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Home My WebLink About8. Small Cities Development Program Update #8 CITY OF SHAKOPEE Memorandum TO: Economic Development Authority Mark McNeill, EDA Executive Director Economic Development Advisory Committee FROM: Paul Snook, Economic Development coordinat$ SUBJECT: Small Cities Development Program (SCDP) Update DATE: March 27, 2003 Enclosed is the March 2003 update on the Small Cities Development Program (SCDP) from the Carver County HRA. In 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 $165,000 135% $-43,500 $10,000 +43,500 (transfer from comcl) 0 Commercial (goal: 15 units) $251,250 $122,831 49% $128,419 $25,000 - $ 46,186 (t'ferto s-fam) $ 43.500 (t'fer to rental) $ 38,733 TOTAL $741,750 $646,017 87% $95,733 UpdateMar03.doc 1 3/27/2003 Small Cities Shakopee Rehab Program Substantial progress is being made to close out the program. The last of the single family rehab applicants will be out to bid soon. A few of the rental and commercial applicants were given deadlines of December 31st to provide the HRA missing application materials and/or bids. Because of our staffing turnover at that time, we have extended the deadline to April yth. However, we have made it clear that this is their final extension and that they will be dropped from the program at that time. 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. UpdateMar03.doc 2 3/27/2003 Single-Family Rehab Summary 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. 2 of the 3 applicants have scheduled their appointments with our Rehab Specialist to complete their housing inspection and work write-up. We hope for them to be able to go out to bid by mid April. The final applicant is in the process of moving into her home and is not yet eligible for the program. We are hopeful her timing will work out so she can benefit from the program. 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 HRA Loan Number: NO NEW CLOSING TO REPORT Household Composition: Loan Amount: Gross Income: Improvements: Market Value of the Property: Rental Rehabilitation Project UpdateMar03.doc 3 3/27/2003 Recap on the program 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 Four remaining applicants have been given the opportunity to participate in the rental rehab program. 2 of the applicants are very close to having all of their documentation needed from their contractors submitted. We hope to give their contractors their Proceed to Work in the next two weeks. We have also begun processing an additional application that was on our waiting list. Because 4 of the applicants on the waiting list for single family did not apply, there is additional funding from the commercial program available. Amount Funded $121,500.00 Amount Committed $75,000.00 (closed on their loans) Amount Allocated $67,500.00 (have been pre-approved) Balance Remaining $-21,000.00 Transfer from Commercial Program $42,500.00 ($21,000 from above plus $22,500 for Balance after transfer $0.00 the additional applicant) UpdateMar03.doc 4 3/27/2003 Applicants that have closed HRA Loan Number: NO NEW CLOSED LOANS TO REPORT Loan Amount: Number of Rental Units: Monthly Rent: Improvements: Market Value of the Property: Commercial Rehabilitation Project 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 There are 2 remaining commercial applicants that have yet to close on their loans. Both have been given until April th to submit all materials from their contractor. We are very optimistic that one of the applicants will have all of his materials submitted. We are not as confident that the other applicant will meet the deadline. Amount Funded $251,250.00 Amount Committed $83,581.19 (closed on their loans) Amount Allocated $39,250.00 (have been pre-approved) Balance Remaining $128,418.81 UpdateMar03.doc 5 3/27/2003 Transfer to Rental $-43,500.00 Transfer to Single Family $-46,185.98 Balance after transfer $ 38,732.83. (will be given back to DTED end of Sept. ) Applicants that have closed HRA Loan Number: Loan Amount: Gross Income: Improvements: Market Value of the Property: UpdateMar03.doc 6 3/27/2003