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Item No: 6A Meeting Date: October 15, 2010 Mo S MEW Type of Business: EDA Administrator Review: _ Oty of Mounds View ,Staff Report To: Economic Development Commission From: Heidi Steinmetz, Economic Development Specialist Item Title/Subject: Review Proposed Mounds View Home Improvement Loan Criteria Background During several recent meetings, the City Council, EDA and EDC have been discussing changing the ERA's Housing Replacement Program. After many discussions (on the dates listed below), the City Council directed City staff to develop criteria for a new, one- year pilot program of various loan options. 1. July 6, 2010 City Council Work Session 2. July 16, 2010 EDC Meeting 3. August 9, 2010 EDA Meeting 4. August 20, 2010 EDC Meeting 5. September 7, 2010 City Council Work Session 6. September 27, 2010 EDA Meeting Discussion Staff has attached to this memo draft criteria of four proposed loan options. The EDA reviewed these options at the September 27th EDA meeting. The EDA asked that the loan to value ratio for Options 2 & 3 be changed to 90% and that a residency requirement of one year be added to all four options. The EDA also asked the following questions: ® What would it cost to service a loan at 3% interest? ® What would it cost to service a loan if the principle & interest payments are deferred for five years? Suzanne Snyder and Marie Malrick of the Greater Metropolitan Housing Corporation (the Housing Resource Center's parent organization) plan to attend the October 25th EDA meeting to present the EDA with answers to the above questions. Ms. Snyder expressed concerns to City staff about setting the loan to value ratio at 90% (instead of 110% as originally proposed by City staff) because many of the Mounds View homeowners that could benefit from the proposed loans do not have 10% or more equity in their homes. Furthermore, the City should not forget that the goal of a home improvement loan program is to help maintain and improve the City's housing stock. Therefore, the City should base its home improvement loan criteria and decisions on accomplishing that goal.