Cities Still Carry Poverty Burden, HUD Study Says

WASHINGTON — Despite recent gains in creating jobs and combating crime, the nation’s largest cities continue to suffer from an exodus of middle-class residents and an increasing concentration of poverty, according to a government study scheduled for release today.

The study by the Department of Housing and Urban Development concludes that conditions have improved in most major cities since the recession of the early 1990s, but many “are still lagging behind [and] . . . continue to face very deep-seated problems that threaten not only the long-term health of those cities but their connected suburbs.”

In a speech today to the nation’s mayors in San Francisco, President Clinton will endorse the report’s principal proposals, which center on a series of measures to encourage greater home ownership in the cities, a senior White House official said Sunday.

Those ideas include stepped-up enforcement efforts against housing discrimination, subsidies to encourage police officers to live in inner-city neighborhoods, a reduction in federal mortgage insurance costs and allowing poor families to apply federal rent vouchers toward home ownership, according to a copy of the report made available to The Times.

The study’s release comes just one week after Clinton announced his intention to lead a national dialogue on race, which led him immediately into criticism from some civil rights leaders, who maintain he has not done enough to help the urban poor.

The HUD study is somewhat schizophrenic in tone, alternately taking credit for progress since Clinton’s election and highlighting remaining problems it says demand further government action in urban areas.

Perhaps most ominously, the study found that middle-class families of all races continue to migrate out of cities, leaving urban areas with much higher concentrations of poor and single-parent families than their surrounding suburbs.

But HUD also concluded that many cities are being rejuvenated by a reduction in crime, a surge of hard-working new immigrants and an influx of Information Age jobs in such areas as banking, engineering and communications.

Rather than examining the health of specific communities, the study looks at broad national trends affecting cities.

On the positive side of the ledger, the study notes that during the past four years, unemployment has dropped by nearly one-third in the nation’s 50 largest cities. With that invigorated economic activity--and an increased commitment to government reform--most city governments are in stronger fiscal shape than earlier in the decade, the report concludes.

In addition, the report notes other positive trends: significant declines in serious crime in most major cities (Los Angeles showed a 11.6% drop in 1996, according to preliminary FBI figures) and a sharp increase in mortgage lending to African Americans and Latinos as the Clinton administration has intensified enforcement of the fair-lending and community-reinvestment laws.

But drawing on data from the Bureau of Labor Statistics and the Census Bureau, the study concludes that cities continue to face three major challenges.

One is jobs: Despite the recent gains in employment, the study found that four of the 10 largest cities still have not recovered all the jobs they lost during the recession of the early 1990s. And it notes that 97% of all new businesses formed during the early 1990s were located in the suburbs.

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While cities are benefiting from an influx of high-wage service jobs--wages in cities are rising faster than in the suburbs--many low-income urban residents lack the skills to take advantage of those opportunities, the report warns. At the same time, they lack access to suburban areas, which are creating more entry-level jobs.

“We say you have to figure out how to get people out to the service jobs out in the counties,” HUD Secretary Andrew Cuomo said in an interview Sunday.

In addition, cities continue to suffer from the long-term erosion of their middle-class tax base. In 1996, middle-income and more affluent families were three to four times more likely to move from city to suburb than in the other direction.

Finally, although the poverty rate in the nation’s cities has declined somewhat since 1993, it remains just under 21%--almost 50% higher than in 1970. Between 1970 and 1990, the number of two-parent families with children in the cities fell by 1.5 million, while rising by 1.3 million in the suburbs, HUD found.

In detailing Clinton’s urban agenda, the report primarily collects ideas the president has already proposed, such as leveraging greater private investment in inner cities and providing incentives to encourage the hiring of former welfare recipients.

In today’s speech, White House officials say, Clinton will also specifically urge congressional Republicans to include provisions in their tax bills that would provide incentives for companies to clean up polluted urban areas known as “brownfields” and expand his empowerment zone plan.

In 1994, Clinton designated six cities as empowerment zones; each received a $350-million package of federal grants and tax breaks meant to encourage business investment and social reconstruction in depressed neighborhoods. Passed over in the final selection, Los Angeles received a $400-million-plus subsidy for a community investment bank.

The report’s new recommendations center on encouraging home ownership.

Through administrative action, it says, HUD will encourage police officers to live in distressed neighborhoods by selling them HUD-foreclosed properties at a 50% discount; HUD will also double the number of housing-discrimination cases it refers to the Justice Department for prosecution each year.

“We all know, if we are being truthful, there is still segregation in housing and there is more we can do,” Cuomo said.

In addition, HUD will reduce government insurance premiums for first-time inner-city home buyers, a move intended specifically to encourage more middle-class families to live in the cities, Cuomo said.

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Clinton will urge Congress to allow some of the 1.4 million households that receive federal rent subsidies to use their vouchers to pay for mortgages on private homes.

In separate bills to reform the public housing system, both the House and Senate have embraced that idea. But that legislation--which has cleared the House and is expected to pass the Senate later this month--faces an uncertain future because the administration opposes other elements of it, particularly a proposal to allocate more public housing units to low-income working families, rather than the very poor.