HdG council lays out possibilities for future of RAD loan program

As several business leaders urged Havre de Grace leaders Monday night to keep its revolving loan fund afloat, the three options the city has for transforming the program were laid out for council members.

The Revitalization and Development Loan program began with a $392,500 grant from the Maryland Department of Housing and Community Development almost 25 years ago and has continued providing business loans from the revolving fund.

The state is asking the city to return the nearly $212,000 in the fund to the state, which would then be sent back to the city as a grant for various projects.

The change is needed to meet various federal requirements, according to state officials.

The council has 180 days from the bill's introduction to vote on it, and council members did not act on it Monday. The bill was introduced Aug. 4.

Cindy Stone, of the state's Housing and Community Development department, told council members Monday the city has three options.

The first option is to use the balance of the loan fund for an eligible community block grant project and transfer the portfolio of loans to the state.

The second option is to use the balance for a grant project, but let the city continue to manage the loan portfolio and remit payments to the state on a quarterly basis.

The third option is for the city to keep operating the loan fund and provide loan information to the state for final approval on new loans.

It would also effectively mean running the program similarly to the community block grant program, which involves, for example, requiring loan applicants to retain or create new jobs, the majority of which would be filled by people of low-income to moderate income, Stone said.

Stone said her department has been working with 17 Maryland jurisdictions about making changes in their RAD loan programs. She said three counties wanted to keep the program but did not have the staff to oversee it under the new requirements and returned the funds.

Allen Fair, a local businessman, told the council again that he hates to see the RAD program dissolve.

Fair said it appears the state needs money and is going to take back the RAD loan money.

Stone responded that the money from the program goes back into the same pot and does not return to the general state budget.

Fair said many buildings in town can definitely be helped by the loan program.

"There are plenty of buildings in town that need help for business, so I think with that much money, it would be worth pursuing to keep that [loan program]," he said.

Steve Sheppard, president of Havre de Grace Main Street, also said he hopes the program would stay.

Sheppard said maybe the city could take on the loan portfolio with the help of the county or other means.

"Maybe we could keep it and not have the bad loan ratio like we have now," he said, referring to loans in default.

Chuck Maslin, of Laughing Crab Catering, who helps organize the Seafood Festival, said: "I realize it's had some problems but the RAD program over the years has been very successful and important to the City of Havre de Grace."

Maslin said without the program, he and his wife, Lori, could not have turned three vacant storefronts into Laurrapin Grille.

"The Laurrapin Grille would not be in Havre de Grace were it not for the RAD loan and what we were able to get established on that property," he said.

Maslin explained later that he got the loan for Ice Dreams, a previous business he owned in the building. The loan allowed the Maslins to sell the business and building to the future owner of Laurrapin.

Stone added the state does have other sources of funding available for businesses to use.

Michael Hatem, of Washington Street, said he is the only surviving member of the city's original RAD loan committee.

He said one of the problems is the committee had been asking for guidelines from the state and they were never provided.

A couple loans "had to have some massaging done," he said, and he is concerned if the state takes over the loans, it would not be able to deal with business owners' unique situations.

Stone said the state respects the loans already in place and would honor those agreements.

She noted the federal Department of Housing and Urban Development wants to know the money is spent correctly and that the program is producing jobs.

She said the problem the state found is that many jurisdictions have been sitting on the money and not doing anything with it.

Havre de Grace officials said at a meeting earlier this month the program has 11 active loans.

The Town of Bel Air started a similar program that made its first loan in 2013. Harford County government operates what it calls an Economic Development Opportunity Fund that provides business financing.

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