The City of Jefferson has applied for a new grant to renovate some downtown upper story apartments.

At their regular meeting in July, the City Council approved an economic development forgivable loan agreement of $435,000 with Jefferson resident Chris Deal and CityView Properties to renovate three apartments at 200 East State Street. The development agreement is tied with an application for a Community Development Block Grant from the Iowa Economic Development Authority for upper story living. City Administrator Mike Palmer says the agreement is a five-year forgivable loan and he describes how that will impact the City’s financing.

“It goes against our debt limit, although it’s a very small percentage. We don’t have to put out any money. Just so everybody knows (what) goes in that it does go against our debt (limit), which means if there’s ever a default that the City would be responsible for it.”

The amount would total three-percent of debt to the City. Additionally, the Council also approved a $250,000 purchase agreement with Deal for the same property, contingent upon receiving the grant. Palmer explains why the City had to be the applicant for the grant, instead of Deal.

“Through the Community Development Block Grant, since it’s federal money, only a city can apply for it. So that’s where we come in is to apply on the City end. A private developer, like what he (Deal) is would not be eligible.”

Palmer adds, if the grant isn’t awarded, then the City would retain possession of the property. Grant award recipients could be notified as early as next month.