|HUD No. 00-133|
|Further Information:||For Release|
|In the Washington, DC area: 202/708-0685||Monday|
|Or contact your local HUD office||June 12, 2000|
CUOMO RELEASES STATE OF THE CITIES REPORT SHOWING ECONOMIC RECOVERY BY CITIES IS WORSENING THE AFFORDABLE HOUSING SHORTAGE
SEATTLE - The booming national economy and the growth of high-tech jobs have helped reverse decades of decline in America's cities, but the recovery has driven up home purchase prices at twice the inflation rate and rents at 1.5 times the inflation rate - worsening an affordable housing shortage, according to a report issued today by Housing Secretary Andrew Cuomo.
The Department of Housing and Urban Development's State of the Cities 2000 report says growth in cities has been strong and sustained in high-tech and other jobs, business creation and homeownership. It points out that during the economic expansion, wage growth in cities has surpassed that of their surrounding suburbs.
However, the report says that despite the strong recovery by cities, suburban growth continues to outpace urban growth - especially in the important high-wage, high-tech industries. In a sign of the "Digital Divide," the number of high-tech jobs in the suburbs is growing 30 percent faster than in central cities, the report finds. Central cities are the major cities in a metropolitan statistical area.
The report says four "megaforces" are challenging cities today: 1) The New Economy driven by high-tech job growth. 2) The New Housing Challenge of housing costs rising faster than inflation, creating a record shortage of affordable housing. 3) The New Demography of an aging and more diverse population and a declining middle class. 4) The New Forces of Decentralization that are consuming land - primarily in suburbs - at twice the rate of population growth.
"Cities are enjoying the benefits of the longest and strongest economic expansion in our history, but many are still not full participants in the new prosperity that has swept across our nation," Cuomo said. "In these times of good economic news and budget surpluses, it makes sense to invest in cities to help them create more jobs, more businesses, more affordable housing, and increased homeownership."
Cuomo - who released the fourth annual State of the Cities report in an address to the U.S. Conference of Mayors meeting in Seattle - said the report documents the need for initiatives in President Clinton's proposed Fiscal Year 2001 federal budget to accelerate the economic recovery of cities and to increase the supply of affordable housing.
Here are details on the State of the Cities findings:
THE NEW ECONOMY
A total of 2 million high-tech jobs were created throughout the nation between 1992 and 1997, the report found. The report focused on 114 major metropolitan areas and found that of the 1.5 million high-tech jobs created in these metro areas during the period, about 600,000 were created in cities and about 900,000 were created in their suburbs. The number of high-tech jobs in cities grew by 27 percent during the period - compared with 35 percent growth in suburbs.
The report said since President Clinton took office in 1993, nearly 4.6 million city residents have gained employment, benefiting from 8.5 percent growth in jobs and 4.4 percent growth in new businesses.
Despite these positive signs, one in eight cities remain doubly-burdened by high unemployment and either significant population loss or high poverty rates. In 1999, a total of 67 of the nation's 539 central cities had unemployment rates 50 percent higher than the national rate and had either lost more than 5 percent of their population since 1980 or had a poverty rate of 20 percent or higher. The number of such doubly-burdened cities dropped from 74 in 1998.
In addition, the suburbs' share of metro jobs continues to increase. In 1997, 57 percent of metro-area jobs were located in suburbs - up from 55 percent in 1992.
THE NEW HOUSING CHALLENGE
The State of the Cities finds that the same economic growth that is fueling the high-tech sector is driving up housing costs in both central cities and suburbs, and is contributing to a worsening of the affordable housing crisis in the nation. Of the 25 metropolitan areas identified as top high-tech markets, all but four had rent increases greater than inflation. Rents increased by more than 20 percent between 1995 and 1999 in Denver and the San Francisco Bay area, while they rose by more than 15 percent in Boston, Kansas City, Atlanta, Seattle, San Diego and Chicago.
With 5.4 million low-income American families suffering from "worst-case" housing needs - families living in substandard housing or paying more than 50 percent of their income in rent - the need for additional rental assistance is at an historic high.
Between 1993 and 2000, the number of families owning homes around the nation grew by 8.9 million, and both cities and suburbs benefited. But while the percentage of families in cities that own their homes was at a record high of 51.2 percent in he first quarter of this year, it still lagged far behind the suburban homeownership rate of 73.8 percent.
THE NEW DEMOGRAPHY
Between 1980 and 1998, the percentage of the population in central cities made up of minority group members rose from 34.8 percent to 46.9 percent. In suburbs during the same period, the proportion of minorities nearly doubled from about 13 percent to almost 23 percent.
In 2030, the elderly population will reach 70 million, doubling the current number of elderly Americans. A disproportionate number of elderly poor live in cities.
Immigrants are fueling a new diversity in suburbs and cities and are increasingly likely to move to suburbs - a distinctly new phenomenon. In many communities, immigration has helped reverse the population decline of many cities, blurred ethnic and racial lines, and changed the traditional divide between African Americans and whites to create a multiracial, multiethnic society.
THE NEW FORCES OF DECENTRALIZATION
Population growth in suburbs relative to cities accelerated in the 1990s compared with the 1980s. Between 1990 and 1998, suburban population grew by 12.2 percent, compared with 4.7 percent for cities. Only 38 percent of Americans now live in cities that are the centers of metropolitan areas, compared with 45 percent in the 1970s.
As suburbs grow, land is being consumed at twice the rate of population growth. Overall, land use for single-family homes has increased an average of 2.3 million acres per year since 1994. With current land use rates, the projected nationwide increase of 36 million households in the next 30 years will result in new development equivalent to the size of 100 cities the size of Houston.
To address the challenges posed by decentralization, the State of the Cities report recommends implementation of Livable Communities and Smart Growth strategies, including the Clinton-Gore Administration's Livable Communities Initiative, innovations in transportation and land use policy at both the federal and local levels, as well as a continuing emphasis on improving public safety, the educational system and infrastructure of urban core communities. The report also recommends enhanced regional cooperation, a top priority of both the U.S. Conference of Mayors and the National Association of County Officials.
Cuomo said $2.5 billion in cuts to HUD's proposed budget that were approved last week by the House Appropriations Committee will hurt efforts to give cities a greater opportunity to share in America's prosperity.
The Appropriations Committee eliminated President Clinton's request for 120,000 Section 8 rental assistance vouchers to help poor families get desperately needed housing. Other cuts approved by the committee include the following reductions: $270 million for programs to revitalize and provide operating subsidies for public housing; nearly $400 million for Community Development Block Grants that invest in a broad range of community projects; $37 million for a new initiative called American Private Investment Corporation designed to spark economic development; $22 million for communities in the Mississippi Delta; $30 million for reclamation of formerly polluted industrial sites called brownfields; $7 million for housing and economic development in rural communities; $20 million for faith-based and community organizations that work to supply affordable housing, create economic opportunity, promote fair housing and increase the effectiveness of HUD programs; $65 million for the HOME program to expand homeownership; $180 million for homeless assistance programs; $69 million for elderly housing; $28 million to help people with AIDS get housing; initiatives to reduce gun violence; and $35 million in Drug Elimination Grants for public housing developments.
Other key elements of the President's
proposed budget that would benefit cities include: the Brownfields Redevelopment
initiatives of HUD and the U.S. Environmental Protection Agency; efforts
to bridge the "Digital Divide" including community technology
centers funded by the U.S. Department of Commerce; the President's
One America Initiative, and HUD's Fair Housing programs addressing
the increasingly diverse, multicultural nature of metropolitan areas; welfare-to-work
initiatives including the expanded Earned Income Tax Credit, Welfare-to-Work
and Work Opportunity Tax Credits, the U.S. Department of Transportation's
Access to Jobs Initiative, and targeted education and training initiatives
of the U.S. Departments of Education, Labor, and Health and Human Services.
Senator John F. Kerry of Massachusetts - "HUD's report demonstrates that strong cities are central to preserving and strengthening the fabric of our society, our economy, our quality of life and our neighborhoods."
Senator Paul S. Sarbanes of Maryland - "The State of the Cities 2000 shows that high-tech development is creating economic prosperity in America's cities - bringing new jobs to residents and improving the fiscal health of our cities. We must continue to support sound economic and social policies that invest in people and bridge the digital divide between communities with access to computers and those without."
Congressman John J. LaFalce of New York
- "The State of the Cities
report demonstrates the continuing and growing need to support affordable
housing and community development programs, and the urgency of quickly enacting
the President's New Markets Initiative to expand the reach of our national
economic growth to under-performing communities."