EDA mulls projects to be funded with cash reserve
NEW ULM — The Economic Development Authority (EDA) discussed draft ideas first presented at the July EDA meeting.
In June, 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 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 EDA board was presented with a survey of Garden Terrace residents. The majority of tenants, 53, had no interest in the program. Four indicated interest and the others did not respond.
During the July meeting the board was concerned this program, if implemented, could cost as much as $440,000 a year if every tenant participated, but with only four interested votes, the total cost of the program is estimated to be $50,000 at most. The EDA also can discontinue the program at any time if the cost become too high.
Dalton said this is a program that looks to the future. Currently, Garden Terrace does not have tenants looking to buy a home. The idea is this incentive might bring in tenants looking for temporary workforce housing.
It was clarified that rent was not being increased for this program and the tenants who chose not to buy a home later were not subsidizing the down payments for other tenants. Each tenant pays into their own account with their own rent payments.
Dalton said he personally had been enrolled in similar programs on two different occasions, but since he did not buy a house after moving out he could not take advantage of the program. He did add the program did not negatively affect him or impact cash reserves.
Board member Les Schultz said some of the tenants who had no intention of using the program questioned if a different type of incentive would be available for them.
Board member Charlie Schmitz said the EDA might need to consider some of the upcoming maintenance costs associated with Garden Terrace.
It was suggested a cap be put on the number of people allowed to use the program to ensure there was enough money in reserves to pay the costs.
Later, the board discussed the Homebuyer Assistance Loan Program draft. This program would provide financing to those wishing to buy their first home in New Ulm through a zero percent, deferred payment loan. The borrowers must be a resident of New Ulm or work in New Ulm at least 32 hours per week. The draft also included loan forgiveness for New Ulm graduates. The question was whether to be an income based or limited to a percentage of the home purchase price.
Board member Daniel Braam felt the loan needed to be a percentage of the home cost to prevent all users of the program taking the maximum amount.
No decision was made on either program. Both the rent down payment and Homebuyer Assistance Loan Program are still in the drafting stage and will return to the board for further consideration
Buyers for a lot in Milford Heights withdrew their offer. The EDA had approved the bid of $12,103 for a lot in Block 4 in Milford Heights, Phase One, in June. The buyers had requested a three-year extension in which to build a home.
The covenant agreement for the lot requires a home be constructed on the property within 18 months, but the EDA was willing to grant an extension to the bidder to allow three years before completing it. However, the city attorney advised the board, 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.
Housing Coordinator Heather Bregel informed the board they did receive enough “yes” votes from the neighboring property owners. The sale was going to move forward on Wednesday, but the bidders withdrew their offer on Monday.
Bregel said the bidders withdrew their bids over the back-and-forth nature of the approval. The buyers thought they received the bid back in June, but the deal was delayed because of the covenant vote.
In addition, the buyers thought the assessments for the property were $15,000 but the current assessments for the property were $25,000.
“They felt they had gotten bad information and felt there was to much back and forth,” Bregel said.
Braam asked if a new vote for a covenant extension is needed to approve a new buyer for this three-year extension.
City Manager Brian Gramentz said the vote was specific to a lot, not a buyer, so the EDA could offer this specific lot with a three-year extension without another vote. For the extension to be granted to another property, a vote would likely be necessary.
Braam said the back and forth was a factor in the EDA losing this sale. He suggested the board taking a vote for all remaining lots to eliminate all possible obstacles. The board will present the issue before the city attorney and bring in back for later consideration.
In other news
Garden Terrace Apartments were the topic of multiple maintenance and improvements. The first was a quote for new Garden Terrace Apartments common area furniture in the amount of $10,181. This quote was approved.
Later the board authorized staff to solicit bids for a garage furnace replacement at both Garden Terrace buildings. The cost of this project is estimated at $75,000. The EDA has adequate reserve funds to cover the project.
Another bid for exterior painting at Garden Terrace was awarded to South Central Painting, in the amount of $22,500.
Last, staff was authorized to seek out quotes for concept plans and landscaping improvements to the Garden Terrace property not to exceed $25,000.
Schmitz said he has received calls from Garden Terrace regarding window replacements.
Bregel said window replacement was a recurring concern. The windows in the building are 20 years old.
Schultz suggested the windows in Garden Terrance should at least be upgraded to double-pane windows to deal with extreme weather.
The board suggested staff seek quotes for window replacements.