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3.4 A modification of the program is proposed which would include a City loan and partial City and School District tax abatement program. The modifications may help in closing the gap to enable the completion of extensive improvements and provides a design booklet that can be shared by homeowners to reduce the expense of design fees. 3.5 The additional assistance would reduce the burden of escalating construction prices while still meeting the goals of the Rambler Redesign Program for quality, innovative design and construction. 4.0 Sugaested Amendment- City Loan and Partial Tax Abatement 4.1 The following outlines the proposed City loan and partial City and School District tax abatement criteria. 4.2 The City Loan is proposed as follows: 1. Improvement costs, including design fees, must be at least $50,000. 2. The proposed City loan, through the Housing Fund, would equal 20% of the improvement costs up to a maximum of $20,000. The remaining cost of the improvement must be financed by the homeowner. 3. The proposed City loan would be at no or low interest and amortized over 20 years, matching the payment schedule of a participating bank or mortgage c9mpany. If the homeowner stays in the home longer than 10 years the 2nd half of the loan would be forgiven. 4. The City loan would be serviced by a bank or mortgage company. 5. Full repayment of the loan would be required if the home were sold in the first 10 years. Prepayment would be permitted. 4.3 The City and School District tax abatement is proposed as follows: 1. The City and School District would abate 'Yz of the new taxes generated from the improvements for a total of ten years (maximum allowed by State Statute). The City and School District would collect the remaining half of the tax increase on the improvement and the full amount after 10 years. 2. The abatement would be cancelled if the home were sold anytime within the first ten years. 4.4 There are several benefits provided to the homeowner and the City through a City loan and partia] tax abatement amendment under the Rambler Redesign Program. - 1. _ It is estimated that over a twenty-five year period, the City would recover approximately 70 percent of a $20,000, zero percent interest loan in new taxes f _(even with the rebate). In addition, at least 50 percent of the loan amount would ~. be collected in loan repayments in years 1-10. The increase in the taxes plus the loan repayment combined, over a twenty-five year period, would result in a 120 percent return on investment to the City. 2. The City loan repayments and the~ from the improvement can be filtered back into the Housing Fund to support additional home improvement loans. RCA - Rambler Redesign Amendment 09/14/98 - Page 2 of 4