A pilot program has made funds available to landlords who rent to low-income tenants for home rehabilitation or restoration projects, thanks to a joint effort between the Delta Housing Authority (DHA), Colorado Housing and Finance Authority (CHFA) and the Department of Local Affairs - Division of Housing. The program is a two year pilot, with a total pool of $250,000. CHFA provides the financing while DOLA provides the funds for administration, which is the role of DHA.
Launched on April 1, the Rental Rehabilitation Loan Program offers affordable loans to landlords who rent to low- or moderate-income tenants, to make necessary repairs to their rental properties. The loans are available for properties located within Delta, Montrose, Gunnison, Hinsdale, Ouray and San Miguel counties.
Delta Housing Authority is the only organization in the state of Colorado that currently offers this program, and DHA was specifically chosen to pilot the program by CHFA, explained Todd Wicklund, who oversees the program at the housing authority. DHA has had much success in past years administering the Housing Rehabilitation Program, which provides funding for low- or moderate-income homeowners to make home repairs.
The two programs are very similar, Wicklund said. Through the rental rehab program, a landlord can apply for a loan for up to $25,000, over a term of 15 years at 3 percent interest. The funds can be used for anything that improves the safety or livability of the home, including accessibility and access, property cosmetics, health or safety improvements, or energy efficiency upgrades. Twenty percent of the loan funds can be used for detached items, such as landscaping or curb appeal types of projects, or an outbuilding that needs a new roof. "Some of those things aren't critical to the home, but are still important to the overall livability," Wicklund said. "So we look carefully at every situation." Pretty much the only improvements not allowed to be funded by this program are flat-out luxuries, like hot tubs, he added. A landlord can also apply for multiple loans, to be used at different properties they own.
This loan program, while intended for the landlord, is really still all about the tenant and DHA's mission of providing access to affordable housing. Therefore, it is the tenant's income and the amount of rent they pay that determines the eligibility of the loan. For example, in Delta County, a family of four can earn no more than $51,050 annually in order to be classified as low- or moderate-income earners; their monthly rent payment, too, must be considered "affordable." The landlord, of course, must qualify for the loan based on his or her own credit history, ability to repay and must show a positive cash flow history from the property in question.
"This program is where the rubber meets the road," Wicklund said. "It's all about getting the work done. We try to put the leadership in the hands of the owner." His role, and the role of DHA, is to help a landlord secure financing at a low rate and guide them through the loan specifications. But then the landlord has flexibility to use those funds to get their rental rehabilitated in the ways they see fit. "We definitely want the borrower to take charge of this, and we're here to help in any way we can," Wicklund said.
A landlord can do the work themselves and use the loan funds to finance the materials, or DHA can assist by helping a borrower solicit bids or find a contractor. DHA has its own pool of contractors they work with who know the loan program specifications, and who have committed to keeping their labor costs low. "A low interest loan is not a deal if you pay too much for the work," Wicklund said.
Since this program is meant to assist low-income renters, it's likely the program won't be well utilized in some counties, like San Miguel or Gunnison. "But we believe that in Montrose, Delta and possibly Ouray, we'll see some strong interest. We feel pretty certain that we can help in these counties," Wicklund said.
Landlords can call Wicklund at 874-7266 to get more information or to apply.