City ponders new use for loan funds
The city will try a new approach to fostering investment in key revitalization areas with a pool of federal funds.
High Point still has access to $3.9 million in the form of federal loans that were never used in a small business loan initiative that it established with seven partner banks in 2010. The banks contributed $5.8 million to the project, but no applicants qualified for a loan from the pool, which totalled $9.7 million.
After a year, the banks declined to renew the arrangement, so the city had to find another way to utilize the funds or risk losing them. City officials are modifying their plans for the funding so that it can be used in a partnership with developers of affordable multifamily housing.
The idea is for the city to use the money to fund “public improvements” — such as water and sewer infrastructure, roads and sidewalks or land acquisition — associated with a development.
The city would have to draw on the funds by September 2015. The City Council has not yet approved the initiative, which must also get the blessing of the U.S. Department of Housing and Urban Development — the source of the federal funds.
The strategy would come into play with projects that utilitize tax credit financing through the N.C. Housing Finance Agency, according to city Community Development & Housing Director Mike McNair.
“Basically, the city would become part of the project,” said McNair. “Our role would be to acquire the property and make the improvements.”
Some of the net operating income from the development would go to the city, which would use the funds to repay HUD.
McNair said two recent examples of tax credit-financed projects could by prototypes for how the partnership would work.
One is Admiral Pointe, a 54-unit, three-story complex at Admiral and Samet drives for low- to moderate-income older residents that was developed by Wynnefield Properties of Jamestown. The city authorized a $560,000 loan for the developer to help the project qualify for tax credits.
The other is Park Terrace, an affordable multifamily development overseen by the High Point Housing Authority. The city’s contributions to that project include financing the extension of E. Grimes Avenue from Randolph to Asheboro streets, which is expected to enhance the authority’s efforts to win financing for an upcoming addition to Park Terrace.
A draft application from the city to HUD states that the initiative would help meet a need for affordable housing, because recent studies have revealed that housing expenses exceed 35 percent of the household income of a substantial number of High Point’s low- to moderate-income residents.
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