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Mounds View EDA October 25, 2010 Regular Meeting Page 2 44 7. EDA BUSINESS 45 46 A. Resolution 10-EDA-261 Approving Mounds View Home Improvement Loan 47 Program Criteria 48 49 Economic Development Coordinator Steinmetz explained at the September 7th Work Session, the 50 City Council directed staff to develop criteria for a new, one-year pilot program of home 51 improvement loan options. The EDA reviewed draft criteria for the program on September 27th 52 and requested that staff make several changes to the criteria. The EDC reviewed the draft criteria 53 on October 15th and made recommendations for changes to the criteria for the EDA to consider. 54 55 Economic Development Coordinator Steinmetz reviewed the changes with the EDA in detail. 56 City staff, the EDC and Suzanne Snyder (GMHC) share the concern that the EDA’s request to set 57 the loan to value ratio at 90% (instead of 110% as originally proposed by City staff) would 58 drastically limit the pool of Mounds View loan applicants. This is because many people who 59 would apply for these loans do not have 10% or more equity in their homes. The other two 60 loans, emergency loan and code enforcement loan, would stay at 100%. Staff further reviewed 61 neighboring communities home improvement loan program information. 62 63 Economic Development Coordinator Steinmetz indicated a change may need to be made 64 regarding the third party appraisals for these loans. At times this will be necessary and other 65 times will not. Staff recommended that the EDA approve Resolution 10-EDA-261 approving the 66 Mounds View Home Improvement Loan Program Criteria with the EDC’s recommended 67 changes. After this approval, city staff would begin marketing the program (in November and 68 December of 2010) for a program launch in January 2011. After the EDA finalizes the criteria, 69 Suzanne Snyder and Marie Malrick will discuss underwriting fees with City staff and then City 70 staff would present the information to the EDA at a future meeting. 71 72 President Flaherty requested further information on the third party appraisal situation. Economic 73 Development Coordinator Steinmetz noted information could also be gained off of the Ramsey 74 County property tax records or comparable residential real estate records and the City would not 75 have to be an official appraisal. 76 77 Commissioner Mueller questioned if Option 1, the demolition deferred loan, had to be 18% per 78 annum. She recommended this rate be reduced to 4% or prime, as 18% would be highly 79 prohibitive. Economic Development Coordinator Steinmetz indicated this information was taken 80 out of another document as a standard and could be changed by the EDA. The demolition loan 81 was due upon title change, when the primary mortgage was paid off, or when the owner no 82 longer ceases to live at the residence. Executive Director Ericson indicated the rate was selected 83 because it would encourage full repayment upon the sale of the property. 84 85