Pittsfield Council Vote Down Tyer's Home Improvement Program
The council voted down "At Home in Pittsfield," a program that would have used $250,000 from the General Electric Economic Development Fund to provide zero-interest loans for residents looking to make exterior improvements to their homes.
The program needed a supermajority of seven of 10 voting councilors — President Peter Marchetti abstained from the debate because of his full-time job with Pittsfield Co-operative Bank — but only received six.
The program had already faced some concerns by the City Council regarding the source of the funding, the equitability of eligibility for those outside of the Morningside and West Side neighborhoods that were targeted for enhanced services, the repayment or loan forgiveness measures, and replicating similar types of programs.
The mayor reassessed the program and alleviated some of those concerns, but not all.
"We retooled the program to be just for existing homeowners at this time," said Director of Community Development Deanna Ruffer, explaining one of a number of changes the administration had made.
The program had been open to homebuyers who would have been able to tap into the funds for fixer-uppers but Ruffer said there was concern about speculative buyers looking to use the funds and then flip the house.
To that end, the administration got rid of any potential forgiveness, requiring that the loan be repaid in full when the home is sold as well as adding a requirement that the resident also lives there for five years after receiving funds or else pays a 3 percent interest rate. Ruffer added that once announced, some 100 homeowners had contacted the city asking about it.
"We have made them all repayable. There is no forgiveness," Ruffer said.
The program required that the residence be owner-occupied but Ruffer said the administration dropped the size of the structure from one to four families to one or two family homes.
The program also dropped the area median income for eligibility from 135 percent of the area median to 120 percent but said anyone eligible for the existing Community Development Block Grant funding for a similar program would be ushered into that program instead.
However, what hadn't changed was the percentage of money available for those in the West Side and Morningside neighborhoods. The two lowest income neighborhoods and the two with the lowest housing values would be eligible for up to 20 percent of the increased assessed value whereas the rest of the city would be eligible for only 10 percent.
Further, the administration eyed dedicating 60 percent of the total money used for the program to those two neighborhoods. The administration said the efforts were targeted to those neighborhoods because they've shown the most need and have homes that have stayed in families for generations needing repair. Tyer said housing values in those neighborhoods are half of that in other areas of the city.
The total loan was restricted to $25,000 across the city, whereas before Morningside and West Side had a greater ceiling.
The general structure of the program hadn't changed. The money would be available for residents making exterior repairs on their homes. The city had partnered with four local lenders so that any improvement loan would be backed by a mortgage and lenders would also have complementary products to help the residents do more.
But siding or a deck or a roof isn't what Ward 7 Councilor Anthony Simonelli thinks of when he hears the term "economic development." The city had been given $10 million about two decades ago by General Electric as the company set sail for bluer oceans.
Simonelli said the intent was to bring businesses and jobs back to the city, not make home improvements.
"Do you consider repairing a roof or a foundation economic development? I think of LTI. I think of Ice River Springs. I think of the BIC," Simonelli said of the use of those funds, funds that were used as incentives to bring about commercial growth. "Let's safeguard this money for the purpose it was intended for."
For Ward 4 Councilor Christopher Connell, it was about jobs. He said this program wasn't going to create new jobs, for what he believes the money is intended.
Connell had previously suggested that the program be funded through free cash. The city's auditor, however, advised against using free cash because the program would not be open to every resident.
On Tuesday, Connell turned his attention to potentially funding it through the annual budget. Tyer refuted that option for much of the same reason the auditor didn't like free cash. The General Electric funds came from the pockets of the company whereas the budget is paid for by every resident in the city. Tyer said she doesn't want a situation where people who are not eligible for the program are being forced to subsidize the improvements of others.
"We can use this source to stabilize our neighbors," Tyer said.
The link between housing and economic development is certainly strong — as Ward 1 Councilor Helen Moon pointed out most of the government agencies dealing with the two are linked such as the Massachusetts Office of Housing and Economic Development. 1Berkshire recently released a report on business development and cited a "cross cutting issue" as being a lack of stable and quality housing for employees of companies looking to grow or move here to work.
Councilor at Large Peter White works in the employment field and said he consistently hears that housing is a problem for employers. According to Tyer, 43 percent of the city's housing stock was built before the 1940s and many buildings have fallen into disrepair.
"A city is only as strong as its neighborhoods and we need strong neighborhoods," White said, detailing homes in disrepair throughout the city. "This is us starting a program with the only source of funding we can use right now and investing it in ourselves."
It's a start, White said. Tyer's plan was a pilot and the administration said it would be able to look at the impact it made. After about two years of studying the effect on assessed values, the improvement to neighborhoods, and any potential other investment it triggers would determine how successful the pilot was.
At that point, the mayor said the state could look to replicate it on a larger scale and community businesses and foundations might be willing to help fund it.
"We have to start doing something. We can't keep doing things the way we've always done them," White said.
Lori Gazillo Kiely from Berkshire Bank said the Berkshire Bank Foundation would certainly consider contributing to the program if it is proved to be successful.
Ward 5 Councilor Donna Todd Rivers said these types of programs already exist but banks choose not to offer them. She cited the Federal Housing Administration's 203K program that offers very similar loans to people who struggle with the traditional loans at banks.
She said local banks don't offer those existing programs but they are available through various lenders. She fears that the local banks are just seeing this city program as a way to mitigate their own risk in lending.
"I think the city is mitigating their risk with this program," Rivers said.
There is some truth to that sentiment as proponents of the program have said this would close the gap in loan funding offered at the local banks. It would serve as a separate tool used by lenders in putting together a loan package for the customer.
However, between Rivers and Simonelli both making it a point to note that banks earn money through lending, Paula Lewis from Lee Bank took exception to what she saw as an "attack" on local lenders.
She said those programs offered by out-of-town banks have a significantly higher rate of foreclosure. Local lenders have programs to help those in their community stay in their homes should something bad happen.
"Outside lenders do not work with borrowers as well as local lenders do," she said.
Meanwhile, Councilor at Large Melissa Mazzeo also questioned the source of the funding and suggested the city use income from marijuana taxes instead. The City Council had approved putting half of expected cannabis revenue into stabilization and put a pause on earmarking any more until the revenues are known. So far, the city has received about $10,000 in revenue but that was only one month, the first month recreational sales happened in the county, and from one store.
That led to a heated back and forth between Mazzeo and Tyer. The two clashed over a number of details of the housing program.
It didn't take long to see that the votes weren't there to pass the program. But the council continued to talk about the issue well into the night. Mazzeo, Connell, and Ward 2 Councilor Kevin Morandi all pushed the mayor to return with a proposal that used a different funding source.
But the mayor and the administration had worked for a long time developing the plan and were steadfast that this was the plan they were putting forward after already making concessions on what was originally presented.
A motion to file the petition failed. A followup motion to refer back to the mayor failed. Simonelli, whose meeting it was to make the motions, then sat silent, refusing to put the issue to a vote. He then attempted to adjourn the meeting altogether with no luck. Eventually he relinquished the floor to allow somebody else to make a motion.
White made a motion to approve that received a 6-4 vote, which was one short of the supermajority needed.
Interestingly, Rivers had sided against the program for most of the evening and in earlier votes. But seeing that the entire idea could possibly die, she voted in favor in hopes to keep it somewhat alive. As she prefaced earlier in the evening, the councilors don't dislike the idea, they just have problems with the details.
Tags: Housing program,
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