City approves $1.2 million loan for apartment project

City Commissioners unanimously approved a request for $1.2 million of Community Development Block Grant funds for a proposed rental housing project during their Aug. 16 meeting.

The funds are part of the city’s housing rehabilitation loan program that uses CDBG funds and offers no-interest loans to low income residents and landlords of affordable and low income housing units to make necessary upgrades to their properties.

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About a year ago, Dan Bateman approached the city about a proposal to renovate the former Cambridge Court assisted living facility at 1109 6th Ave. N. into apartments.

Bateman recently purchased the property and is proposing to turn the vacant five-story, 90-unit building on 1.26 acres into 50 apartments with 23 being two-bedroom and the other 27 as one bedrooms, according to the city staff report.

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During the meeting, Bateman said he works at Pasta Montana and noticed employees leaving due to housing issues or struggling to find housing. He said that was part of his inspiration to start looking for something and found the former Cambridge Court for sale.

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The building was constructed in 1929 and is zoned as multi-family, high density.

Cambridge Court closed in 2018 and the building has been vacant since. The property has begun falling into disrepair, according to the city.

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The new apartments would range in price from $652 to $999 per month, according to Bateman’s application.

During the meeting, Sherrie Arey of NeighborWorks Great Falls said that the loan program has been underutilized and that this project is a “wonderful opportunity for workforce housing close to downtown.”

Commissioner Rick Tryon said “bravo on this project. We need these kinds of things.”

His major investments, according to the city staff report, include:

  • installation of a fire alarm system: $83,251
  • installation of fire sprinklers: $420,227
  • installation of new windows: $231,851
  • new water and sewer service lines: $75,000
  • elevator testing: $10,000
  • electrical service to apartment units: $250,000

“Because of the significant expenses that will be needed to renovate the vacant building coupled with the applicant’s willingness to offer some affordable rental units, staff believes the project is an ideal fit for the city’s rental improvement loan program,” according to the city staff report.

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Additional requirements of the loan program include:

  • the landlord cannot displace any existing tenants;
  • 51 percent of tenants must meet income requirements;
  • rents for units being rehabilitated must be affordable to lower income tenants following HUD Section 8 guidelines for determining rent and must remain affordable for 2 years;
  • the property must remain a residential housing unit for the life of the loan;
  • rental loans require a monthly payment start upon substantial completion of the project;
  • the rental property should be financially self-sufficient. (If not, landlord income verification may be requested)

The program’s minimum loan amount is $10,000 and $25,000 is the maximum loan per unit or $100,000 per project.

Applications over $100,000 may be reviewed; and other requirements may apply, including City Commission approval.

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City staff are recommending approval of the loan request, not to exceed $1.2 million, since the projects addresses several city goals including renovating a “notable, historic building; providing much needed rental housing units; addressing a blighted property; and increasing the community’s affordable housing stock,” according to the staff report.

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The city’s revolving loan fund currently has a balance of about $1.4 million and “staff has been searching for a possible catalyst project that will both reduce the city’s current balance and provide a significant community impact,” according to the staff report.

The revolving loan fund will still be able to accommodate requests for emergency loans and rental and homeowner program funds, according to city staff.

Since it’s a loan, the funds will come back to the city to be used for more affordable housing projects.

The city planning and community development program administers the loan as part of its CDBG program.

“The loans have made significant community impact, acting as incentive for both homeowners and landlords to renovate older homes and apartment units for affordable housing. In particular, the program has been successful in allowing downtown building owners to activate the upper stories of their buildings for affordable rental units,” according to the city.