HomeMy WebLinkAboutIV.A.3 - Expanded Home Improvement Loan Program Project Proposal: Expanded Single-Family Home Improvement Loan Program
Project Purpose: Expand the existing CDA-administered Home Improvement Loan Program to include Local Affordable Housing Aid (LAHA) funding. The expanded Home Improvement Loan Program would be available to
residents earning no more than 80% of Area Median Income (AMI). Those homeowners who earn between 81-115% AMI in cities that contribute to the expanded Home Improvement Loan Program will be placed on a waitlist and will be eligible for the program only if there are no homeowners below 80% AMI on the waitlist.
Project
Objectives: • Continue to improve the housing stock of Dakota County.
• Expand existing program with proven results to more income-eligible residents of County.
• Provide cities with a way to use LAHA for an existing housing program.
• Diversify funding resources for an existing CDA program. Project Outcomes: • Increase number of homes improved from 60-70 per year to 115-120 per year after Year 2 of infusion of cities’ LAHA funds.
Project Details:
• Provide deferred 0% loans of up to $35,000 for home improvement projects.
• Home improvement projects prioritize health, safety, and structural integrity issues. o Common improvements include new roofs, siding, HVAC systems, windows, building foundation or other structural updates, accessibility
improvements, kitchens and bathrooms(accessibility).
o Other improvements would be considered if they address health and safety issues or otherwise improve the value of the home. Common improvements are repairs or replacement of detached garages, kitchens and bathrooms (non-accessibility), driveway replacement/repair
• Homeowners must be income eligible and meet other CDA program requirements, e.g. own and reside in home, meet credit standards, be current on property taxes, properties must be at least 15 years old, etc.
o CDBG funds require 80% AMI cap
o LAHA requires 115% AMI cap
• Eligible homeowners with incomes at or below 80% AMI could use either countywide and city CDBG and cities’ LAHA funds.
• Eligible homeowners with incomes between 81-115% AMI would use only available city LAHA funds and only if there are no homeowners with incomes
at or below 80% in that city.
• Program income generated from LAHA would be used for future home improvement loans, similar to the CDBG program. The CDA would track program income and deposit into individual city accounts.
Project Funding: • Current CDBG entitlement funding totals $1,193,635 for FY 2023, which includes cities and Dakota County CDBG allocated to the CDA’s existing
Home Improvement Loan Program.
• CDA spends approximately $1,900,000 to rehab 70 homes in a fiscal year, on average. These loans are currently financed primarily with federal Community Development Block Grant (CDBG) funds, though there are some
CDA levy dollars included.
o Takes about 18 months to fully expend a year’s worth of CDBG and program income. o Funds are replenished annually, provided Congress funds the CDBG program.
• Future LAHA – CDA estimates it could successfully deploy an additional approximately $1,400,000 to rehabilitate an additional 55 loans per year after first full year of additional funds.
• Individual cities contributing their LAHA funds to the expanded Home
Improvement Loan Program would have separate subaccounts that will be tracked by CDA staff. Project Staff: • Existing staff: o 1 FT Rehab Coordinator
o 1 FT Rehab Advisor
o 1 FT PSA
o 2 Rehab Advisor contractors – each takes 5-7 files per year, total of 15
• One additional FT Rehab Advisor will be needed to deploy city LAHA funds. The CDA Board of Commissioners has committed to funding this position
with CDA levy until the Local Affordable Housing Aid legislation is changed to allow LAHA funds to be used for administrative costs. At that time, the CDA will work with cities to use a portion of the LAHA funds for the Rehab Advisor position.
Project Reporting: The CDA would provide annual reports to participating cities and Dakota County. The annual report would include the following:
o Community’s contribution to program that fiscal year
o Number of loans using LAHA
o LAHA funds expended o Program income generated