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Mark E. Alston, Owner of Alston & Associates Mortgage Company, and past 1st Vice President of the California Association of Real Estate Brokers, provided a three-page report titled “Reparations, Redressing Institutional Racism and Redlining, Evanston, lllinois” to the City’s Reparations Subcommittee. In his report, Mr. Alston recommends reparations in the form of down-payment and closing cost assistance, and also counseling and financial training for black families seeking to buy a home.
City Council decided as part of its 2020 budget discussions to deposit up to $10 million in tax revenues collected from the sale of recreational marijuana into a Reparations Fund.
The City’s Reparation’s Committee is tasked with recommending ways to use the Reparations Fund. At the March 6 meeting, the Committee discussed a variety of ways to assist black homebuyers, homeowners, and tenants.
To date, the Reparations Committee has focused on four target areas: 1) housing/redlining, 2) local businesses/entrepreneurship, 3) mental health/emotional healing, and 4) financial health – financing through partnering with local banks.
Mr. Alston’s Report
Mr. Alston says “a tremendous disparity exists in the levels of wealth owned by white and black households in the United States. This is the legacy of slavery and government sanctioned discriminatory laws and practices, especially in the areas of home ownership and housing opportunities.”
At the end of 2019, he says, 44% of black Americans owned their own home, compared to 73% of white Americans. He adds that because home ownership is the primary source of building wealth for the majority of Americans, creating strategies that promote and sustain home ownership are essential means of resolving the racial wealth gap.”
Relying of data available under the Home Mortgage Disclosure Act (HMDA), Mr. Alston says, 247 black households applied for mortgages in Evanston, and only 95 of their applications were approved in the most recent disclosure period. Out of a total of 1,487 mortgages made in Evanston, black households received only 6.3% of the new mortgages, even though black people constitute 16.6% of Evanston’s population.
During the same period in Evanston, White applicants were approved for mortgages 67.57% of the time; by contrast, only 42.6% of black applicants were approved for mortgages.
“This lack of success in the mortgage space has a negative effect on the consciousness of the community and helps to foster an environment where blacks are more apt to purchase a non-appreciating asset, such as a car or other consumer goods, rather than chance denial on a wealth-building, appreciating asset such as a home. This self-perpetuating cycle of consumerism is prompted by the disparate treatment of black consumers in the housing and mortgage industries,” says Mr. Alston.
“In America the average black family earns $43,966 annually, compared to the average white family income of $70,727 per year. White American households typically have ten times the net wealth of black American households. In other words, for every dollar White America has, black America has a dime. The result of fewer financial resources is less economic capacity and lower overall credit scores. Given the historic institutional and systemic discriminatory features and disparate treatment embedded in practices in the American housing and finance industries, we have a housing finance system designed, whether intentionally or not, to unjustifiably discriminate.
“Also, as a matter for consideration, it should be understood that discrimination in housing is as much the result of local policies and traditions as it is the result of federal policies such as redlining. Black families in Evanston were systematically herded into one area, West Evanston. Real estate agents practiced informal racial zoning, steering black households to West Evanston while restricting them from other areas. White Evanston sellers placed private restrictive covenants in the sales contracts for their homes that forbade future sale to black buyers. Evanston banks refused to make loans to blacks who wanted to live outside of West Evanston. In 1919 the City passed a zoning ordinance that zoned almost every block where black people lived to commercial use.
“As a result, black families were forced to live in West Evanston. The City, by both practice and policy, segregated black families into an area that became undervalued and underserved. Historic local policies and practices served to facilitate the unequal and disparate housing situation we have today, thereby depriving black households of economic opportunities and institutionalizing financial inequity for black communities, en masse.
“In America, sustained home ownership creates generational wealth. However, a primary obstacle to homeownership is accumulation of requisite down-payment and closing cost amounts. Many working-class black families are credit worthy but unable to save the necessary cash investments to access the housing finance system.”
Mr. Alston made two recommendations:
“Reparations in the form of down-payment and closing cost assistance would provide an immediate boost to home ownership opportunities for black families in Evanston.
“Funded pre-home ownership counseling and financial training are important to sustaining and maintaining successful home ownership. I strongly recommend the formation of accessible and program-funded housing counseling sites.”
The Reparations Committee
At its meeting on March 6, the Reparations Committee, with Alderman Robin Rue Simmons (5th Ward) and Ann Rainey (8th Ward) present, touched on various ways they could use the Reparations Fund to help black homebuyers, homeowners, and tenants, and asked City staff to provide information about similar programs offered by the City in the past.
Ald. Rainey summarized a City project that took place many years ago to convert a 24-unit apartment building on Clyde Avenue into a 12-unit condominium building that provided affordable housing units for Evanston families. She said the City provided down-payment assistance to families who bought condominium units in the building; families who lived in the units for more than a set number of years did not have to repay the down-payment assistance to the City.
Ald. Rue Simmons asked staff to provide additional information about the project, and said, “If something like that could happen again, those units would all be set aside for the black community in the name of reparations.” She added that the real estate market has changed since the time of the project, but “it’s really an interesting model.”
Ald. Rainey added that the City’s First Homebuyer Assistance Program, provided first homebuyers with assistance in making a down payment, and participating banks offered low-interest loans.
Ald. Simmons asked why that program was stopped and added that down-payment assistance was not the cause of the housing crisis some ten years ago. She said no-document loans, and giving people higher loans than their income should have allowed were the problem. “It was predatory lending,” she said.
She asked staff to provide additional information about its past down-payment assistance programs, and said if the City provided down payment assistance, she thought it should not be a loan, or a lien on the home, but “truly a grant.” She said, “What would be unique about this is it would be for a targeted community.”
Ald. Rue Simmons added she would like to have some requirement on ownership and occupancy to obtain the down-payment assistance, but did not want the requirements to be such that the homeowner would not have equity in the house in 10 or 15 years.
Ald. Rue Simmons also said they needed a grant program that would help existing homeowners stay in their homes, and added that the grant program should include landlords and that it should not exclude multi-family housing “because I want to make sure that some of this work that we’re doing is protecting the black families that are not ready for homeownership, that are tenant residents and that they have a way to benefit or at least benefit from a collective benefit if we are improving residential housing for rent.”
She said she also wanted banks to come before the Reparations Committee and make presentations. “The ask is, ‘What can they do creatively with mortgage products and other financial products, specifically like a creative loan term, and reduced rates, maybe reduced closing costs?’” She mentioned a 40-year mortgage term as a possibility.
Ald. Rue Simmons added that Charles Barron and his wife Assembly woman Inez Barron had established housing developments in New York that were 100% affordable. “I’ve been against that because I’ve thought we need intergenerational, mixed income housing,” she said.
She said, though, that the Barrons used an area median income that was based on their neighborhood as the measure for affordability, with the intent of keeping their neighborhood intact. “They have been very successful in stabilizing their community, stopping the loss of black residents,” she said.
She said she was going to visit with them in New York to learn more about their projects.
Ald. Rue Simmons introduced Rev. Michael Nabors, Pastor of Second Baptist Church of Evanston, who, she said, is leading the effort to collect community input about reparations. The City’s website has posted a facilitator’s guide that people can use to facilitate the discussions and to obtain information on how to participate.
Rev. Nabors said he is coordinating the dialogues about reparations throughout the community for people who cannot attend the Reparations Committee meetings on Fridays at noon, and the collection of the community input.
The Committee plans to present its initial recommendations to City Council on June 5.