City of Huntsville Moves Forward with Innovative Home Renovation Loan Program
The City of Huntsville is considering an application that, if successful, would allow the municipality to launch a home improvement funding program for residents.
The program is delivered through the Green Municipal Fund, implemented through the Federation of Canadian Municipalities (FCM) and funded by the Government of Canada. It’s being hailed as a way to help communities of all sizes develop innovative financing programs to help homeowners reduce their greenhouse gas emissions and energy bills while creating jobs in the community.
In order to access the program, the municipality would need to find 20% of the total cost of the program as recoverable debt, according to a report presented to the Huntsville General Committee on June 29 by Julia McKenzie, Huntsville’s director of financial services/treasurer. .
She recommended that the municipality apply to access the full amount available, meaning it would need to find $2 million in recoverable funds.
“A loan contribution of $2 million will support a full $10 million application to FCM. It is recommended that the full grant amount ($10,000,000) be requested at this time to maximize the amounts available to Huntsville for this program within the current funding envelope. The $2 million total of City contributions to the program, if approved by Council, will be included in the 2023 budget along with the associated funding source. It is important to note that the funds paid by the City will be recoverable because they will be in the form of debt and will probably have a low risk of default because they will be placed for collection on the property tax account. In the event of the sale of the property, the debt will continue to be collectible on this property tax account. In the event that the property tax bill is overdue, the City will work with that taxpayer to catch up on payments and, as a last resort, it will more likely than not be recovered through a tax sale.” , McKenzie said.
She also recommended that loans be attached to homes as part of a local improvement change, much like a water and sewer connection fee. “Under this mechanism, the loans would be attached to the property and not to the owner. This has two important advantages; first, it helps the homeowner access capital for the high initial costs of renovations and second, it allows the transfer of the lien to a new owner in the event the applicant sells the home before the loan is paid off. This is particularly useful when the amortization of the renovation is longer,” she added.
Third-party administration costs would be covered by the program and the idea is that it will eventually be self-financing.
Deputy Mayor Nancy Alcock said the program makes sense and she supports it, while Huntsville Mayor Karin Terziano wondered if a property might be harder to sell with a lean on it.
“From a buyer’s perspective, if you have an energy-efficient home, I think that would outweigh having a loan on it because your energy costs would be lower. So you may have a higher property tax bill that includes this change, but also lower energy bills. McKenzie also said an energy efficiency system is being developed that would give scores to homes and communities “so it’s actually more valuable if your home is one of those properties. .it’s actually the real estate associations that are driving this in these communities.”
McKenzie also told the committee that she did not expect the renovation loans to last longer than 10 years.
Councilor Jonathan Wiebe told the committee that most parts of Europe already have similar programs in place “and they see that house values - it’s really worth it and has a real impact on…the how people buy houses, etc.”.
The committee approved the recommendation to proceed with the application. If approved, more details should be available, including proposed interest rates for the loans.
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