Current approaches focused on Opportunity Zones are merely continuations of prior policies, which have possible consequences by either inducing gentrification or the eventual dilapidation of projects in low-income neighborhoods. Texas’s approach, and a shared vision by Houston officials, erects developmental projects in less-affluent areas – albeit some affluent – to ostensibly maximize the opportunity for residents.
A 2016 decision by the City of Houston illustrates how conventional approaches rebuild low-income neighborhoods, instead of using place-based policies that integrate low-income families into high-mobility areas, which have a 50 percent higher impact than current approaches.
This well-publicized decision did not support the 2640 Fountain View affordable housing resolution, which would have been in a high-mobility, low-poverty area for low-income families with vouchers. Instead, the project was moved to 302 Crosstimbers, which is in an area with less mobility and higher poverty.
A group of researchers from Harvard collaborating with the U.S. Census Bureau made The Opportunity Atlas, which identifies high-opportunity neighborhoods that are affordable for low-income families.
The results demonstrate that allowing low-income families to move to a neighborhood that is 22 percentage points lower consequently produces substantial long-term gains to individuals and to the city, such as increasing the chances in removing families from assistance programs. Moreover, the researchers found that children who moved to low-poverty areas before the age of 13 do much better as adults:
- 30% higher in earnings to a $100,000 gain over life in present value
- 27% more likely to attend college
- 30% less likely to become single parents
- Pay $400/year more in taxes
To replicate the researcher’s findings, a census tract should have a poverty rate of at least 22 percent lower, a median family income less than 80 percent of the area’s median income, and the child must move at or below the age of 13 years of age. To provide an example of a low-income family moving between high or low poverty areas, two locations were used to exemplify both conditions and a default low-income family tract to exhibit a hypothesis-point.
Map represent outcomes by tract and their relative deviation from the $6,700 mean used in the Opportunity Atlas. Source: James Hanna
By using the default location with a poverty level above 40 percent and moving to the Fountain View location, a child at the age of 13 or below would have a prospective increase in annual income of approximately $15,456 at the age of 26. Otherwise, a child remaining in the default location would see a decrease in annual income by roughly $3,336 by the age of 26. Therefore, residents at the Fountain View location would have a difference in annual income of around $12,120.
Conversely, by moving from the default location to the Crosstimbers neighborhood, a child is associated with approximately a negative $815 outcome variation between the two areas. However, since the Crosstimbers area does not have a 22 percentage-point difference in poverty, the associative impacts of a child’s prospective outcomes are unknown.
By following the current Opportunity Zones provided by the Texas Legislature, Houston can find itself in a similar nebulous position with its housing programs, despite new development. Too much development can cause risk of gentrification. At the same time, too little development may limit a neighborhood from upward outcomes, as well.
Moreover, the researchers’ findings do not suggest cross-sectional, big data experimental methods are better than other alternatives to policymaking. Rather, they admit that they are experimental and there is not enough evidence to indicate such policies are more effective in improving local policies. The project is a starting point for building the needed evidence.
Policymakers should consider exploring both modes of policy-implementations to incorporate a priori and a posteriori consideration. As current policies have priori implications, the intended low-income tracts targeted in rebuilding low-income neighborhoods have dubious outcomes, whereas the Opportunity Atlas research does not have ample results to conclusively support such recommendations.
Overall, Houston officials ought to implement an experimental policy. Allocating vouchers to low-income families with children who remain in low-mobility neighborhoods may potentially rebuild vulnerable communities. Additionally, allocating vouchers to low-income families to move to neighborhoods with high-mobility would ideally integrate low-income families. In a way that is conducive, Houston policymakers can collect their own data to find a corrective policy-mechanism that focuses on the dynamics of the community by building the evidence needed to fully support a single or multi-purpose policy.
James M. Hanna is a graduate from the Hobby School of Public Affairs at the University of Houston with a Masters of Public Policy. James provided research in the Hobby School's annual Texas Mobility Project whitepaper covering topics on mobility outcomes of counties with highly concentrated poverty. Before receiving his masters, he received three bachelor's degrees at Texas Tech University and found his passion working with data, budget management and compliance while working for the 83rd Legislature and a federal regulatory agency.