Economic Development Authority - Elizabeth Showalter, Community Development Specialist
Title
Title
Home Improvement Grant Programs
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Executive Summary
The proposed grant programs will utilize excess funds held in the City’s Revolving Home Improvement Loan Fund to encourage reinvestment in older homes in the City.
Background
The EDA has maintained a home improvement loan fund which has been used since 1998 to provide low interest and deferred home improvement loans. The fund currently has $2.7 million, which is more than is needed to sustain the existing loan programs. At the August 2, 2021 workshop staff presented several options for grant and loan programs and staff was directed to move forward with the programs.
Grants have several benefits over loans in some circumstances. While most loans are repaid with interest, each loan incurs origination and servicing costs which deplete the revolving loan fund without any tangible improvement to housing. A grant program can be administered internally by city staff, which allows all of the funds to go to the property owner. Additionally, a grant program can serve as a motivation for homeowners who are not motivated by loans to make improvements. Nearby cities have found great success with similar grant programs.
Staff is proposing a five year grant pilot program to be funded out of the existing revolving loan fund. The success of the program and the funds in the revolving loan fund will be evaluated at the end of the pilot program, and if the EDA choses to continue the program, long term funding will be identified. Long term funding may include the EDA levy, Community Development Block Grants, HOME funds, and other grant programs.
The property eligibility, eligible projects, and other terms can be adjusted during the pilot program if necessary to meet the program goals.
The term sheets for each of the grant programs are attached and the terms are summarized for each program below.
Front Door Program
• Incentivizes curb appeal improvements on older homes
• Owner occupied homes only, must be homesteaded
• Maximum assessed value of $350,000
• Must be at least 30 years old
• Grants up to $5,000 (15-25% reimbursement)
• Limited to $150,000 in total grants per year (for both the Front Door Program and the Manufactured Home Beautification Program)
• First come first serve in year one, may change to a lottery in the future
Manufactured Home Beautification
• Incentivizes curb appeal improvements on older manufactured homes
• Owner occupied homes only, owner occupancy affidavit is required
• Grants up to $3,000 (15-25% reimbursement)
• Limited to $150,000 in total grants per year (for both the Front Door Program and the Manufactured Home Beautification Program)
• First come first serve in year one, may change to a lottery in the future
Major Remodeling
• Incentivizes large improvements on older homes
• Owner occupied homes only, must be homesteaded
• Maximum assessed value of $350,000
• Must be at least 30 years old
• Grants up to $7,500 (5-15% reimbursement)
o Increased maximum grant amount and reimbursement percentage following Councilmember Jepson’s comments at the workshop
• No limit on grants per year
Rental Property Grant Program
• Incentivizes exterior improvements, safety, and accessibility
• 1-12 unit rental properties
• Must be at least 30 years old
• Grants up to $5,000 (5% reimbursement)
• No limit on grants per year
Strategic Plan Relationship
Not applicable.
Board/Commission Review
Not applicable.
Financial Impact
The grant programs will be funded out of the existing revolving loan fund, which was established through a bond sale in the 1990s. These funds must be used for housing programs. The table outlines the estimated budget for the programs.
|
Beautification Grants (maximum) |
$150,000 |
|
Major Remodeling and Rental Grants (estimate) |
$45,000 |
|
Increase in Remodeling Advisor Visits (estimated) |
$5,000 |
|
Marketing (first year only) |
$1,000 |
|
Total |
$201,000 |
The loan fund currently generates approximately $50,000 in annual income that is not needed to cover administrative costs or forgivable loans. At the end of the pilot program, the loan fund balance is anticipated to be approximately $2 million, without accounting for an increase in loans issued. The two programs most likely to see heavy utilization are the down payment assistance and accessibility loans, which both have a maximum loan amount of $10,000 and are deferred, so the funds will not be paid back for 20-30 years, unless the property is sold. Staff will monitor the popularity of these programs, and if necessary establish an annual budget to ensure the programs are sustainable.
Public Outreach/Input
Not applicable.
Staff Recommendation
Staff recommends approval of the resolution to establish the home improvement grant programs.
Attachment List
Term Sheets
Body
WHEREAS; a goal of the 2040 Comprehensive Plan is to improve the quality of the existing housing stock; and
WHEREAS; the Revolving Home Improvement Loan Fund has more funds than are necessary to sustain the loan programs; and
WHEREAS; the proposed pilot programs are similar to successful programs offered in other cities that have improved the quality of existing housing stock
NOW THEREFORE, BE IT RESOLVED, that the Blaine Economic Development Authority hereby approves a five year pilot program of home improvement grants as outlined in the term sheets attached to the staff report.
PASSED by the Blaine Economic Development Authority this 15th day of November, 2021.