Commission approves $500,000 chattel loan arrangement with Western State Bank to spur manufactured-home infill

The City Commission approved an agreement with Western State Bank on May 6 to place $500,000 from the community trust reserve into an interest-bearing account held by the bank. The funds will secure chattel loans Western State Bank will make to prospective buyers of manufactured homes in Garden City’s manufactured-home communities to promote infill and replacement of older units.

City staff described the program as intended to support buyers with lower-than-normal down payments so that homes can occupy vacant lots in existing manufactured-home subdivisions such as East Garden Village and Prairie Wind. Staff said the program could initially help fill a few dozen lots and—if popular—could support up to about 200 spaces over time.

Under the agreement, the $500,000 acts as a loss reserve Western State Bank may draw on to cover net losses after repair and resale of homes in the event of loan defaults. Staff said funds will be returned to the community trust reserve at the program’s conclusion, minus any amounts required to cover net losses. Western State Bank confirmed it will underwrite loans using its standard underwriting process; the bank’s representative said the account structure is intended to permit ongoing operation and that either party can terminate the arrangement subject to agreed provisions.

City staff said the $500,000 appropriation will be expensed from the community trust reserve and that the fund’s projected balance after other projects would be sufficient to support the commitment. Staff noted the city currently directs interest from idle accounts to the general fund, and if the draw on the reserve is significant the commission could later consider a different treatment of interest to help replenish the account.

Tyler Widom of Western State Bank attended and described the bank’s underwriting as “standard” and said the bank anticipates operating the program with the city’s funds as a secured pool for chattel loans. The commission approved the agreement subject to legal edits and appropriated the $500,000 to Western State Bank according to the agreement. Staff noted the agreement is evergreen until either party exercises termination rights and that draws to cover losses would diminish the community trust reserve until repaid or otherwise resolved.