across the country, just 49 percent of Hispanic Americans and 45 percent of Black Americans own their own homes, compared to 74 percent of White Americans. Hispanic and Black households also have just a fraction of the wealth of their White counterparts. As home prices rise, the Neighborhood Homes Tax Credit will make a generational investment in homeownership affordability. Specifically, only homes that are located in census tracts with poverty rates of at least 130 percent of the area poverty rate, median family income below 80 percent of area median income, and median home values lower than the area median value are eligible for the credit. This covers approximately 1 in 4 census tracts nationwide – the most underserved communities in America. Homes that are redeveloped using the credit may only sell for four times the area median family income, and homebuyers cannot have incomes exceeding 140 percent of the area median family income. This will enable low- and moderate-income buyers – including homebuyers of color – to purchase their own homes and build wealth.
- Incentivize Ending Exclusionary Zoning and Expanding Housing Choices. Exclusionary zoning laws – like minimum lot sizes, mandatory parking requirements, and prohibitions on multifamily housing – inflate housing and construction costs and lock families out of neighborhoods with more opportunities. In the American Jobs Plan, President Biden is calling on Congress to enact the Unlocking Possibilities Program, an innovative, new $5 billion competitive grant program that awards flexible and attractive funding to jurisdictions that take concrete steps to eliminate needless barriers to producing affordable housing and expand housing choices for people with low or moderate incomes.
The fund has several key features to support locally-led efforts to advance zoning reforms:
- Grant program for community engagement, technical assistance and analysis that will help communities identify the most powerful levers to produce more affordable housing;
- Investment and incentives to implement land-use and zoning policies that remove needless barriers to needed housing; and
- Extensive evaluation and development agenda to identify the policy changes that most effectively encourage affordable housing production.
Communities that qualify for implementation and investment awards will have access to flexible funding that help support public services in neighborhoods where new affordable housing is being developed and that benefit all community members. The goal of these efforts will be to increase the production of affordable housing, expanding access to good jobs and powering inclusive economic growth.
- Invest $31 Billion to Scale Up Efforts to Support Minority-Owned Small Businesses. Too many small businesses owned by people of color struggle to access loans and federal programs that can help them grow and succeed. President Biden has proposed a historic effort to tackle these persistent challenges and empower small business creation and expansion in communities of color. Specifically, the President's American Jobs Plan will invest $30 billion in new Small Business Administration (SBA) initiatives that will reduce barriers to small business ownership and success. These initiatives will increase access to capital by establishing a new direct loan program for the smallest businesses, developing new loan products to support small manufacturers and businesses that invest in clean energy, and launching a new Small Business Investment Corporation that will make early stage equity investments in small businesses with priority for those owned by socially and economically disadvantaged individuals. The American Jobs Plan will also invest billions of dollars in SBA technical assistance programs that incubate and offer mentoring and technical assistance to 8(a) firms, reinforce the American subcontracting network to create pathways to prime contracting, encourage Fortune 500 firms to diversify their procurements, and bring more socially and economically disadvantaged businesses into federal research and development programs. These investments will also include an innovative new $1 billion grant program through the Minority Business Development Agency that will help minority-owned manufacturers access private capital.
Joseph R. Biden, FACT SHEET: Biden-Harris Administration Announces New Actions to Build Black Wealth and Narrow the Racial Wealth Gap Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/350154