Near-Northwest-Neighborhood-Plan-Final-Strategic-Plan-2019

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40 1. Pre-Approved Building Plans for Small Residential Structures One of the “soft” costs of construction is paying for a building plan that fits in the surrounding neigh- borhood and meets zoning and local building code requirements. A collection of pre-approved plans would reduce the overall costs by providing those interested in new construction a selection of building types that fit into the neighborhood context – both in style and characteristics as well as common lot widths found within our neigh- borhoods. Since properties have varying condi- tions and constraints, a property specific site plan would still need to be developed. 2. Detached Accessory Dwelling Unit Revolving Loan Fund Paying for the construction of an ADU can be chal- lenging. Most homeowners do not have enough equity in their home to access a home equity related loan product, this is either due to the mortgage balance or because the appraised value of the home is less than the cost to build an ADU. Obtaining a personal loan large enough to pay for new construction can be equally as challenging. Refinancing their entire property is often neces- sary in order to amortize the pay back schedule of such an investment to a manageable level. A revolving fund would look to provide loans, in part secured by the rents created by the new unit, as another pathway for willing property owners to add an ADU to their lots. 3. Infrastructure Replacement Funding There are practical considerations for building in older neighborhoods where underground infra- structure can be 75 to 100 years old, including making connections into existing utility lines in the public right of way. Buildings that will use municipal sewer and water services (this includes all buildings within City limits) need to make con- nections to the sewer and water lines which are located under the street in front of the building. In areas with existing infrastructure, this entails exca- vating the street so new sewer and water laterals can be installed. Infrastructure replacement fund- ing would be focused on off-site infrastructure such as sidewalks, water and sewer laterals, and any repairs or upgrades to water mains required in areas which may have insufficient service, partic- ularly for new buildings with sprinkler systems. Funding could be provided as low interest, long term financing or as small grants. 4. Sprinkler Grants for Qualifying Rehabilitation and New Construction of Multi-Unit Buildings Building code requires certain types of buildings to include sprinkler systems, such as mixed-use buildings and medium sized multi-unit residential buildings. The addition of sprinklers can be cost prohibitive to the rehabilitation of existing build- ings or the construction of new multi-unit build- ings. Sprinkler grants would help to cover these additional costs borne by small buildings that are difficult to recover through rents early in the re - development of the neighborhood. These grants would likely be tiered to the size of the project and would be phased out after a period of time. 5. Patient Capital to Provide Equity Positions for Small Developers and Mission-Based Organizations Patient capital could help keep small projects from being largely owned by an investment partner, providing a wealth building tool. This resource could be used to fund 5-20% of a project in order to help new developers or neighborhood-based organizations have the capital necessary to obtain construction loans. The equity would be in the form of a low-interest loan that returns dollars over a 3-10-year period. The terms and lengths of loans could be adjusted based on the outcomes achieved by the project. 6. Loan Guarantee Fund A challenge sometimes encountered by small developers is not having a personal financial state- ment with enough assets to meet banking insti- tution thresholds for a personal guarantee for a construction loan. The loan guarantee fund would provide the financial backing to viable projects in order to assist the developer in obtaining a con- struction loan. This allows the developer to focus on securing investment dollars but not having to attract an investor with high net worth and liquid assets – who will likely want a high rate of return. The fund does not directly provide resources unless the developer fails to meet the repayment terms of the construction loan. Program parameters and requirements will need to be developed in order to protect the funds resources and ability to provide long term assis- tance. Areas that will need to be considered in- clude developer resources and credentials, project viability, loan products to be used, eligible amount of construction loans to be covered, and potential cost containment measures such as requiring the use of a pre-approved building plan. While these programs have been identified as poten- tial options to facilitate development they need to be further explored and evaluated in order to determine program requirements and if any would be a good fit for South Bend. The City could develop a pilot program(s) to test to see if and how these programs would assist in furthering development. If programs are implemented, they would phase out, or evolve, as the market improves to address the gap on its own.