07-27-1998 EDA - Laserfiche WebLink

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EXHIBIT B City of Mounds View Home Improvement Loan Interest Subsidy Program Program Overview Due to the age and condition of the city's housing stock, it is important to encourage reinvestment in the community to avoid blight and to upgrade the quality, livability and marketability of the housing stock. The goal of the program is to provide an interest subsidy to home improvement loans to accommodate all homeowners within the city as an incentive to improve the livability and quality of the city's housing. The program will include two separate components to accomplish the goal of accommodating all homeowners within the City: I. An MHFA Home Improvement Loan Interest Subsidy which will take advantage of (and further reduce the interest rate for) existing MHFA loan programs with below-market interest rates for qualifying low to moderate income households. II. A Market Rate Home Improvement Loan Interest Subsidy for all other qualifying homeowners within the city who would not otherwise qualify for MHFA home improvement loans. By providing both programs, every qualifying homeowner within the city will be provided an opportunity to receive an equal subsidy for home improvement loans. The following are the terms and guidelines for the both of the programs. I. Terms for MHFA Home Improvement Loan Interest Subsidy The Mounds View Economic Development Authority(EDA) is making available $40,000 in tax increment financing (TIF)funds for the purpose of subsidizing the interest rate of home improvement loans under this program. The loans will be Minnesota Housing Finance Agency (MHFA) loans originated by participating lenders and subsidized by the City of Mounds View. The city will provide interest subsidies for MHFA loans. Maximum loan amounts through this program will be $35,000. The loans will be originated by the participating lenders; Western Bank and Center for Energy and the Environment(CEE). The program expects that subsidized loans will be originated for a period of at least two years. The City of Mounds View will provide funds in an account at participating lenders for the purpose of subsidizing qualifying home improvement loans. Loans provided by MHFA and originated by the lender will be subsidized in a lump sum payment from the city account(i.e. a$10,000 loan for a term of 10 years at 8% subsidized to a 5%rate will require a 3% lump sum interest payment of $1,587.20 by the city). Target Properties All qualifying owner occupied residential properties having 1-4 units. MHFA Community Fix-up • Fund loans will be used for homeowners with an adjusted household income of$69,900 or less with homes built before 1965. Other qualifying homeowners may access other MHFA Fix-up Fund loans.