HomeMy WebLinkAbout8. Small Cities Development Program
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CITY OF SHAKOPEE
Memorandum
TO: Economic Development Authority
Mark McNeill, EDA Executive Director
Economic Development Advisory Committee
FROM: Paul Snook, Economic Development coordinator~
SUBJECT: Small Cities Development Program (SCDP) Update
DATE: May 2, 2003
Enclosed is the April 2003 update on the Small Cities Development Program (SCDP) from the Carver
County HRA.
m summary, the HRA reports the following SCDP funding activity:
Amount % of Funds
Amount Committed/ Committed/ Balance Max Avail per
Funded Allocated Allocated Available Property or Unit
Single Family
Residential
(goal: 30 units) $369,000 $358,186 97% $10,814 $19,000
+ $46,186 (transfer from cornel)
$57,000
Rental
Residential
(goal: 30 units) $121,500 $142,843 117% $-21,343 $10,000
+21.343 (transfer from cornel)
0
Commercial
(goal: 15 units) $251,250 $91,459 36% $159,791 $25,000
- $ 46,186 (t'ferto s-fam)
$ 21.343 (t'fer to rental)
$ 92,262
TOTAL $741,750 $592,488 80% $149,262
UpdateApril03.doc 1
5/2/2003
Small Cities Shakopee Rehab
Program
As the Shakopee Small Cities program draws to a close, the project is abuzz with
construction activity. Two major commercial rehabilitation projects are underway as we
speak and 3 single-family and two rental projects should begin construction before the
next update. Only one rental project would remain.
Single-Family Rehabilitation
Project
Recap on the program
To be eligible for the program, the applicant's income must be below 80% of the area
median income. The homeowner will be eligible for a 50 to 100% grant depending upon
their income. The homeowner would need to provide leverage ranging from 0 to 50%.
The HRA has low-interest loans the homeowner could apply for to use as their leverage
requirement. However, if they are not eligible for a leverage source due to poor credit,
too many debts, no equity, etc., the leverage requirement will be waived and they will
receive a 100% Small Cities grant.
The grant is a 0% interest, 1 O-year deferred loan. If the homeowner stays in the home
for 10 years, they will not have to pay the loan back. The loan is forgiven on a pro-rated
basis of 10% per year. For example, if the homeowner moves out 3 years later they
would be responsible for paying back to the City 70% of what they borrowed.
After their application has been approved, Dave Schaffer, the HRA's Rehab Advisor, will
schedule an appointment to inspect the home to determine what improvements can be
done. Dave will draw up a work write-up for the homeowner to submit to contractors. It
is the responsibility of the homeowner to select the contractor(s).
After reasonable bids have been attained, the homeowner will schedule a time to close
on the loan with the HRA. The HRA will make the payments to the contractor(s) after
the work has been inspected by Dave Schaffer. The HRA will then submit a draw
request to the City (to submit to DTED) for reimbursement.
Single-Family Rehab Summary
UpdateApril03.doc 2
5/2/2003
26 applicants have closed on their loans and work is under way. 22 of those applicants
have had all of their work completed. There is currently one applicant from the original
single family pool of funding who is still optioning bids and has yet to close on her loan.
To date, $358,185.98 has been given to households. Only $3743.95 of this amount
remains for work yet to be completed.
Commercial funding will be transferred to assist 3 additional applicants. All of the
applicants are currently obtaining bids and should close on their loans within the next
two weeks.
Amount Funded $369,000.00
Amount Committed $348,685.98 (closed on their loans)
Amount Allocated $ 9.500.00 (have been approved)
Balance Remaining $ 10,814.02
Transfer from +
Commercial Program $46.185.98
Balance after transfer = $57,000.00 (to assist 3 applicants with $19,000 each)
Applicants that have closed
Due to the death of one of the beneficiaries of the program, her loan amount was paid
back to the city. These funds were placed into an account with the city to be used to
assist homeowners on the waiting list. The following applicant benefited from these
program income funds.
HRA Loan Number: 57P-02-28
Household Composition: 2 Adults
Loan Amount: $8716.00
Gross Income: $24,960.00
Improvements: bathroom update and windows
Market Value of the Property: $145,000
Ren tal Rehabilitation Project
Recap on the program
UpdateApril03.doc 3
5/2/2003
Any rental owner may apply for the program as long as their property is located in the
targeted Small Cities Boundary. 51 % of their rental units need to be leased by tenants
at or below 80% of Metro Area Median Income, and the rents for all of the units would
need to be at or below the Fair Market Rents. If the property is in the targeted area, and
both the tenant's income and rent are within the allowable limits a property owner would
be eligible for a deferred loan up to $7,500 per unit. A maximum loan amount is
currently under advisement with city staff. The owner is required to match these dollars
with a 50% match. This is a secured loan, which will be forgiven after seven years.
Compliance of rent restriction and tenant characteristics is in force for the full seven
years. The loan is forgiven on a pro-rated basis of 14.28% per year.
After their application has been approved, Bill Schwanke, the HRA's Rehab Advisor, will
schedule an appointment to inspect the rental property to determine what improvements
should be incorporated into the scope of work. Bill will draw up a work write-up for the
homeowner to submit to contractors. It is the responsibility of the homeowner to select
the contractor( s).
After reasonable bids have been attained, the property owner will schedule a time to
close on the loan with the HRA. The HRA will make the necessary payments to the
contractor(s), after Bill Schwanke has inspected the work. The HRA will then submit a
draw request to the City (to submit to DTED) for reimbursement
Rental Rehab Summary
5 property owners received funding from the rental rehab program with a total of 16
rental units being rehabbed. Of the applicants who have yet to close on their loans, 2 of
the applicants are ready to close, but are currently working on securing their 50%
leverage portion. One additional applicant is currently determining the stability of his
foundation before determining if he would like to go through with the program.
However, he has been given a deadline to determine his foundation issues or he will be
dropped from the program.
Amount Funded $121,500.00
Amount Committed $82,842.65 (closed on their loans)
Amount Allocated $60.000.00 (have been pre-approved)
Balance Remaining $-21,342.65
Transfer from
Commercial Program $21.342.65
Balance after transfer $0.00
Applicants that have closed
UpdateApril03.doc 4
5/2/2003
HRA Loan Number: No new applicants have closed this period
Loan Amount:
Number of Rental Units:
Monthly Rent:
Improvements:
Market Value of the Property:
Commercial Rehabilitation
proj ect
Recap on the Program
Any commercial property owner may apply for the program as long as their property is
located in the targeted Small Cities Boundary. Note: this boundary is the small area
located in the core downtown area of the bigger Small Cities targeted area. Priority is
given to owner occupied structures or where leases are currently in place. Building
improvements must be directed toward correcting defects or deficiencies in the property
affecting the aesthetics or the property safety, energy consumption,
structural/mechanical systems, habitability or handicapped accessibility of the property.
Owners are eligible for 50% of the total commercial repair costs, with a maximum loan
up to $25,000. The loan is a deferred loan for seven years; which is pro-rated in case of
sale.
Commercial Rehab Summary
Of the two remaining applicants for the commercial program, one applicant was
dropped from the program because he sold the property. The other applicant has
closed on his loan and work is underway. Work is also underway for the last remaining
commercial applicant who closed on his loan this winter. A total of 7 commercial
property owners received commercial funding. With the 50% match requirement,
roughly $200,000 of rehabilitation was completed with the commercial program.
Amount Funded $251,250.00
Amount Committed $91.459.98* (closed on their loans)
Balance Remaining $160,040.20
UpdateApril03.doc 5
5/2/2003
Transfer to Rental $-21,342.65
Transfer to Single Family $-46,185.98
Balance after transfer $ 92,511.57 (will be given back to DTED end of
Sept. )
* One of the program beneficiaries had a change order. His loan amount has been
amended from $12,977 to $17,618.
Applicants that have closed
HRA Loan Number: 57C-OO-12
Loan Amount: $25,000.00
Gross Income: $60,000
Improvements: Accessibility improvements, adding a commercial
kitchen,
Market Value of the Properly: $100,600
UpdateApril03.doc 6
5/2/2003