07-27-1998 EDA - Laserfiche WebLink

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Item No. 56 11111/‘ Meeting Date: 7-27-98 Staff Report No. Type of Business: EDAB WK:Work Session;PH:Public Hearing; CA:Consent Agenda;EDAB:EDA Business Mounds View Economio Development Authority Staff Re ort To: Mounds View Economic Development Authority From: Steve Dorgan, Housing Inspector Item Title/Subject: Home Improvement Loan Interest Subsidy Program Date of Report: July 23, 1998 SUMMARY Staff has been working with the EDC over the last several months to develop a home improvement loan program. The goal of the program is to provide an interest subsidy to home improvement loans which would accommodate all homeowners within the city to improve the quality, livability and marketability of the city's housing stock. The EDC recently approved guidelines of the proposed program for recommendation to the EDA. The recommended program includes two separate components to ensure all homeowners within the city are accommodated. Under the proposed programs,TIF funds would be used el to subsidize loans for all homeowners within the city regardless of income status. The two components of the proposed program are as follows: 1. MHFA Home Improvement Loan Interest Subsidy Interest subsidies will be provided to existing Minnesota Housing Finance Agency(MHFA)home improvement loans with below market interest rates. Homeowners qualifying for MHFA loans would have loans subsidized to a 5%rate(maximum of a 3%subsidy). At the EDA meeting on April 27, 1998, the commission approved application to the MHFA for the"Community Fix-up Fund"as part of an overall Home Improvement Loan Program. The MHFA approved the city's application for the Community Fix-up Fund, which essentially increases the maximum household income limit from$49,000 to $69,900 for homes built prior to 1965. Qualifying home owners would include households with incomes of less than$69,900 and owning a home built before 1965. 2. Market Rate Home Improvement Interest Subsidy A subsidy of 3%would be provided to market rate loans (i.e. Market interest rates at 11%would be subsidized to 8%). Subsidized market rate loans would be provided to homeowners that would not otherwise qualify for MHFA loans. Once implemented, the guidelines of the program may be changed as necessary when conditions or demand dictate. However, due to the availability of TIF funds,the proposed program is a mechanism which would provide an incentive for homeowners to remodel or improve their homes and address some of the deteriorating housing conditions in the city. The proposed program would be administered by 40 participation lenders.