In a move to allow for transparency and clarity around the community development and housing loan processes, Oak Park’s village board approved a new policy to address requests to defer or forgive loans.
The village administers community development or housing loans both to nonprofit organizations who provide community development, housing development or housing rehabilitation services and to individual homeowners in Oak Park looking to purchase or improve a property.
The new policy is intended to help support more low- to moderate-income households. Some funding for the loans comes from Community Development Block Grant and U.S. Department of Housing and Urban Development dollars, Village President Vicki Scaman said, which are intended to make a difference in those communities. But the loans come from the village’s community development loan fund or the affordable housing fund, too.
“Even a $10,000 loan can be a game changer for somebody,” Scaman said.
Trustees all voted to approve the new policy, apart from Trustee Cory Wesley who recused himself from the discussion because he said he has a related loan out on his house.
As of Dec. 31, 2023, the village had 106 outstanding loans amounting to more than $4.1 million. A lot are small-value loans for homeowners, but 13 of the loans, totaling more than $2.6 million, are for the Oak Park Residence Corporation and Oak Park Housing Authority. Both the OPRC and OPHA have requested loans be deferred or forgiven, which the board has typically approved.
The new policy outlines that both nonprofit organizations and individual homeowners can be eligible for loan forgiveness. When considering a loan forgiveness request, village staff members say they will consider several factors, including the amount of the loan, outstanding loans, impact on housing programs, financial need and past treatment. By approving this policy, Jonathan Burch, the village’s neighborhood services director, said the board is clarifying where the threshold is for loan forgiveness requests.
“We [had] not necessarily established what’s the bar made of, or how high it is, or any of the other criteria,” he said.
The Housing Programs Advisory Committee will now consider loan forgiveness requests for housing loans. The Community Development Citizens Advisory Committee will now consider requests for community development loan forgiveness. The committee recommendations will then be presented to the village board.
The old process for considering loan forgiveness requests was on an ad hoc basis, according to village officials. Village staff would evaluate requests on a case-by-case basis. Trustees said they appreciated the idea of creating a clear policy.
“It really creates a level of equity, I think, that seems like it was not already part of the process,” Trustee Lucia Robinson said. “It’s a process that applies across the board, and one that’s transparent.”
But Robinson also said she’d like the policy guidelines to be stricter, potentially with a dollar amount threshold for forgiveness allowed. There shouldn’t be a “revolving door” of applicants requesting loans and having them forgiven, she said. If a loan is extended, the expectation should be that it will be paid back, she pointed out, but said she wants to benefit as many residents as possible.
“If this loan forgiveness option can then help [residents] remain in this community, can help reduce their cost burden of living in this community, those kinds of things would weigh very heavily for me,” Robinson said.
Trustee Ravi Parakkat suggested instead of forgiving loans regularly, the village provide grants. Village Manager Kevin Jackson said while it is more complex, deferring and forgiving loans rather than providing grants creates incentives for long-term commitment to advance affordable housing goals.
Trustee Brian Straw said he wants to ensure it’s equally straightforward for homeowners and nonprofit organizations to apply, with simple, accessible forms. It should be harder for organizations, however, to receive loan forgiveness than individuals or families, he said.
“There shouldn’t be something where you can only apply for forgiveness if you are a nonprofit that starts with ‘Oak Park,’” Straw said. “And I think that is historically how this has operated.”