I recently had an op-ed published in The Denver Post entitled, “Government Loans Bring Trouble” (also available on reason.org here) that explores failed urban renewal initiatives in Denver, Colorado. Last week The Denver Post’s Jeremy P. Meyer wrote a piece entitled, “91 housing groups, businesses in arrears on loans from city of Denver” that sheds more light on the city’s burgeoning failed loan portfolio. Meyer reports:
Nonprofit housing groups, restaurants, a tavern, a furniture store and a theater company are among 91 borrowers with delinquent city loans through Denver’s Office of Economic Development.
The city is working on cleaning up its portfolio of 655 loans, of which roughly 14 percent, or $21.6 million worth of loans, are in arrears.
Past-due amounts on those delinquent loans total more than $8 million, according to documents the city supplied to The Denver Post in response to an open-records request.
Meyer continues:
Nine of the loans in collection with the city are in liquidation, meaning all efforts to get borrowers to pay back the amounts have been exhausted and the city is working on foreclosing on the business or property…
Foreclosure and liquidation is the last resort, say city officials who manage the portfolio of loans that use federal grants for small-business loans and to provide affordable housing…
Of the 91 distressed loans, 38 are in the process of being “worked out,” meaning city officials are working with the borrowers to find solutions to get them to pay back the loans. That can include deferring payments, suspending the payments on the principal or refinancing. Those borrowers in the “workout category” owe more than $6 million in past-due payments.
Meyer’s full piece is worth reading and is available online here. It’s unlikely the city will be able to work through its loan portfolio without generating more controversy, which makes this an issue to watch in 2012.