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RESOLUTION AUTHORIZING THE HOUSING AND REDEVELOPMENT AUTHORITY OF DULUTH, MINNESOTA, TO FORGIVE PARTIAL AMOUNTS OF A REHABILITATION LOAN MADE UNDER THE SINGLE FAMILY HOMEOWNER REHABILITATION PROGRAM.
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CITY PROPOSAL:
RESOLVED, the city council of the city of Duluth hereby authorizes a partial forgiveness by the Duluth Housing and Redevelopment Authority (HRA) of the repayment of a Community Development Block Grant loan in the amount of $21,316, which is equal to 86 percent of the total loan amount of $24,786.
Statement of Purpose
STATEMENT OF PURPOSE: This resolution authorizes the forgiveness of a portion of a deferred loan given by the Duluth HRA to Anne Blodget (formerly Anne Rock), to rehabilitate her home located at 406 North 54th Avenue West in Duluth. The HRA is requesting the authority from the city to accept a partial payment as satisfaction of the loan.
In 2003, the Duluth HRA provided a total of $24,786 in loans from two programs they administered, the Deferred Loan/Property Rehab Program and the Spirit Valley Citizens Neighborhood Development Association, both of which were funded with the city of Duluth’s Community Development Block Grant allocation. The loan agreement was entered into on August 5, 2003, with a term of fifteen (15) years. At the end of the term, on August 5, 2018, the loan would be forgiven as long as the property was not “sold, transferred or otherwise conveyed” prior to this date.
The home, in the Ramsey neighborhood of West Duluth, is located in an area that is designated for redevelopment under the Ramsey Village Neighborhood TND Master Plan. Ken Talle, who has successfully built rental properties in Ramsey in the past, wants to continue to develop new housing units on a large site, which includes Ms. Blodget’s home.
The Duluth HRA and city staff have discussed with the developer and received a request from the homeowner for the reduction of the repayment of the loan to be on a prorated basis. Of the 180 months of the 15 year term, 155 payments will have passed in July, when the sale of the house would be finalized. This equates to 86% of the term of the loan. Applying this percentage to the loan amount, results in forgiveness of $21,316, and a remaining amount of $3,470 will be repaid to the HRA. Given the potential for the redevelopment of the neighborhood and the addition of much needed rental housing, this appears to be a reasonable settlement. The community planning manager concurs and recommends approval of the loan forgiveness.