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Item No. Staff Report No. Meeting Date: 2/1/99 Type of Business_ WK WK•Work Session;PH:Public Hearing; CA:Consent Agenda;CB:Council Business City of Mounds View Staff Report To: Honorable Mayor and City Council From: Steve Dorgan, Housing Inspector Item Title/Subject: Housing Grant Application Update Date of Report: January 28, 1999 SUMMARY Staff is in the process of drafting grant applications to fund existing and proposed housing programs for the City. Applications will be made to the Minnesota Housing Finance Agency's (MHFA) Community Revitalization Fund, Metropolitan Council Local Housing Incentive Fund, and Ramsey County Community Development Block Grant Program. Funding will be sought for the following existing and proposed programs: Existing Program 1. Housing Replacement Program (HRP): The City adopted The HRP in 1996. Since that time, the City has purchased 4 single-family homes for the purpose of redevelopment. The homes have been demolished and the lots prepared for resale to prospective builders/developers for the construction of new single family homes. To date, acquisition, demolition and administrative costs have been funded from the tax increment pool. However, limited funds are available to continue the program. Therefore, the City will make grant applications in the amount of$150,000 to both the MHFA and Metropolitan Local Housing Incentive Fund as well as to Ramsey County for the purposes of continuing the Housing Replacement Program. Proposed funding would provide for the purchase of 2-4 homes depending on whether both grant applications are approved. These funds must be used for homes which household incomes are low-moderate (maximum of 115% of the area's median income or$69,920). The grant is anticipated to provide funding for acquisition and demolition costs for the program through the end of the year 2000. Proposed Programs 2. Interest Subsidy Home Improvement Loan Program: The City Council has previously reviewed a proposal to implement an interest subsidy home improvement loan program. Originally the proposed program was to use TIF to subsidize interest rates for home improvement loans. However, legal staff has advised that TIF funds may not be used to subsidize interest rates for single-family home improvement loans. Therefore, staff is making a grant application for$70,000 to the MHFA and Metropolitan Council Local Housing Incentive Account for funds that would subsidize interest rates of the existing Community Fix-up Fund Housing Loan Program offered through MHFA. The requested grant would provide funds to subsidize existing loans offered through the Community Fix- up Fund at 8% down to 5%. This would allow for 3% subsidies to approximately 40- $10,000 loans. These funds must be used for homes which household incomes are low-