County Land Bank Declines SBA Loan
The Chautauqua County Land Bank has declined accepting a COVID-19 Small Business Administration loan.
During a special meeting Wednesday, Gina Paradis, land bank executive director, told the board that the finance committee has decided to decline accepting an Economic Injury Disaster Loan (EIDL) from the Small Business Administration. She said the board had discussed during previous meetings accepting the EIDL, but the finance committee decided that the land bank wasn’t the right fit for the purpose of the loan.
A EIDL is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation to health care benefits, rent, utilities and fixed debt payments.
“We felt we really didn’t meet the criteria for getting the loan,” Paradis said.
Paradis said the land bank could have accepted a EIDL loan for up to $125,000 at a 2.75% interest rate, which could be repaid over 30 years. She said the terms were favorable, however, accepting the loan would have created more debt load for the land bank, which might not be the best option for the land bank because of a lack of annual revenue streams.
The land bank has discussed several times during the past year that housing stock is low for its Sales 4 Rehab program, which is one of the ways the land bank generates revenues. Also, the land bank mainly operates because of several grants it has received from the state Attorney General’s Office, which has secured millions in settlement funds following the mortgage crisis. However, the grants aren’t annual and land bank officials don’t know how many more grants they will receive from the Attorney General’s Office.
Land banks across the state have been lobbying for annual funding from the New York state budget, which hasn’t occurred yet. Also, with the financial issues the state is dealing with following the pandemic, it’s unlikely state lawmakers will create a dedicated funding line in the budget for land banks any time soon.
Even with the unknowns about future funding, Paradis said the board thought it wasn’t worth incurring the debt because the land bank might not have any use for the money. Because of the pandemic, she said there is a moratorium on foreclosures and the Chautauqua County Tax Foreclosure Auction might not happen this year.
“Right now, there is not a whole lot we could do with (the money) because there are no foreclosures happening,” she said. “We don’t know how long that will last. They’ve talked about extending the moratorium at least through the end of the year and possibly into next year.”
In other business, the board approved Diane Hannum to be the new chairwoman. Paradis said Jim Caflisch, former chairman, is retiring as the Chautauqua County Real Property Tax director, so the board needed to approve a motion to make Hannum, former vice chairwoman, as the new chairwoman. Paradis said Hannum will be chairwoman until at least next March when the board will vote for its officers.