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Housing Program Memo December 8, 2011 Page 5 pay some percentage of the closing costs, servicing and other expenses. In addition, there were comments about the amount of equity (i.e. loan-to-value ratio). Observation Staff would suggest that there needs to be a balance. In principle, the program should offer something that private lender's won't. To the extent the program is loaded with fees, residents are likely to be less interested. CEE has indicated that most of the City's costs could be recouped by charging a 4% interest rate rather than 3%. CEE staff has found that there is little advantage in charging a lower rate to attract greater participation. CEE is suggesting that the City consider at least a 100% - 110% loan-to- value ratio (which would include some value for the new improvements). Fewer borrowers have the kind of equity given the decline in housing values in recent years. Final Thoughts Staff would like to work with Council on reaching some type of consensus on whether to establish a program and feedback on program goals. Unfortunately, CEE representatives were unable to attend this work session discussion. Staff will attempt to address questions in their absence; however depending on the nature of the issues discussed it may be appropriate to extend the discussion to a work session at a later date where CEE representatives are available. Staff would point out that this agency can share insights into municipal housing programs beyond what City staff is capable of. City staff looks forward to some direction on the next steps. Attachments: • Age of housing map • Proposed New Brighton program details (Exhibits A-11 and B-11) • Memo from CEE memo on potential loan volume and leveraging of local dollars. • Current income limits • Eligible home improvements