Proposal detail and background

The Council approves $782,000 in ongoing General Fund to fund 6.0 FTEs positions that are currently frozen for vacancy savings.

To meet the economic challenges in 2020 and 2021, CPED froze eleven vacant positions in the 2021 budget to support enterprise’s efforts to focus on preserving core services, minimize layoffs and avoid cuts that would exacerbate racial inequities. The rebuild and recovery efforts are have started and CPED staff is required to deliver on the Mayor’s priorities of economic inclusion and provide more for housing options. CPED has also received American Rescue Plan Act (APRA) awards for these initiatives for which additional staffing resources are required. CPED requests funding to unfreeze 50%, i.e. 6.0 FTEs, of the currently frozen positions in multiple divisions who will work across the department and with other departments on delivering these priorities.

Description of the change

The extraordinary and devastating events in the spring and summer of 2020 created a large projected gap between revenues and expenditures in the 2020 budget. The emergency measures to contain the spread of COVID-19 led to a global recession and a sharp downturn in local economic activity and sales taxes. In response to these crises, all city departments reduced their spending, focused on preserving their core services, minimizing layoffs and avoiding cuts that would exacerbate racial inequities. CPED froze eleven vacant positions and pivoted to do more with less to make sure the City was able to allocate funds for urgent needs like emergency housing assistance, violence prevention and the rebuilding of small business harmed in the summer unrest.

The recovery and rebuild efforts have started and additional APRA awards have been made available for these programs. CPED has been delivering in these difficult times with limited capacity and funding request for additional six staff will support enterprise’s recovery and rebuild efforts.

Equity impacts and results

Having the funding stability for these currently frozen positions will increase department’s likelihood to hire a more diverse workforce and provide opportunities to continue to recruit as retirements and other attrition occurs.

Proposal detail and background

The Council approves $6,290,000 (CDBG PI and TIF) one-time for the Affordable Housing Trust Fund (AHTF) to provide gap financing for the production and preservation of affordable rental housing.

This request addresses the Mayor’s priority of expanding access to affordable housing and the SREAP goal to reduce involuntary displacement in rental housing for Black, Indigenous, and People of Color (BIPOC) communities. The global pandemic highlighted how disparities in housing quality have serious health impacts for residents, especially children, and the energy cost burden is disproportionately high for low income renters. The AHTF is one of the primary tools for providing financing to help close the gap between what it costs to provide decent, safe housing and what low income residents can afford. It is also helps implement City goals around equitable development, anti-displacement, ending homelessness, deep affordability, density, and sustainable and healthy buildings. Significant resources for the AHTF, which increases the number of projects that can be fully funded and constructed on a faster timeline, is a critical strategy to expand access to affordable housing.

Description of the change

This request is an expansion of an established program, and paired with approximately $8.7 million in base budget, will create a $14.75 million AHTF. A $14.75 million AHTF will allow for the production and/or preservation of 300-500 housing units affordable to households with incomes at or below 50% AMI, and will enable the City to achieve the 2020-2030 annual new production goal assigned by the Metropolitan Council (150 units at 50% AMI and 155 units at 30% AMI).

The AHTF complements other enterprise work that addresses the need for more affordable housing. It directly overlaps with the federal Low Income Housing Tax Credit program and the Housing Revenue Bond program, and is partly constrained by the resources available in those programs. Due to the costs associated with housing development, it is rarely feasible to finance a new project without bonds, tax credits and/or TIF in addition to AHTF.

The City relies on multiple partners to execute the AHTF program including private developers (nonprofit/ for profit) and other funding partners (federal, state, regional, local). The AHTF directly expands access to affordable housing. Other challenges listed in the background section are addressed through program requirements and scoring incentives related to affordability level and term, community preference, green and healthy building requirements, and equitable development and locational choice incentives.

Equity impacts and results

BIPOC and LGBTQ+ communities are disproportionately impacted by housing instability caused by the shortage of affordable rental housing, including rent and energy cost burden, formal/informal evictions, and homelessness. Persons with disabilities experience poverty at higher rates than the population as a whole and veterans are overrepresented among the homeless population.

The AHTF is one tool the City uses to implement its duty to Affirmatively Further Fair Housing to overcome patterns of segregation and foster inclusive communities. There are many requirements in the AHTF designed to improve disparities in housing need and access, replace segregated living patterns with integrated and balanced living patterns, improve access to opportunity in areas of concentrated poverty and foster and maintain compliance with civil rights and fair housing laws. Robust community engagement continues to be a key component of the City’s certifications related to Affirmatively Furthering Fair Housing.

The production and preservation of affordable housing made possible by expanded funding within the AHTF will help reduce disparities by expanding locational choice and access to decent, safe, affordable housing, both inherently and as the result of specific program policies and rules designed to achieve that outcome.

AHTF resources will be used to blend with other financial tools (housing tax credits, tax exempt bonds, tax increment financing) and to leverage other funding sources (debt, private equity, Minnesota Housing, Hennepin County, private philanthropy, etc.) to increase the number of affordable housing units produced and preserved. Projects funded through the AHTF are required to remain affordable for a minimum of 30 years. CPED specifically tracks outcomes at 30%, 50%, and 60% of AMI consistent with Metropolitan Council annual goals. By program rule, AHTF resources only support units at or below 50% AMI.

A $14.75 million AHTF will allow for the production and/or preservation of 300-500 housing units affordable to households with incomes at or below 50% AMI, and will enable the City to achieve the 2020-2030 annual new production goal assigned by the Metropolitan Council (150 units at 50% AMI and 155 units at 30% AMI).

The $490,000 amount is included in the base budget and is not reflected in a change item.

Proposal detail and background

The Council approves $490,000 in one-time Community Development Block Grant (CDBG) Program Income to provide gap funding for 11.2 Planners positions who receive compensation from a combination of General Fund and CDBG to allow for stability for personnel funding at Current Service Level.

Description of the change

The Planners are compensated 70% from General Fund and 30% from CDBG. Both sources have limited allocation amounts and the CDBG entitlement alloction for administration category under the 20% cap has not kept pace with the cost-of-living increases. For a few years now, this limited funding availability has necessitated the need to provide the much needed gap funding by using CDBG PI to keep the staffing at Current Service Level.

Given the staff is required to deliver on the Mayor’s priority of economic inclusion and provide more for housing options, approprtion of this funding source will provide stability in department’s Current Service Levels. It will ensure stability as these positions will have the continued support to work on the development strategies and projects

Equity impacts and results

Having the funding stability for these positions will increase department’s likelihood of retaining a more diverse workforce and provide opportunities to continue to recruit as retirements and other attrition occurs.

This proposal to provide basic funding source for staff will buy stability in CPED’s ability to retail the staff and deliver on the City’s economic development and housing priorities.

Proposal detail and background

The Council approves $456,000 in one-time CDBG Program Income funds for commercial real estate loans made under programs like Great Streets Real Estate Gap Financing and for some of the contracts under the Business Technical Assistance Program (BTAP). This change item would replenish CDBG funding that has been spent down in recent years on such loans and BTAP contracts. This funding aligns well with the Economic Inclusion priority area since the loans are generally made in commercial areas facing economic challenges and the BTAP assistance supports entrepreneurs with low incomes.

This funding aligns well with the Economic Inclusion priority area since the loans are generally made in commercial areas facing economic challenges and the BTAP assistance supports entrepreneurs with low incomes.

Description of the change

This request is a continuation of long-standing programs. Replenishing these programs with CDBG funds will allow for additional investment into real estate redevelopment and technical assistance for businesses. This funding will increase contracts to community-based service providers and capital for non-profit development projects.

Equity impacts and results

These funds are used in areas of the city historically left out of economic opportunity. It supports business owners and emerging developers who encounter barriers to economic growth. Costs for businesses to recover from the impacts of the pandemic disproportionally impacts smaller, less-capitalized businesses in many cases these are businesses led by BIPOC entrepreneurs. BTAP serves 70% to 80% BIPOC clients on average.

The adoption of this change would result in:

• Increase in the number of businesses served
• Increase in women and BIPOC developers trained
• Increase in retention of BIPOC owned businesses
• Redevelop of blighted properties in Minneapolis

Proposal detail and background

The Council approves $1,000,000 of ongoing funding to support capital improvements, housing preservation and construction, debt service payments, and/or other financing tools to preserve, improve the quality of, and expand deeply affordable rental housing for Minneapolis residents.  Funding would support Minneapolis Public Housing Authority’s (MPHA) strategy to recapitalize, preserve, improve and expand public housing, including public housing converted to other forms of federal subsidy programs, subject to MPHA retaining a permanent ownership interest in the property and continuing to oversee all operations.  MPHA will submit a budget proposal each year detailing how the funding would be spent.  This information will be included in the budget materials proposed by the Mayor and considered by the City Council.

MPHA estimates its current capital backlog to be over $170 million for its nearly 6,000-unit portfolio. Meanwhile, Congressional appropriations for MPHA capital improvements provides only a fraction of the funds needed to address property repairs, historically less than 10% of the actual need. In addition to nearly 1,000 homes and townhomes scattered in wards across the city, a large portion of MPHA’s portfolio is comprised of 42 highrise buildings that are approximately 60 years old. The needs of these properties continue to rise as the properties age and, without sustained investments, they will not remain viable. MPHA has a combined total of over 17,000 people on waiting lists for all MPHA offered housing programs (including Section 8 Housing Choice Vouchers), which illustrates the scarcity of affordable housing for those earning 30% or below AMI. Not only does MPHA face the challenge of preserving its existing portfolio to serve this population, there is great demand to create additional housing to address this critical need.

Description of the change

This proposal builds off of recent City investments, including more than $1 million investment in creating 16 new townhomes serving families with children experiencing homelessness; a $2.3 million investment in the Elliot Twins renovation of 174 units of existing public housing units and creation of 10 new public housing units; and the City’s recent approval of $1 million of federal Community Development Block Grant (CDBG) funding to add fire suppression systems in public housing highrise buildings.  Historically, the City used annual levy funds to support MPHA activities, including both capital improvements and operations costs, such as providing security at public housing buildings.  An ongoing funding commitment from the City will allow MPHA to incorporate this resource into their strategic plan to expand the number of units they can improve, replace and/or create.  In addition, the City’s investment will be leveraged by MPHA to raise other private and public funds to further support this critical preservation work.

Equity impacts and results

MPHA’s residents are comprised of:

• Nearly 90% Black, Indigenous, and people of color of which over 80% are Black/African American
• Over 50% are elderly or near-elderly
• Average household income is approximately $15,000 annually

MPHA will submit an annual report outlining how funds were spent, number of units assisted, location of housing assisted, status of improvements/development, and dollars leveraged from other public and private sources as a result of City funding. The City’s most recent approval of the $1 million in funding for the addition of fire suppression systems in public housing properties illustrates what may be accomplished with sustained investments. MPHA anticipates the City’s contribution will help leverage an additional $2.2M in State of Minnesota resources to help fund this work in four of its highrise properties containing 656 units. This project does not just provide critical life-safety upgrades for the 656 households there now, but over a 30-year span can impact over 2,000 households. City investments also play a crucial role in preservation and new development projects where MPHA can take advantage of many of the traditional affordable housing financings tools. For instance, the $4.6 million in proposed ARP funds for the MPHA scattered site new construction project will facilitate a $33 million investment funded through loans, investments, and grants that will create 84 new deeply affordable family units.  

Proposal detail and background

The Council approves $120,000 in ongoing General Fund to fund 1 FTE currently budgeted in Development Fund to allow for longer term stability for personnel funding.

The Development Account sources of funds have been declining over time. When this fund had a more substantial balance, the City decided to use it to fund FTEs from multiple teams within CPED. The projections show the depletion of this fund in the next few years. Given the staff is required to deliver on the Mayor’s priority of economic inclusion and provide more for housing options, shifting staff funding source to General Fund provides longer term stability in these strategies.

Description of the change

This fund supports enterprise’s development projects which range from housing and economic development to employment and training opportunities for youth and adults. This proposal to shift the funding source for staff will buy stability in CPED’s ability to deliver on the City’s economic development and housing priorities. It will also bring stability for the positions it currently supports as these positions will have the continued support to work on the development projects this fund supports.

Equity impacts and results

Having the funding stability for these positions will increase department’s likelihood of retaining a more diverse workforce and provide opportunities to continue to recruit as retirements and other attrition occurs. This proposal to shift the funding source for staff will buy stability in CPED’s ability to deliver on the City’s economic development and housing priorities.

Proposal detail and background

The Council approves $250,000 in ongoing funding for the provision of legal services for low-income renters pursuant to Chapter 143 of the Minneapolis Code of Ordinances and reduces the ongoing General Fund allocation of $250,000 in Affordable Housing Trust Fund program budget.

• Evictions can produce lasting harm to renters, including loss of income, homelessness, restrictions on future housing choice, educational success, mental health, and more.
• Renters who have low incomes often lack legal representation in eviction proceedings, while rental property owners usually enjoy legal or professional representation.
• Renters who are represented by attorneys are less likely to be evicted and are more likely to maintain housing stability.
• Renters who are represented by attorneys are less likely to use homeless shelters and other emergency resources.
• An eviction on record makes it harder to secure safe, stable housing.
• Evictions disproportionately affect the city’s lowest income residents in the most racially diverse communities.
• The City enacted an ordinance to create a right to counsel for renters with low incomes and to establish a goal of ensuring that all renters with low incomes facing eviction have an attorney provided to them.

Description of the change

Minneapolis currently funds a contract with service providers to provide representation services for renters who have incomes below 200% of the federal poverty guidelines. That contract expires in March 2022 and was funded with one-time CDBG-CV funds. At present, there is no ongoing funding allocated for eviction representation services. This amendment would allocate $250,000 from CPED’s Affordable Housing Trust Fund to CPED’s Legal Services fund to extend the current level of legal services.

This ongoing funding for the provision of legal services will provide for partial ongoing implementation of the City’s Right to Counsel Ordinance, which was adopted unanimously by the City Council and Mayor in 2021. This investment complements earlier eviction protections such as the Pre-eviction Filing Notice Requirement, Fair Chance Access to Housing, and Renter First Policy.

In addition to supporting the goal of ensuring all renters with low incomes facing eviction have representation, ongoing funding also supports City housing strategies outlined in the Mayor’s recommended budget, such as supporting renters, preventing homelessness, preventing involuntary displacement of Minneapolis residents, especially low-income residents in racially diverse communities, and prioritizing resources to invest in households facing the most severe housing instability.

Equity impacts and results

Over half of Minneapolis households rent their homes and evictions disproportionately affect the city’s lowest income residents in the most racially diverse communities. According to local and national research, Black, Indigenous, and People of Color residents are much likelier to have an eviction filed against them. A 2016 study completed by the City of Minneapolis Innovation Team found that nearly half of renter households in North Minneapolis experienced a filing in the previous three years. Single, Black mothers face the highest risk of evictions in the US.

Implementation of the Right to Counsel ordinance is supported by numerous adopted policies and processes, including the Minneapolis 2040 Plan and the Strategic Race Equity Action Plan (SREAP). In 2018, the Twin Cities were part of Policy Link’s Anti-Displacement Policy Network Coalition that included City staff, City council members, representatives of community organizations and community engagement. The Anti-Displacement Policy Network team and community representatives identified increased renter protections as a policy need to reduce involuntary displacement. The Minneapolis Advisory Committee on Housing voted to support the Right to Counsel ordinance.

A right to Counsel Ordinance was adopted in October 2021. It established a goal of ensuring all renters with income below 200% of the federal poverty guidelines who are facing eviction have an attorney provided to them. This is achieved by contracting with legal representation service providers to represent qualified renters. The Right to Counsel ordinance specifies that the program director shall review the performance of designated organizations on at least an annual basis and shall prepare a written report detailing the number of covered individuals served, the extent of legal services performed, the income limits, if any, set by the program director, the number of covered individuals who did not receive legal services, and other metrics evaluating outcomes and program performance.

Right to Counsel adds to the City’s Renter Evictions Protections and Renter-First Policy to achieve racial equity by implementing protections intended to reduce evictions. Success indicators include access to legal counsel for renters and the decline of evictions, especially among people of color, in addition to an increase in rental housing retention among people of color. Progress toward these goals is being tracked because housing stability is one of the priorities identified in the SREAP process.

Preliminary results from pilot investments show progress toward reaching these goals through funding of Right to Counsel. A 2018 summary of clients, 80% of whom were people of color, found that fully represented renters win or settle their cases 96% of the time while those without any legal services win or settle only 62% of the time. Represented renters are almost twice as likely to stay in their homes and if they agree to move, they get twice as much time to do so and are much less likely to have an eviction record to make the move more difficult. Nearly 80% of renters with lawyers leave court without an eviction record stemming from the case, compared with just 6% of unrepresented renters.