BY COUNCILOR FEDORA:
The city of Duluth does ordain:
Section 1. That Section 2-172 of the Duluth City Code, 1959, as amended, be amended to read as follows:
Sec. 2-172. Award regulations.
(a) (1) For each dollar expended from the fund for a contract or project, the recipient must demonstrate, achieve, and guarantee in an enforceable agreement, secured at the option of the city, that at least five dollars of funds from sources other than funds which come, directly or indirectly, from local Duluth tax revenues, including those local revenues from the city or its subsidiaries, authorities, or commissions, shall be spent on costs of the project, which costs would qualify for HIF funding under this ordinance;
(2) Loans. If any part of a project or award under this Article includes a loan or extension of credit that is funded by, or utilizes in any way, funds from the housing investment fund (the fund), referred to in Section 2-167, et. seq., then the loan or extension of credit shall comply with the following regulations:
(A) The loan or extension of credit shall be required to be repaid to the city in a manner acceptable to the city auditor;
(B) The loan or extension of credit shall be repaid in equal monthly installments of combined principal and interest over a term that is continuous and does not exceed 30 years from the date the lender signs the note or instrument evidencing the loan, terms and obligation to repay;
(C) The loan or extension of credit shall be repaid with interest at a fixed rate which rate is equal to at least 75 percent of the stated prime rate at the time of the commencement of the term of the loan;
(D) All money received in repayment of the loan or extension of credit shall be deposited into the community investment trust fund created by Section 54(E) of the City Charter;
(b) The following regulations apply to awards for projects to create new or improved residential housing structures:
(1) Funding awards shall be in the form of loans, which may be interest bearing or deferred. Projects providing long-term (over 30 years) affordability may be considered for forgivable loans. The decision to forgive shall not occur before one year prior to the end of the loan period . Only projects meeting the federal definition of supportive housing may have deferred payment, zero interest loan with a balloon payment in year 30;
(2) The maximum award shall be of $150,000 per housing project, unless the housing project includes an on-site American Indian Center supported by the Duluth American Indian commission, in which case the maximum amount of funds for the American Indian housing project/program shall not exceed 20 percent of total housing investment fund revenues;
(3) The project must be completed within 24 months of funding availability;
(4) The project must demonstrate a funding gap indicating the need for housing investment funds, and 70 percent of total funding must be secured or likely to be secured within six months of the time of application. Housing investment funds are not intended to fund projects in the early stages of development, but to help complete project financing;
(5) The applicant must own or have a purchase agreement on any property to be rehabilitated;
(6) The applicant must own, have a purchase agreement, or for tax forfeit property have a commitment from a public entity to make available for transfer to the applicant the land needed for new housing construction;
(c) The following regulations apply to awards for housing programs:
(1) Funds for housing programs shall be recycled into additional housing units, or used to ensure long-term affordability of assisted units, or be repaid to the housing investment fund;
(2) Housing programs are allowed to initially apply for up to $150,000, and thereafter may apply for additional funds for multiple years. Requests for multi-year funding will be considered on a case-by-case basis;
(3) Housing investment funds shall be used to leverage new resources, i.e., create a revolving loan fund or larger program.
Section 2. That this ordinance shall take effect 30 days after its passage and publication.
COUNCIL REQ/ATTY BFB:nmj 1/31/2008
STATEMENT OF PURPOSE: This ordinance creates standards and requirements for any loans made as part of a project funded by the housing investment fund.