The city of Shoreview hopes a new home improvement program will do double-duty, by motivating homeowners to do needed updating as the recession recedes and luring new residents who think they can't afford a home in the city.

On Monday, the city's Economic Development Authority will launch its Home Energy Improvement Loan Program, which offers loans from $2,000 to $20,000 to qualifying homeowners seeking to do greener replacements for roofs, heating and cooling systems, insulation, water heaters, windows and doors.

City officials were hearing stories about people who needed to sell their homes but were unable to get financing to make vital improvements, said Council Member Blake Huffman.

It made sense to focus on basic improvements to make the city's housing stock more efficient and stable, he said.

"We'd rather they fix up their roof than add a swimming pool to the back yard," he said, adding that participants can still qualify for federal rebates for some of the same improvements. He also said that as the city has more experience with the program, it likely will change to meet residents' needs.

Not every Shoreview property or resident will qualify. The program comes with an income limit -- 120 percent of the city's median income, which translates to $119,776 for a family of four. Also, only detached single-family homes with a current market value of $314,640 or less qualify.

Officials recognized that Shoreview has a higher-than-average median income and property value, Huffman said, and the caps are meant to reflect that. Still, he said, more than half of the city's residents should qualify, and so should about 70 percent of the properties.

Funding for the program comes from previously dedicated property tax funds, not from the general fund or any additional tax levy. As residents repay the loans, the pot will be replenished and increased by their interest payments.

2 points above prime rate

The loans are available at 2 points above the prime rate, which Huffman said is comparable to the market rate for a second mortgage, and must be repaid within 10 years or upon the sale of the home. Residents who stay in their homes for at least 10 years can have all of the interest reimbursed.

"What we are trying to do is invite young families into Shoreview," said Mayor Sandy Martin, "young families looking for a home, but who can't quite manage a second loan to do these things, or are maxed out already on the home loan. This is an opportunity for them."

Officials know that, like commercial banks, they probably won't be immune to loan defaults. But Huffman said he has learned from other suburban cities' experiences that the loans tend to perform a little better than the rest of the market.

And as the city's population ages, it will be increasingly important to fill the homes that owners leave with people who are ready to commit years to neighborhoods.

"The school district always is trying to increase its numbers for funding purposes," Martin said. "And [young people] make for a more vibrant community. Young families invest back into the community with willingness. They've got kids in the schools, kids in the parks programs, they're very supportive of the things the community wants to accomplish."

Maria Elena Baca • 612-673-4409