THE FORECLOSURE CRISIS has struck Providence like a Category 5 hurricane. Since 2006, 1,571 properties have been foreclosed in Providence, according to the city’s Planning Department. When lenders take possession of properties, they evict the occupants, board up the buildings and try to sell the property. Many Providence neighborhoods now resemble New Orleans after Hurricane Katrina hit, with blocks of boarded up and vandalized vacant buildings. And, like New Orleans, the City of Providence sees this disaster as an opportunity to rid the city of its poorest residents.

To respond to the crisis, Mayor Cicilline has devised a scheme to use $10 million of public funds borrowed from the federal government. Under “Section 108,” cities such as Providence may borrow money from the U.S. Department of Urban Development (HUD) and repay the loan out of the city’s annual allocation of Community Development Block Grant (CDBG).

CDBG funds are supposed to be used to stabilize low-income communities and assist their low-income residents. Instead, Cicilline proposes to use $5 million to make loans to developers to acquire foreclosed vacant properties for redevelopment and to acquire and demolish vacant homes. The new housing developed would be “affordable” according to HUD definitions but in reality would be priced out of the reach of most of the affected neighborhoods’ residents. Another $3 million of the loan is earmarked for loans to new homebuyers to buy foreclosed properties. The remaining $2 million is split between more loans to new homebuyers and, last and least, foreclosure prevention. Of the $2 million, an unspecified amount could go toward a foreclosure-prevention gap-financing program run by Rhode Island Housing, but even that agency’s director, Richard Godfrey, says the Homesaver Program will probably help only 1 in 10 people save their homes. Not exactly a big boost for Providence families who are desperate to stay in their homes.

The city’s refusal to allocate significant funds for foreclosure prevention is no accident. At the Planning Department’s poorly publicized public hearing on May 1, every person who testified asked that Section 108 funds be used to help homeowners at risk of foreclosure stay in their homes. Some homeowners spoke of what losing their homes would mean to their families. Others pointed out that unless foreclosures were stopped, more properties would become vacant, costing taxpayers money for police and fire protection and remedial programs for students whose education is disrupted by eviction.

The city’s reluctance to use Section 108 or other funds for foreclosure prevention is shocking but logical. The city’s logic is simple—the people losing their homes through foreclosure, both homeowners and tenants, have low incomes — and if we get rid of “those people” then higher-income people will move in. The goal is clear: to gentrify those neighborhoods where foreclosures are concentrated, Valley and Olneyville in particular. These neighborhoods are home to projects into which private investors have sunk millions of dollars, lured by generous tax breaks, in hopes of gentrification. These projects include the Rising Sun Mills, the American Locomotive Company and Eagle Square.

Tom Deller, the director of the city’s Planning Department, initially dismissed the pleas of city residents to use the Section 108 funds for foreclosure prevention, saying $10 million would save no more than 40 to 60 homes “and then the pot of money would be gone.” He claims that using the money to get new owners into foreclosed properties could reach more people. However, his assumption is that the city will sink $200,000 into every house, and never recoup that money, which need not be the case. Instead of helping developers and new homeowners buy properties, the city should expand the proposed gap-financing program to help more owners save their homes. Since the majority of properties affected by the crisis are multi-family houses, the benefits of prevention will have a multiplier effect. Prevention will slow the destabilization of neighborhoods caused by lenders who kick renters out of foreclosed properties because banks don’t want to be landlords.

Based on his Section 108 loan application, it is clear that Mayor Cicilline prefers “rehabilitation” to prevention and that he would rather see families evicted so that the city can benefit from the “economic stimulus” of construction work funded by the loan money. The Providence City Council must approve the Section 108 application before HUD can review it. We urge the City Council to reject the application as written, and to require the Planning Department to sit down with neighbors and housing activists to develop a plan that keeps existing homeowners and tenants in their homes. That plan should also aim to create a stock of housing that remains affordable for low- and moderate-income households over the long term, using innovative housing models such as limited equity cooperatives and community land trusts.

Providence should not follow the lead of New Orleans—public funds should be used to benefit its current low-income residents, not displace them. Providing public funds to private investors to develop vacant properties will only make the housing crisis, which predated the foreclosure crisis, worse.

Norman Ospina is co-chairperson of the Olneyville Neighborhod Asssociation; Judith Reilly is a board member of Direct Action for Rights and Equality.