August 19, 1998 98-R-0972

FROM: Robin Cohen, Principal Analyst

RE: Vermont's “Good News Garage” Program

You asked for information on Vermont's Good News Garage Program. You also wanted to know if such a program could be replicated here.

SUMMARY

The Good News Garage (GNG) program fixes and sells donated cars to people in need, including people enrolled in Reach-Up, Vermont's welfare-to-work program. The garage was started by Burlington area churches and received its initial funding from the Lutheran church, in recognition that most available jobs were located in the more remote parts of the state, which were not accessible by public transportation. The Garage fixes the cars and charges only for the repairs. Over 140 cars have been sold at a $550 average selling price. The waiting list is almost triple the number sold. The legislature recently appropriated $57,000 to the state's Office of Economic Opportunity to allow the expansion of the program in northern Vermont.

Vermont's Department of Social Welfare (DSW), which administers the Reach-Up program, refers clients to the GNG. In addition, DSW is initiating its own transportation assistance program. Starting in September, DSW hopes to begin offering loans to current and recent Temporary Assistance to Needy Families (TANF) recipients to purchase and repair personal vehicles. The state is providing some start-up capital and hopes to leverage up to $1 million more in private funds.

Connecticut is poised to start its own version of GNG shortly. Bridgeport's The Workplace, Inc. is one of only 49 sites in the country to receive a competitive federal Welfare-to-Work grant to provide services to welfare recipients to ensure long-term employment. It will use part of this grant to fund a car donation and repair program.

The GNG is a car donation program with strong ties to the Lutheran church. A cluster of Lutheran churches in the Burlington area came up with a “donated wheels” program after they got together in 1994 to identify community needs. Lutheran Social Services of New England owns and operates the program and a local advisory committee advises it of local issues and concerns.

Lutheran Services of Vermont started the program in 1996, and it has received funds both from Lutheran churches and the state of Vermont. The program actually has several components, the donated wheels being one and automobile repair another. And the wheels program includes both bicycles and automobiles.

The repair component operates competitively with professional repair garages. Its financial support from public and private sources as well as private paying customers allows it to offer repairs to low-income citizens on a sliding fee scale. The repair component also presents a training opportunity to low-income people, in particular women. Once they get the training at the garage, participants are attractive to car dealerships who can get tax deductions for hiring them. So far, the program has sent four Reach-Up clients into the workforce. Program participants

can also enroll in a free seminar which covers the basics of preventive car maintenance.

Anyone donating a car can claim a charitable contribution on his federal taxes based on the car's fair market value. Cars can be dropped off at a Lutheran Social Services program site or picked up at a donor's home. Donors are sent an information form which is reviewed for suitability for the program. People interested in purchasing vehicles must fill out applications, which include a cover letter indicating that their income cannot exceed 225% of the federal poverty level, and that about $135 may be needed to cover the costs of registration and title, insurance start-up, state inspection, and the 6% state sales tax.

GNG's operating budget is $220,000. Lutheran Social Services and federal Housing and Urban Development grants fund the garage and pay the competitive salaries of two mechanics and the program's director. Money from repairs and sales of high-end donated cars also sustain the operation.

VERMONT TRANSPORTATION LOAN FUND

Vermont's DSW, in partnership with the state's community action programs and the Vermont Development Credit Union (an organization established in 1989 to provide financial services to low-income Vermonters), has initiated a loan fund program that, starting next month, will provide current TANF recipients and those who have stopped receiving TANF benefits within the last 12 months with loans to purchase reliable vehicles.

DSW is using $260,000 of its TANF block grant to capitalize the loan program, with an additional $25,000 going to CAP agencies to administer and evaluate it. The Vermont Development Credit Union will determine the amounts loan amounts, interest rates, and repayment terms, as well as work with clients who are denied credit to become credit worthy. DSW officials are hoping to leverage an additional $1 million for the fund.

According to Barbara Stracha, the Workplace's Director of Marketing and Communications, Goodwill Industries will solicit car donations. These cars will then be turned over to Bullard Havens Regional Vocational-Technical School in Bridgeport where clients will perform any necessary repairs as part of the school's Auto Mechanic/Auto Repair program. Clients can then purchase the cars for the costs of the repairs. The money from the purchases is put back into the program.

We are still waiting for cost information and will forward this to you once we receive it.

RC:lc