WORTHINGTON -- Informational meetings regarding a state-allocated grant for income-based home improvement loans will be take place starting at 6 p.m. Thursday at the County Administration Building.
The Small Cities Development Program grant, administered by the Minnesota State Department of Employment and Economic Development, is awarded to Minnesota cities based on size and need.
Eligible cities must have a population of less than 50,000, and the county population must not exceed 200,000.
"The funds are for communities that do not receive a direct allocation of Community Development Block Grant funds through the federal government," said Southwest Minnesota Housing Partnership Director of Community Development Jennifer Prins.
The city has been approved for the program since 2004, Worthington Director of Community and Economic Development Brad Chapulis said. Cities must re-apply every two years, with different neighborhoods chosen each time. The current loan period ends this December.
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The area of focus for the 2013 application process is a section east of Humiston Avenue and south of Oxford Street, Chapulis said. A letter was recently sent notifying those residents of the program and pre-application process.
Applicants must own a home or rental property in the outlined area, and must meet income eligibility requirements based on family size.
If approved, property owners will receive a 0 percent deferred loan to cover 70 percent of the rehabilitation cost. The owners are responsible for the remaining 30 percent.
Qualified homeowners that don't move for 10 years don't have to repay the Small Cities loan amount, Prins said.
If the owners do move, Chapulis said, the excess funds get recycled back to the city and go to similar projects.
"It's a valuable thing even if someone does move -- the funds can be reloaned to another family," Prins said.
When it comes to selecting an area, Prins said officials do a "windshield survey" consisting of a drive-through and assessment of the neighborhoods. The area picked is based on need and the probability of showing the most impact to the state.
"We need to show that there are homeowners and rental property owners that want to do this," Prins said. "That's when we start the pre-application process, so that they can learn about the program and decide if they are interested."
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On average, the program lends out a maximum of $600,000 to fund about 28 projects in the two-year period. The pre-application process targets about 56 qualified homeowners, to account for unforeseeable changes such as income and moving.
By picking target areas, the city can show a bigger impact at the end of the two-year period, Prins said.
"Showing those 28 properties in an area that's 10 blocks by 10 blocks is different than showing 20 properties that get rehabbed across a whole town," Prins said. "The city can reapply for different target areas in years going forward."
SWHP works with the city of Worthington and the Southwest Minnesota Opportunity Council throughout the application process and beyond to ensure the program runs smoothly, Prins said.
The SWHP works to ensure state and federal requirements are being met, and SMOC works directly with the property owners and contractors to ensure project goals are fulfilled, Prins said.
The state sends a representative to monitor the projects, usually during the middle of the loan period.
"It works very well; we're all familiar with the rules now," Prins said.
Homeowners can hire any contractor they want, as long as those employed are certified and licensed to do the specific repairs.
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"We need to continue to stabilize and improve our existing houses," Chapulis said. "We don't want our housing stock to deteriorate to a point of not wanting to be repaired."
The city will know by July if it has been approved, Prins said. If so, projects will begin in about a year.
While they don't know the exact number of cities that will apply for next year's loan, both Chapulis and Prins said the process is selective.
"As long as we continue to illustrate the need within community, I think we will have a competitive application," Chapulis said.
Daily Globe Reporter Kayla Strayer may be reached at 376-7322.
