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<br />Item No: 7A <br />Meeting Date: Oct. 25, 2010 <br />Type of Business: EDA <br />Administrator Review: ____ <br />City of Mounds View Staff Report <br /> <br /> <br /> <br />To: Economic Development Authority <br />Cc: Economic Development Commission <br /> From: Heidi Steinmetz, Economic Development Specialist <br />Item Title/Subject: Resolution 10-EDA-261 Approving Mounds View Home <br />Improvement Loan Program Criteria <br /> <br />Background <br /> <br />At the September 7th Work Session, the City Council directed City staff to develop criteria for <br />a new, one-year pilot program of home improvement loan options. The EDA reviewed draft <br />criteria for the program on September 27th and requested that staff make several changes to <br />the criteria. The EDC reviewed the draft criteria on October 15th and made recommendations <br />for changes to the criteria for the EDA to consider. <br /> <br />Attached is a revised version of the draft criteria based on input from the EDA, EDC and the <br />Greater Metropolitan Housing Corp (GMHC). The revisions are highlighted in yellow. Below <br />is a summary of those revisions and who suggested the revisions: <br /> <br />1) No residency requirement (EDC recommendation) <br />2) 90% loan to value on the General Home Repair Loan (EDA request) <br />3) Home Repair & Code Enforcement loans <br />a. 100% loan to value (EDC recommendation) <br />b. Minimum loan amount of $1,000 (GMHC recommendation) <br />c. 3% interest rate and fixed monthly payments (EDA request) <br />d. Maximum loan term of 15 years (GMHC recommendation) <br /> <br />Both Suzanne Snyder and Marie Malrick of the Greater Metropolitan Housing Corporation <br />(GMHC) will be attending the October 25th EDA meeting to answer questions about the <br />revised criteria. (Attached is a memo from Ms. Snyder recommending against interest-only <br />loans or loans that defer payments for five years.) <br /> <br /> <br />Discussion <br /> <br />City staff, the EDC and Suzanne Snyder share the concern that the EDA’s request to set the <br />loan to value ratio at 90% (instead of 110% as originally proposed by City staff) would <br />drastically limit the pool of Mounds View loan applicants. This is because many people who <br />would apply for these loans do not have 10% or more equity in their homes. <br /> <br />When home values decline, so do equity levels. The lack of home equity has much to do <br />with decreasing home values. Mounds View’s single-family home values decreased by <br />6.71% according to the Ramsey County Assessor’s data for 2008 Assessment Payable 2009