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HomeMy WebLinkAbout11-22-2010EDA RESOLUTION 10-EDA-261 MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION APPROVING CRITERIA FOR THE MOUNDS VIEW HOME DEMOLITION LOAN 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 Mounds View Home Demolition Loan would provide up to $10,000 at 3% interest for up to ten years to demolish blighted single-family or duplex properties in Mounds View; and, WHEREAS, the goal of the Mounds View Home Demolition Loan is to remove the blighting influence of substandard homes in Mounds View so that adjacent property values in Mounds View are maintained and protected. Resolution 10-EDA-261 Page 2 of 2 NOW, THEREFORE BE IT RESOLVED, the proposed criteria for the Mounds View Home Demolition Loan as presented in the attached Exhibit A, is hereby approved, established, and adopted by the Mounds View Economic Development Authority. Adopted this 22nd day of November, 2010 by the Mounds View Economic Development Authority ___________________________ Joe Flaherty, President (ATTEST) ___________________________ James Ericson, Executive Director EDA RESOLUTION 10-EDA-262 MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION APPROVING CRITERIA FOR THE MOUNDS VIEW GENERAL HOME REPAIR LOAN 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 Mounds View General Home Repair Loan would provide up to $15,000 at 3% interest for up to ten years for general home repairs to owner-occupied single-family or duplex properties in Mounds View; and, WHEREAS, the goal of the Mounds View General Home Repair Loan is to assist in maintaining and improving Mounds View’s housing stock. Resolution 10-EDA-262 Page 2 of 2 NOW, THEREFORE BE IT RESOLVED, the proposed criteria for the Mounds View General Home Repair Loan as presented in the attached Exhibit A, is hereby approved, established, and adopted by the Mounds View Economic Development Authority. Adopted this 22nd day of November, 2010 by the Mounds View Economic Development Authority ___________________________ Joe Flaherty, President (ATTEST) ___________________________ James Ericson, Executive Director EDA RESOLUTION 10-EDA-263 MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION APPROVING CRITERIA FOR THE MOUNDS VIEW CODE ENFORCEMENT HOME LOAN 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 Mounds View Code Enforcement Home Loan would provide up to $7,000 at 0% interest for up to ten years 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, WHEREAS, the goal of the Mounds View Code Enforcement Home Loan is to assist in maintaining and improving Mounds View’s housing stock. Resolution 10-EDA-263 Page 2 of 2 NOW, THEREFORE BE IT RESOLVED, the proposed criteria for the Mounds View Code Enforcement Home Loan as presented in the attached Exhibit A, is hereby approved, established, and adopted by the Mounds View Economic Development Authority. Adopted this 22nd day of November, 2010 by the Mounds View Economic Development Authority ___________________________ Joe Flaherty, President (ATTEST) ___________________________ James Ericson, Executive Director EDA RESOLUTION 10-EDA-264 MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION APPROVING CRITERIA FOR THE MOUNDS VIEW EMERGENCY DEFERRED HOME LOAN 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 Mounds View Emergency Deferred Home Loan would provide up to $7,000 at 0% interest to owner-occupied single-family, duplex and manufactured home properties in Mounds View; and, WHEREAS, the goal of the Mounds View Emergency Deferred Home Loan is to provide 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 Mounds View residents if not addressed immediately. Resolution 10-EDA-264 Page 2 of 2 NOW, THEREFORE BE IT RESOLVED, the proposed criteria for the Mounds View Emergency Deferred Home Loan as presented in the attached Exhibit A, is hereby approved, established, and adopted by the Mounds View Economic Development Authority. Adopted this 22nd day of November, 2010 by the Mounds View Economic Development Authority ___________________________ Joe Flaherty, President (ATTEST) ___________________________ James Ericson, Executive Director Economic Development Authority (EDA) Demolition Home Loan Criteria Draft 8 - November 22, 2010 The purpose of this loan is to provide loans to demolish blighted single-family or duplex properties in Mounds View. Blight Qualification (for Demolition Loan Only) Once a 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 the borrower’s existing prime/A-rated fixed rate mortgage. Interest Rate The interest rate is fixed at 3%. The monthly payment is fixed. Loan Term The maximum loan term is 10 years, however the loan shall become due upon sale, transfer of title, refinancing of the property, whichever occurs first. Eligible Properties Mounds View single-family or duplex properties that qualify as blighted. 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 licensed and insured. Demolition Home Loan Page 2 of 3 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. Demolition Home Loan Page 3 of 3 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. Item No: 7A Meeting Date: Nov. 22, 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 Criteria for the Mounds View Home Demolition Loan Background Over the past several months, the EDA/City Council has been discussing developing a home improvement loan program to replace the EDA’s existing Housing Replacement Program. To date, the EDA/City Council has reviewed the proposed loan criteria on September 27, October 25, November 1 and November 8. Discussion Attached is a revised version of the draft criteria for the Home Demolition Loan based on input from the EDA’s November 8th meeting. The only revision since the November 8th meeting was that the following language was added to the Loan Term “whichever occurs first”. Other Commissioner Stigney requested information about the success of the loans that the Greater Metropolitan Housing Corporation (GMHC) has administered for other cities. GMHC staff informed City staff that their most seasoned portfolio for city loans is the City of Roseville’s program, which is ten years old. Roseville offers interest-bearing installment loans and GMHC has administered 57 loans for the City of Roseville. Only two of the loans through Roseville’s program are 90 + days delinquent. Roseville has not written off the loans because they have liens on the properties and still hope to collect on the loans, despite the delinquencies. GMHC also administers loan programs for the Cities of Woodbury and Shoreview. Those programs are new and those cities have only made a few loans, thus no default information is available. Recommendation City staff recommends that the EDA approve Resolution 10-EDA-261 Approving the Criteria for the Mounds View Home Demolition Loan. After this approval, city staff would begin marketing the program 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. 11-22-2010 EDA Meeting Item 7A – Resolution 10-EDA-261 Page 2 of 2 Respectfully submitted, ____________________________ Heidi Steinmetz, Economic Development Specialist Attachments • Mounds View Home Demolition Loan Criteria • Resolution 10-EDA-261 Economic Development Authority (EDA) General Home Repair Loan Criteria Draft 8 - November 22, 2010 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 the borrower’s existing prime/A-rated fixed rate mortgage. Interest Rate The interest rate is fixed at 3%. The monthly payment is fixed. Loan Term The maximum loan term is 10 years, however the loan shall become due upon sale, transfer of title, refinancing of the property, whichever occurs first. Income Limit The applicant’s total gross annual household income shall not 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 Loan to Value The borrower’s combined mortgage debt including the Mounds View loan cannot exceed 90% of the property value based on the taxable market value as determined by Ramsey County for the current year. Applicants may also 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. Debt to Income 50% Eligible Properties Mounds View owner-occupied single-family & duplex properties General Home Repair Page 2 of 3 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. Eligible Repairs Exterior repairs:  Exterior painting  Rafters, soffit and fascia repair  Energy efficient window glass and screens  Railings and stairs  Landings and porches Interior repairs are allowed only if they are related to life safety of the residents and required by Mounds View’s Code Enforcement Officer:  Energy efficiency improvements  Accessibility improvements for people with disabilities  Failure of the heating, electrical, ventilation, or plumbing/septic system  Roof leaks that have led to significant damage to the interior  A structural failure of the foundation, walls, or roof that could cause collapse;  Removing lead paint or the cause of a confirmed concentration of lead in the resident’s whole blood (Environmental Intervention Blood Lead Level) Ineligible Improvements  Exterior repairs to condos and townhomes  New construction (additions)  Luxury items, such as swimming pools  Working capital, debt service or refinancing of existing debts 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. General Home Repair Page 3 of 3 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. 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. Item No: 7B Meeting Date: Nov. 22, 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-262 Approving Criteria for the Mounds View General Home Repair Loan Background Over the past several months, the EDA/City Council has been discussing developing a home improvement loan program to replace the EDA’s existing Housing Replacement Program. To date, the EDA/City Council has reviewed the proposed loan criteria on September 27, October 25, November 1 and November 8. Discussion Attached is a revised version of the draft criteria for the General Home Repair Loan based on input from the EDA’s November 8th meeting. Below is a summary of those revisions: • Under Loan Term, “Or if the property ceases to be owner-occupied” language was replaced with “whichever occurs first”. • The Loan Term was changed from 15 years to 10 years. • Under Eligible Repairs, “Energy efficient” and “Interior repairs are allowed only if they are related to life safety of the residents and required by Mounds View’s Code Enforcement Officer” language was added. Recommendation City staff recommends that the EDA approve Resolution 10-EDA-262 Approving the Criteria for the Mounds View General Home Repair Loan. After this approval, city staff would begin marketing the program 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 General Home Repair Loan Criteria • Resolution 10-EDA-262 Economic Development Authority (EDA) Code Enforcement Home Loan Criteria Draft 8 - November 22, 2010 The purpose of this loan is to provide loans for 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 the borrower’s existing prime/A-rated fixed rate mortgage. Interest Rate The interest rate is 0%. The monthly payment is fixed. Loan Term The maximum loan term is 10 years, however the loan shall become due upon sale, transfer of title, refinancing of the property, whichever occurs first. Loan to Value 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 may also 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. Debt to Income 50% Income Limit The applicant’s total gross annual household income shall not 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 Eligible Properties Mounds View owner-occupied single-family or duplex properties Code Enforcement Page 2 of 3 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. Eligible Repairs Exterior repairs required by Mounds View’s Code Enforcement Officer such as:  Exterior painting  Rafters, soffit and fascia repair  Energy efficient window glass and screens  Railings and stairs  Landings and porches Interior repairs are allowed only if they are related to life safety of the residents and required by Mounds View’s Code Enforcement Officer. This may include a structural failure of the foundation, walls, or roof that could cause collapse. Ineligible Improvements  Exterior repairs to condos and townhomes  Any repairs to mobile homes  Driveways, sidewalks and paved areas  “Junk” or debris removal, removal of inoperable vehicles, etc. 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. Code Enforcement Page 3 of 3 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. 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. Item No: 7C Meeting Date: Nov. 22, 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-263 Approving Criteria for the Mounds View Code Enforcement Home Loan Background Over the past several months, the EDA/City Council has been discussing developing a home improvement loan program to replace the EDA’s existing Housing Replacement Program. To date, the EDA/City Council has reviewed the proposed loan criteria on September 27, October 25, November 1 and November 8. Discussion Attached is a revised version of the draft criteria for the Code Enforcement Home Loan based on input from the EDA’s November 8th meeting. Below is a summary of those revisions: • Under Loan Term, “Or if the property ceases to be owner-occupied” language was replaced with “whichever occurs first.” • The Loan Term was changed from 15 years to 10 years. • Under Eligible Repairs, “Energy efficient” language was added. • “Code Enforcement Loan applicants may also apply for the General Home Repair Loan not to exceed a total loan amount of $15,000” language was removed. Recommendation City staff recommends that the EDA approve Resolution 10-EDA-263 Approving the Criteria for the Mounds View Code Enforcement Home Loan. After this approval, city staff would begin marketing the program 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 Code Enforcement Home Loan Criteria • Resolution 10-EDA-263 Economic Development Authority (EDA) Emergency Deferred Home Loan Criteria Draft 8 - November 22, 2010 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. This criteria does not apply to mobile home owners. Interest Rate The interest rate will be 0% deferred. Loan Term The loan shall become due upon sale, transfer of title, refinancing of the property, whichever occurs first. Income Limit The applicant’s total gross annual household income shall not 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 Loan to Value 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 may also 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. 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. Emergency Deferred Page 2 of 3 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. Debt to Income 50% Eligible Properties Mounds View owner-occupied single-family, duplex or manufactured home properties Eligible Improvements  Failure of the heating, electrical, ventilation, or plumbing/septic system;  Roof leaks that have led to significant damage to the interior  A structural failure of the foundation, walls, or roof that could cause collapse;  Removing lead paint or the cause of a confirmed concentration of lead in the resident’s whole blood (Environmental Intervention Blood Lead Level)  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. Emergency Deferred Page 3 of 3 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. 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. Item No: 7D Meeting Date: Nov. 22, 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-264 Approving Criteria for the Mounds View Emergency Deferred Home Loan Background Over the past several months, the EDA/City Council has been discussing developing a home improvement loan program to replace the EDA’s existing Housing Replacement Program. To date, the EDA/City Council has reviewed the proposed loan criteria on September 27, October 25, November 1 and November 8. Discussion Attached is a revised version of the draft criteria for the Emergency Deferred Home Loan based on input from the EDA’s November 8th meeting. The only revision since the November 8th meeting was under the Loan Term criteria, “Or if the property ceases to be owner- occupied” language was replaced with “whichever occurs first”. Recommendation City staff recommends that the EDA approve Resolution 10-EDA-264 Approving the Criteria for the Mounds View Emergency Deferred Home Loan. After this approval, city staff would begin marketing the program 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 Emergency Deferred Home Loan Criteria • Resolution 10-EDA-264