Minneapolis approves $15.4 million for foreclosure stabilization with Recovery funds
The City of Minneapolis will use $15.4 million in federal Neighborhood Stabilization funds for its continuing efforts to stabilize and to rebuild communities heavily affected by mortgage foreclosures. The funds come from the American Recovery and Reinvestment Act of 2009, which awarded about $19.5 million to a consortium that included Minneapolis, Hennepin County and the City of Brooklyn Park. The U.S. Department of Housing and Urban Development (HUD) approved the Minneapolis consortium’s foreclosure-recovery plan earlier this month.
The City Council and Mayor Rybak approved a spending plan for the funds in mid-March. The $15.4 million plan is focused around purchasing, redeveloping, and rehabilitating foreclosed properties. It is estimated that in the next three years, the funding will provide the financing of 70 homes, rehabilitation of 54 units, acquisition and demolition of 56 blighted properties, and redevelopment of 80 properties.
$3.5 million will be used for development gap financing to non-profit developers to cover the difference between the cost of purchase and rehab of a foreclosed and/or abandoned single family home or rental property. These units will be primarily rental.
$2.6 million will be used to acquire foreclosed or abandoned properties that cannot be rehabbed due to cost or condition, demolish them and hold them as vacant parcels and land bank until the market is ready to absorb new development. The City will continue to pursue a partnership with the Twin Cities Community Land Bank to facilitate the acquisition and holding of blighted properties.
$1 million will be used for demolishing blighted foreclosed or abandoned properties that cannot be rehabbed due to cost or condition acquired in the land banking activity.
$5.2 million will support the redevelopment of demolished or vacant properties. These units will be primarily for homeownership.
$1.6 million will cover program administration costs for the City of Minneapolis Departments of Community Planning and Economic Development, Finance and Intergovernmental Relations.
The funds must be spent by 2013, with 50 percent of the funds spent by 2012. All funds must be used for housing individuals or families whose income is at 120 percent of area median income or below. In addition, 25 percent of the funds must be used for housing low-income individuals or families whose income is at or below 50 percent of area median income.
Funding must mitigate the negative effects of at least 100 abandoned or foreclosed homes.
The City of Minneapolis Foreclosure Recovery Plan
In Minneapolis, 3,077 properties were foreclosed in 2008, 2,074 were foreclosed through November 2009, and another 2,500 are projected to be foreclosed in 2010. The City's focus on prevention, reinvestment, and market repositioning in 2010 and beyond will lead to market recovery in our neighborhoods.
Minneapolis strategies for recovering a healthy housing market are: prevention, through continuing foreclosure prevention outreach and counseling; reinvestment, through pursuing aggressive property acquisition and promoting property development; and repositioning, through engaging in community building and market efforts.
Published Mar 15, 2010