Eight funds will make neighborhood contributions go further
It is an ironic sign of success for the Minneapolis Neighborhood Revitalization Program (NRP): more 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 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 income, or $61,120 for a family of four. Three programs target people earning up to 50 percent of MMI, or up to $38,200 for a family of four. The last program would pay to improve blighted or vacant property.
Neighborhoods can choose one or more of the funds or draft their own. However, city officials have said they will subject programs that don't target affordability to greater scrutiny.
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.
"One of my biggest concerns had been that every single neighborhood would have to reinvent the program, so that more money would be going into administration and less into providing services," Rybak said. "What we have now is ... a way for neighborhoods to pool their resources and not reinvent the wheel," he said.
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 programs to build new affordable housing, and neighborhood groups are more interested in improvement projects that protect the city's existing housing stock, he said.
In many of the eight programs, neighborhoods could limit the money to their specific neighborhood, or put it in a multineighborhood or citywide pool.
The four funds limited to those making up to 80 percent of MMI are:
- Home Improvement Program. Neighborhoods could dovetail their money with various Minnesota Housing Finance Agency (MHFA) home fix-up funds. The MHFA provides loans up to $35,000 at interest rates between 5 and 8.5 percent. The NRP home improvement program 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 between $1,000 and $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. (When the original buyers sell, they keep 25 percent of the appreciated value. That lowers the resale price, boosting affordability for the next buyer.)
Programs with a 50-percent-MMI limit are:
- Rental Property Improvement Loan Fund, which provides a fixed-rate loan (initially 4 percent) of up to $56,000 for structural improvements, lead or asbestos removal, improving energy efficiency, and other investments. Tenants at or below the income limit must occupy at least half the units, and landlords must rent a percentage of units to low-income tenants for 15 years.
- Emergency Repair Fund. This program offers $500-$10,000 loans to financially strapped homeowners who must immediately fix hazardous conditions -- 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 for 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.
Rybak pledged to spend more time working with neighborhood groups as they start their Phase II plans. He is also wants a ninth option, a corridor housing initiative to fund affordable housing projects along avenues such as Lyndale or Nicollet.