$35 million economic development package passed at MHDC

As Chair of the Missouri Housing Development Commission, I am very excited to announce that moments ago we passed a $35 million economic development initiative. This initiative, first unveiled by Governor Jay Nixon and myself on November 24, will provide property tax relief to thousands of qualified middle- and low-income Missouri homebuyers, create and protect potentially thousands of good-paying jobs and help improve energy-efficiency in Missouri housing.

The $35 million package was approved at today's MHDC meeting, which was webcast live for the first time ever in an effort to bring increased transparency to the housing agency. The package provides:

1. $15 million to pay the first year of property taxes for qualified homebuyers who purchase a new or existing home after January 1, 2010. This has the opportunity to help between 9,000 and 11,000 Missouri families making less than $100,000 a year.
2. $15 million to finance and begin construction on affordable multi-family housing. This will create and save thousands of jobs at a time when Missouri unemployment is over 9% and allow us to continue to make quality affordable housing available to all Missourians.
3. $5 million in assistance to qualified homebuyers to help with down payments and closing costs. This helps potential homebuyers overcome the obstacle of coming up with enough cash for a down payment and closing costs. MHDC has been a national leader on this front.
4. Additional assistance to homebuyers who purchase an energy-efficient home or purchase energy-saving appliances. This is an opportunity to raise energy-efficiency standards in Missouri, making a positive impact on both the economy and the environment. It's a win-win.
   

This economic development package provides property tax relief to thousands of Missourians at a crucial time in our economy without spending Missouri tax dollars. This will be paid for entirely out of MHDC's reserve fund and federal recovery funds already in our possession. This comes in addition to more than $100 million in recovery funds and more than $19 million in reserves already allocated to boost Missouri's economy and put Missourians back to work.
My goal as Chair is to ensure MHDC is playing a pivotal role in Missouri's economic recovery and I believe we are doing that. The agency already offers competitive interest rates on home loans for qualified borrowers and a cash assistance loan plan for first-time homebuyers to help with down payments and closing costs. MHDC has also been a national leader in allowing Missourians to use the $8,000 federal first-time homebuyer tax credit up front for a down payment or closing costs. This program has been a success and will continue until at least April of 2010.

At a time when economic resources are scarce, it is important for you to know that I am constantly looking for new and innovative ways to get our economy moving again as well as ways to better marshal the tools and resources that are available.

One of those tools is the Missouri Linked Deposit Program, which provides low-interest loans to qualified small businesses and family farms. On November 23, I announced the largest-ever small business loan issued through the program. A small agricultural company in Marshall qualified for a $3.4 million loan, which will save the business more than $300,000 over five years compared to the cost of a regular loan. In addition, the loan will allow the company to add jobs and expand its customer base.

Thanks to changes made earlier this year to the Missouri Linked Deposit Program through my Invest in Missouri legislation, I am able to issue these kinds of loans to more small businesses with less turnaround time, allowing them to receive much-needed capital quickly.
Again, this costs Missouri taxpayers nothing. The Missouri Linked Deposit Program allows us to invest right here in Missouri to help small businesses that need it the most and who are playing a pivotal role in our economic recovery.

We have about $200 million in loans already out to small business throughout Missouri and we still have another $520 million available. To find out more about the Missouri Linked Deposit Program, click here.

Regards,

Clint Zweifel
Missouri State Treasurer

The Right Time to Buy a Home Is Now

Passage of the American Recovery and Reinvestment Act of 2009 is a step in the right direction to help the housing market begin the recovery process. Now, it’s up to potential homebuyers to take that first step too. The $8,000 tax credit couldn’t come at a better time. Late winter and spring are the prime seasons for sellers and buyers who want a change of location, a new school district, to down-size or move on up.

However, time is of the essence. Details of the plan are:

• First-time homebuyers will receive an $8,000 tax credit, or 10 percent of the home’s value, whichever is less. First-time homebuyers are defined as those who have not owned a principle home during the past three years.
• The credit can be applied to either 2008 or 2009 tax returns and does not need to be repaid if the homebuyer lives in the house for a minimum of three years.
• The tax credit applies to first-time buyers who purchase a principle home between January 1, 2009 and December 1, 2009.
• Claiming the tax credit is easy. Once the sale is completed, new first-time buyers can claim the tax credit on their returns. No special forms or documents are required.
• Income restrictions do apply for the tax credit. Single homebuyers must make less than $75,000 and couples less than $150,000.

Mortgage Reduction Component Is Part of the Solution

While the $8,000 tax credit is an incentive to excite new buyers about home ownership and reduce inventory, the Homeowner Affordability and Stability Plan takes aim at reducing foreclosures and reducing mortgage payments. Between seven and nine million homeowners could see relief under this plan to partially stem the tide of even more housing stock going into foreclosure.

One feature of the plan focuses on responsible homeowners who continue to pay on their mortgages but at rates higher that the current rates. Because of lack of equity, these homeowners have been unable to refinance at a lower rate. Under this plan, qualified homeowners in good standing will be eligible to reduce their monthly rate, and free up the balance of the payment for potential spending.

For those at risk of losing their homes, a second feature of this plan aims to provide incentives for those entities in the housing industry, such as lenders, mortgage holders and borrowers to provide more affordable conditions for responsible homeowners in these circumstances.

This federal assistance is another step in reaffirming a robust society, and to begin the long road back to responsibility and a sense of hopefulness.