Posted with Permission of Preservation Alliance of Minnesota
By - Erin Hanafin Berg, PAM Field Representative
My heart always sinks a little when I receive a message like this one, from Jenny in Duluth:
I am wondering if there are any
programs, funding or loan options for purchasing a home that needs
restoration. The home is not on the historic registry, but it is a
beautiful brick house built in 1913 that needs extensive repairs. The
house is in foreclosure, and I am would like to learn about any programs
that might exist to help me restore it as my primary residence.
Unfortunately, there are very few preservation programs available in Minnesota to help residential property owners. The new
state rehabilitation tax credit
is only available for income-producing properties that are listed in
the National Register of Historic Places. Grants, like the
Minnesota Historical and Cultural Grants,
typically can only be used by non-profit organizations or municipal
entities. Minnesota had a property tax exemption program, called
This Old House,
that allowed homeowners to freeze their local property taxes at the
pre-renovation value for up to fifteen years, but the program ended in
2003 and the legislature has seemed reluctant to reauthorize it. We lag
behind our neighbors in Wisconsin, where a
25% income tax credit is available for historic homeowners; reportedly,
more than 16,000 historic houses might qualify. In terms of historic preservation funding, Minnesota homeowners come up short.
But other funding-assistance programs out there can help, and many
people don’t know to turn first to their local housing agencies. Many
Community Development Corporations (CDCs) have residential housing
improvements and neighborhood stability as the core of their missions,
and may have loans, grants, or other financial resources available. In
Duluth, for example,
Neighborhood Housing Services is the local lending partner that provides access to the
Minnesota Housing Finance Agency’s Fix-Up Funds.
Oftentimes income qualifications apply, but this doesn’t mean that a
household has to be near the poverty line to be eligible—the guidelines
are often set as a percentage of the area’s median household income.
(You might be surprised to learn
what qualifies as “low-income” in your community.)
Rebates for energy-efficient appliance upgrades (furnace,
refrigerator, water heater, etc.) are often available through the local
utility company or community-based energy agency. In Duluth, the local
utility is
Minnesota Power, which has an extensive list of rebates.
DEEP – Duluth Energy Efficiency Program – offers up to $2,500 in rebates for all income levels.
Weatherization assistance for low-income residents is available across the state, accessed through local partners like the
Arrowhead Economic Opportunity Agency in Duluth. (If you plan to undertake weatherization improvements, be sure to read our
information on window rehabilitation before you assume that your windows need replacing!)
There are also some special
HUD-financed rehab loans
available through mortgage companies and banks. According to HUD, “The
borrower can get just one mortgage loan, at a long-term fixed (or
adjustable) rate, to finance both the acquisition and the rehabilitation
of the property” (as opposed to a first mortgage, which would finance
the purchase of the property pre-renovation, and then higher-rate
construction loans to fund the rehab work). Also, there are still
programs through Minnesota Housing to assist
first-time homebuyers, or buyers who have not owned a home within the past three years.
MHFA’s CASA program
includes a “purchase and repair” option, but it is only available in
targeted areas and both income limits and purchase price limits apply.
Financial assistance is available for rehabilitating an older home,
but you need to know where to look. Hopefully this gives Jenny, and
others like her, a place to start.