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<br />Item No: 7B <br />Meeting Date: December 12, 2011 <br />Type of Business: EDA <br />Administrator Review: ____ <br />City of Mounds View Staff Report <br />To: Economic Development Authority <br /> From: Heidi Steinmetz, Economic Development Specialist <br />Item Title/Subject: Consider Amending the Mounds View Home Improvement Loan <br />Program Loan-to-Value Criteria and Extending the Program <br />Through 2012 <br /> <br />Background <br />On November 22, 2010, the EDA approved the Mounds View Home Improvement Loan <br />Program, which consists of the following four loan programs available to Mounds View <br />residents: <br /> <br /> Loan Name Amount Interest Payment Type <br />1. Home Demolition Loan Up to $10,000 3% Fixed <br />2. Code Enforcement Home Loan Up to $7,000 0% Fixed <br />3. General Home Repair Loan Up to $10,000 3% Fixed <br />4. Emergency Deferred Home Loan Up to $7,000 0% Deferred <br /> <br />The EDA approved the program as a one-year pilot program. <br /> <br />Discussion <br />City Administrator Jim Ericson recently met with the Greater Metropolitan Housing <br />Corporation (GMHC) staff to discuss the status of the program. GMHC staff administers the <br />program for the Mounds View EDA. To date, one $6,260 General Home Repair Loan was <br />provided by the program for a bathroom remodel. There were several applicants that did not <br />qualify for the program due to the EDA’s loan-to-value criteria of 90% for the General Home <br />Repair Loan and the 100% loan-to-value criteria for the Code Enforcement and Emergency <br />Loans. <br /> <br />Prior to the EDA’s approval of the program, staff suggested a loan-to-value criteria of 110%. <br />This is because loan applicants may not have 10% or more equity in their homes. When <br />home values decline, so do equity levels. The lack of home equity has much to do with <br />decreasing home values. The chart below shows loan-to-value ratios for other city loan <br />programs: <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br />Source: GMHC <br />City Loan Program Loan-to-Value Criteria <br />Columbia Heights 100% <br />Minneapolis 100−120% <br />Roseville 115% <br />St. Anthony 100% <br />St. Paul 110% <br />Shoreview no loan to value <br />Woodbury 90%