Investing In Communities

Being in municipal government, and having a partner involved with affordable housing, I read this Bennington Banner article with significant interest:

A request to defer repayment on a loan made by a local housing project so it can work on stemming rising heating costs did not pass at a Select Board meeting Monday.

Applegate Housing Limited Partnership, which manages Applegate Apartments, requested that the town defer for one year repayments to a Community Development Block Grant, which is awarded though the Vermont Community Development Program 16 years ago. Last year it had requested, and received, a one year extension.

One Board member, Justin Corcoran, voted 'No' because he had “questions”, though it's clear that what he really means is he doesn't like these grants and how they work (despite voting for the deferral last year).  The rejection is unfortunate because it will lose the community a great deal of money, so I'm hopeful that folks knowledgable in community development will be able to educate the Board in a couple weeks and obtain a better result.

The bottom line:

“Essentially the way the programs work, while they're called a Community Development Block Grants, they're set up as loans through the community,” [Bennington Economic and Community Development Director Michael Harrington] said. “The reason they're set up as loans is there's not necessarily an expectation that money will get paid off or get paid back to the community. The reason they're set up that way is because it allows the community to have equity in these affordable housing projects within the community.”

The grant came with an automatic 15-year deferral period, he said. Typically such projects are given between 15 and 30 year deferrals. This allows the community, through the board, to ensure the development is meeting the needs it was built to address and is up to standard.

Some confusion might stem from the multiple levels of government involved and the structure of the funding.  The monies do initially come from a grant (the CDBG program), and are distributed in a variety of ways including loans through municipalities.  In this case the Feds have given money to Vermont, and through a competitive process the State provided a grant to Bennington, who in turn loaned funds to the non-profit developer and its local partners.

The CDBG loan in question can only be used for housing, reflecting the State's policy priority.  Since Bennington never really had this cash–acting merely as a conduit for funding community development–the Town doesn't actually get it back to use however it wants.  What's more, a percentage of the money paid back returns to the statewide pool for reallocation to other projects.  

A key concept here is “community equity.”  If there were a natural termination point for a given project, I guess it would make sense to ensure repayment of the CDBG loan to free up funds for other useful work elsewhere.  However, the intention here is to keep applying the funds to a pressing, on-going community issue, such as providing affordable housing for residents.

The Applegate development currently has a high occupancy rate (102 out of 104 units, with roughly 3 persons in each on average), so it's clearly filling an important need in Bennington.  As the Banner article notes, skyrocketing heating costs have created an operating loss and without deferral of the $4300/month loan payment, “the group [will not be] able to pay all of its bills.”  

That's actually a very circumspect way of saying they'd be forced into foreclosure.  Which would be bad.  For everybody.  

The most immediate problem from a civic duty perspective, of course, is that you'd be at best cutting essential programs and at worst pushing 300+ citizens into homelessness.  These are mostly low-income working people who spend most of their money locally (which is partly why the economic multipliers associated with affordable housing are so high).

Bennington would also lose over $100k in payroll, real estate and other local taxes until it was able to somehow occupy/redevelop the property.  And given the size of the property, a not-insignificant amount of money is presumably spent locally just for maintaining Applegate.

On the flip side, deferring the loan supports reinvestment that will provide affordable housing for some of Bennington's most vulnerable residents, who then can keep working and spending in the community.  Plus upgrading Applegate will pump even more money into local businesses–the article notes overall costs will be $3.5M, so there's about $2.9M of additional funding that will flow to the project.

Vermont has a long history of such investments, with exceptional stewardship of money fostering successful projects to the benefit of all.  So from where I sit, this is a no-brainer, and I'm optimistic that the Board will properly reconsider its decision.  I mean, really, do you want to cut your community development money in half and turn away millions of dollars the local economy could use, all while throwing people onto the streets?  That would be as financially misguided as it is heartless.

ntodd

8 thoughts on “Investing In Communities

  1. I’m no expert here, am giving a large portion of my positive view of this & other such projects a thumbs up.

    Unless I’m mistaken or complex has changed hands, there is an Applegate in S. Londonderry — the heart of an extremely high-end market for really anything in the Stratton, Bondville, SoLo district of the 802 private sector.

    Question is this: These apt complexes public or otherwise use electricty for all utilities inc heating. So I’m unsure why there would be a problem here as our household elec bill has dropped significantly w/advent of GMP & resultant programs.  

  2. except the CDBG one (didn’t read, not a political or policy wonk here & don’t know what I’m supposed to see) but didn’t think & perhaps don’t need them as your story seemed to provide significant commentary & related details to understand most of what is taking place here.

    If town refuses to budge, could feds step in as guarantors or ‘loan’ said entity until retrofit transition is made, maybe.

    Unless I’m missing something here seems rather dickish of the town to push for this clamp down, when reportedly, there is a plan of some sort & appears they were far from blindsided.

    Can they, would they really drag this to its bitter conclusion given the consequence to business as well as the human toll?

    Many of these projects are zoned in areas which are not exactly high-rent districts or prime real estate so no one is in any hurry to get rid of them. I lived in one that was built on a toxic waste dump. The So. Londonderry one is well hidden behind Brown Enterprises & so on.  

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