1.1                          A bill for an act 
  1.2             relating to housing; establishing a pilot program to 
  1.3             improve neighborhoods by providing deferred 
  1.4             low-interest loans; appropriating money. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [DEFERRED HOME IMPROVEMENT LOAN PILOT PROJECT.] 
  1.7      Subdivision 1.  [PILOT PROJECT ESTABLISHED.] (a) The 
  1.8   housing finance agency shall create a pilot project to stabilize 
  1.9   and improve neighborhoods by financially assisting owners of 
  1.10  deteriorating single-family homes to make exterior housing 
  1.11  improvements. 
  1.12     (b) Pilot projects shall be operated by local units of 
  1.13  government and must include: 
  1.14     (1) identification of single-family homes that are not in 
  1.15  compliance with a city code or are otherwise determined to be 
  1.16  deteriorated; and 
  1.17     (2) a loan program to assist homeowners in bringing homes 
  1.18  into compliance with the code or remedy the deterioration.  
  1.19     Subd. 2.  [PILOT SCOPE.] (a) The pilot must operate in at 
  1.20  least one city outside of the metropolitan area, one city 
  1.21  commonly referred to as an inner-ring suburb in the metropolitan 
  1.22  area, and one other city in the metropolitan area.  
  1.23  "Metropolitan area" has the meaning given it in Minnesota 
  1.24  Statutes, section 473.121, subdivision 2.  To the extent there 
  1.25  are sufficient applications, the commissioner shall allocate 
  2.1   approximately one-third of funds appropriated for pilot projects 
  2.2   to projects located outside of the metropolitan area.  
  2.3      (b) Loans under this section must be used for exterior 
  2.4   improvements necessary for single-family residential housing to 
  2.5   comply with a local code or otherwise repair a deteriorating 
  2.6   condition.  
  2.7      Subd. 3.  [LOANS.] (a) Each local project shall establish a 
  2.8   revolving loan fund to provide loans under this section.  
  2.9      (b) Loan interest may be deferred for up to 15 years.  
  2.10  Loans shall bear simple interest at a rate not exceeding five 
  2.11  percent per annum.  Local units of government shall determine 
  2.12  the interest rates on loans.  A preference shall be given to 
  2.13  loan applications for improvements that will reduce energy 
  2.14  costs.  No more than a total of five percent of funds provided 
  2.15  under this section to a local unit of government may be used for 
  2.16  property inspection and administration.  
  2.17     (c) If the property is sold before the loan has been 
  2.18  repaid, the balance of the loan, together with interest that has 
  2.19  accrued, if any, is due at the time of sale. 
  2.20     (d) The maximum loan that can be awarded is $10,000.  If 
  2.21  improvement costs are greater than the maximum, the homeowner is 
  2.22  responsible for the excess. 
  2.23     Subd. 4.  [INCOME LIMITS; LOAN AMOUNT.] If household income 
  2.24  is: 
  2.25     (1) greater than 115 percent of the area median income, the 
  2.26  homeowner must pay 50 percent of the cost of the improvement, 
  2.27  with the remaining balance to be paid with a loan under this 
  2.28  section; 
  2.29     (2) equal to or less than 115 percent of the area median 
  2.30  income, the homeowner must pay 25 percent of the cost of the 
  2.31  improvement, with the remaining balance to be paid with a loan 
  2.32  under this section; and 
  2.33     (3) equal to or less than 80 percent of the area median 
  2.34  income, the entire cost of the improvement may be paid with a 
  2.35  loan under this section. 
  2.36     For the purpose of this section, "area median income" is 
  3.1   that determined by the United States Department of Housing and 
  3.2   Urban Development.  
  3.3      Sec. 2.  [APPROPRIATION.] 
  3.4      $1,500,000 is appropriated from the general fund to the 
  3.5   housing development fund for purposes of section 1.