Bridges

Bridges Summer 2017

Bridges is a quarterly review of regional community and economic development issues, projects and regulatory changes for practitioners from community-based organizations, as well as for Community Reinvestment Act officers, academics and government of

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I N D E X T H E F E D E R A L R E S E R V E B A N K o f S T . L O U I S | C E N T R A L T O A M E R I C A ' S E C O N O M Y S U M M E R 2 0 1 7 Community-Based System Dynamics: An Essential Tool in the Community Development Toolbox 5 8 9 Opportunity Knocks: Socially Underwriting the Small-Dollar Mortgage Communities and Capital: A Foundation for Success A N D M O R E > > Redlining Louisville Project: Early Lessons Learned By Jeana E. Dunlap and Joshua Poe I magine if all your hard work and aspira- tions were crippled by a small handful of individuals with low expectations for your future success, credibility or worth. Redlin- ing practices in America did just that. In the latter months of 1937, the city of Louisville, Ky., had recently recovered from the Great Flood of 1937, the single most significant natural disaster in its history. At the same time, the federal government was embarking on a new mechanism to support homeowner- ship opportunities for millions of Americans. e Home Owners' Loan Corp. (HOLC) was also attempting to mitigate risk for the financial institutions that would help deploy billions of dollars in mortgage capital across the country. e Office of Redevelopment Strategies of Louisville Metro Government launched Redlining Louisville: e History of Race, Class, and Real Estate. is interactive map allows investigation of some of the ways redlining and the HOLC has affected hous- ing, development, disinvestment and lending patterns in Louisville since the 1930s. HOLC residential security maps provided snapshots of nearly every major American city in the 1930s before urban sprawl moved into greenfield sites (an area of land, usually in the countryside, that has never had build- ings on it before). e colors in a typical map represented a four-point classification system devised by the HOLC to indicate where local lenders were encouraged to make loans and where loan requests should be denied. Green ("A Grade") was an indicator for the very best borrowers, followed by blue ("B Grade") and yellow ("C Grade"). Red ("D Grade") was the color reserved for areas of the city where access to capital would be withheld. In describing how neighborhoods were graded in the 1937 Louisville residential property survey, the HOLC, along with local realtors, lenders and other real estate profes- sionals, offered the following explanation: SOURCE: Redlining Louisville: The History of Race, Class and Real Estate. >> continued on Page 3

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