Workshop Item - Elizabeth Showalter, Community Development Specialist
Title
Title
Affordable Housing Programs
end
Background
At the City Council Retreat on May 22, 2021, staff provided an overview of potential housing programs that would improve the quality of housing in the city or expand housing opportunities for lower income households. This report outlines the potential to use a portion of the funds currently in the Revolving Home Improvement Loan Fund for additional programs to achieve these goals through home improvement and purchase assistance programs.
These programs would help achieve the goals in the Comprehensive Plan including:
Goal #1
Provide housing opportunities that meet the needs of all generations and income levels particularly varying types of independent and accessible senior housing.
Goal #3
As housing preferences change, the City supports taking actions that improve the quality of the existing housing stock and supports the development of housing that meets the needs of the population today.
Goal #4
Preserve the manufactured housing communities within Blaine as important affordable housing option.
Current Fund Status
The fund currently has a balance of $2.7 million and a fairly steady cash flow from the repayment of revolving loans. As of July 1, 2021, approximately $500,000 of loans are currently outstanding.
Annually, the fund provides an average of $100,000 in repayable loans and has $15,000 in administrative costs and forgivable loans.
The fund’s reserves generate investment earnings as part of the city’s investment portfolio and most loans from the account are repaid with interest. Approximately $65,000 is received annually in interest and loan repayments. The accumulated interest covers administrative costs and forgivable loans. Over time the fund has increased in size and there are adequate reserves on hand to support the current loan programs.
The reserve funds may be used for a variety of new programs that can be grouped into grants, loans, and purchase-assistance programs.
Grants
The objective of the proposed grant program is to promote improvements to homes in older neighborhoods. The grantees may be able to afford the improvements, but the grant provides the necessary encouragement to take on a project or to expand the scope of a project to improve curb appeal. This promotes neighborhood stability and a steady or increasing tax base in those neighborhoods that may be susceptible to declines in value as the homes age.
To target the desired homes, staff recommends eligibility be limited to owner-occupied homes that are at least 30 years old and have an assessed value of $350,000 or less. Approximately 8,500 homes in Blaine would be eligible for the program under these requirements. The requirements can be modified in the future if the Council feels the program is under-utilized.
The three potential grant programs are:
1. Front Door
2. Manufactured Home Beautification
3. Home for Generations
The first two programs provide a 15-25% reimbursement for upgrades to homes that improve curb appeal and the Home for Generations Program provides up to 10% reimbursement for major remodeling projects. Both programs would have a maximum grant per household of $5,000.
Curb appeal grant programs have proven to be very popular so a limited number would be made available each year to ensure funds are not expended too quickly. Staff recommends limiting the curb appeal programs to $150,000 for the first year. Depending on interest in the program a lottery may be needed in future years to ensure fair distribution. The $150,000 would fund 30 projects at the maximum grant amount. Staff anticipates most grants will be for smaller amounts, so it is likely that closer to 50 projects can be funded with that amount.
The third program provides a 5-10% grant for major remodeling projects. Since the project must be valued at $35,000 or more, a limited number of homeowners will use this opportunity. Staff does not recommend putting a cap on the number of grants offered through this program.
To ensure that the projects receiving grant money are well designed, staff will encourage applicants to utilize the remodeling advisor service from CEE. Each remodeling advisor visit costs the city $250. The budget below includes a projected increase in the use of this service.
Grant Program Summary
|
Program |
Example Improvements |
Terms |
Amount |
|
Front Door |
Beautification (25% Grant) |
Must include at |
$1,000 |
|
|
- Front door |
least one |
-$5,000 |
|
|
- Columns |
beautification |
grant |
|
|
- Brick |
element totaling |
|
|
|
- Landscaping |
$1,000. |
|
|
|
Basic (15% grant) |
Homeowner |
|
|
|
- Roofing |
must contribute |
|
|
|
- Siding |
at least $4,000. |
|
|
|
- Driveway |
|
|
|
|
- Trim |
|
|
|
Manufactured |
Beautification (25% Grant) |
May include any |
$500-$3,000 |
|
Home |
- Front Door |
combination of |
grant |
|
Beautification |
- Front steps/deck |
Projects. |
|
|
|
Basic (15% grant) |
Homeowner |
|
|
|
- Roofing |
must contribute |
|
|
|
- Siding |
at least $2,000. |
|
|
|
- Skirting |
5-10% grant |
|
|
Home for |
Major remodeling valued |
based on |
$1,750 |
|
Generations |
at $35,000 or more such |
number of |
-$5,000 |
|
|
as additions, finishing |
exterior |
grant |
|
|
basements, major kitchen |
upgrades. |
|
|
|
remodel. |
|
|
|
|
Exterior improvements |
|
|
|
|
include columns, brick, |
|
|
|
|
covered front porch. |
|
|
Grant Program Budget
|
Front Door Grant Funds (maximum) |
$150,000 |
|
Home for Generations Grant Funds (estimated) |
$30,000 |
|
Increase in Remodeling Advisor Visits (estimated) |
$5,000 |
|
Marketing |
$1,000 |
|
Total |
$186,000 |
The loan fund generates approximately $50,000 in annual income that is not currently needed to cover administrative costs and forgivable loans. The current balance, along with a portion of the excess funds not needed to sustain the loan programs, would support the $186,000 annual budget for the grant program. After five years, the balance in the revolving loan fund is anticipated to be approximately $2 million. At that time the grant programs can be reevaluated to determine whether additional funds should be appropriated to supplement the budget. Potential funds include the EDA levy, Community Development Block Grants, and other grant programs.
Loan Programs
Staff recommends modifying the interest rate for the existing low interest loan program to be more in line with current commercial interest rates and adding two loan programs.
Loan Program Summary
|
Program |
Eligible Improvements |
Income |
Terms |
Amount |
|
Low Interest |
Any interior and |
No |
10 year |
Up to |
|
Home |
exterior |
limits |
treasury |
$50,000 |
|
Improvement |
|
|
+1.5%; |
|
|
|
|
|
5-20 year term |
|
|
Emergency |
Emergency or code |
110% |
No interest 20 |
Up to |
|
Deferred |
violation repairs. |
AMI |
year deferred |
$10,000 |
|
|
|
|
(forgiven if |
|
|
|
|
|
term is |
|
|
|
|
|
reached prior |
|
|
|
|
|
to sale of |
|
|
|
|
|
property). |
|
|
Accessibility |
Accessibility (widening |
110% |
No interest |
Up to |
|
|
doorways, ramps, etc.) |
AMI |
30 year |
$15,000 |
|
|
improvements |
|
deferred |
|
|
|
documented by a |
|
(forgiven if |
|
|
|
doctor. |
|
term is |
|
|
|
|
|
reached prior |
|
|
|
|
|
to sale of |
|
|
|
|
|
property. |
|
|
Rental |
Exterior improvements, |
None |
10 year |
$50,000 |
|
Property |
security, fire |
|
treasury +1.5% |
loan. |
|
|
suppression/prevention, |
|
5-20 year |
$500- |
|
|
accessibility, code |
|
term. |
$2,500 |
|
|
violations, health and |
|
5% of cost of |
grant |
|
|
safety. |
|
exterior |
|
|
|
|
|
improvements, |
|
|
|
|
|
fire |
|
|
|
|
|
suppression |
|
|
|
|
|
/prevention, |
|
|
|
|
|
security, and |
|
|
|
|
|
accessibility |
|
|
|
|
|
provided as a |
|
|
|
|
|
grant. |
|
Purchase Assistance
Down payment assistance opens home ownership to households that otherwise may not be able to purchase a home. Research by the Home Ownership Center found that 22% of Anoka County renters would be able to purchase a home with $10,500 of down payment assistance. Based on the discussion at the City Council retreat staff recommends offering $10,000 in down payment assistance to households currently living in Blaine or with a member of the household employed in Blaine. If the council wants to offer assistance to other households, a smaller amount of assistance, e.g., $5,000, could be offered to households not currently living or working in Blaine. Fridley and Coon Rapids both offer down payment assistance up to $5,000 for all income qualified first time home buyers.
|
Program |
Eligibility |
Terms |
Amount |
|
Down |
110% AMI |
Deferred, no |
Up to $10,000 for households |
|
Payment |
First Time |
interest loan. Must be |
Currently living of employed in |
|
Assistance |
Home |
paid back at the end |
Blaine. |
|
|
Buyer |
the loan term, or if |
Up to $5,000 for other |
|
|
|
the home is |
households. |
|
|
|
refinanced. |
|
Additionally, staff is currently working with a local lender to identify a way to provide purchase assistance to manufactured homes in a way that would meet their underwriting standards while also being financially prudent for the City. If staff and the lender are able to structure a program that works for all involved, it will be presented to the Council for consideration.
Staff Recommendation
Discuss the proposed grant, loan, and purchase assistance programs. Provide direction on which programs to implement. Any new programs will require EDA approval.
Attachment List
PowerPoint Slides