The borough now has money to follow through with its Homestead Investment Program, which seeks to turn rental properties into owner-occupied homes in neighborhoods near campus.
The Redevelopment Authority, tasked with running the program, voted Monday at a special meeting to establish lines of credit that will allow borough officials to start shopping for houses.
Borough Council, hours later, approved an ordinance using its credit and taxing authority to guarantee any loans the authority secures for the program, a move that was necessary for the authority to receive the loans.
The homestead program, first approved by council in December, works like this:
Borough officials will identify and purchase homes in near-campus neighborhoods that are at risk of being converted to rental or that are being rented now and could be changed to owner-occupied use.
The borough will put deed restrictions on the homes so they must be owner-occupied and then will sell the properties.
Most of the homes will be sold on the open market at going rates, but a certain number of properties will be sold under affordable housing guidelines.
Borough staff will now have $5 million to draw on to purchase homes.
The Redevelopment Authority took two lines of credit, one for $3 million with First National Bank and one for $2 million with AmeriServ Bank.
Officials said splitting the loans allows the borough to take advantage of the best of both proposals: one offered a lower initial variable interest rate, but higher maximum rate should the market turn sour.
“This is where it comes down to more art than science,” Christopher Gibbons, of Concord Public Financial Advisors, said at the authority meeting.
The lines of credit can essentially be used like a credit card, with the borough taking money out when officials decide to buy a home, Gibbons said.
The line of credit is being split between three potential uses:• $2.5 million to purchase homes and sell them at market rate;
• $1 million to purchase homes and sell them back under affordable housing guidelines; and
• $1.5 million to purchase homes and have the borough maintain and rent them.
Sally Lenker, Redevelopment Authority chairwoman, said the next step is to start identifying possible properties and discussing the program with real estate agents.
The goal of the program is to stabilize and create more diversity in the neighborhoods near campus, borough Manger Tom Fountaine previously said.
“The goal is not to eliminate student rentals, but to create a better mix and more diversity between student and nonstudent (uses),” he has said.
Borough officials have said they hope the program grows and eventually becomes self-funded.
At the same time, the borough hopes it helps maintain safe, stable and attractive neighborhoods and to develop nonstudent and workforce housing within the borough, according to the Redevelopment Authority agenda.
Councilman Evan Myers praised the program Monday as council voted unanimously to guarantee the lines of credit.
“I feel this is very important,” he said.