CEDAR RAPIDS — After years of development, city officials are confident a new loan program for buyers of older Cedar Rapids homes is close at hand.
“We’re at the point now where we can start to see a little light at the end of the tunnel,” City Council member Scott Overland said.
The program — an extension of one in Des Moines — would create a local organization that would provide loans to qualified Cedar Rapids residents.
The financing would include forgivable loans and could be used to purchase or remodel already existing homes in the city.
The idea, city leaders said, is to help keep Cedar Rapids’s core neighborhoods vibrant by investing in decades-old houses.
“We have housing stock in Cedar Rapids that is older and, in some areas, deteriorating. This is a way of encouraging individuals to invest in their properties,” City Manager Jeff Pomeranz said.
“What that’s going to mean is safer and more attractive housing for Cedar Rapids.”
ARTICLE CONTINUES BELOW ADVERTISEMENT
The plan would have Neighborhood Finance Corp., a not-for-profit in Des Moines, expand into Cedar Rapids to run the program. NFC has financed loans in Des Moines and Polk County for 28 years using a neighborhood-focused approach, Executive Director Stephanie Preusch said.
“When you purchase a home through NFC, two things are going to happen: You’re going to get money to do repairs to the home and then a portion or all of that will be in the form of a forgivable loan up to $10,000,” said Preusch, who presented the expansion idea to the Des Moines City Council this week.
Loan funding through NFC comes from a combination of local and national sources, such as banks and credit unions. Local governments, such as Des Moines, also chip in funds to cover the forgivable portions of NFC’s loans.
The Cedar Rapids City Council already has budgeted $1 million toward the financing program and plans to provide $1 million annually for five years, Pomeranz said. About nine or 10 local banks and credit unions have said they’ll participate in an $8 million lending pool, Overland said.
The city also has asked Cedar Rapids’s businesses to chip in money toward an about $1 million fund that would cover start-up costs, such as staffing and office space, for NFC when it comes to town. Overland and Pomeranz credited Kyle Skogman, president and CEO of Skogman Homes, for helping rally business support and funding for that operating fund.
Overland and Pomeranz said the program could be up and running later this year, but a number of boxes still need to be checked. That includes raising the remainder of money for the lending pool and start-up fund.
There are commitments for about 75 percent of the lending pool and about $400,000 raised for operating costs, they said.
The City Council will need to approve an agreement with NFC and NFC’s board also still needs to vote to approve the Cedar Rapids expansion.
ARTICLE CONTINUES BELOW ADVERTISEMENT
Thank you for signing up for our e-newsletter!
You should start receiving the e-newsletters within a couple days.
NFC would hope to finance loans for 70 homes in its first year in Cedar Rapids and 140 the second, Preusch said.
For comparison, the organization financed $15.9 million in lending to 218 properties in Polk County in 2017. The average loan for a home purchase was $91,603.
Pomeranz said the idea for a program similar to NFC’s in Cedar Rapids came up before the 2008 flood, but was put on hold. Overland also brought up the idea during his City Council campaign in 2015.
“Our ROOTS program offered incentives for building new homes, but for a long time the city has also been very interested in what we could do rehabilitate older housing stock within our community particularly in core neighborhoods,” Pomeranz said.
Discussions, Overland and Pomeranz said, have taken off ever since NFC said it may look at expanding to Cedar Rapids. Such a move would mean growth for the Des Moines organization and Cedar Rapids wouldn’t have to build a new program from scratch.
“That way, we don’t have to reinvent the wheel. The wheel is already there, we just latch on to it,” Overland said.
l Comments: (319) 398-8366; email@example.com