Upper Story Housing (Currently Unavailable)

The intent of the program is to make new rental apartments available in upper stories of downtown buildings. To be considered ‘new’, the potential apartment space/floors must have been vacant for at least 5 years. This Upper Story program was established to enhance downtown areas. This is a federal program that is administered by the Iowa Economic Development Authority. The program is highly competitive with only a few projects funded each year.


  • MATCHING FUNDS: The maximum amount of funding available is $550,000 (plus an optional added $50,000 for Green Streets). We recommend that at least half of the cost for the project be provided by local sources such as a bank loan and/or equity (cash) from the owner. $30,000 of the grant funding is reserved by the City to pay for administration.

  • CITY CONTRIBUTION: A city contribution is required, but can be in the form of tax abatement.

  • HOUSEHOLD INCOME LIMITS: At least 71% of units should be reserved for LMI households to maximize points. LMI Income Limits for assisted tenants are based upon the number of people in the rental unit and the County where the rental property is located. See figures below Effective April 18, 2022; these figures change every Spring. The income limits apply for 5 years, then the income of the renters is no longer capped. For example, the income limit for a 1-person household in Cerro Gordo County is $45,000. 
  • RENT LIMITS apply to the units rented by the LMI households only for 5 years. Rents are capped at HUD’s 65% Market Rate; see limits in table below. These figures assume that the landlord is paying for utilities. If the tenant will pay utilities, the rent limits are reduced by estimated utility allowance figures set by the Public Housing Authority. For example, the rent limit for a 2-Bedroom unit in  Kossuth County is $1,153.
  • LIEN: Funding is provided as a 5-year forgivable loan. No repayment is required as long as all rules are met during the 5 years following the closeout of the project.

  • NIACOG FEE: The developer pays $5,000 to NIACOG to prepare the application, which includes writing the application, development of an environmental assessment, and preparing documents for city approval such as resolutions and a Community Development & Housing Needs Assessment.


  • VACANT STATUS: The space must have been vacant for 5 years.

  • NOISE LIMITS: Buildings with transportation noise sources in proximity must have a noise level calculation made (NIACOG can do this.) and if the noise level is too high the project will not be eligible for funding.

  • ABOVE GROUND STORAGE TANKS: If above ground gas storage tanks are within 1 mile of the building, it may not be eligible for funding especially if they are large and contain explosive materials.

  • ARCHITECTURAL DESIGN: Architectural preliminary design work must be completed prior to submittal of the application with the cost being borne locally. This is important to demonstrate readiness to proceed.

  • HISTORICAL: Secretary of interior design standards may be required for construction work if the building (or its surrounding block) retains much of its historic integrity (especially exterior historic integrity). This can add cost and affect the construction design because, for example, they may require refurbishing rather than replacing windows and will not allow downsizing windows (or other features) to save costs, etc.

  • PROJECT TEAM: The developer selects a project team (banker, architect, asbestos/lead abatement inspectors, and grant administrator) prior to submitting the application. A bidding process is NOT required, but the asbestos abatement contractor (if needed) and construction contractor are selected after award and a bidding process is required for these.


  • EXPERIENCED OWNER: Previous experience with federal projects, rental housing development, and rental housing operation by the owner or a partner, will be highly valued in terms of readiness, but is not an absolute requirement.

  • VIABLE 1ST FLOOR COMMERCIAL: Active commercial on the first floor would likely benefit the scoring of the project (and likelihood of funding), but no construction work can be done on the first floor after the grant is awarded and until the project is closed out.

  • SCORING: Projects are scored based upon the following criteria: Project Need (low vacancy), Project readiness, Status of project matching funds (level of commitment), Degree CDBG funds will be leveraged by other funds, Capacity to complete and maintain the project, Financial feasibility of operations, Percent of units reserved for Low To Moderate Income households, and Federal Opportunity Zone status. Maximizing points in these categories will make the difference in receiving funding or not.

Example budget (sources and uses) for 2 apartments:

Total Cost $765,000 + Green Streets Cost $50,000 = $815,000
$660,000 construction* (including lead paint abatement) + $50,000 Green Streets
$70,000 architectural fees
$30,000 administration
$ 5,000 Asbestos Removal

Total Sources of Funds $765,000 + $50,000 Green Streets Grant = $815,000
$382,000 CDBG plus $50,000 Green Streets Funding = $432,000 Total Grant Funds
($600,000 is the maximum for upper story grants; $50,000 is for Green Streets compliance, which is technically optional, but increases score)
$383,000  Bank Loan / Owner Equity (We recommend that at least 50% of project cost be covered by the owner, and, preferably 56% to reach the 3-point level.

 *For reference, in this example, please note that the construction cost is $330,000 per unit for the project shown above.

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