HomeMy WebLinkAbout10-25-2010#
SUNRAY-BATTLECREEK 1 4,363 180,800 159,100 -12.00% 174,262
GREATER EAST SIDE 2 5,255 161,200 142,900 -11.35% 142,473
WEST SIDE 3 3,045 177,150 153,900 -13.12% 162,211
DAYTON'S BLUFF 4 3,194 134,500 121,100 -9.96% 125,843
PAYNE-PHALEN 5 4,923 152,600 143,100 -6.23% 145,900
NORTH END 6 4,793 144,700 136,100 -5.94% 140,796
THOMAS DALE 7 2,153 133,000 113,700 -14.51% 111,875
SUMMIT-UNIVERSITY 8 1,846 180,600 171,100 -5.26% 234,793
WEST SEVENTH 9 2,371 171,500 162,800 -5.07% 165,735
COMO 10 3,455 220,100 207,000 -5.95% 217,341
HAMLINE-MIDWAY 11 2,903 181,600 170,300 -6.22% 172,989
ST ANTHONY PARK 12 1,077 313,400 299,800 -4.34% 313,817
MERRIAM 13 3,253 279,150 259,000 -7.22% 303,208
MACALESTER-GROVELAND 14 5,650 284,150 264,900 -6.77% 302,955
HIGHLAND 15 4,511 280,050 278,000 -0.73% 328,005
SUMMIT HILL 16 1,063 453,900 409,300 -9.83% 480,655
DOWNTOWN 17 21 365,100 303,300 -16.93% 329,286
AIRPORT 20
ARDEN HILLS 25 2,077 299,150 278,800 -6.80% 315,660
BLAINE 29
FAIRGROUNDS 30
FALCON HEIGHTS 33 1,134 273,100 264,200 -3.26% 278,031
GEM LAKE 37 153 290,000 270,800 -6.62% 420,029
LAUDERDALE 47 480 197,200 186,150 -5.60% 194,372
LITTLE CANADA 53 1,251 255,700 228,000 -10.83% 277,171
MAPLEWOOD 57 8,906 220,100 205,400 -6.68% 225,199
MOUNDS VIEW 59 2,829 199,700 186,300 -6.71% 195,238
NEW BRIGHTON 63 5,016 236,200 224,600 -4.91% 249,993
NORTH OAKS 67 1,393 622,400 563,400 -9.48% 662,345
NORTH ST. PAUL 69 3,360 195,600 180,000 -7.98% 192,117
ROSEVILLE 79 8,417 237,000 223,900 -5.53% 246,121
ST. ANTHONY 81 153 255,700 246,800 -3.48% 306,759
SHOREVIEW 83 6,565 275,600 262,200 -4.86% 306,541
SPRING LAKE PARK 85 34 215,250 191,350 -11.10% 190,212
VADNAIS HEIGHTS 89 2,577 252,600 245,300 -2.89% 280,926
WHITE BEAR LAKE 93 6,376 213,500 196,200 -8.10% 231,568
WHITE BEAR TOWN 97 3,387 249,800 241,400 -3.36% 275,823
SUBURBS 54,108 236,600 222,400 -6.00% 261,096
CITY 53,876 183,200 168,100 -8.24% 206,991
COUNTYWIDE 107,984 214,300 199,700 -6.81% 234,101
Mar-09
Page 9
2,829 199,700 186,300 -6.71%195,238MOUNDS VIEW 59
Economic Development Authority (EDA)
Home Improvement Loan Program Criteria
Draft 5 - October 25, 2010
Option 1 – Demolition Deferred Loan
The purpose of this loan is to provide loans to demolish blighted single-family or duplex
properties in Mounds View.
Blight Qualification (for Demolition Deferred Loan Only)
Once a deferred loan application is received, Mounds View’s Code
Enforcement/Housing Inspector will arrange, by appointment, an inspection of the
interior of the home to establish blight qualification. In addition, the inspector will make
a determination as to the potential presence of hazardous materials on the property and
will obtain a statement from the interested participant about any knowledge of the
property’s use for production, storage, deposit, or disposal of any toxic or hazardous
wastes or substances or asbestos products whatsoever, during the time the interested
participant owned the property and before the date of interested participant purchased
property. If a property satisfies the blight conditions as outlined herein, demolition
procedures can continue. If the blight test cannot be met, the city will notify the
interested person in writing indicating the reasons why the property cannot be
considered as blighted.
Loan Amount Up to $10,000 secured by a note & mortgage
Loan Security All loans will be secured by a mortgage in favor of the City. The
loan may be secured in a subordinate lien position behind other
loans.
Interest Rate If the loan is paid in full within 30 days of the date the loan
becomes due and payable, the interest rate is 0%. If the loan is not
repaid within 30 days of the date it becomes due and payable, the
interest rate is the lesser of 18% per annum or the highest interest
rate allowed by law.
Loan Term The loan is due on sale, transfer of title, when the primary
mortgage is paid off, or when the property ceases to be the owner’s
primary place of residence.
Eligible Properties Eligible properties that qualify as blighted single-family or duplex
properties in Mounds View. See the Blight Qualification standard
below.
Demolition Bids Applicants are encouraged to first consider the Spring Lake
Park/Blaine/Mounds View Fire Department’s house burning/training
program demolition option. If that option is not feasible, applicants
must obtain three demolition bids. The demolition contractor will be
required to obtain all necessary City permits, pay applicable fees
and provide for appropriate handling and abatement of any
hazardous materials encountered. All contractors must be
licenses and insured.
Mounds View Home Improvement Loan Program Criteria
Draft 5
Page 2 of 8
Option 2 – General Home Repair Loan
The purpose of this loan is to provide loans for general home repairs to owner-occupied
single-family or duplex homes in Mounds View.
Loan Amount From $1,000 to $15,000
Loan Security All loans will be secured by a mortgage in favor of the City. The
loan may be secured in a subordinate lien position behind other
loans.
Interest Rate The interest rate will be fixed at 3%, and the monthly payment will
be fixed.
Loan Term Maximum loan term is 15 years. Loan is due upon sale, transfer
of title, refinance or if the property ceases to be owner-occupied.
Income Limit The applicant’s household gross income shall not exceed 80% of
the area median income (see chart on page 5).
Asset Limit The maximum gross assets of the borrower, excluding the
residential property to be improved and a retirement account that
is or was subject to penalty for early withdrawals before age 59 ½,
shall not exceed $25,000. Gross assets will generally be defined
as the current market value of an item listed minus existing
indebtedness on that item.
Loan to Value 90%
Debt to Income 50%
Eligible Properties Eligible properties are owner-occupied single-family or duplex
properties in Mounds View.
Eligible Repairs These loans can be used to finance exterior and/or interior
rehabilitation of a home and/or an existing garage. Eligible
permanent improvements include items to improve energy
efficiency or basic livability of the property, including accessibility
improvements for people with disabilities. New construction and
luxury items, such as a swimming pool, are not allowed.
Contractor Bids Applicants must provide the Housing Resource Center’s
Construction Manager with two bids for each improvement project.
All contractors must be licensed and insured.
Mounds View Home Improvement Loan Program Criteria
Draft 5
Page 3 of 8
Option 3 − Code Enforcement Loan
The purpose of this loan is to provide loans to owner-occupied single-family or duplex
properties in Mounds View that have been required by the City of Mounds View to bring
their properties into compliance with the City Code.
Loan Amount From $1,000 to $7,000
Loan Security All loans will be secured by a mortgage in favor of the City. The
loan may be secured in a subordinate lien position behind other
loans.
Interest Rate The interest rate will be fixed at 3%, and the monthly payment will
be fixed.
Loan Term Maximum loan term is 15 years. Loan is due upon sale,
transfer of title, refinance or if the property ceases to be owner-
occupied.
Income Limit The applicant’s household gross income shall not exceed 80% of
the area median income (see chart on page 5).
Asset Limit The maximum gross assets of the borrower, excluding the
residential property to be improved and a retirement account that
is or was subject to penalty for early withdrawals before age 59 ½,
shall not exceed $25,000. Gross assets will generally be defined
as the current market value of an item listed minus existing
indebtedness on that item.
Loan to Value 100%
Debt to Income 50%
Eligible Properties Eligible properties are owner-occupied single-family or duplex
properties in Mounds View.
Eligible Repairs Eligible repairs are those that Mounds View’s Code Enforcement
Officer have written to the property owner as structural code
citations. Citations for “junk” or debris removal are ineligible.
Contractor Bids Applicants must provide the Housing Resource Center’s
Construction Manager with two bids for each improvement project.
All contractors must be licensed and insured.
Other Code Enforcement Deferred Loan applicants may also apply for
the General Home Repair Deferred Loan not to exceed a total loan
am amount of $15,000.
Mounds View Home Improvement Loan Program Criteria
Draft 5
Page 4 of 8
Option 4 − Emergency Deferred Loan
The purpose of this loan is to provide financial assistance to owner-occupied single-
family, duplex and manufactured home properties that are in hardship financial
circumstances, are unable to get money from other sources and have a serious health
and safety home repair situation that poses a threat to residents if not addressed
immediately.
Loan Amount Up to $7,000
Loan Security All loans will be secured by a mortgage in favor of the City. The
loan may be secured in a subordinate lien position behind other
loans.
Interest Rate The interest rate will be 0% deferred. Loan is due upon sale,
transfer of title, refinance or if the property ceases to be owner-
occupied.
Loan Term The loan is due on sale, transfer of title, when the primary
mortgage is paid off, or when the property ceases to be the
owner’s primary place of residence.
Income Limit The applicant’s household gross income shall not exceed 50% of
the area median income (see chart on page 6).
Asset Limit The maximum gross assets of the borrower, excluding the
residential property to be improved and a retirement account that
is or was subject to penalty for early withdrawals before age 59 ½,
shall not exceed $25,000. Gross assets will generally be defined
as the current market value of an item listed minus existing
indebtedness on that item.
Loan to Value 100%
Debt to Income 50%
Eligible Properties Eligbile properties are owner-occupied single-family or duplex
properties in Mounds View. This includes manufactured homes.
Eligible Repairs Failure of the heating, electrical, ventilation, or plumbing/septic
system;
Roof leaks that have led to significant secondary damage to the
home’s interior;
A structural failure of the foundation, walls, or roof of the home
that could cause collapse;
An Environmental Intervention Blood Lead Level (EIBLL) of a
household resident; or
Other emergency conditions that could cause the home to be
or become uninhabitable will be considered by on a case-by-
case basis
Contractor Bid Applicants must provide the Housing Resource Center’s
Construction Manager with one bid for each improvement project
in an emergency situation if the construction manager deems the
bid reasonable. All contractors must be licensed and insured.
Mounds View Home Improvement Loan Program Criteria
Draft 5
Page 5 of 8
Additional Criteria & Guidelines
General Home Repair & Code Enforcement Loans Only
Income Limit:
The total gross annual household income cannot exceed 80% of the current area
median household income, as defined by HUD per household size, as follows:
Household Size Income Limit
1 $45,100
2 $51,550
3 $58,000
4 $64,400
5 $69,600
6 $74,750
7 $79,900
8 $85,050
Property Eligibility:
Owner-occupied single-family, two-family or duplex properties located in the
City of Mounds View.
Condominiums & townhouses are eligible for individual interior repairs only.
Borrower’s existing first mortgage must be a prime/A-rated fixed rate
mortgage loan.
The borrower’s combined mortgage debt including the Mounds View loan
cannot exceed 90% of the property value to qualify for the General Home
Repair Loan and cannot exceed 100% of the property value to qualify for the
Code Enforcement Loan. This is based on the taxable market value as
determined by Ramsey County for the current year. Applicants also may
submit a third party appraisal that has been completed within the last 6
months. Such an appraisal is to be obtained by the applicant at their
expense.
Ineligible Improvements: Recreational/luxury improvements, working capital, debt
service or refinancing of existing debts.
Mounds View Home Improvement Loan Program Criteria
Draft 5
Page 6 of 8
Additional Criteria & Guidelines
Emergency Deferred Loans Only
Program Purpose: The purpose of this loan is to provide financial assistance to
homeowners that are in hardship financial circumstances, are unable to get money
from other sources and have a serious health and safety home repair situation that
poses a threat to residents if not addressed immediately.
Income Limit: The total gross annual household income cannot exceed 50% of the
current area median household income, as defined by HUD per household size, as
follows:
Household Size Income Limit
1 $29,400
2 $33,600
3 $37,800
4 $42,000
5 $45,400
6 $48,750
7 $52,100
Property Eligibility:
Owner-occupied single-family, duplex properties or manufactured homes
located within the City of Mounds View.
Condominiums & townhouses are eligible for individual interior repairs only.
Borrower’s existing first mortgage must be a prime/A-rated fixed rate
mortgage loan.
The borrower’s combined mortgage debt including the Mounds View loan
cannot exceed 100% of the property value, based on the taxable market
value as determined by Ramsey County for the current year. Applicants also
may submit a third party appraisal that has been completed within the last 6
months. Such an appraisal is to be obtained by the applicant at their
expense.
Mounds View Home Improvement Loan Program Criteria
Draft 5
Page 7 of 8
Application & Loan Disbursement Process
The Housing Resource Center’s (HRC) NorthMetro Office is the program administrator.
Please call the HRC’s construction and loan consultants at 651-486-7401 to answer
any questions about Mounds View’s loan program and/or your project.
GMHC Housing Resource Center NorthMetro Office
1170 Lepak Court
Shoreview, MN 55126
Phone: 651-486-7401
Fax: 651-486-7424
DO NOT SIGN ANY CONTRACTS OR START YOUR PROJECT UNTIL A CLOSING
HAS TAKEN PLACE. ANY PROJECT BEGUN BEFORE A LOAN CLOSING HAS
TAKEN PLACE WILL BE INELIGIBLE FOR PARTICIPATION IN THE PROGRAM.
Application Process: Completed applications will be processed by the Housing
Resource Center (HRC) - NorthMetro on a first-come, first-served basis, as funds are
available until all program funds are committed. After loan approval you will be notified
to come to the HRC for a loan closing to sign a Note and Mortgage.
Rehabilitation Consulting: HRC consultants will be available to advise borrowers
about proposed projects and conduct an optional initial home inspection. HRC will
review bid(s) for reasonableness.
Loan Costs: A credit report fee paid by applicant at time of application; mortgage
registration tax and filing fee and title policy paid by borrower at closing. The title policy
may be financed through the loan.
Contractors & Permits: Contractors must be properly licensed by the state of
Minnesota when required. Permits must be obtained when required by city code.
Total Project Cost: It is the borrower’s responsibility to obtain the amount of funds
necessary to finance the entire cost of the work. If the final cost exceeds the loan
amount, the borrower must obtain the additional funds. Borrower’s contribution to
project cost must be paid prior to release of loan funds. HRC can direct borrowers to
additional financing sources.
Work Completion: Weather permitting, work must be completed within 120 days of
loan closing.
Mounds View Home Improvement Loan Program Criteria
Draft 5
Page 8 of 8
Disbursement Process: Loan funds will remain in escrow at GMHC until payment for
completed work. The following items must be received before the funds can be
released:
1. Final Invoice from each contractor showing all amounts paid and due.
2. Lien Waiver. Original from each contractor.
4. Completion Certificate signed by each contractor and the borrower.
5. Permits Closed. Have the inspector sign the permit card, or have the
inspector leave a message at the HRC (651) 228-1077.
6. Final Inspection and approval by the HRC.
It may take up to 10 business days after receipt of above items to prepare checks.
Payment checks to contractors must be countersigned by the borrower. Lien waivers
must be provided before the funds will be released.
MEMORANDUM
TO: Mounds View Economic Development Authority
Cc: Heidi Steinmetz
FROM: Suzanne Snyder
Greater Metropolitan Housing Corporation
RE: Loan Amortization
I have attached two sample amortization schedules for the Mounds View Home
Improvement Loan Program. The amortization schedules are:
Attachment A: Fully amortized loan at 3% interest for a 15 year term on a $15,000 loan.
Attachment B: Fully amortized loan at 0% interest for a 15 year term on a $15,000 loan.
Although we discussed an interest-only loan payment, I discussed this option with
GMHC’s underwriting specialist and she and I agreed that an interest-only loan on a
home improvement loan is not advantageous for the borrower or the city. The interest-
only loans that we currently administer are for down-payment assistance, not home
improvement loans, and there is a difference.
Unlike a down payment loan, which is not paid off until the first mortgage is paid, a
home improvement loan generally carries a term of one-year for every $1,000. A home
repair loan of $15,000 will have a loan term of 15 years. If the borrower is making
interest-only payments, then at the end of the 15 years the principle will become due and
the borrower will have a balloon payment of $15,000.
In most cases the homeowner will not have $15,000 cash available to repay the loan and
they will most likely still have a first mortgage loan. Therefore they will have to qualify
for additional financing to make the balloon payment. This can present a hardship for the
borrower and may create more likelihood of defaults on the loan, which certainly isn’t
good for the city.
If the city wishes to have a low-interest loan I recommend the loan be fully amortized,
i.e., fixed monthly principle and interest payments for the term of the loan. As shown in
Attachment A.
I also do not recommend deferring the payments for five years. It is faulty to assume that
people will be in a better financial situation in five years and be more likely to afford
payments. People on fixed incomes will not be in a better position to make payments at a
later time. Many people in low-paying jobs will always be low-income earners. If the
city wants the loan to be an installment loan it is better to begin the payments
immediately.
Therefore, I think the main consideration for the EDA is whether they want to make no-
interest or low-interest loans, and then either choose to make them fully amortized
installment loans that begin payments immediately or deferred loans that are not paid
until the house is sold, the first mortgage is paid off, the title is transferred or the property
is no longer the principal residence.
EDA RESOLUTION 10-EDA-261
MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY
COUNTY OF RAMSEY
STATE OF MINNESOTA
RESOLUTION APPROVING MOUNDS VIEW
HOME IMPROVEMENT LOAN PROGRAM CRITERIA
WHEREAS, the Mounds View Economic Development Authority (EDA) has Housing
and Redevelopment Authority powers provided in Minnesota Statutes, Sections 469.001 to
469.047; and,
WHEREAS, the purposes of Sections 469.001 to 469.047 are:
(1) to provide a sufficient supply of adequate, safe, and sanitary dwellings in order to
protect the health, safety, morals, and welfare of the citizens of this state;
(2) to clear and redevelop blighted areas;
(3) to perform those duties according to comprehensive plans;
(4) to remedy the shortage of housing for low and moderate income residents, and to
redevelop blighted areas, in situations in which private enterprise would not act without
government participation or subsidies; and
(5) in cities of the first class, to provide housing for persons of all incomes; and,
WHEREAS, pursuant to the purposes of Housing and Redevelopment Authority
powers, in September 2010, the Mounds View City Council directed City staff to develop
criteria for a new, one-year pilot Home Improvement Loan Program; and,
WHEREAS, the proposed loan program would offer four separate home
improvement loan options to Mounds View homeowners; and
WHEREAS, the purpose of the four loan options are:
(1) to provide loans to demolish blighted single-family or duplex properties in Mounds View;
(2) to provide loans for general home repairs to owner-occupied single-family or duplex
homes in Mounds View;
(3) to provide loans to owner-occupied single-family or duplex properties in Mounds View
that have been required by the City of Mounds View to bring their properties into
compliance with the City Code; and
(4) to provide financial assistance to owner-occupied single-family, duplex and
manufactured home properties that are in hardship financial circumstances, are unable to
get money from other sources and have a serious health and safety home repair situation
that poses a threat to residents if not addressed immediately; and,
Resolution 10-EDA-261
Page 2 of 2
WHEREAS, the goal of the proposed program is to improve the City of Mounds
View’s housing stock in order to increase property values contributing to the City’s tax base.
NOW, THEREFORE BE IT RESOLVED, the proposed Home Improvement Loan
Program as presented in the attached Exhibit A, is hereby approved, established, and
adopted by the Mounds View Economic Development Authority.
Adopted this 25th day of October, 2010 by
the Mounds View Economic Development
Authority
___________________________
Joe Flaherty, President
(ATTEST)
___________________________
James Ericson, Executive Director
CITY OF MOUNDS VIEW
ECONOMIC DEVELOPMENT AUTHORITY MEETING AGENDA
MOUNDS VIEW CITY HALL
Monday, October 25, 2010
6:00 PM
1. CALL TO ORDER
2. ROLL CALL: President Flaherty, Vice President Stigney, Commissioner Hull,
Commissioner Mueller, Commissioner Gunn
3. APPROVAL OF AGENDA
4. PUBLIC INPUT:
Citizens may speak to issues not on tonight’s agenda. Before speaking, please give your full
name and address for the minutes. Also, please limit your comments to three minutes.
5. APPROVAL OF MINUTES
A. September 27, 2010 EDA Minutes
6. CONSENT AGENDA
7. EDA BUSINESS
A. Resolution 10-EDA-261 Approving Mounds View Home Improvement Loan Program
Criteria
B. Authorize Jack LaSota of Traffix Graphix to replace the vinyl on the two existing
monument entrance signs located along County Road 10
8. REPORTS
9. NEXT EDA MEETING: Monday, November 8, 2010, 6:30 p.m.
10. ADJOURNMENT
PROCEEDINGS OF THE MOUNDS VIEW EDA 1
CITY OF MOUNDS VIEW 2
RAMSEY COUNTY, MINNESOTA 3
4
Regular Meeting 5
September 27, 2010 6
Mounds View City Hall 7
2401 Highway 10, Mounds View, MN 55112 8
6:03 P.M. 9
10
11
1. CALL MEETING TO ORDER 12
13
2. ROLL CALL: President Flaherty, Vice President Stigney, Commissioner Hull, 14
Commissioner Mueller, Commissioner Gunn, and Executive Director Ericson. 15
16
NOT PRESENT: None. 17
18
3. APPROVAL OF AGENDA 19
20
MOTION/SECOND: Gunn/Mueller. To Approve the September 27, 2010, Agenda as 21
presented. 22
23
Ayes – 5 Nays – 0 Motion carried. 24
25
4. PUBLIC INPUT 26
27
None. 28
29
5. APPROVAL OF MINUTES 30
31
A. August 9, 2010, EDA Minutes. 32
33
MOTION/SECOND: Mueller/Hull. To Approve the August 9, 2010, Minutes as presented. 34
35
Ayes – 5 Nays – 0 Motion carried. 36
37
6. CONSENT AGENDA 38
39
None. 40
41
7. EDA BUSINESS 42
43
A. Review Draft Home Improvement Loan Program Criteria 44
45
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
Mounds View EDA September 27, 2010
Regular Meeting Page 3
each loan to protect the investments the City would be making in each home. Ms. Snyder 88
indicated the loan to value ratio could be readjusted to assure that the homes had more value 89
before receiving assistance. She noted some programs to establish tenure before allowing 90
homeowners to qualify for the program. 91
92
President Flaherty suggested a homeowner live in their home for at least one year before 93
qualifying for this program or have at least 10% equity. 94
95
Vice President Stigney agreed with this recommendation. He recommended that staff look into 96
adding a clause that would review the ongoing need of the loan over time. If the resident’s 97
circumstances were to change, perhaps interest could be repaid to the City. Ms. Snyder indicated 98
this would be a tedious process to reevaluate each loan along with the resident’s income. 99
100
Economic Development Specialist Steinmetz stated this was a pilot program and the City was 101
looking to try it for one year and see if there was interest among the residents. The City can 102
continue to review the regulations as the loans proceed. 103
104
Commissioner Mueller questioned how ownership would be established for each property. She 105
wanted to assure that homes were owner-occupied and not rental units. Marie Malrick, GMHC, 106
explained her organization would review the title and tax rolls to assure that the property was 107
owner-occupied. Utility bills could also be reviewed to assure the names were correlating. Ms. 108
Snyder stated a loan would be recalled if the owner was not living in the home. 109
110
Commissioner Mueller suggested the loan be deferred for three years with 10% paid back in year 111
four, 20% paid in year five with the total loan paid back in 10 years. This would assist in 112
replenishing the funds available to the City. Ms. Snyder indicated this was a legitimate request, 113
but felt an installment loan would be easier to establish with the borrower from the beginning. 114
These repayments could be no interest, low interest or only interest. She felt the emergency loans 115
at 50% the median income may not be able to make payments. 116
117
Vice President Stigney wanted to be assured that recently laid off employees did not receive 118
loans. He requested that yearly income be reviewed with each request. 119
120
President Flaherty suggested that the loans be deferred for five years and after which time, the 121
loan would require no interest payments. Ms. Snyder explained the loan would require 122
additional management and fees if set up on this schedule. 123
124
Commissioner Gunn indicated this was a pilot program and she did not want to see the program 125
become too complicated for the residents to receive a loan. She recommended the residents only 126
pay a 3% interest payment to assist with replenishing the funds. After the first year, the pilot 127
program could be reevaluated based on the needs and use of the program. 128
129
Mounds View EDA September 27, 2010
Regular Meeting Page 4
Commissioner Hull agreed to leave the criteria as is and not over-complicate the program. He 130
did want to see the loan to value rate increased to 90%. 131
132
Vice President Stigney felt the program should be further evaluated before put into place to 133
assure the City has thought through all issues that may come about. He was in favor of a low 134
interest loan with deferred principal. 135
136
Economic Development Specialist Steinmetz summarized that the loan value ratio would be 137
increased to 90%, and each loan should assure that there was a one year residency in the City of 138
Mounds View. She noted that deferred loans would be offered at 3% interest. Staff would make 139
the necessary changes to the criteria and report back to the Commission. Additional details 140
would have to be worked out with GMHC on how each loan would be administered, managed 141
and closed. 142
143
8. REPORTS 144
145
None. 146
147
9. NEXT EDA MEETING: Monday, October 11, 2010, at 6:30 p.m. 148
149
10. ADJOURNMENT 150
151
President Flaherty adjourned the meeting at 7:01 p.m. 152
153
Respectfully submitted, 154
155
156
Recorded and transcribed by: 157
Carla Wirth 158
TimeSaver Off Site Secretarial, Inc. 159
Item No: 7A
Meeting Date: Oct. 25, 2010
Type of Business: EDA
Administrator Review: ____
City of Mounds View Staff Report
To: Economic Development Authority
Cc: Economic Development Commission
From: Heidi Steinmetz, Economic Development Specialist
Item Title/Subject: Resolution 10-EDA-261 Approving Mounds View Home
Improvement Loan Program Criteria
Background
At the September 7th Work Session, the City Council directed City staff to develop criteria for
a new, one-year pilot program of home improvement loan options. The EDA reviewed draft
criteria for the program on September 27th and requested that staff make several changes to
the criteria. The EDC reviewed the draft criteria on October 15th and made recommendations
for changes to the criteria for the EDA to consider.
Attached is a revised version of the draft criteria based on input from the EDA, EDC and the
Greater Metropolitan Housing Corp (GMHC). The revisions are highlighted in yellow. Below
is a summary of those revisions and who suggested the revisions:
1) No residency requirement (EDC recommendation)
2) 90% loan to value on the General Home Repair Loan (EDA request)
3) Home Repair & Code Enforcement loans
a. 100% loan to value (EDC recommendation)
b. Minimum loan amount of $1,000 (GMHC recommendation)
c. 3% interest rate and fixed monthly payments (EDA request)
d. Maximum loan term of 15 years (GMHC recommendation)
Both Suzanne Snyder and Marie Malrick of the Greater Metropolitan Housing Corporation
(GMHC) will be attending the October 25th EDA meeting to answer questions about the
revised criteria. (Attached is a memo from Ms. Snyder recommending against interest-only
loans or loans that defer payments for five years.)
Discussion
City staff, the EDC and Suzanne Snyder share the concern that the EDA’s request to set the
loan to value ratio at 90% (instead of 110% as originally proposed by City staff) would
drastically limit the pool of Mounds View loan applicants. This is because many people who
would apply for these loans do not have 10% or more equity in their homes.
When home values decline, so do equity levels. The lack of home equity has much to do
with decreasing home values. Mounds View’s single-family home values decreased by
6.71% according to the Ramsey County Assessor’s data for 2008 Assessment Payable 2009
10-25-2010 EDA Meeting
Item 7A – Resolution 10-EDA-261
Page 2 of 2
to 2009 Assessment Payable 2010. (Attached is a spreadsheet showing this data compared
to other Ramsey County cities.)
Furthermore, the chart below shows that the most common loan to value ratio for a city home
improvement loan is at least 100%.
Source: GMHC
Recommendation
City staff recommends that the EDA approve Resolution 10-EDA-261 approving the Mounds
View Home Improvement Loan Program Criteria with the EDC’s recommended changes.
After this approval, city staff would begin marketing the program (in November and December
of 2010) for a program launch in January 2011. After the EDA finalizes the criteria, Suzanne
Snyder and Marie Malrick will discuss underwriting fees with City staff and then City staff
would present the information to the EDA at a future meeting.
Respectfully submitted,
____________________________
Heidi Steinmetz, Economic Development Specialist
Attachments
• Mounds View Home Improvement Program Draft Loan Criteria
• Memo from Suzanne Snyder dated October 21, 2010
• Median Est’d Market Value of Single-Family in Ramsey County
• Resolution 10-EDA-261
City Loan to Value
Columbia Heights 100%
Minneapolis 100−120%
Roseville 115%
St. Anthony 100%
St. Paul 110%
Shoreview no loan to value
Woodbury 90%