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Levy hike allows Willmar HRA to rehab housing

WILLMAR -- A large levy increase approved Monday night by the Willmar City Council will enable the Housing and Redevelopment Authority to carry out a new project to buy, rehabilitate and resell homes in the center of the city for eligible first-time home buyers.

The HRA will use much of its 34 percent levy increase to administer a housing rehab project that members of the council's Community Development Committee say is needed to improve housing in the city's core areas.

Committee members such as Jim Dokken support the concept of making housing affordable in areas where the city has already spent millions on sewer and water and other infrastructure improvements rather than constructing new affordable housing on the edge of the city.

A consensus for rehabbing and reselling homes for affordable housing in the core area unfolded this year during committee members' discussion about the federal foreclosure bailout program and during discussion of the controversial Westwind affordable housing project.

"I think that the program is a great concept,'' said Dokken in an interview. "I wish we'd had a little more time to discuss it within Community Development. But hopefully we will have some communications and coordination between the HRA and the committee as this progresses through the system. But I completely support what they are attempting to do.''

The program would be a joint project of the city HRA and the Kandiyohi County HRA to use state housing money to develop a revolving loan fund to buy, rehab and resell a minimum of four homes in the city and two in the county to eligible underserved, first-time buyers. The homes will be bought through any available bank financing for first-time buyers.

The HRAs anticipate the maximum acquisition and rehab cost at $125,000 per home. State housing money will pay for 80 percent or more of the costs and HRA money will cover the remaining 20 percent up to $25,000.

The council annually approves the HRA's levy, and the HRA asked for a larger levy increase because the state does not provide funds to cover administrative costs for this type of project.

Costs for inspections, work write-ups and working with contractors will be paid by the HRA.

A draft proposal says 26 homes for sale in Willmar and six for sale in other towns in the county range from $45,000 to $85,000, making the program affordable to low-income households.

Willmar HRA Executive Director Dorothy Gaffaney said the proposal is only a draft and has not yet been approved by the city HRA board or the county HRA board and has yet to be submitted to the Minnesota Housing Finance Agency for approval.

Gaffaney drafted the proposal after meeting this year with the Community Development Committee and after hearing the committee's interest in such a project.

Finance Committee Chairman Denis Anderson told the council that the increase is largely due to the fact that the HRA will institute the project.

The HRA operates on a fiscal year rather than calendar year. The levy will increase from $141,796 for the fiscal year of July 1, 2008, through June 30, 2009, to $189,908 for the fiscal year of July 1, 2009, through June 30, 2010. According to Gaffaney, the HRA slated $30,000 of the $48,112 increase for project administrative purposes.

In other action Monday, the City Council approved the overall city budget of $20,842,161 for 2009, down $1,832,690 from the 2008 budget of $22,674,852.

Also, the council approved the 2009 levy of $3,525,325, up 4.2 percent from the 2008 levy of $3,383,646.