NEW ULM – The New Ulm Economic Development Authority’s (EDA) two rehab loan programs were up for review Tuesday.

A special EDA work session was held to discuss the future of the “Get It Ready Single Family Rehab” and the “Multi-Family Rental Rehab” programs.

Earlier this month, the EDA voted to allocate yearly funding to four of its programs. The Homebuyer Assistance Loan and Small Business Incentive Grant received annual funding, but the board held off funding the Get It Ready Single Family Rehab and the Multi-Family Rental Rehab programs for further review.

The Get It Ready Single Family Rehab program allocates $120,000 each year. Applicants may apply for up to $40,000 to make home improvements to help sell a home. The program’s original idea was to help seniors cover needed maintenance on a home they hope to sell before downsizing.

The loan has a 2% interest rate, but the program has a caveat. Homeowners over 65 do not need to repay the loan until the house sells.

EDA Director Heather Bregel said the original idea behind The Get It Ready program was to preserve New Ulm’s housing stock by offering low-interest loans for needed repairs.

“This was intended as a revolving loan,” Bregel said. “The plan was to fund the programs every year until it became self-sustaining.”

The loan repayments would eventually be used to cover the cost of the program for the next year. In 2025, five loans were funded for $117,980. One loan was repaid in full for $8,466.74. The EDA would need to allocate $96,981.17 to bring the program balance back to $120,000.

Bregel said the board originally believed it would take 10 years for Get It Ready to be a self-sustaining. They are currently five years into the program.

EDA board member Andrea Boettger asked if the program was being used as intended–a resale assistance program–or if it had become an age-in-place program.

Since homeowners over 65 are not required to pay back the loan until the house is sold, Boettger questioned if some applicants were using the program as an age-in-place loan.

“There is no current timeline that they have to sell the house,” Bregel said.

In theory, a person over age 65 could use the loan to fix a leaky roof and then live in the house for another 10 years and not have to pay back the loan until selling the house. She said about half of the Get it Ready loan recipients were not making payments because they were over 65.

“That is something you could change,” she said. Going forward the EDA could set a deadline to sell the home before repayment began.

Boettger suggested a maximum of 36 months to sell the home. She said after three years, any maintenance would begin to depreciate. She wanted the program to be a true Get It Ready program.

“The idea was to open these properties for younger families,” Boettger said.

Bregel said the Get It Ready program is heavily utilized. She agreed extra guidelines could be added to ensure loan applicants plan to sell their homes, but recommended the board fund the program in the next year.

The board had fewer concerns about the Multi-Family loan program. This program allocates $150,000 each year to provide loans to rental property owners. Two loans were funded in 2025 for $100,000. Loan payments have been received in the amount of $34,142.55. The EDA would need to allocate $65,857.45 to bring the available balance back to $150,000 for loans in 2025.

The board’s only concern was the program was being under utilized. Only two loans of $50,000 were issued in 2024.

Bregel said promoting the Multi-Family loan program was a challenge. Two years ago, all $150,000 was issued for rental property projects but there were other applicants seeking loan funds. Bregel was forced to turn possible applicants away in 2023 because the program was overly promoted. In 2024, not enough applicants applied because the program did not receive less promotion.

Bregel recommended no changes to the Multi-Family going into 2025; except for increasing the promotion of the project.

Since this was a work session, no formal decision was made on the two loan programs. The two programs are expected to be brought back for funding allocation during the February EDA meeting with changes to the Get It Ready loan program limiting the time applicants have for selling the home.