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Mounds View EDA September 27, 2010 Regular Meeting Page 2 Economic Development Specialist Steinmetz explained that after several meetings and much 46 discussion the Council directed staff to develop criteria for a new, one-year pilot program of 47 various loan options. Staff worked with Suzanne Snyder and Marie Malrick of the Greater 48 Metropolitan Housing Corporation (GMHC) to develop the proposed loan criteria. She then 49 presented four proposed loan options being the Demolition Deferred Loan, the General Home 50 Repair Deferred Loan, the Code Enforcement Deferred Loan and the Emergency Deferred Loan. 51 Each of these options are zero-interest deferred loans. Three of the four options were for low 52 income residents. 53 54 Commissioner Mueller requested further information on the General Home Repair Deferred 55 Loan. She questioned if the loan had a set timeframe in which it must be repaid. Economic 56 Development Specialist Steinmetz stated the loans do not have a timeframe and would not be 57 paid back until there is a title transfer. The main goal of the program was to encourage residents 58 to invest in their homes and stay in the community. The lien would be in the City’s name against 59 the property. 60 61 Commissioner Mueller expressed concern on how the program could continue and how the funds 62 would be replenished if the loans did not have to be paid back in a timely manner. 63 64 Commissioner Mueller requested staff review the debt to equity ratio with the Commission. 65 Suzanne Snyder, GMHC, reviewed the maximum debt to equity ratio should not exceed 50% of a 66 residents income. At times, there is no debt to income limit as the proposed home improvement 67 loans were deferred and required no additional payments. 68 69 Commissioner Mueller asked for further information on the income requirements for this 70 program. Ms. Snyder explained the demolition program would be offered to all. She then 71 indicated the other programs were targeted to lower income households. The limit was set to 72 households at 50% of the median area income, which would be around $42,000 annually, 73 dependent on the household size. This area was up for discussion. 74 75 Commissioner Mueller recommended the demolition loans be paid back in installments. She 76 then questioned if the General Home Repair Loan could be used for a down payment on a 77 manufactured home. Ms. Snyder stated this was not written into the current criteria but the 78 Council could revise the language. Economic Development Specialist Steinmetz recommended 79 that down payment assistance be provided for single-family homes, townhomes or land. 80 81 Commissioner Hull asked if the loans would be repaid if the home were to go into foreclosure. 82 Ms. Snyder stated the deferred loan would only be paid after the first mortgage. The lien would 83 guarantee that it would be repaid when the property were sold. Installment loans would be an 84 option for the City, but would not serve the lower-income residents as well as the deferred loans. 85 86 President Flaherty suggested the equity value of homes be evaluated or reviewed further with 87