Gainesville's loan review committee now has the authority to lend more money to those needing assistance with housing rehabilitation. But the authority to lend more does not necessarily mean that there is more money to offer.

The Gainesville City Council recently approved changes to the policies and procedures of the city's housing rehabilitation loan program that raise the maximum amount that can be lent to those who need financial assistance to bring their homes up to fire and life safety standards.

The changes also give the applicants longer periods to pay back their larger loans.

Construction costs have risen above the previous loan maximums -- $50,000 for a conditional deferred payment loan and $65,000 for a low-interest loan -- Frances Williams, program manager for the city's housing and neighborhood development department, told the council at their March 13 work session.
"Let me just say, construction costs are getting higher and higher," Williams said.

Melody Marlowe, Gainesville's chief financial officer who serves on Gainesville's loan review committee, said the committee started finding that it has become more feasible financially to reconstruct a house than to rehabilitate it.

"What we were running into is (with) a home that needed improvements, the costs of making those improvements were more than building a new structure," Marlowe said. "So it made sense financially to provide funding for a new house, rather than improvements."

Since the program was originally intended to only help with home rehabilitation, the loan maximums were set to deal with repairs, not total reconstruction, and the loan review committee needed some "wiggle room" to be able to deal with situations like that.

Williams asked the council to raise the maximums, adding $25,000 to the conditional deferred payment loan and $35,000 for the low-interest loan, and it voted unanimously to approve the changes on March 18.

The ability to give out more funding is not backed by more funding, however. The city's housing rehabilitation program is funded by grants from the state's Department of Community Affairs, federal community development block grants and a revolving fund controlled by the Gainesville Non-Profit Development Corp.

The state grants, called Community Home Investment Program grants, or CHIP, are 24-month grants, capped at $300,000. The city may receive less than $300,000 from the state department, but never more. With the 2005 state grant, the city was able to assist five of 23 people who asked for financial assistance with the rehabilitation of their homes. The rest of the state money helped others with down payments on new homes.

The revolving fund controlled by the Gainesville Non-Profit Development Corp. depends on others who make payments on previous loans, and the federal grants are at the mercy of the federal budget.
"These are relatively small grants," City Manager Bryan Shuler told City Council on March 13. "With these limits, your impact is minimal."

Although Shuler said he was not against raising the maximums, he pointed out that giving more money to one rehabilitation means there will be less money to help other properties. "I'm not saying it shouldn't be done," Shuler said. "I'm just making that observation."

The bigger issue, Marlowe says, is federal budget cuts, and there is already talk of cutting the Housing and Urban Development budget in Washington.

In the four years that Housing and Neighborhood Development has been guaranteed a share of the block grant funding as a designated "entitlement community," nearly $100,000 has been shaved off the department's allotment with federal budget cuts. "Every time there's talk on the federal budget, HUD is attacked," Marlowe said.

Also, Marlowe said Shuler's observation would be true if the loan review committee was spending all of its funds for housing rehabilitation every year.

Marlowe said the city helps a maximum of five people each year with housing rehabilitation, and the funding has yet to run dry. The city has not handled more housing rehabilitations because the approval process takes up a lot of time, not because there is not enough funding. "We haven't even been in that situation," she said.