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HRA Meeting Minutes – Tuesday, May 17, 2011 Page 3 1 2 Mr. Finzell explained that the RLT provided closing costs to help homeowners buy down their 3 mortgage, along with funding similar to the HIP Program for up to $25,000 in rehabilitation; 4 and modeled after the HIP Program guidelines. Mr. Finzell noted that it was an upfront 5 program, making sure that mechanical systems and roofs and other basic home structures were 6 up to code and to address deferred maintenance issues, through use of funds from two (2) 7 different grant sources. Mr. Finzell advised that the parameters of the pilot program remained 8 flexible since it was a pilot program; and in exchange for receiving those funds, those 9 properties were brought into the trust. When the homes were sold, the homeowner received 10 25% of the increased or appreciated value and sales price, with the Trust receiving 75% of the 11 sales price, providing for long-term investments for families to remain in their homes, and after 12 they leave it, the home stays in the Trust and remains affordable housing for other families. 13 14 At the request of Ms. Kelsey, Mr. Finzell advised that the City of Shoreview was marketing 15 the pilot program in their utility billings and city newsletter, as well as on their website, and in 16 person presentations by RLT staff at City Hall; and other marketing efforts underway or 17 planned. Mr. Finzell noted the frustration in having pro-active homeowners contact their 18 banks early on, realizing they were in trouble and running thirty (30) days late and starting to 19 exhaust their savings; however, they wouldn’t qualify for assistance until they were 3-4 20 months behind and a sheriff’s sale process was already initiated. Mr. Finzell noted that the 21 banks were overwhelmed in dealing with the numerous foreclosure situations and told those 22 homeowners attempting to be pro-active to “call back” due to the system being overwhelmed. 23 Mr. Finzell advised that there was no way to deal with those situations at this time; even 24 though people were trying to keep their homes; and those were the people the RLT wanted to 25 work with earlier in the process. 26 27 At the request of Chair Maschka, Mr. Finzell provided an example: 28 $100,000 original purchase price for a subject home; and the additional appreciation of an 29 additional $100,000, for a sales price on the open market of $200,000. Under the land trust 30 model, the Trust would take the $100,000 of appreciated value and divide it with 25% to the 31 family; 75% to the Trust; and the house going back on the open market at a sales price of 32 $125,000 rather than $200,000 to retain it as affordable housing for another applicable, modest 33 income family within federal income eligibility guidelines. Mr. Finzell noted that the land 34 trust house would appreciate, but slower and less appreciation; allowing for the home to 35 remain affordable over the life of the ground lease (99 years). Mr. Finzell advised that if a 36 family was able to afford a home on the open market through their local bank without trust 37 assistance, the trust told them to do so; as its programs were designed as “but for us” you 38 couldn’t get the house scenarios; and was geared for people traditionally left out of home 39 ownership. Mr. Finzell advised that the RLT worked cooperatively with Habitat for Humanity, 40 with Habitat working with median incomes of up to 50%; and the Trust working with those in 41 the 50-80% range, hoping to address the broader spectrum. 42 43 Member Elkins noted the value of the Trust in allowing privacy for families needing this type 44 of assistance, without losing face with their neighbors and/or the community; and prior to the 45 public foreclosure process. 46 47 Mr. Finzell advised that the RLT was one of three (3) certified agencies in Ramsey County as a 48 home ownership center who were under contract with Lutheran Social Services (LSS), that 49 families were referred to when they received their bank notices that they had reached a 3-4 50 month delinquency level. Mr. Finzell advised that information was provided on counseling 51 services and agencies to review options; and LSS represented the RLT as an option, with 52 almost 300 families told of the RLT program since its inception to-date. One of the ideals of 53 the RLT and its assistance to families so far, and since the pilot program was initiated, is that 54 the neighbors don’t know and in some cases, the City or County may not know other than for 55 the RLT drawing down county funding. Mr. Finzell noted the embarrassment of many of