Tag Archives: AustinTalks

West Side left out of city foreclosure program

Last week Mayor Emanuel announced a $20 million program to rehab and reoccupy foreclosed homes in nine neighborhoods.  At AustinTalks, Otis Monroe points out that Austin and North Lawndale aren’t part of it – traditionally “left-out communities” that have been left out again.

Indeed, not a single West Side community is included in the program.

In Austin, the same day the city program was announced, South Austin Coalition was releasing a report calling on banks to fix the housing crisis and the related economic collapse by writing down underwater mortgages to market value (see Newstips).  That would free up $70 billion a year in consumer spending, creating a million jobs a year, according to the New Bottom Line Campaign.

Yesterday a New York Times editorial backed up the report’s contentions:  “The economy will not recover until housing recovers — and that won’t happen without a robust effort to curb foreclosures by modifying troubled mortgage loans.

Instead of pushing the banks to do what is needed, the Obama administration has basically urged them to do their best to help, mainly by reducing interest rates for troubled borrowers…

Reducing principal is a better solution than lowering interest rates, because it reduces payments and restores equity. Bankers resist, because it could force them to recognize losses they would prefer to delay. The administration has resisted, in part because principal reductions are seen as rewarding reckless borrowers.

But many of today’s troubled borrowers were not reckless. Rather, they are collateral damage in a bust that has wiped out equity and hammered jobs, turning what were reasonable debt levels into unbearable burdens.

The Times urges action by regulators and by Fannie Mae and Freddie Mac to ease the rewriting of underwater mortgages.  The paper calls on President Obama to include “strong support for principal reductions and easier refinancings” in a forthcoming announcement on jobs — otherwise he “will not get at the root of the problem.”

SAC and NBL don’t focus on government; they argue it’s up to banks to rewrite mortgages – and they owe it to us, having received trillions in bailouts and backstops.  And right now they’re sitting on unprecedented cash reserves.

SAC chose a foreclosed home in Austin now being rehabbed by the Westside Health Authority in the first phase of a $2.4 million community restoration fund, won from U.S. Bank by the Coalition to Save Community Banking after the takeover of Park National Bank.

That shows that communities can pressure banks to step up and take responsibility – though it will take a lot more pressure to get banks to take full responsibility for their role in the collapse, especially with a political establishment that treats banks with kid gloves.

In any case, it shows that community groups on the West Side are acting to save their neighborhoods from the ravages of foreclosure, in the face of historic neglect – and that they merit more attention from the mayor.

Hearing on youth unemployment

Jarrett Norwood, 18, is volunteering at Ashunti Community Resource Center since funding for his summer job dried up – and he’s afraid he won’t be able to pay the fees for community college this fall.  “I can’t really afford to work for free,” he said.

Norwood was among hundreds of West Side residents at a hearing on jobs held by State Representative LaShawn Ford, AustinTalks reports.

“We see that the system is failing,” said Ashunti CEO Regina Lewis. “A lot of our kids have given up. They don’t believe in the system, period.”  More here.

Austin stiffed by TIF

With Mayor Emanuel’s TIF panel looking into the program’s effectiveness, AustinTalks examines its impact in a community with the seventh-highest unemployment rate in the nation – and finds it falling far short.

Only four TIF projects have been authorized for Austin; only one – relocation of a Coca Cola warehouse – has met the terms of its TIF agreement; and that project has employed just 28 people who live in or near Austin, according to a report by Ellyn Fortino.

More than half of the 200 TIF projects authorized since 2000 are located downtown (as Fortino and ChicagoTalks staff previously reported in the New York Times).  “Few if any projects can be found in Chicago’s most blighted communities on the West and South Sides,” Fortino writes in today’s report.  “And many of those projects haven’t been completed at all – if started.”

Of $22 million in TIF subsidies allocated for Austin, “only $1.4 million has been paid out – most of it for the Coca Cola distribution center,” Fortino reports.  That’s out of $1.2 billion citywide.

That project is “a prime example of how low-income neighborhoods in TIF districts don’t get what they deserve,” with property taxes diverted from public services to benefit big corporations, one activist tells AustinTalks. It’s “legalized corruption,” says Dwayne Truss of the South Austin Coalition.

As for those other TIF projects in Austin, “no one in the Department of Housing and Economic Development, which oversees the TIF program, could shed light on why the three other projects are incomplete,” Fortino writes in a sidebar.

David Orr recently offered suggestions for Emanuel’s TIF panel, focusing on recapturing funding for schools and other public bodies.  Newstips recently reviewed a range of proposals for TIF reform.