Erik Burgess, Published April 08 2013
Moorhead approves $5K loan program for new homesMOORHEAD – There could soon be another money-saving tool in the homebuyer’s toolbox here following City Council actions on Monday night.
The council voted 7-0 on Monday night to set up a citywide loan program that would offer a $5,000 no-interest loan to first-time buyers of newly constructed houses here, which would be put toward special assessments. The program is intended to encourage new home construction in Moorhead, which seems to be at a “low point,” according to City Council documents.
“These are efforts to stimulate the market,” said Deputy City Manager Scott Hutchins.
The loan program would work in conjunction with the city’s residential property tax rebate program, which is also effective through December 2014, said City Planner Lisa Vatnsdal. Vatnsdal told the council that monthly payments are seen as one of the major concerns for first-time homebuyers.
The loan would be deferred and paid back to the city when the homeowner sells the house, Vatnsdal said. Loans will be given on a “first-come, first-served” basis, she said, through December 2014 or until the funds are depleted.
This would provide a homeowner with an annual savings of $550, or $46 a month, when applied against a 20-year special assessment at 6 percent interest, but Councilman Mike Hulett said that typical homeowners stay in their houses for around 7 years, meaning the city could be getting its money back sooner than that 20-year period.
Vatnsdal said homes in Moorhead typically have anywhere between $20,000 and $60,000 in specials, meaning on the low end of the scale, a $5,000 loan would cover one-quarter of that.
“I think it’s meaningful,” she said.
To provide for the loans, the council designated $500,000 from its economic development revolving loan fund administered by West Central Initiative, a west-central Minnesota community foundation made up of nine counties. Before Moorhead can begin the homebuyer loan program, it needs permission from the West Central Initiative board to access those funds.
Moorhead’s revolving loan fund has nearly
$1.1 million, and the dollars are typically used to help small-business development, retention and expansion, Vatnsdal said. The most recent loan the fund provided for was one used in the opening of Pizza Nico in July 2011. The revolving loan fund was established in 1992 with $500,000 in proceeds from a housing bond repayment. Since then, it has provided 35 loans totaling around $1.3 million, city documents say.
To conclude the meeting, the council went into executive session to discuss “pending litigation” regarding the only toll bridge between Fargo and Moorhead. After the session, Mayor Mark Voxland declined to comment, citing state open meetings laws that say he doesn’t have to comment on pending litigation. The city wants to end a 25-year contract with the privately run Bridge Co. and buy back the toll bridge, but the two parties have been unable to agree on a price. Voxland wouldn’t say whether the city of Fargo is involved in the pending litigation.
Councilman Steve Gehrtz was absent from Monday night’s meeting.
Readers can reach Forum reporter Erik Burgess at (701) 241-5518