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Home My WebLink About7.A. Small Cities Development Program (SCDP) Uodate 1ft, 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: January 7, 2003 Enclosed is the December 2002 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 + $65,186 (transfer from commercial) $76,000 Rental Residential (goal: 30 units) $121,500 $142,500 117% $-21,000 $10,000 +21,000 (transfer from commercial) 0 Commercial (goal: 15 units) $251,250 $122,831 49% $128,419 $25,000 - $ 65,l86 (t'fertos-fami1y) $ 21,000 (t'fer to rental) $ 42,233 TOTAL $741,750 $623,517 84% $118,233 Small Ci ties Shakopee Rehab Program The approved applications reported below for the commercial program had until the end ofthe year to submit bids and close on their loans. They then will have 120 days (weather permitting) to complete their projects. Based on the scopes of work being developed, all projects should be completed by the beginning of summer. Even with optioning additional interest in the commercial program, $42,233 will tentatively be returned to DTED. However, this will be available to qualified applicants / projects until the end of the grant period in September. Single-Family Rehabilitation Project Recap on the program To be eligible for the program, the applicant's income must be below 80% ofthe 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, 10- 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, ifthe 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 26 applicants have closed on their loans and work is under way. 21 ofthose applicants have had all of their work completed. There is currently one applicant who is still optioning bids and has yet to close on their loan. Commercial funding will be transferred to assist 4 of the 7 applicants who were on the waiting list. The remained 3 did not apply for the program even after several attempts were made to contact them. Weare currently processing the applications to determine eligibility, however, we had not made any loan approvals because we were holding off until the December 31 st deadline for commercial applications to be taken to make sure funding would be available. Amount Funded $369,000.00 PunountCommitted $348,685.98 (closed on their loans) Amount Allocated $ 9,500.00 (have been approved) Balance Remaining $ 10,814.02 Proposed transfer from Commercial Program $65,185.98 Balance after transfer $76,000.00 - funding for 4 remaining applicants @ loans of$19,000.00 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 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 Surrunary Four applicants are submitting final bids and should close on loans the last part of January. 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 Proposed transfer from Commercial Program $21,000.00 Balance after transfer $0.00 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 ofthe property. Owners are eligible for 50% ofthe 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 Two applicants closed on loans this month. Two other applicants are scheduled to close Mid January. 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 Transfer to Rental $-21,000.00 Transfer to Single Family $- 65,185.98 Balance after transfer $ 42,232.83 Applicants that have closed HRA Loan Number: 57C-00-07 57C-00-09. Loan Amount: $25,000.00 $12,977.21 Gross Income: Improvements: Roof, Exterior Masonry Roof, Energy Improvements Market Value of the Property: