Revolving Loan Fund to Increase Traffic Safety Information

Overview

The City of St. Louis Department of Public Safety is working with the not-for-profit Justine Petersen to facilitate a revolving Health and Safety Loan Fund. Applicants to this program will be eligible for a loan to assist with fully licensing vehicles through payment of property taxes, automobile tag fees, and auto insurance premiums.

The provision of these loan funds will further a significant public purpose: to increase traffic safety and decrease the risk of uninsured motorists in St. Louis.

Importance of Updated Vehicle Tags and Car Insurance

Drivers with expired tags create a hazard for law enforcement as temporary tags are more readily accessible for abuse and manipulation. Cars with expired tags also avoid necessary environmental inspections. While the St. Louis Metropolitan Police Department and the Parking Violations Bureau issue tickets for expired tags, we need to use every tool available to get drivers into compliance and improve the management of cars on our roads.

All drivers pay the price when drivers are uninsured. These are reflected back to the community as higher insurance payments and immediate losses when an individual has an accident involving an uninsured driver. The prevalence of uninsured drivers creates a community risk for extreme and uncovered medical costs in addition to high out-of-pocket deductibles.

Program Size

The total amount of funding allocated to the revolving loan fund is $315,479. The initial contract for this funding will be one year; however, the contract is subject to up to four renewals.

Loan Eligibility

Residents of the City of St. Louis who have a household income of no more than 80 percent of the area median income are eligible to apply. Applicants must show proof of residence, proof of household income, proof of vehicle ownership, and ability to repay the loaned amount.

Program Application

At this point, applications are not yet open for the program. We anticipate applications going live in the fall.

Loan Amounts

Loans may be provided of up to $3,500. As the program gets underway and Justine Petersen is able to further evaluate demand, this amount is subject to change if negotiated with the City.

Loan Repayment

This is a loan, and applicants must show proof of household income and ability to repay. Those receiving the funds are expected to pay back the loan. They will be provided with financial counseling to support repayment and work with a counselor to establish reasonable repayment plans. This is an interest-free loan; however, late payments are subject to a late payment penalty. In the event that a client misses several payments and drops out of communication with their financial counselor, the loan will be sent to collections. Justine Petersen has a track record of success with these types of programs; however, we anticipate that between 5-8 percent may end up in collections.

About Justine Petersen

The City is entering into a contract with Justine Petersen Housing and Reinvestment Corporation (JP). This not-for-profit organization is named after the late Justine M.Petersen, who helped hundreds of low- to moderate-income families in the St. Louis area purchase their own homes.

Since inception in 1997, JP and Great Rivers have:

• Counseled individually over 40,000 families on credit-building strategies;
• Assisted 6,000 to purchase homes, accessing $720MM in safe, affordable mortgage loans;
• Originated $7MM in small-dollar loans to 10,000 individuals for short-term emergencies and creditbuilding;
• Originated over $230MM in small business /micro-enterprise loans to over 13,000 micro-enterprises that were unable to access financing any place else;
• Provided technical assistance and training to over 16,000 entrepreneurs;
• Refinanced $1.7MM in high-interest automobile loans for 105 people.

JP borrowers are:

• 80% People of Color (POC);
• 66% low- and moderate-income (LMI); and
• 92% are POC or LMI