Eight funds should help neighborhoods aid lower-income residents -- but not the poorest of the poor
It is an ironic sign of success for the Minneapolis Neighborhood Revitalization Program (NRP): pressure to spend its remaining funds on affordable housing.
Housing affordability wasn't an issue when NRP started in the 1990s, said NRP Executive Director Bob Miller. The program -- which diverts taxes from commercial development to neighborhoods -- didn't even track the income of those who benefited. But during NRP's first decade, rents and home values rose -- and affordability became the new buzzword.
To comply with state law, neighborhoods must spend 70 percent of their Phase II money on housing. To ensure that housing is affordable, NRP's governing board approved eight investment funds Nov. 22.
Four programs target people making at most 80 percent of metro median incom ($61,120 for a family of four). Three programs target people earning up to 50 percent of MMI, ($38,200 for a family of four). The last program would mprove blighted or vacant property.
Neighborhoods can choose one or more of the funds or draft their own. However, city officials have said they will more strictly scrutinize programs that don't target affordability.
City officials and NRP advocates have sparred over the city's role in shaping and reviewing NRP programs, which are funded by taxes diverted from the county, schools and parks as well. The housing-funds proposal passed the NRP Policy Board unanimously, with Mayor R.T. Rybak moving approval.
Rybak said neighborhoods could "pool resources and not reinvent the wheel" by contributing to funds rather than each administering separate efforts.
Said Miller: "Everything went through so much easier than I anticipated."
Miller said friction still exists between city and NRP leaders on the best use of NRP housing dollars. The city is more interested in building new affordable housing, while neighborhood groups favor protecting existing housing stock, he said.
In many of the programs, neighborhoods could limit the money to their specific neighborhood, or put it in a multi-neighborhood or citywide pool.
The funds with 80 percent MMI limits are:
– The Home Improvement Program. Neighborhoods could dovetail their money with Minnesota Housing Finance Agency (MHFA) home fix-up funds. The MHFA loans up to $35,000 at interest rates between 5 and 8.5 percent. The NRP would give an additional loan, up to $15,000, at half the MHFA interest rate.
– Purchase/Major Rehabilitation Loan Fund, which helps people buy a home that needs significant renovation. The loans range from $5,000 to $40,000, at one-third conventional mortgage rates.
– First-time Homebuyer Assistance Fund, which gives loans of $1,000-$30,000 at one-third conventional mortgage rates.
– Land trust investments. The program loans between $25,000 and $50,000 to people buying a home through a land trust. (Sellers keep 25 percent of the appreciated value. That lowers the resale price and boosts affordability for the next buyer.)
Programs with a 50-percent-MMI limit are:
– The Rental Property Improvement Loan Fund, which provides a fixed-rate loan (initially 4 percent) of up to $56,000 for structural improvements, improved energy efficiency, and other investments. Low-income tenants must occupy at least half the units, and landlords must rent those units to low-income tenants for 15 years.
– Emergency Repair Fund, which offers $500-$10,000 loans to financially strapped homeowners who must immediately fix hazards -- roof repairs, or heating, wiring or plumbing problems. The zero-interest loan would be repaid when a title is transferred or under other circumstances. (Miller said this was the most-requested option at neighborhood meetings.)
– Support the city's Affordable Housing Investment Fund, which subsidizes construction of affordable apartments.
The final fund provides money to buy and redevelop vacant, blighted or underused properties to achieve neighborhood improvement goals.
Minneapolis residents at or below 30 percent of MMI have the greatest unmet housing need for affordable housing, according to city statistics. Yet aside from the Affordable Housing Trust Fund option, no NRP housing programs exclusively target that very low-income group.
Miller said most people below 30 percent MMI are renters, not owners. He didn't think it made sense to target the home programs at that income level.
"I can't sell that at the neighborhoods. I won't get anybody participating," he said.
The Rental Property Improvement Loan fund targets apartment buildings with renters earning at or below 50 percent of MMI. Even at that income, Miller said he doesn't think landlords will participate because they have to keep some units affordable for 15 years.
Rybak pledged to spend more time working with neighborhood groups as they start their Phase II plans. He also wants a ninth option, a corridor housing initiative to fund affordable housing projects along avenues such as Lyndale or Nicollet.