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Borough creates pot of $436,000 for fixing properties

By Dan Miller danmiller@pressandjournal.com
Posted 4/12/17

Middletown now has a $436,000 pot of money that the borough can use to fund loans to residents to fix up their properties.

Now, it’s up to council and the borough to figure out how the …

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Borough creates pot of $436,000 for fixing properties

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Middletown now has a $436,000 pot of money that the borough can use to fund loans to residents to fix up their properties.

Now, it’s up to council and the borough to figure out how the program will work.

That process is to start in earnest during council’s next meeting on April 18, when council will discuss the loan program during its workshop session, Council President Damon Suglia has said.

Councilor Diana McGlone proposed the loan program in January. Loans of up to $10,000 would be available to residential property owners, for owner-occupied properties and for rental properties.

The loan amount would run from $2,000 to $10,000, depending on an applicant’s credit score. As proposed in January, loans for owner-occupied properties would be repaid over seven years at a 1 percent annual interest rate. Loans for rental properties would be repaid over five years at a 2 percent annual interest rate.

All money from the loans being paid back would replenish the loan fund, to pay for future loans and to make the fund self-sustaining.

Loans would mostly be for such things as facade improvements; new roofs; new windows; and upgrades to electrical and heating, ventilation, and air conditioning systems, McGlone said. Projects could also be tied to improvements needed to bring a property up to code.

A committee appointed by council would consider and approve loan applications. The borough would provide a list of “suggested” home improvement contractors, some of whom McGlone expects to offer discounts to Middletown property owners who participate in the program. But property owners should be free to choose any contractor they wish, she said.

The $436,000 to jump-start the program comes from a state grant that the borough provided to a developer to build the Woodlayne Court apartment complex on Wilson Street.

Woodlayne Court repaid the grant to the borough in 2013, and the money has been sitting there ever since.

During council’s April 4 meeting, Councilor Ben Kapenstein announced that the state had approved the borough using the $436,000 for anything it wants, so long as the money supports economic development in Middletown.

McGlone is elated over the news.

“I am extremely thankful to the individuals at the state and the county, who clearly see the benefit of this and what this will do for our community from an economic standpoint,” she said.

“To my knowledge I don’t know of any other municipality that does a program like this for its residents. At least for Middletown this is ground-breaking in terms of what we can do to assist residents in our community. This is not a hand out but a hand up and I am very pleased to be a part of it.”

The $436,000 pot opens up opportunities that weren’t apparent earlier, when it looked like the borough would have to cobble together the funding from various sources.

For example, the program could be expanded to include loans that property owners could use to fix up businesses in town. McGlone suggested that half the $436,000 could be used to start the residential loan program, and once that is up and running the other half could be used to start a loan program focused on improving businesses.

Assuming both loan programs are self-sustaining as planned, the fund could also have money available on a case by case to assist developers who want to invest in a big project in Middletown, such as building a three-story apartment complex, McGlone said.

However, a number of challenges remain before the borough can get the program up and running.

“We don’t have anybody on staff who knows how to do things like this,” Suglia told the Press & Journal. “Somebody’s going to have to manage the money.”

The borough also needs to look at the income of loan applicants, not just their credit score, said Councilor Robert Reid.

“We’re not going to loan money to someone who is a multimillionaire,” he said.

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