City eyes $1.2 million loan for downtown apartment project

During their Aug. 16 meeting, city commissioners will consider a request for $1.2 million in Community Development Block Grant funds for a proposed rental housing project.

The funds are part of the city’s Housing Rehabilitation Loan Program which uses CDBG funds and provides interest-free loans to low-income residents and owners of affordable and low-income housing to make needed improvements to their properties.

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About a year ago, Dan Bateman approached the city about a proposal to renovate the former Cambridge Court assisted living facility at 1109 6th Ave. N. in apartments.

Bateman recently purchased the property and proposes to turn the five-story, 90-unit, 1.26-acre vacant building into 50 apartments, 23 of which are two-bedroom and the remaining 27 are one-bedroom, according to the city staff report. .

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The building was built in 1929 and is zoned high density multi-family.

Cambridge Court closed in 2018 and the building has been vacant ever since. The property began to deteriorate, according to the city.

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The new apartments would cost between $652 and $999 per month, depending on Bateman’s request.

Its main investments, according to the city staff report, include:

  • installation of a fire alarm system: $83,251
  • sprinkler installation: $420,227
  • installation of new windows: $231,851
  • new water and sewer lines: $75,000
  • elevator test: $10,000
  • electrical service to apartments: $250,000

“Because of the significant expenditures that will be required to renovate the vacant building and the applicant’s desire to provide affordable rental housing, staff believe the project is a perfect fit for the city’s Rent Improvement Loan Program” , according to the city staff report. .

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Additional loan program requirements include:

  • the landlord cannot move any existing tenants;
  • 51% of tenants must meet income requirements;
  • rents for units being rehabilitated must be affordable to low-income tenants in accordance with HUD Section 8 guidelines for determining rent and must remain affordable for 2 years;
  • the property must remain a residential dwelling unit throughout the term of the loan;
  • rental loans require a monthly start of payment upon substantial completion of the project;
  • the rental property must be financially self-sufficient. (If not, a verification of the owner’s income may be requested)

The minimum program loan amount is $10,000 and $25,000 is the maximum loan per unit or $100,000 per project.

Requests over $100,000 may be considered; and other requirements may apply, including City Board approval.

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City staff recommend approval of the loan request, not to exceed $1.2 million, as the projects meet several City objectives, including the renovation of a “significant historic building; providing much-needed rental accommodation; tackle a degraded property; and increasing the community’s affordable housing stock,” according to the staff report.

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The city’s revolving loan fund currently has a balance of approximately $1.4 million and “staff have been researching a potential catalyst project that will both reduce the city’s current balance and have a significant impact on the community,” according to the staff report.

The revolving loan fund will still be able to meet requests for emergency loans and rental and landlord program funds, according to city staff.

Since this is a loan, the funds will go back to the city to be used for more affordable housing projects.

The Urban Planning and Community Development Program administers the loan under its CDBG program.

“The loans have had a significant impact on the community, encouraging both homeowners and landlords to renovate old houses and apartments into affordable housing. In particular, the program has been successful in enabling downtown building owners to activate the upper floors of their buildings for affordable rental housing,” according to the city.

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