At the November 16 meeting of the Winston-Salem City Council, our centrist-Democrat-dominated governing body voted 7-1 to use $1 million from the City’s scarce housing assistance funds to subsidize development at Whitaker Park. Councilmember Dan Besse was the only member of the council who objected.
In today’s blog Throwback Thursday blog (the first of what I hope to be regular installments), I’m going to briefly examine the City’s use of $2 million in Community Development Block Grant (CDBG) loans to assist Brookwood Business Park while they ignored the needs of nearby Piedmont Circle.* You may ask why I’m lumping a business park with a public housing community? Brookwood and Piedmont Circle are adjacent to each other. And it’s striking to see a new business park from the City and the County’s modern Sheriff’s Office across the street from Piedmont, while Piedmont Circle appears to be frozen in time.
The City’s funding for Brookside Business Park was briefly described by the City’s Community Development Director, Marla Newman, back in January, when the Council decided to pay off the $2 million CDBG loan it used for the business park adjacent to Piedmont Circle.
According to Wikipedia, Community Development Block Grants are used for “local community development activities with the stated goal of providing affordable housing, anti-poverty programs, and infrastructure development.” CDBG funds can be used for infrastructure, but they are intended to benefit “low and moderate-income people.”
The Winston-Salem City Council used $2 million on Brookside Business Park instead of addressing an obvious need, the replacement of aging housing units at Piedmont Circle that were built in 1953. While the Cleveland Avenue Homes are in the process of being replaced, residents at the oldest housing project in Winston-Salem are being forced to live in housing units that date back to the Korean War.
When it comes to the lack of safe, well-built, affordable housing units in Winston-there is plenty of blame to go around. But the City’s prioritization of business development over affordable housing is a huge part of the problem.
“In 1999 the City obtained a Section 108 loan in the amount of $2.0M for the
Brookwood Business Park. The loan has been fully expended. Repayment of the loans was guaranteed by, and to be paid from, the City’s annual CDBG allocation.” –City of Winston-Salem Finance Committee, 01/13/2020
RES - HUD Section 108 Loan Defeasance
COMMUNITY DEVELOPMENT BLOCK GRANTS (SECTION 108 LOAN GUARANTEE)
Loan guarantee assistance for community and economic development.
Nature of Program: Section 108 is the loan guarantee provision of the Community Development Block Grant (CDBG) program. Under this section, HUD offers communities a source of financing for certain community development activities, such as housing rehabilitation, economic development, and large-scale physical development projects.
Eligible activities are (1) real property acquisition, (2) rehabilitation of property owned by the applicant public entity or its designated public agency, (3) housing rehabilitation eligible under the CDBG program, (4) special economic development activities under the CDBG program, (5) interest payments on the guaranteed loan and issuance costs of public offering, (6) acquisition, construction, reconstruction, rehabilitation, or installation of public facilities, (7) assistance for public facilities in colonias, (8) debt service reserves for repayment of the Section 108 loan, (9) other related activities, including demolition and clearance, relocation, payment of interest, and insurance costs. When determining eligibility, the CDBG rules and requirements apply. As with the CDBG program, all projects and activities must meet CDBG’s primary objective (use of 70 percent of funds must benefit low- and moderate-income persons) and one of the following three national objectives: (a) principally benefit low- and moderate-income persons, (b) assist in eliminating or preventing slums or blight, or (c) assist with community development needs having a particular urgency. Loans may be for terms up to 20 years. –Hud.gov
*I use the name Piedmont Circle when describing the public housing complex that is officially known as Piedmont Park. It was called Piedmont Circle when it opened in 1953. It’s still referred to commonly by that name. When the Housing Authority builds a decent park at Piedmont Circle, I will gladly begin referring to it as Piedmont Park.