Read Mr. Buford’s remarks on a major finding the Public Finance report uncovered.

NoDebtMap

Good morning. It is a pleasure to be here today, discussing an issue that is of paramount importance to our region. As Dave Leipholtz just explained, the Better Together project is unique in its scope and approach. When I was asked to sit on the board, I accepted with enthusiasm, but not only because I share a passion for data-driven work and community collaboration. I joined because this is a conversation we must have, particularly in the African-American community.

When Better Together began the Public Finance study, we thought we knew what we would find: budget surpluses here, budget shortfalls there. We expected to gather information about debts and assets. We anticipated equipment lists and salary spreadsheets. And we did compile all of those things. But what we didn’t expect was to uncover how municipalities’ ability to issue debt affects their economic future. We did not know we would encounter a very harsh reality – one in which poor, predominantly African-American municipalities cannot reinvest in their own community. When we discovered this, we knew that the Public Finance study revealed far more than numbers. It shone a bright light on serious inequality in our region.

Of course, we know there are tremendous obstacles to reinvestment and improvement in urban areas. But what I’ve long believed – and what this first study shows — is that fragmentation itself is an obstacle. I look at our fragmented region and I see many small communities, a number of which were created to foster segregation.

For example: municipalities like Bellerive, Bel-Nor, Beverly Hills, Glen Echo Park, Northwoods, Pasadena Hills, and Pasadena Park were all formed in part to “maintain their homogeneity.” The city of Black Jack incorporated in response to HUD plans to build housing projects in the area and immediately adopted a zoning ordinance that prohibited the development of any new multi-family housing units. The courts eventually found that the “ultimate effect” of this zoning was to prevent African Americans the ability to obtain housing in Black Jack, and stated that denying housing on the basis of race is a violation of the Fair Housing Act. And let me be perfectly clear: most of the municipalities I just mentioned are majority African American today.

This is not a rant. This is our history. I think that once we see all of the data, the public will be moved to action. As I mentioned, when the Better Together research team started the Public Finance study, they didn’t expect to find anything new or surprising. In fact, they expected that the study would be dry and fairly boring. After they had collected all the necessary data, they began to review cities’ debt in order to best understand what it meant for the St. Louis region and our financial health – again, thinking they would find nothing extraordinary. However, as they began to think about the role debt plays for a local government, they discovered something startling: Fragmentation serves as a structural impediment to community reinvestment.

Let me say that again: Fragmentation is a structural impediment to community reinvestment.

Allow me to walk through what I mean by that. In conducting the Public Finance study, Dave and the Better Together research team collected budgets and financial reports from the 115 local governments in the St. Louis region. They discovered that 49 of the 90 municipalities did not report debt. Again, on its surface, this seems like a positive thing. We generally think of “having debt” as negative. But when we think about how municipalities use debt, we realize that it is often used to finance capital improvement projects: to buy new police cars . . . or build community centers . . . or invest in infrastructure like streets and sidewalks and parks.

Some communities, like Huntleigh or Westwood, are able to afford these things without taking on debt. Others, such as Twin Oaks, have substantial commercial and industrial enterprise, which provides a strong tax base to fund necessary projects.

The rest are left out in the cold, unable to reinvest in their communities.  Without the ability to issue debt, a municipality cannot make capital investments. It cannot invest in infrastructure. Without this ability, the doors to growth opportunity slam shut. The economic ladder in these areas is not just difficult to climb – it is non-existent.

As the President and CEO of the Urban League of Metropolitan St. Louis, I worked for 29 years to attain that organization’s vision: that African Americans and others in the St. Louis region will have the opportunity to create economically self-sufficient lives in flourishing communities.

Fragmentation denies thousands of people the very opportunities that the Urban League endeavors to protect.

What do these communities – the ones that cannot issue debt, the ones that cannot reinvest – look like? The majority of them are in North County. Most are small, with populations less than 5,000. The families are predominantly African-American. The poverty rates are higher than the metro average – anywhere from five percent higher to thirty-five percent higher.

We’ve long known that individuals in poor communities were shut out of traditional credit markets and are often forced to turn to alternate sources of capital. Go to any impoverished neighborhood in the area, and you will find an abundance of alternative “financial institutions.” Places like payday loan stores, pawn shops, title loan stores or check-cashing shops – all of which charge exorbitant rates and fees to access much-needed capital. This is no secret. However, what we didn’t realize was that it’s not just individuals who are shut out of traditional markets. In many municipalities without debt, the entire community is also shut out of traditional markets, with even fewer places to turn for capital to reinvest.

What happens to a community that cannot reinvest? It becomes a community in decline. Places in decline cannot afford basic upkeep. Public spaces become unsightly and unsafe. And the surest way to kill any interest in private investment is to make it look as though there’s no public investment. I can’t even tell you how often I’ve heard references to “those people” not taking care of their neighborhoods. That’s a straw-man, an excuse.

The real obstacle, again, is fragmentation.

Many neighborhoods in the City of St. Louis struggle with poverty, but these neighborhoods do not languish in the same way that the small municipalities do. Why? Because they happen to live in the City of St. Louis and the city can issue debt. The City can reinvest. Leaders in the City face challenges, to be sure. Individuals and families who live in poverty in the city face many of the same issues as people living in these North County communities. But they at least have the tools needed to invest in their communities – access to capital and ties to a larger municipal government with a larger tax base and more assets. At times, the simple reality of living mere blocks away in the City of St. Louis means their communities can invest to build beautiful community centers, to keep parks clean, to keep streets surfaced and safe. Again: This is not about individual poverty. This is about being fortunate enough to live in a place that has access to credit markets and the capital they offer – or unfortunate to live in a place that does not.  

Neither our infrastructure nor our collective conscience can afford this current level of fragmentation. It is both my privilege and my mission to work to find a better way forward.