Council debates need, merit, constitutionality of $500G rental microloan program

Clockwise from top right, Mayor Caroline McCarley and Councilors Jeremy Hutchinson, Jim Gray, and Palala Belken take turns making their points on a housing microloan proposal discussed during a council workshop on Tuesday. (Courtesy/City of Rochester)

ROCHESTER - Saying that homeless insecurity poses a "grave vulnerability to our city," three city councilors on Tuesday proposed a $500,000 housing microloan fund that would lend up to $2,000 per household to help those at the "knife's edge" from being evicted.

The proposal was brought forward by Councilor Jeremy Hutchinson - a longtime homeless advocate - and first-term council members Palana Belken and Chris Rice.

Hutchinson is hoping to have the full council vote on the measure on May 5 immediately following a public hearing to expedite the release of the funds, which would come out of the city's unassigned fund balance.

The unassigned fund balance is a barometer of the city's fiscal health and can also be used to reduce the tax rate with any surplus.

City Manager Blaine Cox, who moments before had presented an outline of the Fiscal Year 2021 budget, cautioned that the $500,000 program would be another "liability against our cash flow."

Cox said nonproperty tax flow is already compromised with COVID-19, he said, adding to the city's fiscal woes.

But Hutchinson proclaimed the need great and the situation dire.

"This is an immediate requirement," Hutchinson said. "There are folks who may be a week away from being on a list for shelter; the longer we delay this the sooner that becomes their reality. This is a homeless prevention measure. This is a way to help people who are absolutely at the knife's edge."

Hutchinson's impassioned plea got pushback from several councilors including Pete Lachapelle, who said he supported the concept but wanted to see it vetted by the finance committee.

City Councilor Jim Gray agreed that the proposal should move to the purview of the finance committee, while also worrying about the constitutionality of the proposal.

As Hutchinson detailed the plan, the residential microloan program would give households up to $2,000 at zero percent to specifically pay just the rent or mortgage on a city home or rental property. He said he thought about 200 applications might be presented by those looking for assistance.

Several councilors referenced Gov. Chris Sununu's prohibition on foreclosures or evictions while the emergency orders are in place, but proponents of the program believe once it is lifted, landlords will be inclined to demand full payment of back rent or begin eviction procedures.

"If I were a landlord, or had control over a property as manager, hey, I'd be saying 'you're back to work, you have 30 days to come back with your past due rent or I'm gonna start the eviction process,'" Rice said. "And I have a gut feeling that a lot of these landlords will want their money; they have bills to pay."

It should be noted that Gov. Sununu did clarify his eviction prohibition order by saying that while it did not forgive tenants of their rent obligations, both tenants and landlords had an obligation to work out a fair payment plan until they can catch up once the emergency order is lifted.

Councilor Doug Lachance feared the program, though well intentioned, would add another layer of indebtedness to working class families.

He also pushed back on the notion that landlords would come clamoring for all the back rent within a month of someone going back to work.

"I am a former landlord, myself, and landlords are not chomping at the bit to evict tenants," Lachance said. "Either way, they'll be negotiating with the landlords or the city."

Lachance also said he hadn't received one phone call from a constituent looking for such a program.

"We're creating a problem that may not exist," he added.

Mayor Caroline McCarley, who said she supported the intent of the program, suggested that in the next two weeks they should be conferring with Rochester Welfare Director Todd Marsh, the city attorney and others to hone its wording in expectation of a public hearing and council vote on May 5.

Gray went on record to say he was against such a hasty vote.

"It would not be my preference. My preference would be send it to the finance committee," he said.

"That is not outside the realm of possibility," McCarley replied.