National cuts could threaten local services

National cuts could threaten local services

May 2nd, 2011 by Yolanda Putman in News

AT A GLANCE

Local HUD-approved housing counseling agencies include:

• 28th Legislative District Community Development Corp.

• Catholic Charities of East Tennessee

• Chattanooga Neighborhood Enterprise Inc.

• Chattanooga Department of Human Services

• Partnership For Families, Children and Adults

Source: HUD

Chattanooga officials are watching a proposed 16.5 percent cut to the city's Community Development Block Grant funds, which could reduce money planned for development in low- to moderate-income neighborhoods.

The money provides sidewalks, street paving, services for the homeless and housing improvement projects, and it's the most flexible type of funding available, said Beverly Johnson, the city's neighborhood services director.

"Absolutely it's a big deal. It's several hundreds of thousands of dollars cut," she said.

She said she expects a final decision within weeks or days.

In all, proposed cuts at the national level would reduce such funding by $647 million next year, to $3.34 billion, according to a statement released in April by the U.S. Conference of Mayors.

That's on top of the elimination of $88 million in funds that go to housing counseling agencies around the country that are approved by the U.S. Department of Housing and Urban Development, officials said.

The funding cuts could be felt as soon as October, officials said.

"Agencies are going to be hurt by that funding going away, no doubt about that," said David Johnson, president and CEO of Chattanooga Neighborhood Enterprise, one of a handful of such counseling groups here.

HUD-certified counseling services are needed, David Johnson said. Of the 731 customers that CNE served last year for homebuyer education or foreclosure prevention, 92 percent of those who went through foreclosure prevention counseling were able to remain in their homes, he said.

Those who participate in homebuyer classes are 34 percent less likely to become 90 days late on their mortgage, he said.

"It gets results," Johnson said. "It mitigates risks to lenders when you have an informed, educated borrower."

Thanks to diversified funding sources, CNE does not expect to lose its counseling funds and could sustain a reduction in block grant money in the coming fiscal year.

However, CNE could be affected in succeeding years if community development block grant funds aren't restored, Johnson said.