New forgivable loan program for Cedar Rapids’s aging homes?

CEDAR RAPIDS - Nobody wants a yellow-colored toilet, Scott Overland said.

It is just such a 45-or-more-year-old toilet and matching sink in his father-in-law's bathroom that has gotten Overland thinking about what the city's aging neighborhoods might need.

Overland, chairman of the City Planning Commission and a candidate for the east side District 2 seat on the City Council, is proposing the creation of a neighborhood finance corporation in the city that, in part, could provide forgivable loans of perhaps $10,000 to homeowners to allow them to upgrade their houses when they otherwise might not have the resources to do so.

The idea is one that has worked in Des Moines for 25 years with the financial backing of city and county governments and the support of the local banking community and neighborhoods. And it is an idea worth stealing, Overland said.

Since the flood of 2008 in Cedar Rapids, the city has seen tens of millions of dollars in federal, state and city funds used to fix up and replace residential property in the city's oldest core neighborhoods affected by the disaster. But Overland said it's time to think about aging neighborhoods outside the core of the city, too.

He named Kenwood Park, Noelridge Park, Cleveland Park and others like them.

He said the program, like the Des Moines one, might feature five-year, $10,000 forgivable loans attractive to aging homeowners who are contemplating a move or younger people who might buy in an older neighborhood.

'These are good, solid neighborhoods, and we just need to be more proactive,” he said. 'A little bit invested could yield a lot in preserving the property-tax value and increasing values over time.”

Council member Pat Shey investigated and championed the idea for a neighborhood finance corporation as well as a neighborhood development corporation modeled after similar entities in Des Moines back before Cedar Rapids's flood. The Cedar Rapids Neighborhood Development Corp. now is operating, focusing on the development and redevelopment of commercial property and apartments. However, the idea of a neighborhood finance corporation landed on a bottom shelf.

Shey said the city's flood recovery is through or in the pipeline and so the time is right to 'dust off” the neighborhood finance idea.

He said, too, that community leaders found new ways to approach problems during the city's flood recovery, and he cited the Block by Block neighborhood rebuilding program in flood-hit areas on the city's west side, the TotalChild neighborhood turnaround program in Wellington Heights and the use of tax credits by developers to help finance projects.

'So in my view, the bench in Cedar Rapids has gotten deeper since the flood and it has the ability to revisit (the neighborhood finance idea) now,” Shey said.

The Des Moines program seemed to work at raising property values in the targeted neighborhoods that got loan support, and Shey said the banks there 'loved” the program.

'All those Des Moines banks have branches in Cedar Rapids,” he said. He said Cedar Rapids Bank & Trust, where he worked for a time and where Overland now works, also has been enthused by the idea.

The model

Stephanie Preusch, executive director of the Des Moines Neighborhood Finance Corp., said the 25-year-old not-for-profit organization got its start when city, county and local business leaders felt Des Moines's core neighborhoods were dying and that the city couldn't grow without them.

As a result, the city and Polk County each put in $1 million in seed month to get the corporation off the ground. The city now contributes $1 million each year and the county, $800,000, she said.

Over 25 years, the Des Moines NFC has provided more than $222 million in loan support for home purchases, refinancing, home improvements and conversions of multiunit rentals into single-family homes. The organization loans money just like a bank, with $10,000 forgiven for home purchases and refinancing and up to $10,000 for home improvements.

Cedar Rapids, as with Des Moines, has access to federal funds each year to help with home renovation - Cedar Rapids in 2013, for example, used $518,000 on 68 projects or about $7,600 per project. However, the money only goes to those at 80 percent of the median household income or below, and Preusch said neighborhoods need mixes of incomes. She said the NFC provides support for homeowners without income restrictions.

'It has made it possible for new families to move in and not think, ‘I would buy that house, but the kitchen still is the 1950s' type of thing,” she said. 'So it lets them choose Des Moines over picking a newer house in the suburbs.

'It also has allowed a lot of people who were thinking, ‘I'd love to get this kitchen remodeled or we're just going to move' to stay and get it remodeled because they got this forgivable loan.”

Pat Murphy, a Realtor for Skogman Realty in the Cedar Rapids metro area who has been selling homes for 40 years, said the idea of the neighborhood finance corporation may be a useful one, though he said it is more likely to interest those who want to stay in a house or sell it down the road rather than today's homebuyer.

Murphy said homebuyers 40 years ago fashioned themselves home-improvement specialists and were more than willing to buy a house that needed some work. Not so today, he said. He said most buyers today want a 'perfect” house that doesn't need any work.

'The problem you are stating here is exactly true,” Murphy said. 'We have so many people who really can't afford to do anything to their house, and it's difficult to find a buyer for them.”

But he said there is little middle ground between the buyer who wants a perfect house and the one who wants to buy it for next to nothing to rent it out or flip it.

City Council candidate Overland, vice president, investments, at Cedar Rapids Bank & Trust, stood in the Kenwood Park neighborhood this week and said it is example of a place of nice, affordable, older homes that a neighborhood finance corporation could help keep that way.

Erica Yoder, president of the Kenwood Park Neighborhood Association and president of the city's association of neighborhoods, said any program that aims to improve the quality of the housing stock in the city would be beneficial.

Earlier this year, Overland said he attended a Noelridge Park Neighborhood Association meeting where most in attendance were retirees who had lived in their homes for years and who had started to see more owner-occupied homes turn into rentals.

He, like Yoder, said there isn't anything wrong with rental property.

'But I kind of detect, where there are older folks in town who have lived in their houses for a long time, they see changes, and some they don't like,” Overland said.

'Neighborhoods go through life cycles, and as they get older, they start to have some issues,” he said. '…

These are nice neighborhoods, and we really need to keep them that way as best as we can.”