Town asked to manage $1.3 million in loans
In a special meeting scheduled for 5:45 p.m. on Thursday, April 12, the Town Council will decide on a proposal for Jamestown to assume responsibility for distributing $1.3 million in state loans and grants for the purchase and repair of foreclosed properties. The council will also select its priorities for block-grant requests to fund 11 public-service projects.
The 12th item on the draft priority list is the pass-through proposal. The special meeting, which will be followed by the council’s budget workshop with the School Committee, was scheduled on short notice because the priority list is due next week, and a council member, along with the town planner and the town administrator, will be unable to attend Monday’s regularly scheduled council meeting.
The Planning Commission last week signed off on the town’s 2012 Community Development Block Grant priority list, having found that the 11 projects were consistent with the Comprehensive Community Plan. The priority list was supposed to have been reviewed by the council during its April 2 meeting, but Town Planner Lisa Bryer asked for more time to answer questions about the pass-through proposal. The source of the state’s funds for the Community Development Block Grant is the U.S. Department of Housing and Urban Development. The source of the unprecedented proposal for a town to manage the $1.3 million allocated to a subset of the block grant’s program – the State Housing and Rehabilitation Program (SHARP) – was the Newport-based Church Community Housing Corporation.
The $1 million SHARP revolving loan package focuses solely on the acquisition of foreclosed properties for affordable housing; the associated $300,000 Rehabilitation Grant Program is used to repair the purchased properties. Towns and nonprofit groups purchasing foreclosed properties with the SHARP loans must repay the loans (by selling the properties to qualified buyers) within 12 months or they are returned to the open market.
Nonprofit groups like the Church Community Housing Corporation have a time-limited right of first refusal when foreclosed properties become available, and that’s where Jamestown – or some other town – could come in. Rhode Island is slow to release money from the SHARP (presumably for bureaucratic reasons), which means that the groups could miss the opportunity to purchase a property. But a town could release the SHARP money much more quickly than the six to eight weeks typically required for a state disbursement, and the Church Community Housing Corporation nominated Jamestown to assume this role.
“We need to clarify what our administrative role would be in working with other municipalities and we also need to know the limits of our liability,” Town Administrator Bruce Keiser told the Press, referring to the problems that would arise if a town or a nonprofit group used money from the SHARP for purposes other than those spelled out in a disbursement.
“We are supportive of affordable housing,” Keiser said, “but we have to ensure that we’re not assuming any potential liability to Jamestown taxpayers, and that we are adequately compensated for our efforts. Another question is: What value is there in this proposal to promoting the acquisition of affordable housing in Jamestown?”
Currently, Jamestown’s affordable housing totals just under 4 percent of its total housing stock, which includes rental, owned and elderly units. The state wants 10 percent of the housing in each municipality to be affordable, although there aren’t many towns and cities reaching that goal. “Providence has,” Bryer said, “and Middletown is close. I believe Block Island may have met the goal when they built a municipal housing development a few years ago.”
Asked about the benefits to Jamestown from managing the $1.3 million program, Bryer said, “I think the benefits would be the same as they would be in any community in that money will be readily available for the purchase of foreclosed homes. That’s the benefi t. Obviously, other communities don’t know that this proposal is under consideration, so Jamestown will have its eyes open for foreclosed properties, and that may give us a little bit of a benefit in the beginning.”
The Press was unable to reach Church Community Housing Corporation for comment on its nomination of Jamestown to administer the disbursements. But Bryer said, “They approached us because of our strong commitment to affordable housing. We’re one the few communities in the state that allocates money to affordable housing every single year.”
Under the proposal, nonprofit groups seeking grants from the SHARP to purchase foreclosed homes would submit their applications to the Community Housing Land Trust – a Pawtucket-based nonprofit that provides technical assistance for affordable housing programs. Said Bryer, “They would determine if a project is worthy of a loan grant and ensure that all the application ducks are in a row. And, then, they would issue a draw-down request to the town of Jamestown.”
The checks issued in response to draw-down requests would be issued by Finance Director Tina Collins, who told the Press, “We’re still looking at the magnitude of the proposal.” Asked if she had any worries about its apparent magnitude, Collins replied that Town Solicitor Peter Ruggiero is examining the proposal, and that “he is working through some concerns, and if he has concerns, that would lead me to have concerns, as well.”
One of the questions Ruggiero has to answer is the level of indemnifi cation that the Interlocal Trust – the town’s insurance provider – would provide for problems that arose after the checks were cut. “That’s just one of the grey areas Peter is studying,” Collins said.
Another apparent issue is the additional work for Collins – and not the work from writing out checks. Rather, it would be the work involved with annual audits, which are required of every town that is granted more than $500,000 in federal funds for municipal or educational projects.
“In the past 12 years, I’ve only had to perform two individual audits,” Collins said. “Last year, it was for the streetscape project. Prior to that, I had to audit our use of federal funding for two water tanks. But [managing money from the SHARP] would almost guarantee that we will have to perform an individual audit every year.”