Stonington — The town will launch a loan program on Thursday that will help low- and moderate-income households make home improvements that they otherwise may not be able to afford.

The Housing Rehabilitation Loan Program, which is funded with $150,000 in federal American Rescue Plan money, is designed to enhance access to quality housing.

First Selectwoman Danielle Chesebrough initially had proposed that the town use $500,000 from its $5.2 million in ARPA funds but the Board of Finance cut that request to $150,000 to fund the pilot program.

“Programs, such as this, have the potential to not only address critical safety issues within a home, but also stand to greatly improve the physical and mental wellness of its residents. We look forward to being able to open doors to repair opportunities that will allow residents to remain in their respective homes for many years to come,” town Director of Human Services Leanne Theodore said in the announcement of the program.

In exchange for a loan to make specific home improvements, the town will hold a mortgage on the property and have an affordable housing deed restriction — meaning the property would have to remain affordable — for the length of the loan. Housing is defined as affordable when it is "sold or rented at or below prices for which a household pays 30% or less of their income;" in Stonington, the median family household income is $79,250.

Those who obtain loans can repay them through a payment plan, or repay them when the property is sold, refinanced or transferred.

Two types of loans are available:

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[naviga:li]No-interest deferred loans are available to owner-occupied households earning 80% or less of median household income for the Norwich-New London Metropolitan Statistical Area, or $78,500 for a family of four, according to a housing market study that was conducted as part of the creation of the town's recent affordable housing plan.[/naviga:li]

[naviga:li]Low-interest loans are available to investor-owners whose tenants meet income criteria and agree to specific affordable rent requirements. The interest rate is 3%, payable monthly over a five-year term.[/naviga:li]

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Details about the program, including how to apply, will be available on the town website, stonington-ct.gov, by the end of the week. Anyone interested in learning more about the program also can contact the Human Services Department at (860) 535-5015.

The Human Services Department also will be available to meet with property owners and tenants to explain the program.

Applications will be considered on a first-come, first-served basis with one exception. An applicant needing rehabilitation work to correct an emergency condition that affects the health and safety of the household will be moved to the top of the list.

“Getting the new program off the ground took 11 months of a great deal of work from many people. We are so fortunate in Stonington to have such dedicated staff who truly care about the community they serve," Chesebrough said. "We are optimistic about the positive impact this new program will have, and its potential to sustain over time.”

j.wojtas@theday.com