For nearly two decades, Raleigh has tried to encourage its neediest residents who live in its oldest neighborhoods to fix up their homes with a variety of city loans.
Now, city leaders are considering loans that, in some cases, won't have to be re-paid.
A city council subcommittee Tuesday endorsed a program that could make the city's rehab loans more attractive.
If the program is ultimately approved by the City Council, it would allow certain owner-occupants earning up to 50 percent of the area's median income to apply for a combination of totally forgivable and deferred repayment loans.
Those who earn up to 80 percent of the area's $69,800 median income could apply for traditional low-interest loans.
Should the program be approved, it would mark a partial return to an old city policy.
Right now, Raleigh offers low interest, deferred repayment housing rehab loans to residents who earn less than 50 percent of the area median income. For a family of four, that figure is $34,900.
Priority is given to the elderly and disabled as well as residents of Raleigh's lowest-income census tracts, blighted redevelopment zones and conservation districts.
The programs are supposed to make it easier for people of limited means to rehab the older houses in which they live.
But just 67 Raleigh residents received these special loans in the past two fiscal years. That number includes less than 15 loans made in Southeast Raleigh communities known as Thompson-Hunter I and II, an area where 75 percent of homes have code violations.
The loan program, some residents say, isn't working and doesn't make much sense.
This summer, as the city began discussing what it will do with the 40 boarded-up homes and lots it owns near downtown, the chorus of voices questioning the wisdom of the loan program grew. By September, it included Mayor Charles Meeker and Southeast Raleigh's City Councilman James West.
"Some of the people living in the areas we want to target have made it clear that the loans, are not making an impact," Meeker said at a late September community gathering. "It may be time to examine the city's experience with grants vs. loans."
For about a decade beginning in 1974, Raleigh offered its poorest residents grants of up to $35,000 to bring their homes up to code.
The city lent funds to owner occupants who earned more money.
In the early to mid 1980s city staff grew concerned about cuts in the federal housing programs that provided most of the funding for repair grants, said Michele Grant, director of the city's community development department.
Raleigh decided to abandon its grant program and adopt a deferred repayment loan program that required recipients or their heirs to repay the loan if they move, die or sell the home.
Loans, unlike grants, are repaid and help sustain a program, said Grant. In the 1980s, there were also concerns that homes repaired for elderly residents would simply be fixed up with city funds and sold, in better condition, when the owner died or moved. The elderly resident's heirs would benefit from the city grant, but have no obligation to repay it, she said.
Some Southeast Raleigh residents consider the loan program a thinly veiled attempt to move more property near downtown into city hands or gradually change the demographics of some of the city's older neighborhoods.
"What good is a loan if the people who need it can't afford to pay it, if they or their kids are going to loose that house in the end when they cant pay it back" said Octavia Rainey, a Southeast Raleigh resident who lives in a redevelopment zone. "HUD [U.S. Department of Housing and Urban Development] sends Raleigh that money as grants, so why do they need to loan it out?"
(Raleigh's deferred repayment rehab loan program is funded with a combination of HUD and city bond funds.)
At an Oct. 11 meeting of the subcommittee, West compared the loan program to federal-lending practices that have made black-owned farmland a rarity. Last month, West said he suspects that the loan programs are feeding some Southeast Raleigh residents' mistrust of the city.
"I think the city is either going to have to take a closer look to see if these loans are really working, making a difference on the ground or look at creating some sort of education piece that explains why we offer loans instead of grants," West said.
But other residents are not convinced that the grant-like loan terms proposed Tuesday will have a significant impact on Raleigh's older communities.
In Martin-Haywood where the city owns 40 properties, only 30 percent of the homes are owner- occupied. The vast majority are rental properties owned by people who live elsewhere.
"In an area where 70 percent of homes are rentals ... what does that do?," said Jeffrey DeBellis, who lives in Downtown East, at the Tuesday meeting.
Meeker, who this month helped his son purchase a home in the same area, said that there is some general-market interest in the area. People, such as his son, who plan to live in the community are buying some of the area's rental homes.
Staff Writer Janell Ross can be reached at 829-4698 or firstname.lastname@example.org.