EDA moves forward with homebuyer assistance loan program
NEW ULM — A revised draft for the homebuyer assistance loan program was presented to the Economic Development Authority on Tuesday.
This program would provide financing to those wishing to buy their first home in New Ulm through a zero percent, deferred payment loan.
Assistant City Manager Chris Dalton said he took out a few qualification requirements from the previous agreement. Language requiring a minimum of eight hours of in-person or online homeownership training was removed as well as the condition that at least three precent of the purchase price be covered in the down payment.
The program caps available funds at $50,000 and will be administered first-come first-served. New Ulm high school graduates are eligible for 50 percent loan forgiveness over a five-year period.
Board member Daniel Braam suggested allowing greater funding to the program if it proves popular.
Board member Les Schultz asked how the program defined New Ulm residents. The program was written to be used by people living in New Ulm and there was concern the definition would be too restrictive.
The original draft had a six-month residency requirement, but the new draft allows people working 32 hours a week in New Ulm to qualify. This would serve the work force.
The board agreed by consensus to move forward with the program. The draft will be sent to the city attorney and brought back next month for formal approval.
Later in the meeting the board reviewed the revised draft for the down-payment assistance for Garden Terrace residents program.
The idea of the project was to set aside a portion of a Garden Terrace tenant’s rent in a savings account for use as a down payment on a home purchased within New Ulm city limits.
Dalton said the revision would give a $200 credit to residents for every month they pay rent and would reach a maximum credit of $5,000. The program would be capped at a $25,000 limit each year, also on a first-come, first-served basis.
The board was uncertain this program would be as popular. Many of the Garden Terrance residents are senior citizens down-sizing and would not likely use a down-payment program.
Braam said it was a good incentive for a new employee coming to town. It offers a pathway to being a home owner. He said it will not be used by everyone but it provides the opportunity for workers and people wanting to live in New Ulm.
Board member Jessica Janni supported the program. She said if this program had been available when she moved to New Ulm, it would have been an appealing option.
The $200 monthly credit means it will take just over two years to reach the $5,000 limit.
The board agreed to send this draft to the city attorney and bring it back for final approval next month.
Fair market rent rates
The Economic Development Authority reviewed the fair market rents and payment standards for the Section 8 housing choice voucher program.
On an annual basis, the Department of Housing and Urban Development (HUD) issues new fair market rents (FMR). The 2019 new FMR set by the federal government are $558 for a single-bedroom, $700 for two-bedroom, $877 for three-bedroom and $946 for a four-bedroom apartment. This is a $14 increase for a one-bedroom, a $3 increase for the two-bedroom and $3 decrease for a four-bedroom apartment.
Housing Coordinator Heather Bregel said the EDA uses the FMR to set the payment standard for the Section 8 program. For the last few years the EDA kept the payment standards at 100 percent of the FMR.
Bregel speculated the reason for the decrease to the four-bedroom apartments is because few families on Section 8 vouchers have a four-bedroom apartment.
“That would be a seven or eight-person household and we just don’t see families that size that large anymore,” she said.
The board approved the FMR and payment standard for 2019.
Later in the meeting, the board approved flat rents for the public housing program. The flat rents were based on the FMR standard. As with last year the payment standard will be set at 100 percent with the FMR.
EDA budgets for 2019
The board approved the 2019 budget for EDA general fund and the 2019 Section 8 program budget.
City Finance Director Nicole Jorgensen said the EDA general fund was mostly maintaining operation. With the current assessment payment, the EDA is looking at $39,000 deficit next year.
In 2017, the board approved payment in full of all new assessments on EDA buildable lots already been sold. Until all the lots are sold, the EDA will have assessment payments on the remaining lots. The EDA has the option of transferring funds from Garden Terrace to cover the loss.
The 2019 Section 8 program’s annual budget had an estimated $400,838 in expenditures.
In other news
The family unit gutter project was authorized, and staff will solicit bids. The project includes gutter replacement as needed and installing gutter guards on ten scattered site family unit rental houses. The estimated project cost is between $5,000 and $10,000. A portion of a 2017 capital fund grant will be used to cover the project. It is expected the program will save maintenance staff time.
Board member Les Schultz made the motion to approve. He said anyone who went from not having gutter guards to having gutter guards would strongly support this.
The motion passed unanimously.
A $37,626 Garden Terrace furnace replacement project bid was awarded to Ahrens Heating. Bregel called Ahrens Heating to confirm this was the bid as it was significantly lower than anticipated.
A $40,000 loan from the commercial property loan program to Stake Properties was approved. The project involves re-roofing at 317 N. Minnesota St. The total loan for the project is $80,000. Citizens Loan will provide the remaining $40,000.
Assistant City Manager Chris Dalton gave a report of August activities. In the last month Dalton:
• Met with the Windings vice-president and finalized their Minnesota Investment Fund and Job Creation Fund applications. These applications have been submitted to DEED.
• Saw the closing of the NUEDC lot, which was sold to DLC.
• Met with individuals interested in George’s Ballroom. He has been determining if their project idea is feasible.