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EDA reviews homebuyer assistance loan program

NEW ULM — The Economic Development Authority (EDA) reviewed the Homebuyer Assistance Loan Program, Tuesday.

The loan program was first introduced to the EDA in July. It is intended to provide assistance to first-time homebuyers in New Ulm. The EDA-funded program would offer zero-percent, deferred-payment loans of up to $10,000. It can be used to help meet both a borrower’s down payment and closing cost requirements.

Assistant City Manager Chris Dalton said the draft had not changed since the last review, but City Attorney Roger Hippert had additional questions. The draft included an incentive for homebuyers that graduated from a high school in New Ulm; there was a question of whether this included home-schooled students, those who did not graduate, but received a GED in New Ulm, or Minnesota Valley Lutheran High School graduates.

The board was willing to approve all of these types of graduates to qualify for the incentive, but they had concerns the incentive would be unfair or too complicated.

For example, if a student attended 11 years at a New Ulm High School, but in their senior year they went to school elsewhere, do they still qualify?

“I think it could bog down the program if we get into that kind of hair splitting,” board member Dan Braam said.

“There is a lot of enthusiasm in the community for something like this,” he said.

Susan Fix asked to take the New Ulm student incentive out as it complicated the program.

Les Schultz said he liked the incentive, but admitted he could not think of a fair way to administer it.

The board discussed how long the loan should be deferred. The draft had listed three years, but the board was more comfortable with five years.

Braam said the five-year deferment would strike the part of the market the EDA wants to impact.

Dalton agreed to make the changes and bring the program back for review next month.

The board reviewed a draft of the Garden Terrace Resident Program. This program gives renters at Garden Terrace an automatic monthly credit that could be used for a down payment on a home. The idea of this program was to attract a workforce into moving into New Ulm with an incentive to buy a home.

There were some concerns over whether the $25,000 available annually was enough to cover the program’s budget. The board believes this program would have lower use because many of Garden Terrance residents have already downsized from a home. For this reason the board believes $25,000 was sufficient to cover the program.

This program draft will be brought back for final approval at a later meeting.

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