ECONOMIC DEVELOPMENT AUTHORITY- Erik Thorvig, Economic Development Coordinator
Title
APPROVING MODIFICATIONS TO THE EDA HOME LOAN IMPROVEMENT PROGRAM
Background
The City of Blaine currently has the Home Improvement Loan Program which assists residents in maintaining and improving the quality of Blaine’s existing housing stock. The program was funded in 1996 through the sale of general obligation bonds. In 1998 a resolution was passed outlining specific criteria for approving loans, etc. In general the following are terms of the loan:
Interest Rate: 5%
Loan Amount Maximum: $25,000
Term: 20 year
Income Cap: 110% of area median household income ($91,190)
Eligible Projects: Most improvements are eligible, interior or exterior maintenance or remodeling
The program currently has 61 outstanding loans totaling $528,085. The account has $2,773,500 in cash and investments available. The Center for Energy and Environment (CEE) administers the program and the Community Reinvestment Fund services the loan. Loan approval is not required by the EDA.
Recently CEE approached city staff about marketing efforts for the program as activity has declined over the past several years. One of the things CEE suggested was modifying the program. Other cities have done this recently and rolled out the new program with fanfare. Staff is proposing two modifications to the existing program. The first is to increase the loan amount maximum from $25,000 to $50,000. The second is to remove the income cap. The following table shows other cities programs and the proposed changes to Blaine’s.
|
City |
Interest |
Loan Amount |
Term |
Income Cap |
|
|
Rate |
|
(years) |
|
|
Anoka |
4% |
$25,000 |
15 |
$99,500 |
|
Brooklyn Park |
5% |
$25,000 |
15 |
115% AMI |
|
Fridley |
4.5% |
$50,000 |
20 |
None |
|
New Hope |
4% |
$10,000 |
10 |
None |
|
Coon Rapids |
1-5.875% |
$25,000-$50,000 |
20 |
Varies |
|
St. Louis Park |
4-5% |
$35,000 |
20 |
$99,500 |
|
Blaine (Current) |
5% |
$25,000 |
20 |
110% |
|
PROPOSED |
5% |
$50,000 |
20 |
None |
The increase in the maximum loan amount would open up the program to individuals looking to do a more extensive remodel or addition to their home. By removing the income cap it allows for every home owner in Blaine to take advantage of the program.
Staff is going to promote the program more aggressively through education and publication.
Recommendation
It is recommended that the EDA approve the proposed changes.
Body
WHEREAS, the Blaine EDA established a Home Loan Improvement program in 1998 to assist residents in maintaining and improving the quality of Blaine’s existing housing stock; and
WHEREAS, certain criteria was created for the program including interest rates, loan amounts, loan terms and income caps; and
WHEREAS, proposed changes were discussed at the July 21st, 2016 City Council workshop; and
NOW, THEREFORE, BE IT RESOLVED, that the Blaine Economic Development Authority hereby approves an increase in the loan amount maximum from $25,000 to $50,000 and also approves removing the income cap; and
NOW, THEREFORE, BE IT FURTHER RESOLVED, that EDA members are exempt from using the program during their term.
PASSED by the Blaine Economic Development Authority this 18th day of August, 2016.