State forgives loan for housing

Cooperative had received $707,000 for rehabilitation

January 02, 2003|By Laura Vozzella | Laura Vozzella,SUN STAFF

State officials have forgiven a $707,000 loan to a low-income housing cooperative so that ownership of 30 West Baltimore rowhouses can be turned over to residents.

The Maryland Department of Housing and Community Development (DHCD) made a low-interest loan of $581,000 to the Penrose-Payson Cooperative Housing Corp. in April 1989.

The 40-year, 4-percent- interest loan was used to acquire and rehabilitate rowhouses in the 2000 block of Penrose Ave. and the 200 block of N. Payson St.

The project called for residents to build equity in the homes they rented, so they would eventually own them. But the project ran into trouble.

"The Cooperative Board and the residents were unprepared for the diverse repair and maintenance issues that arose, including improperly repaired roofs and insufficient heating systems," according to a summary presented to the state Board of Public Works last month.

The maintenance problems led the city Housing Authority to eliminate Section 8 housing subsidies for the development, the summary says.

"The reduction in subsidy payments, coupled with an inexperienced board of residents and mounting maintenance expenses, put the project in a continuing cash flow deficit," the summary says.

The cooperative had not made payments on the state loan since July 1995. With interest, the debt reached $707,000 by last month, when the Board of Public Works agreed Dec. 18 to write it off and deed individual titles to tenants.

That decision was intended to strengthen the neighborhood by increasing homeownership, the summary states.

"We thought it would be in the best interest of the community," Ed McDonough, spokesman for DHCD, said yesterday. DHCD encouraged the board to forgive the loans.

The new homeowners should have an easier time getting loans for home repairs now that "they don't have the albatross of our debt around their necks anymore," McDonough said.

Several of the rowhouses were appraised in the summer and fall at values ranging from $3,000 to $10,600. Each is estimated to need $30,000 to $47,000 in repairs - hefty sums for residents, whose average household income is $17,375, according to the summary.

The Oasis Foundation, a nonprofit housing advocacy group, is trying to help residents secure grants or loans to make the repairs.

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