Recent Research Results
RRR logo Cities Face Challenges Despite Strong Economy

"If we are to keep our economy going, we need to keep it growing. We need new workers and new markets. We have both right here at home, and now is the time to take advantage of that."

-- Andrew Cuomo
Secretary of Housing and Urban Development

Most of the Nation's cities are sharing in America's historic economic expansion, according to The State of the Cities 1999, the third annual report on the social and economic vitality of America's cities, recently released by HUD. Although most cities are showing clear signs of revitalization and renewal, many are still experiencing population decline, loss of middle-class families, slow job growth, income inequality, and poverty. These new urban challenges affect small and mid-sized cities throughout the country, from agricultural cities to former industrial giants, from timber towns to former mining centers.

The State of the Cities 1999 describes three major findings:

  • Thanks to a booming national economy, most cities are experiencing a strong fiscal and economic recovery. However, too many central cities are still left behind.

The strong economy has helped cities to recover. For the first time in history, the majority of central city households are homeowners. The central city homeownership rate topped 50 percent in 1998.

Population is still growing faster in the suburbs than in central cities, but the gap is narrowing. Many central cities continue to suffer from serious population losses, and unemployment remains unacceptably high in one in six central cities. Poverty rates of 20 percent or more can be found in one-third of our country's central cities, and poor urban residents continue to face an affordable housing crisis as the strong economy pushes up rents faster than wages.

  • Some older suburbs are experiencing problems once associated with urban areas—job loss, population decline, crime, and disinvestment. Simultaneously, many suburbs, including newer ones, are straining under sprawling growth that creates traffic congestion, overcrowded schools, loss of open spaces, other sprawl-related problems, and a lack of affordable housing.

Suburban jurisdictions—like central cities—are considered to be suffering from distress if their population declined by 5 percent or more between 1980 and 1996 and if their 1995 estimated poverty rate exceeded 20 percent. Nearly 400 suburban jurisdictions in 24 States meet these criteria. Many are small communities, but 77 jurisdictions had populations of more than 5,000.

The costs associated with sprawl are mounting, so curtailing sprawl could save substantial sums of money in the future. Sprawl-related costs include poverty concentration and job mismatches, shortages of affordable housing near jobs, increased capital and operating costs, loss of open space and ecologically sensitive land, decreased environmental quality, increased travel costs, and a decline in sense of community.

  • There is a strong consensus on the need for joint city/suburb strategies to address sprawl and the structural decline of cities and older suburbs.

A historic opportunity exists for cooperation between cities and counties to address the challenges facing our metropolitan areas. In a recent survey by the U.S. Conference of Mayors, more than 80 percent of officials surveyed indicated that city-suburban cooperation is vital to the future of metropolitan areas. The report states that investing in central cities is the key to creating competitive metropolitan markets. In the new global economy, a metropolitan region without a healthy urban center will be at a distinct competitive disadvantage.

The second part of The State of the Cities 1999 outlines the Clinton Administration's 21st Century Agenda for Cities and Suburbs. The agenda is designed to capitalize on the favorable conditions for tapping new markets, to anchor the positive trends in central cities, and to help cities and suburbs address the challenges that face them.

The 21st Century Agenda for Cities and Suburbs relies on strategies that have proven their effectiveness during the past 6 years. These include incentives to encourage more partnerships among the public, private, and nonprofit sectors; comprehensive approaches spanning multiple Federal agencies and departments; revisions to Federal programs to support and encourage community-based organizations and local governments; and individual empowerment and financial self-sufficiency. HUD's new role is to ensure that cities have the resources needed to create jobs, promote affordable housing, fight crime, and create more livable communities.

The 21st Century Agenda for Cities and Suburbs has four parts:

  • Opening doors to new markets. The President's New Markets Initiative is designed to stimulate $15 billion in new private capital investment in low-income areas with high concentrations of poverty. Other key programs that support the New Markets Initiative are HUD's Community Empowerment Fund, the Empowerment Zone and Enterprise Community Initiative, Community Development Block Grants (CDBGs), and Brownfields Redevelopment.

  • Investing in America's working men and women. Untapped labor markets can contribute to national economic growth only if workers have access to jobs and have the skills to perform well. The Administration's FY2000 budget proposes initiatives to strengthen adult education, provide reemployment services to displaced workers, and expand youth employment programs, and includes a proposed $1 billion reauthorization of the Welfare to Work program to increase employment of long-term welfare recipients in high-poverty areas.

  • Expanding homeownership and affordable rental housing. Housing is an essential piece of the coordinated response to the common problems of cities and suburbs. All cities need homeownership to build strong neighborhoods. Rising rent levels have increased the number of households with worst case housing needs to a record 5.3 million. HUD's housing agenda, which includes programs such as HOME, the Low-Income Housing Tax Credit, Section 8 Homeownership Vouchers, and HOPE VI, works to help more Americans achieve homeownership and ensure access to affordable rental housing.

  • Promoting smarter growth and community livability. Cities and suburbs increasingly recognize that they have a common stake in ensuring economic competitiveness and a high quality of life across the metropolitan area. The Livable Communities initiative in-cludes Better America Bonds, a new bond authority for State and local governments to clean up brownfields, create urban parks, and protect water quality; and Community Transportation Choices-major new funding for public transit, transportation plans, and alternative forms of transportation.

The State of the Cities 1999 outlines an agenda for making the Federal Government a partner as America enters a new century. The report stresses the importance of sustaining the Nation's economic growth and extending that growth to the places thus far left behind in the new economy.

The State of the Cities 1999 is available free from HUD USER. Use the order form.

Recent Research Results (RRR) is prepared by HUD USER, the information service sponsored by HUD's Office of Policy Development and Research (PD&R), to provide ready access to research information. RRR contains short summaries of reports recently published under the auspices of PD&R. In addition to disseminating Recent Research Results, HUD USER produces a bibliographic database and provides complete reference and document distribution services, including resource guides, computer packages, blueprints, and audiovisual materials.

HUD USER may be contacted at P.O. Box 23268, Washington, D.C. 20026-3268, (800) 245-2691; in the Washington, DC, metropolitan area, (202) 708-3178; or on the World Wide Web at

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