03-26-1998 - Laserfiche WebLink

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EXHIBIT A To: Economic Development Commission Members From: Steve Dorgan, Housing Inspector MEMORANDUM Subject: Proposed Loan Programs Date: March 16, 1998 • BACKGROUND The City Council has recently directed staff to review possible low-interest loan programs which may be offered by the city to residents for home remodeling and renovation. It was suggested that by establishing a low-interest loan program,the city may provide incentives for the remodeling and renovation for much of the city's housing stock. Staff has reviewed loan programs currently offered to Mounds View homeowners through existing agencies and lenders. Most of the existing loan programs offer low-interest rates typically at 2-8%. However,the household income requirements for these programs limit the number of qualifying homeowners for the lower interest rates of 2-6%. Staff has recently discussed possible low-interest loan programs for the city with Western Bank of Mounds View,the Center for Energy and the Environment(CEE) and the Minnesota Housing Finance Agency(MHFA). A list of existing programs as well as possible loan programs have been compiled for the commission's review. • EXISTING PROGRAMS Minnesota Housing Finance Agency(MHFA) • Great Minnesota Fix-up Fund Qualifying homeowners must have a gross annual income of$49,000 or less. Interest rates are based on the homeowners annual income. Households with an adjusted gross income($1,000 income deduction for each family member)of$30,000 or more pay an annual percentage rate(APR) of 8%. Qualifying homeowners may borrow up to $25,000. Improvements include basic livability and energy efficiency of the home. Available through participating banks. Revolving Loan Program The household adjusted annual gross income must be less than $18,000. The APR is 3% for a term up to 15 years. The loan may be used for basic improvements for livability including: electrical wiring, plumbing, roofing, heating, energy saving items, improvements specific to disabled persons and code items that require code compliance. Deferred Loan Program The household adjusted annual gross income must be less than $10,000. This loan must only be paid if the home is sold or transferred within 10 years. The loan may be used for basic improvements for livability including: electrical wiring, plumbing, roofing, heating, energy saving items, improvements specific to disabled persons and code items 5