Rehabilitation

Single Family Housing

 

The Maxfield Study noted that based on interviews with Realtors, City Officials, housing committee members, and others, the need for home rehabilitation to improve the existing housing stock is one of the greatest, if not the greatest, housing need in the community.  Partners in Housing, Inc. completed a windshield survey in February 2002 which found 11% (800 units) to be in poor condition and 3% (235 units) were described as being in deteriorated condition.  Attachment 3 highlights targeted rehabilitation areas where the initiatives listed below should be targeted.    

 

There are two programs available on an ongoing basis in Albert Lea for housing rehabilitation.  The first is the Rehabilitation Loan Program through MHFA which only allows for three loans at a time and provides a 0% deferred loan for 30 years until the borrower sells the home, transfers the title or no longer lives in the property.  The maximum loan amount is $15,000 although some loans have been upwards of $20,000 due to lead hazards.  There are income restrictions to the program with a total of 16 people on the waiting list.  The funds are administered by Semcac.

 

Another ongoing rehabilitation program is the Fix Up Fund which provides a below market interest rate for up to $35,000 in rehabilitation funds.  Income limits are currently at $89,000 and the recipient must be the year-round owner or occupant of the home.  At the time of the Maxfield Study the rates were 6.25% which have now increased to 7.25%.  Approved Lenders in the area include:

●  American Bank                  ●  Home Federal Savings Bank            

●  Wells Federal Bank            ●  Semcac                   

 

Small Cities Development Program (SCDP)

The program which has often provided the largest impact for rehabilitation needs in a community is the Small Cities Development Program (SCDP) which are Community Development Block Grant (CDBG) funds administered by the Minnesota Department of Employment and Economic Development.  The City is experienced in utilizing SCDP funds and should aggressively target these funds to assist with the rehabilitation needs of the older housing stock.  The overall recommendation through 2015 is for the rehabilitation of 40 to 60 owner occupied units which should be targeted in two phases of 20 to 30 units each. 

 

The City has utilized the SCDP for the new construction of affordable units at Pickerel Park 1 (1999), Lofts at Lea Center (2003), and Pickerel Park #2 (2006).  The last major rehabilitation effort was in 1988 with a comprehensive grant that included acquisition, demolition, infrastructure and housing rehabilitation.    

 

Minnesota Urban and Rural Homesteading Program (MURL)

Based on the substantial rehabilitation needs in the community as well as the affordable nature of the housing stock, the MURL program is a good resource for the community.  Approximately 26% of the home  listings in November/December 2005 were under $75,000.  The community has an adequate amount of affordable single family homes for sale but rehabilitation is needed on many of these units. 

 

The Minnesota Urban and Rural Homesteading Program (MURL) provides funding to acquire substandard homes in a community, conduct rehabilitation on the home, and then sell the home to an “at risk” buyer.  The program increases homeownership opportunities and neighborhood revitalization.  The buyer purchases the home through a contract for deed at 0% for a term not to exceed 30 years.

 

The Albert Lea Housing and Redevelopment Authority has previously submitted an application to MHFA for MURL funds but has not received assistance.  The HRA should continue to apply for these funds with a target of 2 to 3 homes per request.  In addition, the Southwest Minnesota Housing Partnership and Semcac submit regional applications to MURL on a regular basis which could include units for the City of Albert Lea.   

 

Purchase plus Rehabilitation

Another option to assist in rehabilitation efforts is to provide rehabilitation and other assistance to buyers that are looking to purchase older homes in the community.  There are different models that could be utilized for a local program.  The first is for an agency to purchase the homes and then conduct the rehabilitation so the home is “move in” ready for the buyer.  Affordable mortgage products, gap assistance, and entry cost assistance can then be offered as well on the homes.  A second option is to find the buyers first and then let them select the home.  Rehabilitation funds are then utilized after the purchase.  These efforts work to address rehabilitation needs and also assist buyers in accessing affordable mortgage products and other resources that bridge the affordability gap for households.   

 

Manufactured Home Communities

Manufactured homes provide some of the most affordable housing in communities but often place households at risk of losing those homes as they may own the home, but not the land it sits on.  This makes them susceptible to displacement due to sale of sites for potential redevelopment.  It may also create a lack of investment as the households do not have an ownership stake.  This has resulted in community concern over the condition of these communities not only with the homes but the infrastructure as well.  Approximately 2.6% (200 units) of the City’s housing stock was mobile homes according to the 2000 Census.  The City has two manufactured homes communities consisting of approximately 68 pads at Rainbow Terrace and 111 pads at Stoney Creek Estates according to a database maintained by the Housing Preservation Project.  Albert Lea restricts 14 pads at Rainbow Terrace so technically they have 54 pads available. 

 

	Total Pads	Useable Pads	Vacant Pads	Vacancy Rate	% Rented Occupied	Rents
Rainbow Terrace	68	54	6	11%	100%	$155
Stoney Creek Estates	111	111	44	40%	100%	$195