Loans help landlords fix properties

Funding would allow property owners who invest in their units to obtain federal grants.
Thursday, October 23, 2003 | 12:00 a.m. CDT; updated 1:36 p.m. CDT, Sunday, July 6, 2008

Owners of run-down rental properties in parts of Columbia now face an alternative to watching their homes slowly decline and eventually be demolished.

City officials, believing that property owners who invest in their units are making an overall investment in neighborhood quality, are making federal money available to owners through a low-interest loan rental rehabilitation program.

Owners of property in Columbia’s Neighborhood Response Team area are eligible for the program. The area is bounded on the south by Ash and Park streets, on the west by Ridgeway Avenue and Sexton Road, on the east by Range Line Street and on the north by Business Loop 70.

The NRT includes members of the police, health and protective inspections departments. It targets sites in low-income areas in need of repair. Thirty percent of homes in the NRT area are rental units, said Tom Lata, community development coordinator for the city. The annual spring survey revealed that 90 percent of severely deteriorated properties in the area are rental units.

Property owners have been able to apply for the funding since June, and thus far only one has taken up the offer.

Eligibility for loan requires owner investment

Columbia tried a similar program in the past, but it did not encourage owners to maintain long-term involvement with their properties. Some people used the money for standard maintenance rather than substantial improvement.

But this time around, Lata said, the program requires the owners to invest at least $7,500 of their own to be eligible for a $15,000 loan. An owner investment of at least $17,500 would make the owner eligible for a loan of up to $35,000, but only if the project includes lead-based paint clean-up. Without the hazard materials, the amount is reduced by $10,000.

The owners are charged 1 percent interest and must repay the money within 20 years. In return for the loans, the property owner agrees to maintain affordable rent for a 10-year period.

Council looks favorably on program

City officials are encouraged by the program because it requires the upfront investment. They hope it will result in long-term commitments to properties as well as neighborhoods. For some, however, the $7,500 may be prohibitive.

“It’s probably why we haven’t gotten loads of response, but if we just gave them the money, I don’t think it would be worthwhile,” said Lata, adding later that “until now, the council’s not looked favorably on providing money to rental property owners.”

D. Mueller was the first to apply for the program. He plans to double the size of the home he’s owned at 1 Switzler St. for 20 years. Because the renovation is so extensive, Mueller will contribute more of his own money than the city requires. In the end, only three exterior walls and the foundation of the old structure will remain.

Mueller saw neighboring houses sit vacant for years, and then be rebuilt. As he watched the improvements, he weighed the options of either renovating or selling his property. If he hadn’t gotten word of the rental rehabilitation program, he might have sold the house.

“It’s a good program, and certainly going to improve the neighborhood,” Mueller said.

Some are skeptics

Ray Warren of the Douglass Park Neighborhood Association is skeptical of the program. He thinks property owners will use the loans to boost the value of their properties, then make a buck and leave. He’s seen the effects of disinterested property owners buying up cheap property in his district. Landlords rarely live in the area, he said, and are able to get federal help that many residents can’t.

“We struggle to get assistance, and landlords are buying up our property,” Warren said.

Vernon Forbes, a founder who helped fund the Ridgeway Neighborhood Association, is more than skeptical. He agrees the neighborhood needs improvement but sees rental rehabilitation as a crutch for landlords and said they don’t deserve government help after allowing such extreme deterioration of their property.

“The neighborhood is being run down by slumlords,” Forbes said. “They continue to exploit the property to make money on it. They plunder it and plunder it and plunder it.”

Lata acknowledges many people don’t live in the neighborhoods where they own rentals but said the owners are a diverse group. The program gives the properties longevity they might never have otherwise, he said. Without improvement, the homes might eventually be torn down.

“I think it will improve values. It’s kind of the middle road, the way I look at it,” Lata said.

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