Stonington ― The Board of Selectmen took steps on Wednesday to ensure the sustainability of a zero- to low-interest home repair loan program designed to help homeowners make improvements they otherwise may not be able to afford.

The board voted unanimously to create a special revenue fund for payments on loans made by the Housing Rehabilitation Home Loan Program, allowing the funds to be reinvested in the program.

Without the special fund, any repayments would be funneled into the town’s general fund, and might not be available to help future homeowners who apply for loans.

“This is quality of life and affordability and just keeping a community intact, and I think this touches on more than just the tenant or the homeowner,” said First Selectwoman Danielle Chesebrough on Thursday.

The program, which began in May 2022, is funded with $150,000 in federal American Rescue Plan money.

The two types of loans the project offers are available to low- and moderate-income households which meet specific criteria.

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.

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.

In exchange for a loan, the town holds a mortgage on the property and has 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.

Chesebrough acknowledged that the repayment terms mean the town does not know when the loans will be paid back, but the framework now exists to ensure the money can be loaned again to continue helping residents in the future.

To date, the program has received 11 applications, with two projects completed and a third started.

The first project addressed safety issues with porches and exterior stairways on a home that was in danger of being condemned.The loan allowed the homeowner and her tenant to remain in the home and created the opportunity for the homeowner to provide affordable housing to a third tenant.

The second project addressed water damage caused by a faulty roof. Structural and roof repairs and mold abatement allowed a senior citizen couple to continue to remain in their home.

A third project, in progress, will relocate a bedroom from the second floor to the first floor of a home so that the homeowner, who cannot safely climb stairs due to a disability, can remain in her home.

Chesebrough said future projects depend on how much money is left in the fund after the completion of the current project.

Due to the limited funding, applications are considered on a first-come, first-serve 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.

Chesebrough said the town is looking to raise funds to expand the program. Information about the program, including how to apply, is available on the town website, www.stonington-ct.gov. Anyone interested in learning more can contact the Human Services Department at (860) 535-5015.