A job creation idea so obviously good even Washington couldn't possibly say no... could it?
At the same time, local real estate developers and construction companies across the country— which were doing a brisk business building strip malls, doctor’s offices, and the like before the recession—are dying to get back to work. Faced with a growth industry and access to capital, these commercial developers could be counted on not only to build what’s handed to them, but also to take the initiative to get as many projects as possible moving. Private developers could put up the equity themselves, design and build the facilities in joint venture partnerships with community health centers, and then rent out the facilities to the nonprofits on a long-term lease or through various lease-to-own arrangements. Indeed, hungry developers and construction firms would find any number of ways to get the hammers swinging—in small towns and blighted cities across the country—faster than Congress could ever ordain.
And of course, going the SBA route would alleviate many of the headaches and inefficiencies that currently make it so vexing for health centers to fund construction and expansion capital projects. Because SBA 504 loans are routine and efficient to process, the cost of structuring a new project’s financing would plummet. And the interest rates available to beneficiaries of an SBA 504 loan are among the lowest on the market. Right now, they are better than ever.
All those factors would dramatically lower the total cost of any given health center’s commercial real estate acquisition or construction project, which means centers would be able to finance a much higher proportion of the cost through loans. And that, in turn, means many fewer years running silent auctions and bake sales to scrape together a down payment. This is good, because time is of the essence. With real estate values depressed and interest rates at record lows, any health center that managed to receive an SBA 504 loan for a construction project today would wind up with a bargain. Better yet, the center would wind up with a debt burden that would only become more manageable with time, as the center’s revenues rise with inflation, but its payments remain fixed.
It’s hard to imagine Congress appropriating any more direct spending to fuel the construction of health centers. But there’s no good reason why they shouldn’t change a few words in a statute to achieve the same end. Not only would it quickly create much-needed jobs in the construction trades, it would also spark economic activity over the long run in some of the places in America that need it most. In a climate in Washington that is consumed with rhetoric about reducing government expenditures, creating jobs, and the need to get the private sector moving, this small change is one of the most surefire steps that Congress could take to show that government can both lead and get out of the way.
Feed the Political AnimalDonate
Washington Monthly depends on donations from readers like you.