Speeches

City of Minneapolis 2007 Budget Proposal: Closing Gaps in Housing & Jobs

Prepared Remarks by Mayor R.T. Rybak

Wednesday, October 18, 2006

Shortly after I was re-elected I gave three Great City Forum speeches about my goals for our city over the next four years. Today I want to return to the themes I raised in one of those speeches, titled “Closing the Gaps,” to talk about how we are addressing those issues in my proposed 2007 budget, which is now before the City Council.

In that speech I talked about Minneapolis’ history of economic opportunity. I talked about how our economy grew, about immigrants and entrepreneurs powering riverfront mills that made this the milling capital of the world. About how those emerging companies grew into General Mills and Pillsbury, creating thousands of jobs that helped create our middle class and about how those immigrant workers saved their money to create companies like Thrivent and Carlson Companies.

Telling that story we remember that the history of Minneapolis is not a story of rich and poor separated by a yawning gap. The story of Minneapolis is about ladders of opportunity, in education, in jobs, in neighborhoods. It’s about many people from many places becoming one people in one place, woven together in a way that helps each of them succeed.

However, in spite of the strengths of this region, the Minneapolis-St. Paul area has one of the greatest gaps between haves and have-nots of any metropolitan area in the county. We see the impact of those gaps in disparities that exist across the board in our city: in health, education, safety and opportunity. If we sit back and allow these gaps to widen, if we allow our community to become a two-tiered economy, we all will suffer.

The good news is we know how to close these gaps. We are not starting from scratch. We have in place strong policies and they are guided by two key values:

• First, that in a generous community you don’t have to be rich to achieve your potential.
• Second, that in a forward-thinking community everyone should have a safe, stable, affordable place to live.

I’m going to talk about what we’re doing in Minneapolis to put these values into action, and how the budget I’ve recommended for 2007 will support and expand this important work. Of course this is about housing and jobs, but it is also about economic development, and working together to build One Minneapolis.

Let’s start with the first value: in a generous community, you don’t have to be rich to achieve your potential.

When I first came to office, my work to close the gaps was focused on affordable housing, and as I will discuss in a few minutes, that commitment will continue. But the more I work on housing the more I recognize that the best housing program is a good job. That’s why even in this period of declining state and federal aid, we are investing more in jobs, job training and preparing our kids to succeed in life. We are making progress by:

• connecting people to jobs,
• preparing the next generation and
• creating jobs with economic growth and development.

Closing the unemployment gap by connecting people to jobs:
People often ask whether a city government can do anything to help create jobs. Four years ago we decided to stop asking that question and simply do more. So we invested one million dollars into our employment and training network, which works with community based providers to create jobs for those most in need. That investment grew to $1.5 million last year. Our investments paid off.

In the last four years, we have placed 13,300 people into unsubsidized private sector jobs in addition to 3,300 subsidized city jobs to previously unemployed residents. We increased our annual rate of job placement from 2,400 jobs in 2001 to more than 4,200 in 2005. What is most exciting is that our greatest job increases have been in the last two years, when 786 of the 7,500 new jobs (more than 10 percent) were a direct result of our new one million dollar “Close the Gaps” jobs initiative.

When we started our work, unemployment in the City was 1 percent higher than in the suburbs and today we have virtually erased that gap. That’s why in this year’s budget I am proposing to invest another $1.5 million in job placement.

Preparing the next generation with the Minneapolis Promise:
Ask yourself sometime: who will be paying my social security? Who will be in the workforce coming behind us? That used to be a scary thought to me but the more I work with the next generation, and the more progress we make on The Minneapolis Promise, the better I feel. It’s time that we look at our youth from an asset-based perspective. The students in Minneapolis’ schools—who speak more than 80 languages and cross cultural barriers every day—are Minnesota’s best weapon to compete in a global economy.

The Minneapolis Promise sounds simple on the face of it: we are saying to kids that if they stay in school and focus on where they want to go, we will get them there. It’s a simple promise but we can only make it because of a lot of work by a lot of people.

Working through Achieve!Minneapolis we now have career centers in every Minneapolis high school. Starting in 9th grade, we want every kid to work with the career center’s program called My Life Plan to decide where they want to go. We want them to apply for our STEP-UP summer jobs program, and if they need financial help to get to college, to apply for The Power of YOU tuition program at MCTC and Metro State or the Founders Society at the University of Minnesota. We are offering great counseling, top-quality summer jobs and free college tuition to almost every Minneapolis kid in need who meets academic standards. We are making good on our promise and now it’s time for us to raise the bar for our kids, it’s time for them to step up and realize their own promise. We also need the State to step up and provide state aid to help more students in need with college tuition.

Our STEP-UP summer jobs program will continue to be funded in this year’s budget and working with business leaders like Richard Davis, the CEO of US Bank and Ben Taylor of the Star Tribune, we will ensure that our young people have meaningful paid jobs that prepare them for their future careers.

And thanks to the leadership of Senator Linda Higgins, who secured $1.9 million for summer employment from the State last year, we will be able to combine Streetworks and other City job programs with STEP-UP to create a total of 2,000 summer jobs for kids this coming year, a 600 job increase from this past year.

Creating jobs with economic growth and development:
Beyond connecting people to jobs and preparing future workers, we need to also increase job creation with economic development. Our primary goal in this area has been to focus development on commercial and transit corridors. This strategy makes sense, but needs additional support. That’s why in 2007, we propose to:

• Target an additional $1.1 million of our Legacy Fund to corridor-focused development.
• Allocate another $1.2 million NEDF/CEDF programs to corridor-focused development.
• Fund $325,000 for our emerging entrepreneurship program.
• Fund one million dollars for Commercial Corridor Small Business loans1.

We are also working to support new businesses to locate here, as we are doing with Coloplast, the Danish biotech company that is relocating their North American headquarters to north Minneapolis this year. The City is working to make sure that our federal Empowerment Zone resources and local training programs at MCTC ensure that Coloplast has direct access to high quality local employees who live in Minneapolis.

Coupled with creating job opportunity is our second value: in a forward-thinking community everyone has a safe, stable, affordable place to live.

We are addressing the full housing continuum, including affordable housing and ending homelessness. Earlier this year I convened the City-County Commission to End Homelessness with County Commissioner Gail Dorfman and gave them the task of preparing a 10-year plan to end homelessness. They accomplished their task and recently completed a report of their findings and recommendations called “Heading Home Hennepin,” which we will now work to implement.

The most visible part of my 2007 budget addressing the homelessness plan will be the addition of two outreach workers to directly interact with our homeless population. This effort builds off the very successful Project Homeless Connect events held this past year.

But the true upstream housing work involves creating more affordable housing options for everyone. That’s why we are putting $8.9 million in this budget into the Affordable Housing Trust Fund. Last year the Fund was $9.3 million, but the federal CDBG allocation to the City is being reduced, forcing us to reduce that portion of the Fund. I will be working with our federal partners and mayors around the country to increase that allotment. It illustrates that while there is great work coming out of the federal homelessness office, other arms of the federal government are cutting the funds we need to get people stable housing.

Three years ago we set a goal of creating 2,100 housing units for people at or below 50 percent of the metropolitan median income. We have exceeded that goal, building 2,470. We are on track to exceed 2005 production levels in 2006 and we will continue to look for ways to increase support for the Trust Fund, which is having an amazing impact2.

We are restoring neighborhoods by reforming government to improve boarded and vacant properties. We are accomplishing this by expanding coordination across departments, with our housing development working closer with our regulatory services department. We are also increasing funding for the purchase and demolition of boarded and vacant properties:

• In 2006, we increased funding for the removal of boarded and vacant properties by $300,000 mid-year.
• In 2007, we will increase resources to continue to act with speed and scale: $530,000, up from $450,000.
• The first effort is to have the structure rehabbed, if possible, and demolished only as a last resort.
• We have also intensified housing inspection sweeps and funding for home improvement assistance ($500,000 in reallocated 2006 money).
• We now have a three-year goal to address all boarded and vacant properties with direct involvement from both our housing and regulatory services departments. Our first priority is to rehab existing homes whenever possible, and demolish as a last resort.

We have intensified our investment in homeownership initiatives to stabilize our neighborhoods:

• We have a great delivery system in the Northside Home Fund3 and Housing Clusters and we are starting to see an impact4.
• In 2006, we increased funding for home purchase, home improvement, and foreclosure prevention to over three million dollars5.
• We gained a significant new community partner: Home Depot with a $500,000 commitment to build environmentally sustainable and affordable housing in north Minneapolis as part of the Northside Home Fund partnership with the Hawthorne neighborhood.

We are indeed making great progress on our efforts to get every resident into a safe, stable affordable home. Unfortunately, at the same time, Minneapolis is increasingly part of a disturbing national trend of mounting home foreclosures and declining home ownership rates that threatens the progress we have made, especially in north Minneapolis.

While the full spectrum of our housing programs is extremely important, there is no priority more critical to Minneapolis today than the serious and growing challenge of the increasing number of home mortgage foreclosures. There is without a doubt an increase in foreclosures around the country and it appears to be hitting hardest in communities where we have made the most progress to increase homeownership among communities of color.

There were 300 more foreclosures in Hennepin County during the first six months of this year compared to last year—an increase of 71 percent. We can’t completely explain all of the factors causing this serious program, but there are two key factors that are clearly contributing:

• Most significant has been the increase in riskier mortgages such as open option ARMS (Adjustable Rate Mortgages) that are aggressively marketed to some of our most financially challenged residents.
• A second factor appears to be that many homeowners on the margins took so much equity out of their homes through refinancing that they couldn’t weather the sudden change of fortune, like losing their job.

What we do know is that when a home goes into foreclosure, it not only hurts the family, but the home also becomes a potential challenge for the community when it becomes a vacant property on the market, and even further, when it become a safety problem and needs to be boarded.

So, the foreclosure problem really has two victims: the homeowner who loses their home and the community that loses homeowners with roots in the community and too often gains problematic renters in the process. This problem has been made worse by predatory buying groups that are gaining control of a number of these foreclosed properties and then renting them to tenants who decrease the stability of already troubled neighborhoods.

Responding to this growing problem has driven the City’s housing work in recent years. That’s why we increased funding for mortgage foreclosure prevention (to $400,000 from $250,000) and funding for the Don’t Borrow Trouble Campaign to partner with the Emerging Markets Homeownership Initiative to more effectively reach communities of color ($1,200,000). It’s clear that we need more education and financial tools to keep residents out of foreclosure.

We have been meeting with our community planning and housing teams to attack this problem and we are getting help from two of Minneapolis’ best housing partners: Tom Fulton from the Family Housing Fund and Commissioner Tim Marx from the Minnesota Housing Finance Agency, as well as federal partners and private partners like Fannie Mae. One idea we are discussing is to capitalize an independent group that could get control of foreclosed properties before they fall into the hands of the predatory buying cartels, and get them back into the hands of owners who will actually help stabilize the neighborhood.

I want to close by reminding us of why we are doing this work. We have so much to be proud of in Minneapolis. This city is surging ahead on so many levels that people are increasingly looking to Minneapolis as the leading city of our time. But the single greatest challenge we face to becoming the great city of our time is to close the gaps between haves and have-nots.

Our goal in this work should be nothing short of saying that the next generation should grow up in a city where ladders of opportunity exist for everyone. Clearly we are doing this for our children, but we also need to think about whom is really at the core of this issue: single mothers. I’m particularly sensitive to this because I was raised by a single mother, but also because too often when I’m dealing with the challenges of closing the gaps it’s the mothers who are trying to make ends meet. Too often it’s the mothers I see at their kids’ funerals, with their families at homeless shelters, trying to get their kids help at school.

There is one mother in particular that I can’t get out of my mind. I met her on a Saturday this summer in the front yard of her home in the Hawthorne neighborhood. She told me a sad story that day about the troubles she was having raising her three kids, and about how she finally decided to send her son away for the summer to live with relatives in North Carolina because she was afraid for him in her crime-ridden neighborhood.

There are many times when that mother may feel alone, but she didn’t that day. Her house and her yard were filled with about fifty volunteers from Rebuilding Together who were repairing the house exterior and replacing windows on a three-season porch to turn it into a year-round play area for the kids. These 50 people, mostly from the suburbs, were there to let this mother know that she is not alone. They knew that this entire region could not succeed unless every neighborhood, and every mother, has a ladder to success.

Two weeks later we were back on that same mother’s block to announce a half- million dollar grant from the Home Depot Foundation to restore nearby housing. Her home is at the center of the Hawthorne Northside Housing Cluster, and within a few blocks are the new Fellowship Baptist Church Family Center, the county’s massive redevelopment of Lowry Avenue and the remodeled North Regional Library.

We are not treating everyone equally in Minneapolis. We are asking those who are doing well to let us focus on those who are not. We believe that disproportionate need requires disproportionate investment and that we do not build a just society by passing the plate or holding a bake sale. With these values, many people from many places and circumstances become one people in one place: the one beloved community of Minneapolis.

1 The City has strongly utilized one of the primary aspects of this loan program by coordinating the New Market Tax Credit, to support small businesses at Plaza Verde and the Global Market. This work has been important for our new immigrant business entrepreneurs. On Lake Street alone we have coordinated 96 loans, with 22 just at the Global Market.

2 Two projects that received support from the Fund are St. Anne’s Senior Housing project, which just celebrated its groundbreaking last week on West Broadway, will provide 59 units, including four for seniors experiencing long-term homelessness and Hiawatha Commons, rising from a parking lot next to the new Midtown Greenway, which will be celebrating its grand opening of 80 unites of mixed-income rental and affordable housing in December.

3 The Northside Home Fund began as a response to the residents’ request for help to address boarded and blighted properties in their neighborhoods. The City (CPED) developed a partnership between public, private, and neighborhood-based organizations to improve housing options and seeded the effort with one million dollars. Private partners, including the Family Housing Fund, Franklin National Bank, General Mills Foundation, Local Initiative Support Corp., McKnight Foundation, Minnesota Housing Finance Agency, and Northside neighborhoods (Folwell, Hawthorne, Near North, Willard Hay, and Jordan) worked to coordinate a common Northside housing strategy.

4 Five clusters have been identified and each of the five neighborhoods is working with a development partner on a comprehensive redevelopment plan that fits the area. For example, the Hawthorne cluster will include deeper sustainability components, thanks to a grant from The Home Depot Foundation. The Cottage Park cluster in Jordan was re-landscaped in partnership with Ackerberg Group and generous support from Maple Crest Landscaping.

5 This includes an additional $2 million for home improvement loans, with $500,000 targeted to families with citations from the north Minneapolis home inspection sweeps. This also includes $500,000 for homeownership projects, homeownership loans in Heritage Park, and $300,000 to establish a new program to help seniors transition to more appropriate housing by either improving an existing home or moving to a new home.