Coon Rapids makes housing rehab loans easier to get

The city of Coon Rapids is making in easier for residents to apply for housing rehabilitation loans.

The city uses its annual federal Community Development Block Grant (CDBG) allocation to prove the loans.

Through the U.S. Department of Housing and Urban Development (HUD) grant program, Coon Rapids has received $210,751 for 2013.

In addition, the city has $6,875.50 in program income from loan repayments which must be spent and will be used to supplement the city’s 2013 grant.

Under the program guidelines, the city can provide housing rehabilitation loans to homeowners earning not more than 80 percent of the area median income, which is currently $64,400 for a family of four, according to Cheryl Bennett, city housing and zoning coordinator.

The housing rehabilitation program offers zero-interest, deferred loans of up to $24,999 for housing rehabilitation work plus additional dollars not to exceed $5,000 in grant assistance to deal with lead-based paint hazards, Bennett wrote in a report to the Coon Rapids City Council.

“Up to 50 percent of the rehabilitation loan is forgiven after five years,” she wrote.

According to Bennett, loans for energy efficiency improvements provide up to $10,000 in a zero-interest, deferred loan that is completely forgiven after 10 years.

While interest in the program remains strong, Bennett said that an increasing number of homeowners are turned away from the program because they don’t meet program guidelines.

The most common reason is that applicants exceed program asset guidelines, which limit gross asset holdings to $25,000 per household, she told the council.

According to Bennett, gross assets include cash; cash value of life insurance policies, securities and bonds; market value of real estate (excluding the property to be improved); the value of personal property (excluding household furnishings, clothing and one car); and retirement and pension funds until drawn on.

“Many households depend on more than one vehicle and even a modest retirement fund put this program out of reach for many otherwise eligible Coon Rapids residents,” Bennett wrote in her report to the council.

Reviewing asset limits of other similar metro area federal grant housing rehabilitation programs, Bennett found they range from no asset limits to $50,000 excluding retirement and pension funds, she wrote.

Bennett recommended and the council unanimously approved in action Aug. 20 to increase the assets amount that can be held by program applicants by excluding the first $100,000 of value of their retirement and pension funds even though the limit remains at $25,000.

The council also approved a service contract by which the Greater Metropolitan Housing Corporation will administer the city’s program.

The council first awarded the service contract to the housing corporation in 2003 and in each succeeding year.

The services provided under the contract include program marketing, intake and application, income and asset verification, site inspection, scope of work preparation, bidding, bid award, contract execution, construction oversight and document filing.

According to Bennett, through July 31, the housing corporation has closed 134 loans totaling over $2.6 million since 2003.

The city has used the federal Community Development Block Grant funds for the housing rehabilitation program since 2001.

Peter Bodley is at
peter.bodley@ecm-inc.com

 
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