01-26-2009 HRA MIN - Laserfiche WebLink

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Housing & Redevelopment Authority January 26, 2009 Page 2 income (approximately $1,200 in value) Ms. Peper stated that Elk River Municipal Utilities is checking to see if they may be able to offer a similar program. She explained that award of the funds will be announced the end of February, and the city will have 18 months to use the funds from the time HUD signs for their release. Dan Roberts provided information regarding Tri -Cap's process (i.e., inspections, bidding, licensing and bonding of contractors, lead certification, etc.) Commissioner Kuester asked if money could be used for finishing units at the Bluffs of Elk River, since it is a new project. Ms. Peper stated that the work would be considered rehab and would be eligible for funding. Commissioner Kuester asked for clarification on administrative costs. Ms. Peper explained the general administration will be handled by city staff, and work that Tri -Cap does with the homeowner is considered field administration and is funded by the project budget and not administration. She stated that 8.7 percent of the total 4593,000 request would be for general administrative costs as documented and handled by the city. Commissioner Toth asked who would determine qualified applicants. Mr. Roberts stated that Tri -Cap staff would complete the income verification process, which is part of the field administrative costs. Commissioner Kuester asked if applications would be taken in Elk River. Mr. Roberts stated that most of the process can be done by mail, and that application can be made on-line. He noted that income information is obtained via income tax returns and employer verification. Commissioner Toth asked if there is a cut-off date for additional homes to be included in the program. Ms. Peper stated that if other homes are foreclosed in the target area, they can be included. She noted that it may be possible to provide assistance for a home outside the area, if the target area has been completed and there are funds remaining. Chair Wilson asked what is the estimated turnover time. Mr. Roberts stated that it depends on how aggressively the prices are set. He explained that in order to have a quick turnover time, prices must be set low enough. He anticipated a 1-2 month turnover time after a home is rehabbed and is ready to sell. Ms. Peper explained that a home may be sold at a price significantly lower than what is invested (i.e., $150,000 acquisition/rehab cost, sell for $100,000 — value gap of $50,000). Commissioner Lieser asked if the value gap is only on acquisition/rehab. Ms. Peper stated yes, that the value stays in the house. She explained that alien is placed on the home for 10 years at zero percent, and if the loan is sold in less than 10 years, the homeowner would have to pay back a portion of the grant. Ms. Peper stated that she would recommend the city allow a shorter lien term than 10 years for smaller amounts of assistance. Commissioner Toth asked for clarification on the city's administrative costs. Ms. Mehelich stated that staff proposes they would be able to handle the general reporting. She stated that Tri -Cap would provide the field administration and work directly with the households and programming. Ms. Pepin noted that the costs would be clearly spelled out on the deeds. She recommended a five-year recapture term for assistance of $10,000 and under, and ten years for assistance over $10,000. Mayor Khnzing noted that she strongly supported focusing on using local builders and realtors. She noted that the foreclosure problem is not a short-term issue and that a new wave of foreclosures is expected in the spring, and in 2010 when ARM's will reset. She