CR 91-69 Commercial Rehabilitation Loan Program
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March 12, 1991 K Council Report: 91-69
COMMERCIAL REHABILITATION LOAN PROGRAM
TEMPORARY INCENTIVE CHANGES
Proposed Action.
Staff recommends the adoption of the following motion: Move to
concur with HRA approval of Resolution No: 91-275 approvinq the
chanqes. as detailed by staff. to the Commercial Rehabilitation
Loan Program for the remainder of 1991.
The purpose of these changes is to encourage the use of the
Commercial Rehabilitation Loan Program during the period of time
that the Mainstreet improvement project is occurring.
Overview.
Several Committees have been established to work on the design
and implementation of the Mainstreet Improvement Project. The
changes which have been identified below were developed by staff
based on a recommendation by the Mainstreet Promotions and
Communications Steering Committee.
The Steering Committee indicated that an attempt should be made
to provide additional incentives to the business owners during
. this improvement project to upgrade their buildings. If the
business owner can justify improving their buildings at the same
time, the overall affect will enhance the completed work on
Mainstreet.
The changes as suggested by staff are intended to promote the use
of the Commercial Rehab Program. The program guidelines will
remain unchanged except in two areas. staff is recommending that
all principal and interest payments be deferred until January 1,
1992 and that the city provide a grant in the amount up to $500
for architectural services relating to exterior improvements.
Primary Issues to Consider.
o What are the present conditions of the Commer. Rehab
program?
o What are the proposed changes?
o Why are these changes being proposed?
o How long will these changes be in place?
o What is the impact of the changes?
o What requirements will be necessary on the architect
grant?
o Who will qualify for these loans?
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Brian Fritsinger
Economic Development Specialist
4It CR: 91-69
Page 2
Analvsis of Issues.
Based on the motion recommended, the city Council/HRA has the
following issues to consider:
o what are the present conditions of the Commer. Rehab
program?
The current program provides up to $50,000 for building
improvements. The amount of the loan provided by the City must
be matched by the applicant or the bank.
The program provides 3% money for exterior improvements and 6%
money for interior improvements. The length of these loans can
vary from 12 to 20 years.
o What are the proposed changes?
The proposed changes are as follows:
1. The City will defer all payment of principal & interest on new
loans for the remainder of 1991. Payments will begin on
. January 1, 1992. This deferrment will relate to both interior
and exterior improvements.
2. The city will provide up to $500 for architectural design
services. This would be only for exterior improvement design
plans.
o Why are these changes being proposed?
The Mainstreet Steering committee has been researching methods to
promote improvements on Mainstreet. The proposed changes are
only one of many steps being undertaken to show support of the
commercial businesses during this reconstruction period.
o How long will these changes be in place?
The changes would only be ln effect during the following time
period:
March 19, 1991, or when approved by HRA,
through
December 31, 1991
After this time period has elapsed, the HRA and staff can review
the impact these changes made on the program. It is important to
. keep in mind that if amended program is successful, some type of
temporary changes should probably be implemented in 1992 during
phase II of the improvement project.
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e CR: 91-69
Page 3
0 What is the impact of the changes?
staff has calculated the savings for a business owner who
participates under this program which in turn illustrates the
impact to the city by providing the incentives. The savings will
vary dependent upon when the recipient receives its loan. Two
different scenarios are shown.
#1 Savings based on $50,000 @ 3% for 20 years and 8 months of
interest savings. $990 interest + $500 architectural =
$1490 in savings.
#2 Savings based on $25,000 @ 6% for 20 years and 8 months of
interest savings. $992 interest + $500 architectural =
$1490 in savings.
These savings would be less the later in the year an applicant
secures a loan.
0 What requirements will be necessary on the architect grant?
. Presently, Staff will allow the applicant to select their
architect and the city will reimburse them for the first $500.
The architect must be a certified architect. In addition, the
$500 will only be paid for fees associated with exterior
improvement plans.
In the future, Staff will be soliciting bids for architectural
services. After selecting an architect, all applications will be
required to use this individual.
0 Who will qualify for these loans?
The program boundaries are similar to what 1S used currently.
All commercial buildings within the following defined area: Hwy
169 to Shady Oak, 1st street north to 1st street South.
Alternatives.
The HRA/city Council has the following alternatives to consider;
1. Move to authorize the changes, as detailed by staff, to the
Commercial Rehabilitation Loan Program for the remainder of
1991.
2. Move to authorize changes to the rehabilitation program as
developed by the HRA/City Council.
. 3. continue the item for further information from staff.
4. Direct staff to take no further action.