CITY’S HOME IMPROVEMENT LOAN PROGRAM ADDRESSES GENTRIFACTION AND WIDENING RACIAL WEALTH GAP BY HELPING RESIDENTS PROTECT AND ENHANCE THEIR BIGGEST ASSET—THEIR HOME—DURING COVID-19
$40 Million Restore, Repair Renew Low-Interest Loan Program Administered for City by Nonprofit Clarifi Allows Homeowners to Make Repairs in Hard Economic Times
PHILADELPHIA, PA —(Sept. 17, 2020)— Considering the economic pressures people are facing during the COVID-19 pandemic and the current recession,they may be reluctant to spend money on a major home repair, even though it may be critical to their health, safety and long-term financial goals. Delaying work on a roof or plumbing system could jeopardize a family’s most important investment a ta time when our homes are more central to our lives than ever before. An innovative City of Philadelphia-sponsored program—the Restore, Repair, Renew Loan Program—makes these repairs feasible and helps people stay in their homes and their neighborhoods.
Under Restore, Repair, Renew (RRR), the City of Philadelphia and the Philadelphia Redevelopment Authority are facilitating home improvement loans through private lenders. The loans are available at below-market interest rates. The City has allocated $40 million toward the program. Participating lenders are offering 10-year, 3 percent fixed-rate interest loans from $2,500 to $24,999 for eligible homeowners. The average RRR loan amount is $19,555.Clarifi, a 50-year-old financial literacy nonprofit,is an administrator of the program. Its counselors and their teams guide homeowners throughout the process, helping them determine their eligibility for the program, identifying the necessary repairs, referring them to participating lenders, and if needed, providing them with the names of potential contractors. Eligible homeowners who have owned their homes for at least six months can use the loans to invest in a range of repairs that address health, safety, weatherization,accessibility and modernization.Dramatically improving the health of a home also connects to issues of equity,as Philadelphia neighborhoods face rapidly rising property values due to gentrification.
“The goal of the RRR program is to help Philadelphians improve their homes and strengthen their communities,” said Jill Roberts, director of the Healthy Rowhouse Project and manager of RRR for Clarifi.“We’ve already assisted hundreds of homeowners through RRR. We are proud to enhance their lives by preserving affordable housing and creating opportunities for more diverse, vibrant neighborhoods.That is what long-term prosperity and equity are really about.”
The program holds even greater importance as Philadelphia’s communities of color continue to be disproportionately impacted by the COVID-19 pandemic because of systemic inequities in both health care and financial resources. This also includes the racial wealth gap, but homeownership can be a critical step toward breaking this cycle. According to Census data from 2018, Black homeownership in Philadelphia is only at 48 percent, while white homeownership is at 76 percent. Though this gap is smaller compared to other U.S. cities, RRR is helping Black and Brown families accumulate wealth and protect their greatest asset for generations to come.
“The Restore, Repair, Renew Program reverses the damage that the Great Recession had on home improvement lending. Credit dried up for working class and Black and Brown citizens who were being declined,” said City Council President Darrell Clarke, who spearheaded RRR’s creation. “The City has stepped in to fill this gap in our credit markets so homeowners can invest in the most important wealth building tool in America, their homes.”Not only are homeowners protecting their biggest asset in terms of equity, they are also protecting their other biggest asset –their health.There are numerous benefits to improving home health for adults and children, especially when considering the racial disparities in health care quality and coverage that have been further exacerbated by the pandemic. Being able to make needed home repairs can lower health care costs,lead to fewer emergency room visits,reduce work and school absences and further protect our city’s most vulnerable populations, such as children and the elderly and in communities of color.
Between 2015 and 2017, almost 75 percent of low-or moderate-income Philadelphia homeowners were denied home-improvement loans, according to a study by the Federal Reserve Bank. RRR bolsters neighborhoods that have been struggling with disinvestment and displacement caused by gentrification by helping low-and middle-income homeowners get relatively small loans that banks are often not interested in processing, particularly to people with lower credit scores.
District Nine Councilwoman Cherelle Parker also led the program’s establishment. “Working-class homeowners are too often overlooked when seeking to repair and renovate their homes,” she said. “City government has a responsibility to invest in these neighborhoods,as other areas of Philadelphia experience continued growth.”
Philadelphia residents in need of repairs and renovations to their primary residence could be eligible for the program if they have a credit score above 580and have no outstanding municipal liens on the property,unless they are in a repayment plan with the City of Philadelphia.Applicants cannot exceed 120 percent of Area Median Income, which is $81,150 for a single person, $92,750 for a two-person household and $104,880 for a four-person household. To determine if you are eligible, call 215-866-5200 or submit an RRR form at clarifi.org/rrr.