Community Planning and Economic Development (CPED)
2022 Mayor's Recommended change items
Community Planning and Economic Development Department - Core Service Rebuilding
Program: Multiple
Fund: General
FTE: 6
Proposal detail and background
The Mayor recommends $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.
Community Planning and Economic Development Department - Affordable Housing Trust Fund
Program: Housing Planning and Development
Fund: Multiple
FTE: 0
Proposal detail and background
The Mayor recommends $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 $15 million AHTF. A $15 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 $15 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).
Community Planning and Economic Development Department - CDBG Program Income Gap Funding
Program: Multiple
Fund: CDBG Fund
FTE: 0
The $490,000 amount is included in the base budget and is not reflected in a change item.
Proposal detail and background
The Mayor recommends $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.
Community Planning and Economic Development Department - CDBG Program Income for Real Estate Loans
Program: Multiple
Fund: CDBG Fund
FTE: 0
Proposal detail and background
The Mayor recommends $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
Community Planning and Economic Development Department - MPHA Deeply Affordable Preservation and Expansion
Program: Housing Policy and Development
Fund: General
FTE: 0
Proposal detail and background
The Mayor recommends $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.
Community Planning and Economic Development Department - Funding Swap for Development Fund
Program:
Fund:
FTE: 1.0
Proposal detail and background
The Mayor recommends $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.