The City of Lorain’s Rental Rehabilitation Program is funded through receipt of program income. Lorain’s program is designed to provide low interest loans to local rental property owners to improve deteriorating rental units. (Therefore, meeting a national objective by that increasing decent, safe, and sanitary housing primarily in Block Grant qualified target areas).

Low interest public loans are available on a first-come, first serve basis. Both a loan applicant and rental unit must meet certain basic eligibility requirements, listed in Section III, IV, and VII. Rental property rehabilitation under this program is required to be brought up to the City of Lorain’s Housing Code Standards. The City inspectors inspect the unit before and following rehabilitation. Inspections include building, electrical, plumbing and heating. These inspections cite violations and insure rehab work has corrected deficiencies. The property owner is responsible for securing City approved and registered contractors to perform the rehab work.

Rental properties eligible for rental Rehab Program assistance should be located in one of the following target areas. These areas are Census Tracts 222, 223, 224, 228, 229, 230, 231, 232, 233, 235 and 236. Properties in non-designated census tracts may receive assistance if the City Building Department requires property repairs.

Rental property owners are required to complete an Application Form to determine program eligibility. Minimum eligibility requirements include:

• The applicant must own rental property that is primarily residential, located in a program target area, and meets additional eligibility criteria;
• The applicant must maintain a good credit record;
• The applicant must be able to obtain at least 50% of the total financing needed from a financial lending institution or other private source of funds.

To serve the housing needs of those families needing to occupy rental property to attain the goals of the Rental Rehab Program, certain criteria have been developed regarding rental property eligibility.

The rental property must be:

1. Located in a program target area; or, a property repair required by a Building Department Inspector
2. Primarily residential;
3. A one (1) or more bedroom unit;
4. Vacant or a unit that will not require relocation of tenants. In cases of temporary relocation, the owner will pay for the relocation costs;
5. Substandard with one (1) or more code violations costing more than $600.00, and capable of being brought up to the City of Lorain’s Housing Codes; and
6. Capable of being rehabilitated while allowing rents to be maintained at affordable levels.

The basic purpose of this program is to improve the structural and system quality of rental units to meet the City of Lorain’s Building Department Codes and Ordinances. Additional improvements may include energy related improvements, repairs to permit use of rental units by disabled person, and repair of major housing systems in danger of failure.

The City of Lorain Building Department Inspectors will perform inspections to report code and code related deficiencies requiring corrections to the Community Development Department.

1. Public Sector Contribution - The public loan is for an amount equal to one-half the total rehabilitation cost, but not to exceed the maximum eligible amount per unit. A maximum eligibility amount is decided according to the number of bedrooms in the unit, as follows:
   1. 3 or more bedrooms - $8,500.00
   2. 2 bedrooms - $7,500.00
   3. 1 bedroom - $6500.00
   4. Efficiency - $5,000.00
   5. A waiver of public funding limit may be requested if supported by the work to be performed. This waiver must be recommended jointly by the Housing Loan Board and the Community Development Director and approved by the Safety/Service Director.

2. Private Sector Contribution - Each public loan is made in conjunction with a loan from a private lending source. The private sector contribution is one-half of the total rehabilitation. Example: 3 bedroom unit; maximum eligibility is $8,500.00; estimated cost of rehabilitation work is $17,000.00; applicant needs $8,500.00 (MATCHING FUNDS). Owner must be able to finance the portion needed or must submit proof of availability of matching funds for each unit.

3. Terms of Loan
   1. The term of the loan shall be at least equal to that of the public lending institution. In certain cases the term of the city’s loan may be extended beyond that of the primary lending institution. In a case where a financial institution is not utilized, the city’s loan term shall be determined by the city’s Loan Officer.

4. Interest Rate - The interest rate on public loan monies is a fixed 5%.

5. Loan Security
   1. The public loan must be secured by a mortgage on real estate. The public loan will be a subordinate second to the private lending institution’s lien.
   2. The borrower must furnish, at his cost, a current appraisal to substantiate that the City of Lorain’s second mortgage is secured by adequate equity in the property.
      1. If a lending institution is being used to obtain the borrower’s one-half of the repair funds, the City will accept the lender’s appraisal.

6. Loan Conditions - The property owner must agree;
   1. Not to discriminate against any prospective tenants.
   2. To affirmatively market vacant rental units rehabilitated under Rental Rehab Program;
   3. Not to convert the rehabilitated property to condominium ownership or any form of cooperative ownership while any outstanding mortgage exists.

7. Loan Fees - At the time of application, a cashiers check or certified check for $300.00 shall be required. This fee shall be used to cover the costs of title examination, update of title, costs to record the mortgage deed and work specification fees.
   1. The loan fee may be incorporated into the City of Lorain’s loan, at closing. If so, the application check will be returned to the borrower at loan closing.

8. Loan Servicing - The private lending institution services its loan and the Community Development Department will service the Rental Rehab Loan.

1. Labor Requirements - The federal government requires that labors and mechanics employed in the rehabilitation of a project of twelve (12) or more units and assisted with Rental Rehabilitation Program funds be paid wages complying with the Davis-Bacon requirements relating to prevailing wage rates.

Step 1. Rental property owner can secure application forms at the Community Development Department, 200 West Erie Avenue - 5th Floor, Lorain, Ohio, or by calling 440-204-2020. The application form requests information to determine eligibility of the project. For application, click here. (38 kb)

Step 2. The Community Development Department reviews the application form to determine property owners, location and rental unit size.

Step 3. Community Development Department informs owners if project meets basic program selection criteria If project meets requirements: a) The owner is requested to make an appointment with the Program Administrator or with the Rental Rehab Assistant to more fully discuss the Rental Rehabilitation Program and to reach a tentative agreement on assurances that they must meet to receive the public loan. b) A certification is prepared notifying the private lending institution that the project is eligible to receive a public loan. If the project is not eligible: The project is dropped from the caseload.

Step 4. If the property owner’s matching funds are borrowed from a lending institution of his/her choice, a verification of Loan must be submitted to the Community Development Department.

Step 5. Following receipt of the inspection reports by the Community Development Department, the applicant is given copies of all the inspection reports. The Rental Rehab Assistant and property owner review the reports before proceeding with the preparation of the specifications. Once the specifications are completed, they are reviewed with the applicant. A list of licensed contractors is submitted to the property owners so he/she can go forward to receive bids and/or estimates on rehab work. Where required, blue prints, to be approved by the Building Department will replace the specifications.

Step 6. The property owner is required to contact a minimum of two (2) contractors of his/her choice to receive a bid for work to be completed.

Step 7. Following receipt of contractor bids, the owner decides the amount he needs to borrow. If needed, the owner makes an appointment with the private lender to complete required loan forms.

Step 8. Loan agreement with all required conditions is signed between the City of Lorain and the owner.

Step 9. Necessary construction permits are obtained by the owner or contractor, along with copies submitted to this office for Rental Rehab files.

Step 10. Construction work begins. Partial payments on public share for work are approved and disbursed by the City of Lorain.

Step 11. The lender secures contractor lien waivers.

Step 12. Once construction work is completed, construction and final inspections are performed by the City of Lorain inspectors.

Step 13. Final payment on public shares is approved and disbursed.

Step 14. Owners continue to make monthly payments on the loan.

Step 15. The Rental Rehab Assistant notifies the Building Inspector, Electrical Inspector, Plumbing Inspector and Mechanical Inspector that a property initial inspection is required. Inspection reports are prepared and forwarded to the Community Development Department.