The following is an excerpt from an issue brief by the Center for Community Investment at the Lincoln Institute of Land Policy. To read or download the full brief, visit https://bit.ly/cci-ajustrecovery.

Crises by their very nature are times of disruption. Our customary activities and ingrained mental models, things that seem natural and inevitable, can fall by the wayside. As the COVID-19 pandemic has escalated, our normal routines—commuting to work, gathering with family and friends, going to the movies, sending kids out the door to school—have gone out the window. In response to George Floyd’s murder and the persistence of police violence, Americans have taken to the streets in unprecedented numbers and places demanding action to address entrenched structural racism.

It is a time of great uncertainty. Yet this kind of disruption and discontinuity can also be a time of invention and shifts in mental models. Think of the new institutions, new policies, and new routines that emerged from the Great Depression and World War II. We now have an opportunity to imagine a different future, one that uproots the structural racism that has been so central to the development of this country. As we go forward, we can draw lessons from prior crises, including the critical importance of centering racial justice to avoid creating solutions that maintain existing inequities—or create new ones, often for generations to come.

The magnitude of the moment calls for bold leadership. At the Center for Community Investment, we are supporting leaders who are attending to the needs of their communities in ways that position them for equitable long-term recovery, rethinking, and rebuilding. 

Start from the Future

As we consider our options, it is natural to start from current activities and plans. We are emotionally invested in them and have worked hard to garner clarity and buy-in. Yet our circumstances have changed profoundly, and business as usual won’t get us where we need to go.

One way to unhook ourselves from the tyranny of existing activities is to take time to imagine what future success will look like and allow that imagined future to shape the choices we make in the present. Beginning this way allows leaders to step out of the constraints of the present and really consider what might be possible.

For example, some communities are starting to rethink their budgets, in particular the funds allocated to the police department. Rather than starting with how municipal funds are currently distributed, begin by imagining the future you want for your community. Does everyone have a home? Do schools have smaller class sizes? Do community members take responsibility for the safety of their neighborhoods?

Once you have a vision, you can explore how the budget would need to be reallocated to make that vision a reality. Many communities have enacted temporary emergency legislation to protect renters from eviction or establish rent moratoria. Imagine a future in which eviction protections have been made permanent and forgiveness or other creative measures to ease rent burdens are in place. What are the actions you would have to take now to make such a future possible? By digging into the details of the future you want to help create, you can begin to liberate yourself from the confines of the status quo and the uncertainty clouding our short-term horizon.

Triage the Work

Effectively addressing the current crisis and achieving your vision for the future means making tough decisions. No one has the time or resources right now to do everything.

Our triage tool helps you prioritize strategies and activities based on the results you seek now, assessing the relative feasibility and impact of each item on your current agenda in light of your new circumstances. Once you have sorted your strategies and activities into the tool’s five categories (current priority, emerging expanded priority, pause, unknown, and let go), it is important to ask the following questions:

• How do the activities in the current and emerging/expanded priority boxes advance us toward the result we seek to achieve?
• Do we have the capacity to do these activities? If not, what else do we need to shift, pause, or let go of to make space for critical work?

The triage process can be undertaken at multiple levels—a single leader sorting their work, an organization examining its portfolio, a collaboration resetting its priorities. At any level, a triage stance can help you uncover or refine a set of emergent priorities—whether it is work that was not on the table before these crises but now must be attended to or existing work that must now be recast or given higher priority. For example, leaders who were committed to expanding the number of Black- and Latinx-owned businesses are now working to protect existing businesses, which means they must shift their focus away from new entrepreneurs. Similarly, communities around the country that were working on issues of affordable housing are now finding that they must redouble their efforts to protect residents so they can stay in their housing, which means slowing their efforts to produce new units.

Each of these pivots produces new work that must be staffed and resourced. This requires making tough choices, a planning step that cannot be avoided. At the same time, these emergent priorities also provide the opportunity to lay the groundwork for longer term system interventions that advance racial equity: finding new ways to keep people in their homes can help expand a community’s housing strategies, while strengthening the environment for local businesses can ultimately enable the success of new Black- and Latinx-owned businesses.

To help organizations and leaders think through what you need to do, what it’s possible for you to do, and how you should prioritize and sequence your work, we offer a triage tool at https://centerforcommunityinvestment.org/blog/reimagining-strategy-context-covid-19-crisis-triage-tool.

Get Started, Get Going . . . and Keep Racial Justice at the Forefront

It may feel difficult to plan for an uncertain future at a time when community needs are overwhelming and things are changing quickly. However, it is more important than ever to start moving on the long-term community needs you have identified. So where can you begin?

Build On What’s Working

• Is there a local CDFI that is more effectively reaching Black and Latinx borrowers?
• Is there a promising demonstration project working in two neighborhoods that could be extended to three more?
• Does your community have a land bank that is handling 30 properties effectively? What would it take to double that number? How can their approach be replicated?

Identify existing capacity to achieve the results you seek, then ask yourself, how can that capacity be reinforced and increased to produce larger results?

Chunk the Work

Figure out what needs to happen and divide it up. Give different people or departments responsibility for different chunks. If you are part of a cross-organizational collaborative, think about how work can be allocated explicitly among the partners in ways that build upon their strengths.

• Who has deep relationships in the community that can be leveraged?
• Who has experience applying for government or philanthropic grants?
• How can groups work together in a spirit of racial equity so that resources and responsibility are appropriately shared?

Once people begin to see progress and results, it is easier for them to get on board because in the end you have to act in order to collaborate.

Pick a Slice of the Work and Begin

In times like this, it is easy to get paralyzed by the sheer volume of work to be done and the volatility that surrounds us. It is tempting to overthink decision making and prioritizing. The question of where to start can ensnare us as we try to mitigate risk and find the right answer. The right answer turns out to be that there’s no right answer, or at least no right answer we can discern from here. We have to begin in order to find what will work. So begin.

Move Quickly and Pay Attention to Equity

In a crisis situation, speed matters. It is easier to contain the spread of disease than to mitigate the effects of a pandemic, easier to keep people in their homes than to deal with the displacement and vacancies caused by evictions and foreclosures, and easier to keep businesses operating and help people keep their jobs than to deal with the economic shocks of unemployment and the loss of critical services. But moving quickly can lead to privileging existing channels, products, and relationships, which in turn can shut out people and communities of color, as was the case with the CARES Act. At every stage of the work, attend to the racial equity implications of the strategies you advance and choices you make.

For more strategies and advice, read the full brief at https://bit.ly/cci-ajustrecovery.

Acknowledgments

We are grateful for the powerful thinking, work, and commitment of the many members of the CCI community who helped bring this piece into being. Allison Allbee, Nancy Andrews, Nora Bloch, Michael Bodaken, Damon Burns, Amy Chung, Liza Cowan, Ja’Net Defell, Saneta deVuono-powell, Annie Donovan, Rudy Espinoza, Romi Hall, Adriane Harris, George W. “Mac” McCarthy, Eric Muschler, Sarida L. Scott, Thomas Yee, and Barry Zigas participated in the conversations that got it started. Alex Castilla and Kate Dykgraaf helped organize those conversations. Gabriel Charles Tyler provided invaluable assistance with analysis, design, and logistics. Marian Urquilla, Robin Hacke, and Rebecca Steinitz wrote the many drafts it took.
 

In the coming year, MN350, a Minnesota-based climate justice organization, will work with the city of Bemidji, nonprofit groups, residents, and three tribal nations—Leech Lake, Red Lake, and White Earth—to explore what an equitable transition away from fossil fuels could look like. The scenario planning project aims to uncover lessons applicable to other U.S. cities located in proximity to tribal nations and is one of eight projects selected for support by the Lincoln Institute of Land Policy to develop new applications of scenario planning. The projects will focus on two major challenges: stagnant or declining population, and spatial inequity.

Each recipient will receive $10,000 to conduct original research and develop new methods for applying scenario planning, a practice through which communities plan for uncertainty by exploring multiple plausible futures. Completed projects will range from a working paper to case studies to a guidebook for practitioners to model decline or low-growth scenarios.

In addition to the MN350 planning initiative, the Lincoln Institute will support the following projects:

• In Boston, the Metropolitan Area Planning Council will undertake a literature review, stakeholder engagement, and modeling exercise to create a framework for forecasting the racial makeup of particular neighborhoods, with no ‘correct’ forecast, but a range of segregation scenarios against which policies can be tested.
• Cascadia Partners will research equitable technologies for scenario planning, with a particular focus on public engagement in a post-pandemic world.
• Center for a New Economy will produce a working paper focused on San Juan, Puerto Rico, with new data that practitioners can use to determine the impact of disasters on socioeconomic segregation, urban decay, housing affordability, gentrification, and residential displacement. The center will share the research through workshops and webinars with practitioners and decision makers at FEMA, HUD, the Puerto Rico Department of Housing, and municipal governments.
• Officials in Vancouver will write a case study on how they are deploying scenario planning with an equity lens and how they are altering the process to respond to the COVID-19 crisis.
• The City of Youngstown, Ohio is using scenario planning to explore how their comprehensive plan for land use over the long-term might hold up amid various population trends in the future.
• Arnab Chakraborty, professor of urban and regional planning at the University of Illinois, will create a toolkit for communities undertaking scenario planning in low-growth geographies.
• Ian Varley, planning manager at City Explained, will develop case studies and a guidebook, adapting the CommunityViz software as a demonstration tool to model low-growth geographies.

The projects are supported by the Lincoln Institute’s Consortium for Scenario Planning and Legacy Cities Initiative. The Consortium aims to improve the practice of scenario planning and broaden its use across disciplines in communities of all sizes through research, peer-to-peer learning, training, and technical assistance. The Legacy Cities Initiative, a new program of the Lincoln Institute, seeks to promote sustainable and equitable revitalization of post-industrial cities by convening networks, facilitating the exchange of ideas and practices, and researching and advancing new policy approaches.

Together, these projects will help to broaden the applicability of scenario planning, an increasingly popular tool in urban planning, said Heather Sauceda Hannon, the institute’s scenario planning manager.

“Scenario planning is a mechanism for purposeful decision-making and is often used to measure impacts of transportation and land use through a variety of metrics,” said Hannon. “The social implications of decision-making and planning are often more difficult to identify and measure. However, scenario planning can be an effective framework through which planners can explore the potential impacts of decisions on historically marginalized communities. In addition, scenario planning has historically been used with high-growth projections and we want to show how it can be used for areas that have seen decline or low growth.”

The Lincoln Institute is also exploring how practitioners can make the process of scenario planning itself more equitable by, for example, undertaking activities to reach historically underrepresented populations, according to Jessie Grogan, associate director of reduced poverty and spatial inequality for the institute and leader of the institute’s Legacy Cities Initiative.

Emma Zehner is communications and publications editor at the Lincoln Institute of Land Policy.

Photograph credit: J. Stephen Conn/Flickr.

Local governments are still learning what the COVID-19 crisis will mean for their revenues over the next year. In large part, the answer will depend on what part of the economy they rely on for their tax revenue.

Some are already grappling with grim news. In Kansas City, Missouri, council members are looking at budget cuts totalling $300 million over the next six years. In March, they approved a $1.7 billion budget that included a hiring freeze and reductions in travel, but noted they’ll likely have to face more difficult choices in the months ahead.

Meanwhile, more than 1,400 miles away in Boston, Mayor Marty Walsh has proposed a $3.65 billion budget for the next fiscal year. It’s a 4.4 percent spending boost over the current year that includes increased funding for education, housing, and public health.

It’s not that Boston is facing a vastly lower public health or economic impact from the COVID-19 virus. In fact, it has had notably more COVID-19 cases than Kansas City, both in number and as a share of the population. Instead, the difference lies in where each city gets most of its tax revenue.

In Boston, proceeds from the property tax make up 72 percent of general fund revenue. In Kansas City, however, property tax revenue accounts for less than 12 percent of general fund revenue. Instead, the city relies on more economically sensitive income streams: a local wage tax (44 percent of revenues) and the sales tax (20 percent of revenues). With the near-halting of economic activity this spring, the city is expecting an estimated $30 million–or 4 percent of general fund–revenue shortfall in the current fiscal year, which ended April 30, according to Fitch Ratings. That’s mainly due to Kansas City extending its earning-tax payment deadline; officials hope to recoup most of that in the 2021 fiscal year.

While the full impacts of the COVID-19 crisis on municipal revenues over the next few years are still unknown, what is clear is that we have been thrust into an economic recession that is unmatched in the modern era. During economic downturns, the property tax is a relatively stable source of revenue. The average city relies on the property tax for about one-quarter of general fund revenue, according to the Lincoln Institute’s Fiscally Standardized Cities, or FiSC, database. (Counties, by comparison, rely on the property tax for about one-third of their general fund revenue, according to the National Association of Counties.)

“During most post-World War II recessions, property tax revenues have not declined,” says the Lincoln Institute of Land Policy’s Adam Langley, who manages the FiSC database. This is largely because even if a downturn is prolonged enough to affect local home values, the lag time between real estate market changes and property valuations gives governments time to raise rates to make up the anticipated difference in revenue. “The notable exception is the Great Recession,” said Langley, associate director of U.S. and Canadian programs, “and that was a unique circumstance because of the historic housing bust.”

Kansas City Budget Director Scott Huizenga noted that the city’s rainy day reserves are at a record high — equivalent to nearly 20 percent of general fund spending. That’s a far better position than Kansas City was in entering the Great Recession, when it had about 5 percent of annual spending in reserves, according to Pew Trusts. Huizenga notes that forecasting the revenue impacts of the current crisis is a challenge.

“Like most places, we have a two-month delay between the activity on the ground and the revenue impact,” Huizenga said during an interview in late May. “It will be at least a few weeks more before we learn the totality of what happened in April, much less what’s going to happen a year from now.”

Even cities that rely on the relative stability of the property tax are by no means immune from the uncertainty of the moment. Cities across the country are struggling to balance their need for property tax revenue with the potential need to grant deferrals or other targeted tax relief to property owners who may not be able to pay their bills.

For example, California Gov. Gavin Newsom signed an executive order waiving penalties through May 6, 2021 for late property tax payments made by those affected by COVID-19. But the California Association of County Treasurers and Tax Collectors then urged those who could pay to do so on time, noting that property taxes “directly fund education, health care, hospitals, welfare services, fire protection, and homelessness efforts, to name a few.” At this point, most localities haven’t significantly pushed back property tax bill deadlines, even if their state has allowed it.

In many places, existing property tax relief programs are available, and when effectively targeted can provide critical relief to the neediest households without unduly diminishing local revenues. These “circuit breakers” provide relief to households once their property taxes exceed a specified percentage of income, so people with a sudden drop in earnings could qualify for substantial relief. Circuit breakers are available in 33 states and the District of Columbia, although many of those states use formulas that will not provide adequate relief to those with the heaviest tax burdens.

Conflicting predictions about the future of commercial real estate have also added uncertainty to the municipal property tax picture. With social distancing restrictions and other public health precautions decimating the retail and hospitality sector, several major retailers have declared bankruptcy and businesses of all sizes are struggling to stay open.

“Shopping malls and property used in the hospitality and entertainment industry may very well be facing a significant loss in value, particularly over the next couple of years.” said Lincoln Institute Resident Fellow Daphne Kenyon. “This would disproportionately affect those cities that are tourist or shopping meccas.” Reliance on commercial property tax revenue varies significantly from state to state, as illustrated by the Significant Features of the Property Tax database.

The future of commercial office space is also in question; it is expected that many employers will allow full or partial telecommuting after COVID-19 restrictions are lifted, and one University of Chicago study found that 34 percent of jobs in the United States could be performed remotely. Already, major tech companies like Facebook and Twitter have announced plans to let employees work from home permanently.

Some experts are predicting a sort of real estate “swap,” which could see businesses seeking new property outside of downtowns and former downtown office buildings converted to housing. Still others suggest that the smaller space requirements of housing fewer workers will be offset by the need to accommodate social distancing. These and other issues raise questions about the future of real estate in large cities—and therefore the value of downtown real estate properties and the tax revenue they generate.

Hilltop Securities’ Tom Kozlik said there were somewhat similar concerns that firms wouldn’t want to return to downtown Manhattan after the 9/11 terrorist attacks.

“I remember there were some people hesitant to fly or go up in skyscrapers, but that seemed to pass in a pretty short amount of time,” said Kozlik, head of municipal credit for the firm. “This time it’s a little different—I don’t think people have their heads around what the entire public health threat is right now. And that’s one of things policymakers are trying to figure out.”

Despite the many uncertainties facing municipal governments, Kenyon says the relative stability of the property tax is not in doubt. “Property taxes are the most stable of the big three taxes—income, sales, and property. For local governments that depend heavily on the property tax, and for the citizens who benefit from the services that property taxes support, this is a ray of light in a very tumultuous time.”

Liz Farmer is a fiscal policy expert and journalist whose areas of expertise include budgets, fiscal distress, and tax policy. She is currently a research fellow at the Rockefeller Institute’s Future of Labor Research Center.

Photographs in order of appearance

In municipalities across the country, including Kansas City, Missouri, leaders are grappling with the fiscal impacts of COVID-19. The impacts will vary depending on the relative sources of tax revenue in each place. Credit: Kate Brown via Flickr CC BY 2.0.

During most post-World War II recessions, property tax revenues have not declined, largely because the lag time between real estate market changes and property valuations gives governments time to make up the anticipated difference in revenue. The notable exception was the Great Recession. Credit: Lincoln Institute of Land Policy.