EDA discusses programs to help home buyers
NEW ULM — The Economic Development Authority (EDA) board discussed drafts for new financial programs to assist home buyers.
Last month, the EDA paid off the mortgages for both Garden Terrace buildings. The EDA’s reserve account for these buildings has grown to a significant amount. Staff proposed potential projects that could utilize the cash reserve.
Of the projects proposed, the board was most interested in a rent down payment. The idea of the project was that a portion of a Garden Terrace tenant’s rent would be set aside in a savings account for use as a down payment on a home purchased within New Ulm city limits.
Tuesday, the board was presented with a draft proposal for the down-payment program. The program could cost as much as $440,000 a year if each Garden Terrace tenant participated, but staff anticipated between five and ten tenants per year would utilize it. That placed the annual cost at $50,000 a year.
The EDA could discontinue the program at any time if reserve funds could no longer support it.
The board had some concerns regarding tenants that do not wish to use the program. Board member Daniel Braam was concerned some tenants would feel cheated.
He suggested the EDA go into the program with an idea of how many tenants were interested in using it to ensure enough money was set aside.
Les Schultz suggested the city cap the number of program users each year to ensure the city had enough in the reserves to continue it.
Schultz said he received calls from Garden Terrace residents who said they would prefer improvements to the facility over the down-payment program.
Board Chair Charles Schmitz suggested a sign-up list for tenants interested in the program. He said the program could be an incentive for residents to move out. Garden Terrace has an extensive waiting list, and this program could help open up additional units.
Schmitz did not think this program would be a financial burden, but agreed a survey should be submitted to gauge interest.
The board made no official decision on the draft program, but requested more information regarding tenant interest.
Next, the board discussed the proposed draft Homebuyer Assistance Loan Program. This program would provide financing to those wishing to buy their first home in New Ulm through a zero percent, deferred payment loan of up to $10,000.
The board did not officially approve the program, but discussed stipulations involving the loan. This draft program will be brought to the next EDA meeting for further discussion.
In other news, the board received an update on covenant changes discussed at the June meeting. Last month the EDA approved a bid of $12,103 for a lot in Block 4 in Milford Heights, Phase One.
The covenant for the lot requires a home be constructed on the lot within 18 months, but the EDA granted an extension to the bidder to allow three years before completing a home.
The city attorney advised that a majority of homeowners must agree to the covenant change to allow the three-year extension. A total of 15 “yes” votes are needed to grant it. The EDA’s previous approval represents nine “yes” votes. At this time, five additional “yes” votes and one “no” vote have been received.
Last month the board received a bid of $13,247.63 for a different lot in Block 4 of Milford. However, the bidder asked to be exempt from the home requirement. The purchaser has no intention of building a home on this property, but wants to give additional yard space for a different home.
The board tabled a decision last month. Since then, the city attorney has informed the board state statute will not allow an exemption. The bidder has been notified.