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making up its board of directors. The board manages a high-risk revolving loan fund for residents who do not qualify for the conventional loans also available from lenders who take part. The loan fund was seeded with $100,000 from the Ford Foundation and $200,000 more from local foundations. Wilson claims significant results for the program. At the outset, of the 1,700 structures in the neighborhood, 1,300 needed repairs. Over 95 percent of the repairs have been made. Just 44 high-risk loans had to be made; lenders found that 200 regular loans could be made. Though less than $150,000 went to subsidize repairs \(the rest coming from the pockets to attract 20 times as much private reinvestment in the area. The ,upshot: in an area that lenders had written off, property values are now on the rise. Dallas also takes part in the federal urban homesteading program. The object of the program is to put people in homes taken over by the Federal Housing Administration after foreclosure on FHA-guaranteed loans. The houses are sold for $1 to applicants who agree to make needed repairs within 18 months and to live in the houses for three years. The city seeds a home improvement loan fund for these buyers with $66;667 from its federal community development funds, augmented by $500,000 anted up by a consortium of seven area banks. The city’s money constitutes a reserve fund that the banks can tap if there’s a default. So far 250 houses have been turned over to urban homesteaders in Dallas’ Oak Cliff neighborhood. The city also uses community development grants as seed money for several similar home repair loan programs. The newest program is citywide and involves 28 banks and S&Ls with a fund of $4 million. All of this sounds pretty good, and it’s a sight better than what any other Texas city is doing to encourage reinvestment in central-city neighborhoodsbut the Dallas program is just a drop in the bucket. The whole effort has lifted about 38,000 housing units out of the substandard category over the past five years, but over the same period, more than 47,000 units dropped into the substandard category. And out of a total of 360,000 or so units in the city, nearly 100,000 are substandard, according to the latest figures. Indeed, some critics of city government in Dallas charge that the city has followed a deliberate policy of letting older homes deteriorate beyond the point of no return in order to clear the way for big developers like Fox & Jacobs, which is building an uppermiddle-class neighborhood, with city guarantees against any losses, on land in East Dallas next door to downtown. Whatever the merits of that claim, it seems clear, as UT-Arlington’s Mark Rosentraub says, that Dallas’ “model” rehabilitation effort is “minusculelike trying to shoot down a B-52 with a peashooter.” Local programs like the one in Dallas get little or no help from the state. The hearings conducted last year by Sen. Ron Clower’s consumer affairs subcommittee were meant to rouse the Legislature to action on the redlining issue. But the results have been meager, and the benefits of those measures that have been taken are not likely to go to the neediest neighborhoods. The subcommittee’s draft report called for one fairly stiff anti-redlining measure: it recommended that the state treasurer consider the investment patterns of lending institutions before depositing state funds with them. But the recommendation was deleted from the final report, published in January of this year, at the behest of Sen. Bill Meier, who couldn’t abide making social policy through the state’s investments. There is a state law on the books that authorizes a program to subsidize housing rehabilitation loans. But the Legislature has not yet seen fit to appropriate any funds for the purpose. One Capitol insider says the statute, sponsored by Senator Meier, was never meant to be anything more than a token gesture. The 1979 Legislature did pass a couple of bills intended to make it easier for moderateand low-income Texans to obtain home purchase or home improvement loans. One of them, sponsored by Sen. Carl Parker, created a state housing finance agency empowered to raise money for home loans by issuing taxexempt revenue bonds. The other, sponsored by Rep. David Cain, authorizes local governments to set up nonprofit housing finance corporations which would also have the power to float revenue bonds. But Gov. Bill Clements has yet to appoint anybody to the state agency board, and both the state and local revenue bond schemes may be scuttled by legislation now under consideration in Congress. If the programs ever do get under way, the need to assure bondholders that their investment is sound will probably keep the loans from reaching applicants with low incomes. The Legislature also passed one bill that directly condemns the practice of redlining, but it lacks any real enforcement mechanism. The anti-redlining language was attached by Rep. El Franco Lee to the measure that raised the home mortgage interest rate ceiling. Lee’s original proposal would have encouraged the withdrawal of state deposits from Texas lending institutions that discriminate on the basis of race, neighborhood characteristics, or the like. The definition of redlining remained pretty much intact, but the sanction was eliminated. A question of scale It is already against federal law for lenders to discriminate on the basis of the age or location of housing or the race of the applicant, but enforcement is problematic at the federal level too. The best weapon against redlining now available is provided by the Community Reinvestment Act of 1977, which takes a carrot-and-stick approach to the task of changing discriminatory lending practices. The CRA requires all banks and S&Ls whose funds are federally insured to publicly define the “local community” they wish to serve. Once that definition is made known to the lender’s customers, no neighborhood within the designated area may be denied loans. The statement of intentions must specify and explain the types of credit offered. The “carrot,” dangled by the Federal Home Loan Bank Board, is the opportunity for lenders to get a share of a $10 billion national fund set up to finance reinvestment in run-down neighborhoods. Clifton Giles, vice president for community lending in the Little Rock Federal Home Loan Bank, told the Observer that every three months the agency offers. $35 million to member S&Ls in the five-state region including Texas. Applications for the fifth offering are now being processed, and 42 Texas S&Ls have already received over $86 million. The “stick” is a provision authorizing the federal financial regulatory agencies to turn down lender petitions to merge or establish lucrative new branches if they haven’t tried to meet community lending needs through their existing outlets. Community groups can ask the feds to notify them when a petition is filed by a lender operating in their area. The stick has already been applied in the case of a Brooklyn-based savings bank that wanted to branch out to Manhattan. A local community organization argued that the bank hadn’t met its obligation to serve its home area, choosing instead to invest in mortgages outside of New York. The regional office of the Federal Deposit Insurance Corporation agreed and denied the branching application in April of this year. The bank has since announced a more generous mortgage loan policy for Brooklyn. However, as Mark Rosentraub points out, the problem with the federal antiredlining and housing rehabilitation policy is the same as with the state and local effortsthe problem addressed is massive and the government response is puny. What is needed, he argues, is a federal commitment to low-income housing of the same order of magnitude as the current commitment to middle-class housing, which takes the form of $6 bil 6 SEPTEMBER 7, 1979