Minneapolis Awards Funds to Rebuild Neighborhoods Hit by Foreclosure
$6.5M Neighborhood Stabilization Funds go to Nine Nonprofit Developers
March 27, 2009 (MINNEAPOLIS) -- Mayor R.T. Rybak and the Minneapolis City Council today approved the award of $6.5 million in National Stabilization Program funds to developers who will rehab homes in neighborhoods hit hard by foreclosure. This is part of the $14 million in funding that the City has received from the Department of Housing and Urban Development (HUD) and the State of Minnesota to support the City’s strategy to reinvest in these neighborhoods.
An abandoned home or a foreclosed home requires some repair in order for it to be re-occupied. Today’s approval of funding will be used to assist local, non-profit developers with construction gap financing to cover the difference between the development cost (purchase price and the cost of rehab) and the sale price. The properties will then be sold or rented to income-qualified tenants, bringing people back on the blocks in communities hardest hit by foreclosure.
"The key to rebuilding neighborhoods overwhelmed by foreclosures is to get solid, responsible homeowners into these neighborhoods," said Mayor R.T. Rybak. "We know that there are great homes to be had and that people are ready to move back into these neighborhoods. Our job is to help make that happen and this funding will make our job a whole lot easier."
"This opportunity is yet another step in reinvesting and rebuilding our neighborhoods," said Council President Barbara A. Johnson, Ward 4. "These communities hit hard by foreclosure have a solid housing stock and great amenities, perfect for a first-time homebuyer."
"Using a combination of city, state and private sector funds, we now have leveraged nearly $77 million to acquire, redevelop and resell homes in neighborhoods hard hit by the foreclosure crisis," said Tom Streitz, Director, Housing Policy & Development, City of Minneapolis. "This unprecedented challenge has allowed us to forge new partnerships and presents an opportunity for us to reclaim hundreds of homes and revitalize communities."
Nine nonprofit developers will be funded, yielding 236 units, ready for occupants; 130 will be targeted to households at 50% area median income, or $40,450 income limit for a family of four in Minneapolis, to meet NSP requirements. Approximately 35% of the units will be rental and 65% will be ownership.
• Habitat for Humanity: Purchase and rehab foreclosed or abandoned single family units and sell to household at or below 50% AMI. Focus will be in areas of greatest need, as identified by the City. Amount awarded: $740,000, yielding 22 units.
• Project for Pride in Living (PPL): Purchase and rehab foreclosed or abandoned multi-unit structures, no larger than an eight-plex, and rent them to households with income at or below 50% AMI. Focus is in Phillips and North Minneapolis. Amount awarded: $1,064,800, yielding 42 units.
• City of Lakes Community Land Trust (CLCLT): Through the City of Lakes Community Land Trust’s Homebuyer Initiated Program, the buyer will identify a foreclosed property that they own and occupy. Funding will assist with the rehab of the property and will be available to all NSP-eligible neighborhoods (see map). Amount awarded: $775,000, yielding 30 units.
• Neighborhood Housing Services of Minneapolis (NHS): Purchase and rehab foreclosed or abandoned single family units. Half of the units will be sold to households with incomes at or below 50% AMI. Primary focus is in North Minneapolis. Amount awarded: $300,000, yielding 12 units.
• Urban Homeworks: Purchase and rehab foreclosed or abandoned single family and multi-unit structures. The multi-unit structures will be rental and the single family units will be sold for ownership. Primary focus is in North Minneapolis. Amount awarded: $850,000, yielding 23 units.
• Alliance Housing: Purchase and rehab foreclosed or abandoned multi-unit structures (no more than an eight-plex, and rent them to households with incomes at or below 50% AMI. Three properties have been identified in North Minneapolis. Amount awarded: $325,000, yielding 13 units.
• Powderhorn Residents Group (PRG): Purchase and rehab foreclosed or abandoned single family units and sell to households with incomes at or below 50% AMI. Primary focus is in the Jordan and Harrison neighborhoods, North Minneapolis. Amount awarded: $375,000, yielding 15 units.
• Greater Metropolitan Housing Corporation (GMHC): Purchase and rehab foreclosed or abandoned single family units and sell to households with incomes at or below 50% AMI. Focus is in all NSP-eligible neighborhoods (see map). GMHC is the primary agent for the First Look pilot program, where lenders offer foreclosed properties for sale before they are marketed. Amount awarded: $1,390,836, yielding 52 units.
• Minneapolis Urban League: Purchase and rehab foreclosed or abandoned single family homes for resale and multi-unit structures for rental. Focus is in all NSP-eligible neighborhoods (see map). Amount awarded: $675,000, yielding 27 units.
Remaining funds will be spent on:
• Land banking: $4,288,212 to acquire foreclosed properties that cannot be rehabbed due to cost or condition and hold as vacant parcels until the market is ready to absorb new development.
• Demolition: $1,700,000 to address properties on the City’s boarded and vacant list that require demolition.
• Financing: $500,000 to develop a down payment and closing cost assistance program, based on the highly successful Minneapolis Advantage Program that addresses the affordability gap in homeownership opportunities.
Published Mar. 25, 2009