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Building hope and houses: Chattanooga Neighborhood Enterprise cutting staff, refocusing goals(Chattanooga Times (Free Press, TN) (KRT) Via Thomson Dialog NewsEdge) Sep. 3--Twenty years ago this month, Chattanooga Neighborhood Enterprise launched one of the most ambitious housing programs in America. Organizers of the nonprofit corporation set a goal of eliminating all substandard housing in Chattanooga within a decade. Two decades later, CNE has achieved national acclaim but has yet to reach its initial objective. After losing money managing rental properties and handling fewer loans, the company is cutting staff and trying to sell off some properties. Mayor Ron Littlefield, who has cut both city and federal funding for CNE since becoming mayor last year, said CNE had become large and unfocused, and devoted too many resources to the management of unprofitable rental properties. "This always happens with corporations and almost any organization," he said. "People keep hanging new roles on them if they're successful in one way. That generally goes on until the organization begins to tip." But CNE leaders insist the evolving agency helped transform Chattanooga with more than $300 million of housing projects. CNE estimates it has provided counseling, loans or other housing assistance for at least 23,600 Chattanoogans over the past two decades. "I'm proud to be part of an organization that has withstood the test of time and made neighborhoods better," CNE Chairman John N. Foy said. ROAD TO OWNERSHIP Greg King is one of the 3,300 people CNE has helped buy a home through low-interest loans, financial counseling or neighborhood rehabilitation programs. The 45-year-old custodian spent most of his life in public housing but always dreamed of owning his own house. After being rejected for a mortgage loan by a local bank, Mr. King attended a CNE workshop two years ago to find out how to improve his credit, manage his money and qualify for a low-cost mortgage. In January, he moved into a new three-bedroom home in Alton Park financed, in part, by CNE. "It feels great to be in your own home, but I know I would never have gotten here without the help of God and CNE," he said. Helping people like Mr. King was the vision in the 1980s of CNE organizers like Bob Corker, a Chattanooga builder who later became the city's mayor and now wants to become a U.S. senator. Mr. Corker said he was motivated by a church mission trip to Haiti to try to do more to help low-income people in his hometown. Mr. Corker's volunteer work took on a much grander scale when housing emerged as a top community priority from the Chattanooga Venture "Vision 2000" program in the mid-1980s. The mission of providing affordable housing for poor residents also was touted by the late James Rouse, a nationally renowned community activist who saw Chattanooga as a leader in trying to eradicate substandard housing. Mr. Rouse earned his fortune developing suburban homes and malls, but later established the Enterprise Foundation to help rebuild inner cities. "Jim Rouse would go around the country and talk about Chattanooga as a lighthouse to the world," Mr. Corker recalled. "I think setting such a high goal motivated all of us to get involved." FOUNDATION OF SUPPORT The Lyndhurst Foundation, one of Chattanooga's biggest charitable foundations, and then-Mayor Gene Roberts quickly embraced CNE and began funding the agency. Over the past decades, the Lyndhurst Foundation has made CNE its top recipient, providing a total of $23.5 million in grants. Despite recent budget cuts by Mr. Littlefield, the city still has given CNE more than $30 million of local taxpayer funds and allocated even more in federal and state grants to CNE since 1986. Lyndhurst President Jack Murrah said the combined public and private support for CNE has been extraordinary and allowed CNE to help build or redevelop nearly two dozen neighborhoods and hundreds of individual homes across the city. "We weren't trying to create a model for the nation," he said, although CNE has been heralded widely as a leader in putting both private and government resources into affordable housing. Rayburn Traughber, a founding director of CNE who now serves as its president, said CNE helps provide the training and combined government and private funds and personnel to create new programs for lowincome people to rehabilitate or buy their own homes. "We all recognized that home ownership is vital to giving people a stake in their community and a chance to build their own equity," he said. CNE's early successes in helping low-income Chattanoogans fix up or buy their own homes encouraged backers to broaden the group's efforts to include new residential projects, market-rate housing downtown and even management of some apartment complexes. But as the agency grew, Mr. Littlefield and some CNE officials said, the organization became distracted from its core goal. IF IT'S BROKE, FIX IT When he became mayor in 2005, Mr. Littlefield said, he believed it was time to make some changes at CNE. The organization was paying too much money to maintain rental properties, he said. CNE manages 740 rental units, but a strategic plan developed this year by the agency's board calls for most of those properties to be sold in the next 18 months. CNE is preparing to cut 30 of its 50 workers as it stops managing rental properties, officials said. The first cuts happened in July with seven jobs, and the second round will happen this month, said Paul Brock, a CNE director who served as its chairman when the strategy was developed. "The decision to leave property management was not made lightly," he said. "For the next 20 years we'll be more efficient." CNE lost more than $1.4 million in the rental business during fiscal years 2004-05 and 2005-06, Mr. Traughber said. Mai Bell Hurley, a former CNE board member and city councilwoman, said in hindsight, "it was not the best decision" to do rental projects. "We made mistakes. It takes a special group to manage" properties, she said. CNE never intended to become a landlord, said former CNE board member Eddie Holmes. But the organization stepped in when the city government asked it to take over distressed properties such as 136-unit Dogwood Manor in January 2003 and the 124-unit Morrison Springs Apartments in May 2004. In the 1990s, CNE also helped develop some of the first new downtown housing projects in decades to help spur the market. Before CNE's efforts, neither private developers nor banks would consider becoming involved in downtown areas, Mr. Holmes said. "CNE was stressed beyond its capabilities trying to help with revitalization downtown," he said. PLANNING THE FUTURE CNE's new mission statement calls for focusing on making home loans, building homes and rehabilitating distressed homes. It also calls for the organization to be a homeownership teacher from the prepurchase phase to later stages such as building equity and avoiding predatory lenders, Mr. Traughber and Mr. Brock said. This fall, CNE will partner with Lyndhurst and seven private developers to build 23 owner-occupied homes and a soccer field in the Jefferson Heights neighborhood, where CNE previously built eight affordable homes and 14 marketrate homes, according to CNE. A quarter of the new homes will be for low- to moderate-income residents through special CNE financing. CNE will fund the Jefferson Heights development and future projects through the city and Lyndhurst, its traditional partners, although the revenue formulas will change, Mr. Traughber said. The final installment of federal grants is coming this year, a total of $1.95 million. At the peak of its funding, CNE received $2.7 million a year in federal grants. E-mail Jason M. Reynolds at [email protected] E-mail Dave Flessner at [email protected] CNE SERVICES Chattanooga Neighborhood Enterprise offers a variety of services to help low-income home buyers: Home improvement loans: CNE works with Fannie Mae and the city to provide mortgages with interest rates ranging from 0 percent to 6 percent. Second mortgage program: The program provides down payment assistance for residents buying a home. The interest rate varies from 2 percent to 4 percent. Education: CNE sponsors educational workshops to help individuals learn how to apply for a loan, get a credit report, avoid predatory lenders and navigate the closing process. Source: Chattanooga Neighborhood Enterprise Inc. CNE FUNDING $30.5 million: Chattanooga contributions $27.5 million: Federal community development block grants $23.5 million: Lyndhurst Foundation support $12.3 million: HOME funds Source: CNE, Lyndhurst CNE LEADERS Current chairman: John N. Foy Current president: Rayburn A. Traughber Past chairmen: Robert P. Corker Jr.; P. Robert Philp Jr.; Helen S. Pregulman; L. Hardwick Caldwell III; David L. Berry; Alec Taylor; Jerry L. Juneau; Paul K. Brock Jr. Past presidents: Matt Powell; Leigh Ferguson; David L. Berry; Gerald P. Konohia Source: Chattanooga Neighborhood Enterprise Copyright (c) 2006, Chattanooga Times/Free Press, Tenn. Distributed by McClatchy-Tribune Business News. 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