International Falls will seek a state housing rehabilitation grant of up to $1 million with a rental unit component.

The city’s Economic Development Authority will seek from the Department of Employment and Economic Development $800,000 to $1 million to rehabilitation homes in the city. The city, as in previous housing grants, would partner with KOOTASCA Community Action on the application.

Seeking a rental unit component of $400,000 within the larger grant is new to the city, said Shawn Mason, director of economic and community development.

A preliminary application has been sent. Should the application score eligible, a second round of consideration, which requires additional paperwork and research would begin, she said.

“Landlords we spoke to were very encouraged, and indicated they have a need for this program,” stated Mason.

The grant would make loans available to owner-occupied single family dwellings and owners of single family rental units.

The owner of those kinds of rental units could be eligible for up to $21,500 to make improvements to homes that include energy efficient appliances, egress windows, siding, roofing and other items, explained Mason.

The landlord component would allow a landlord to borrow up to $21,500 per dwelling for projects relating to creating efficiencies and safer homes, explained Mason to the EDA this week. The landlord is required to contribute 30 percent of the project costs. The remaining 70 percent is remitted to the landlord in the form of a five-year loan. No payments or interest will be charged during those five years. The loan is forgiven after five years. However, should the home be sold — or should the rent exceed 30 percent of the renters’ monthly income and utility expenses — the loan would need to be repaid to the Economic Development Authority.

Renters currently in homes that get rehabilitated would be “grand fathered” into a 35 percent threshold. Hence, their monthly rent/utilities cannot exceed 35 percent of their monthly income. Any paybacks of loans are directed back to the EDA.

“This is a tool to strengthen our tax base,” she said. “It would improve the quality of life for low to middle income families in our community.”

Jeff Wickstrom, who has owned rental properties in the community for about 20 years, said he welcomes the rental component of the grant.

“I think that it would be awesome,” he said. “I would be the first to sign up. I feel that as I have been fixing properties in town, I’ve been helping increase my property value, but also increasing the neighborhood property value and reducing a blight factor by having a better looking house.”

Wickstrom, who owns 28 rental units, agreed that the rental component of the grant would benefit area renters.

“This would be safer and create better home for tenants,” he said. “And utilities (resulting from more efficient appliances) would be less expensive and that helps the tenants.”

Wickstrom said he’s upgraded all but five or six of his rental properties and said the loans would be helpful to complete the others. “My tenants are lower income people, and if this helps me make houses more efficient, it would help people with lower income with utilities,” he said.

Wickstrom said he believes other landlords would also welcome the program.

“A person would be crazy not to take advantage of this,” he said. “If you stay in business and keep it for five years, why not make those improvements and then it would be in the long run forgiven. It would create a better house with better value. And they may have a larger rental stock in the future. There are so many pluses and bonuses I would think people would want to be involved.”

He said the potential outcome includes improving rental stock by creating an environment in which more people would be willing to invest in rental homes because they know there are dollars out there to help.

Dave Hausmann also owns rental units in the community and said he would be interested in the program, provided the details are not difficult.

“If it’s as easy as it sounds, I would take part,” he said.

He, too, said the program would benefit property owners and renters by creating more valuable property and reducing utilities for renters.

Often, he said, rental homes with high heating bills result in a “slippery slope” for renters who cannot afford the utilities. “The next step is they can’t pay, they try to rent somewhere where utilities are paid and then they don’t ever get utilities in their name because they still own money.”

In addition, he said the program would make for more attractive units.

“You want to see a pretty house when you drive by rather than junk house,” he said.