Recently, many Richmond residents received a mailer claiming that the city had lost a startling $2.7 million as a result of our Richmond CARES program. This number is simply not true.
I am very disappointed that the opponents of this program have chosen to use dishonesty as a tactic instead of engaging our residents in a reasoned discussion about the pros and cons of a complicated, yet potentially beneficial, city program.
For those who don't know, the Richmond CARES program is an attempt to achieve a principal reduction on the mortgages of some 600 or so struggling homeowners in the city of Richmond who are currently underwater. In other words, they owe more money on their homes than what the houses are actually worth. In many cases, this can lead to individuals abandoning their home or no longer being able to pay their mortgages, which can have an extremely harmful effect on the surrounding community.
In a city where more than 50 percent of homes are underwater, it is only natural that our council would be interested in trying to make a program like this work.
That said, it is also true that there is some risk associated with this program. To say that the city has lost $2.7 million, however, is false. In fact, after speaking with our city manager recently, it was clear that the only financial impact the city has seen so far was a $13,000 premium on our revenue bonds.
It is also possible that the city will see a reduction of $30,000 in savings on our Successor Agency Bonds.
When you consider that the city loses around $34,000 every time a home is foreclosed on, however, and this program has the potential to prevent hundreds of possible foreclosures, that risk doesn't seem so high.
The $2.7 million figure comes from a misreading of a presentation that our finance department gave council on Nov. 19.
Supporting documents showed that the city would be receiving a $3.2 million gross debt service saving and a $1.2 million net savings on our Successor Agency Bonds.
The $3.2 million figure was down from $3.9 million had the bonds been sold in the summer.
So instead of making the honest argument and highlighting that $700,000 difference (which would be spread out over 15 years; only $30,000 per year was expected to impact the city), opponents subtracted the $1.2 million net from the $3.9 million gross in order to have a number significant enough to stoke fear into Richmond residents.
To make a long story short, the city of Richmond has not lost $2.7 million because of this program. Richmond residents are smart enough to weigh the real facts on an issue like this and decide whether they want city officials to move forward.
Opponents of Richmond CARES are shooting themselves in the foot by betting their campaign on the hope that our people can't figure out the truth.
As one who said we should "move forward responsibly" when I voted for this program in September, I have been very open to hearing legitimate concerns about the risks and liability issues related to Richmond CARES. There are certainly a number of good honest arguments that could have been made against this program. Unfortunately, when you mislead the public, you lose the credibility to make those arguments.
Jael Myrick is a member of the Richmond City Council.