Community Development

Hornell City Community Development

Economic Development Loan Program

The City of Hornell is applying for funding through the Community Development Block Grant (CDBG) Program to assist homeowners to make essential home repairs and to correct basic structural deficiencies that present health and safety hazards to the residents.

Assistance under the 2024 CDBG Residential Rehabilitation Program will not exceed $25,000 per structure, for ‘hard costs’ (non-Lead Based Paint repairs), plus the cost to mitigate LBP hazards. For owner occupants who qualify as low or very low income, 100 percent of the project cost will be provided as a grant. The grant awards do not have to be repaid unless the property is sold or transferred within 10 years. The amount to be repaid will depend on the length of time between the completion of the work and the sale and transfer of the property.

For owner occupants who are moderate income, 75 percent of the project cost will be provided as a grant. The remaining project cost will be provided as a low interest deferred loan. Loans will be provided at zero percent interest, with payment of the loan award due upon transfer or sale of home.

If the cost to bring the property up to Housing Quality Standards (excluding the costs to address existing lead based paint hazards) exceeds $25,000, the property owner will be required to provide his or her own funds or obtain other non-federal assistance to complete the project. If the project ‘hard costs’ exceed $25,000 and other funding is not available, the application may be rejected.

Applications will be accepted for the program waiting list on an on-going basis. Applicants should note that the waiting list currently includes more than 50 applications and funding is available for only 10 to 12 houses. Applicants should not wait to complete essential repairs through other means and are encouraged to contact other housing agencies (see list below) for assistance.

Eligible improvements include: repairs to major building systems (roof, electrical, heating, plumbing) as well as code items and other necessary repairs. The program does not provide funds for basic remodeling costs. Priority will be given to properties in greatest need of rehabilitation.

As part of the project, a lead based paint risk assessment will be performed. Measures to mitigate existing lead based paint (LBP) hazards will be included in the scope of work. The program does not abate (that is, completely remove) lead based paint from the house.

For an application for the RRP, please contact Cindy Burdell at 607-324-7421. Application forms are also available at City Hall.

Eligibility: There are new income limits set by HUD for this year’s program. To be qualified for housing rehabilitation assistance, you must be the owner and occupant of a single family house in the City of Hornell. Your total household income (gross income from all sources) may not exceed the 2023 HUD income limits shown below for your household size:

Household Size	Very Low Income Limit	Low Income Limit	Moderate Income Limit
1	$ 17,500	$ 29,200	$ 46,700
2	20,000	33,400	53,400
3	24,860	37,550	60,050
4	30,000	41,700	66,700
5	35,140	45,050	72,050
6	40,280	48,400	77,400
7	45,420	51,750	82,750
8	50,560	55,050	88,050

Prior Assistance

If the City of Hornell has provided rehabilitation assistance for this property within the past 15 years, the property will not be eligible for assistance under the proposed program. This condition will be imposed because of the high level of interest in the RRP and in the interests of being able to assist as many homeowners as possible throughout the City.

The Community Development staff may make exceptions to this requirement to make emergency repairs required to protect the health and safety of residents of the property. Such assistance may be provided as loan only assistance under the City's program income fund and will be limited to the emergency repairs.

Program Income Assistance (Loan Only)

The City has established a revolving loan fund to assist property owners to make critical repairs to their properties. Funding under the program is extremely limited and generally available for emergency repairs only.

To be eligible, you must be the owner and occupant of a single family house in the City of Hornell. The total annual household income (gross income) may not exceed the income limits shown under the City-wide Program for the household size. The mortgage (if any) and property taxes for the property must be current. Residents who are buying a house under a land contract will not be eligible for the program.

Assistance under the program income fund is provided as a low interest loan at an interest rate of 0 to 3 percent for terms of up to 20 years. Interest rates below 3 percent are considered on a case-by-case basis, depending on household income and need.

Homeowners should contact these agencies directly for information on eligibility requirements and funding availability. Property owners who are able to obtain partial assistance from these agencies may request loan assistance under the City’s revolving loan fund for some or all of the remaining project cost. Approval of assistance from the City will depend on the availability of funding and the nature of the repairs. Assistance from the City program will not be provided for non-emergency repairs.

Program Description

The Hornell Economic Development Loan Program (EDLP) provides low interest loan money to stimulate local business development opportunities. The EDLP loan funds are provided on a matching basis; previous loans have provided up to 50 to 60 percent of the cost of approved projects.

An applicant business must be able to provide private resources (bank loan, corporate, or personal assets) as its share of costs. Further, applicant businesses must be credit worthy, offer acceptable security for the loan, and document the feasibility of the project. Financial statements (corporate and/or personal) will be required, and applications will be reviewed in accordance with procedures normally followed by banking institutions to ensure sound lending practices. Cash flow projections must also be provided and will be used to justify the proposed loan terms.

Repayment from the loans will be utilized to establish a revolving loan fund that will make resources available for economic development activities in future years.

Eligible Activities

Eligible activities include the acquisition and renovation of commercial/industrial property in the City and the purchase and installation of capital equipment. CDBG resources may be used for working capital, however, this should not be a major component of the loan request. The amount of working capital must be fully justified by supporting documentation.

The allocation of public and private resources among the elements of a total project will be determined on an individual basis following a detailed analysis of the information in the application and supporting documentation. Under no circumstances will CDBG monies be released without an expenditure of private resources.

Work in some cases can be accomplished on a "self-help" basis, but an applicant business cannot be reimbursed for any labor costs. Further, the business must agree to hold the City of Hornell harmless for any damages or injuries which result from work carried out on a "self-help" basis. Contractors hired to work on the project will be required to pay their employees not less than the prevailing Federal wage rates.

Basic Requirements

Renovation work must be constructed in compliance with all local codes and regulations. All permits must be obtained and filed with the Program Administrator prior to the execution of the Loan and Security Agreement for the EDLP loan.

Any building determined to be historically significant by the State Historic Preservation Officer must be renovated in compliance with applicable standards.

No loan funds will be awarded to a business if mortgage payments, property taxes or water and/or sewer charges are delinquent.
All contractors participating in the program must be insured at levels acceptable to the City.

Applicant must agree to comply with all requirements established by the U.S. Department of Housing and Urban Development, including: Federal floodplain and wetlands guidelines; lead-based paint restrictions; and, conflict of interest provisions.

All applicants must submit a standard application form, agree to provide all information requested, certify as to the accuracy of the information, and complete an affidavit. The financial information of individuals will be kept confidential.

Loan Terms

The interest rate and term of the EDLP loan is negotiated with each applicant, based on the nature of the project and the financial projections. The loan terms, and the need for EDLP assistance, may be justified in one of the following ways:

1. Financial Gap - The amount of funding that the firm can raise is only a portion of the debt and equity funds necessary to complete the project. EDLP funds may be requested to fill this gap. In this case, the EDLP loan terms should be comparable to the terms available on the private sector debt committed to the project.

2. Rate of Return (ROR) - The firm may be able to raise sufficient debt and equity to complete the project, however, the returns to the firm are inadequate to motivate the firm to proceed with the project, i.e., the project risks outweigh the rewards. In this case, the firm may request a subsidized or below market interest rate or other favorable loan terms in order to provide a reasonable rate of return on the invested equity. Firms requesting EDLP loans based on Rate of Return considerations must provide financial projections to justify this request.

The applicant may request loan terms based upon other considerations, provided that the request is fully supported by financial data and other project information. The City will evaluate such requests on a case-by-case basis.

Supporting Documentation

The applicant must provide documentation to support the EDLP loan request, including:

1. A detailed description of the project, including a project schedule and maps or drawings as appropriate.
2. Third party documentation of all project costs.
3. A project budget showing the proposed sources and uses for all project funds.
4. Letters from all other financing sources, discussing the terms of the proposed financing and the current status of the application for funding.
5. Historical financial data of the firm, if available. (Financial information will be kept confidential).
6. A two to five year cash flow pro-forma with accompanying notes citing basic assumptions.
7. An analysis of the market and other data to support the project.
8. A discussion of all appropriate feasibility issues such as site control, zoning, public approvals and permits, corporate authorizations, infrastructure, environment and relocation.
9. An explanation of the collateral available to secure the EDLP loan.
10. A personal financial statement for each principal of the business.
11. A recent credit report for each principal of the business.

Additional information may be requested upon the review of the application by the City.

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Hornell City Community Development

City Departments

Economic Development Loan Program

Residential Rehabilitation Program (City-wide Program)

City of Hornell

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City of Hornell

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