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Brewton, Ala., population 5,885, creates model reinvestment program using CRA.

"State Awards Unique Grant" read the headline of The Brewton Standard, announcing the City of Brewton's $500,000 demonstration grant to implement activities which will use the Community Reinvestment Act (CRA) to meet the City's housing needs. CRA is a federal law which mandates that banks reinvest their deposits locally -- to meet identified community credit needs including housing and economic development.

The City of Brewton (5,885 in population) applied for, and was awarded, a Community Development Demonstration Grant (CDBG) from the U.S. Department of Housing and Urban Development through the Alabama Department of Economic and Community Affiars (ADECA). The grant will be used to establish the Brewton Community Reinvestment Challenge Fund -- a comprehensive housing project that includes creating home ownership opportunities for low- and moderate-income persons.

"It is one of the most innovative programs we've seen in the last three years" noted Bobby Pruitt of ADECA as he thanked Brewton for submitting a "fresh project that can be replicated across the state."

The Brewton Challenge Fund represents a comprehensive approach to neighborhood revitalization; comprehensive in its broad focus and the various people that it will bring together under the project. The project will include: home improvements; housing rehabilitation and ownership of the rehabilitated house by the resident; and targeted new home construction and ownership.

The CDBG funds will be used to make 100% grants to the poorest residents, make 90% rehabilitation grants to higher income low- and moderate-income persons, and to make mortgage buy-downs of new home construction in targeted areas.

The funds from local lending institutions will be used to assist the financing of housing rehabilitation and to assist with purchase of rehabilitated and newly constructed homes by low- and moderate-income residents. The local banks involved include First National Bank, Bank of Brewton, Union Bank and First Progressive Bank. Municipal resources will be directed at providing staff and clerical support for initial loan processing and program management activities.

In addition to strengthening partnerships with local banks, the Challenge Fund maximizes the flexibility of CDBG. The program utilizes CDBG funds for purchase/rehab and new construction in addition to traditional housing rehabilitation. The program reliesk exclusively on CDBG and local funds from the municipality and local lending institution as the only prerequisite source of funds, and the program design is oriented to small cities and towns.

Direct Benefits

The proposed direct benefits of the Challenge Fund were summarized by the City. It is estimated that under this current initiative, 40 houses will be rehabilitated, five houses will be purchased and rehabilitated, and ten new homes will be built. It is estimated that the project will benefit, at a minimum, 126 people in 55 households of which 100% will be low- and moderate-income persons. It is estimated that the demonstration community development block grant project will have a total impact of about $2.8 million on the area as the funds filter through the local economy.

The City's funding application listed numerous indirect benefits that will be derived from this project, including:

* The long-term stabilization and preservation of the neighborhood through the rehabilitation of substandard housing units, the demolition of abandoned housing units and the creation of new owners in blighted areas of the City;

* The increase of employment opportunities through the addition of a number of temporary construction jobs within the community;

* An increase in community pride of the residents of the project area;

* The elimination of potential and actual serious threats to the health and safety of the people in the community;

* Encouragement of privately financed repair of housing units in and around the neighborhood through the home improvement program of the project; and

* Promotion of new housing construction on vacant lots. Approximately 20% of the land in the blighted area targeted under this project is vacant and virtually all areas have access to public water, sewer, gas and streets.

How did Brewton find out about such a creative approach to meeting housing and economic development needs? Ted Jennings, mayor of Brewton, attended an NLC seminar on CRA in June 1991 and went back and put together Brewton's community investment plan.

How can you learn more about CRA? Attend the workshop "Using CRA to Meet Your Economic Development Needs" which will be held at the Congress of Cities on Tuesday, December 1 from 10:45 a.m. - 12:00 noon in Room 44.

Small City Needs

"Small cities need a standardized program that will enable and facilitate homeownership opportunities for low- and moderate-income people that will, in the long-term, facilitate homeownership in the poor neighborhoods of small cities. Only one source of federal funds is still available to |all' small cities: CDBG." noted Jennings.

Jennings hopes that Brewton's Community Investment Challenge Fund is not only a model for other cities and towns in Alabama on ways to maximize use of both CRA and CDBG, but for communities nationwide.
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No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:Community Reinvestment Act
Author:Mayer, Virginia
Publication:Nation's Cities Weekly
Date:Nov 23, 1992
Words:811
Previous Article:Partners in community investment.
Next Article:L.A. six months later: prospects remain bleak.
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