Housing and Homelessness
Proposal Details of the Mayor's Recommended ARP Spending, Round 2
The Eliminating Childhood Lead Poisoning and Green Zone Weatherization projects are additional investments in housing quality that are included in the Climate and Public Health goal area.
Proposal Details
Housing Opportunity Fund
Department
Community Planning and Economic Development
Amount
$5,080,116
Staffing Needs
None
Previous ARPA Funding
No
Problem Statement
Minneapolis renters are facing increasing housing costs with decreasing incomes, and the city has fewer affordable housing units today than it did 15 years ago.
Proposed Action Summary
The Affordable Housing Trust Fund (AHTF) is one of the primary tools for providing financing to help close the gap between what it costs to provide decent, safe affordable housing and what low-income residents can afford. This funding would provide additional resources to help projects reach completion when no other funding source is available.
Proposed Action Detail
Housing Opportunity Fund - This proposal is a supplement to the existing AHTF. Due to the rising costs associated with housing development (material and labor), this strategy will complement the existing internal sources and even more competitive external sources. This project would directly expand access to affordable housing. The focus of this request is to expedite the development of new units. Preference will be on projects that:
- Need the last financing source to move the project to construction
- Are in areas that were impacted by the recent civil unrest
Low Barrier Single Room Occupancy (SRO) Pilot - To increase flexibility and meet changing needs, the Single Room Occupancy Pilot from Phase 1 will be combined into this fund. This funding will support development and implementation of a new pilot program to fund acquisition, rehabilitation or adaptive re-use, and/or operating reserves for SRO-type properties in partnership with Hennepin County. This funding level will support acquisition/development of SRO dwelling units.
Racial Equity Impact
Racial and ethnic groups are over-represented amongst low-income households and most people of color are renters, which means that the negative impacts of the shortage of affordable rental housing are disproportionately experienced by communities of color. Rent and energy cost burdened households are disproportionately communities of color. Evictions disproportionately impact neighborhoods with majority BIPOC populations. Historic discriminatory housing policies have had a lasting impact on development patterns. Persons with disabilities experience poverty at higher rates than the population as a whole, and veterans are overrepresented among the homeless population.
The production and preservation of affordable housing made possible by expanded funding will help reduce disparities among affected groups 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.
Results
Projects funded through the AHTF are required to remain affordable for a minimum of 30 years. Historically, CPED reported on units produced and preserved below 80% AMI and below 50% of AMI.
NOAH Preservation
Department
Community Planning and Economic Development
Amount
$4,000,000
Staffing Needs
None
Previous ARPA Funding
Yes, Phase 1
Problem Statement
Post-pandemic housing market uncertainties may present additional opportunities for preservation buyers to acquire NOAH properties as current owners look to sell.
Proposed Action Summary
This funding will increase resources available in two existing NOAH acquisition programs (NOAH Preservation Fund and Small and Medium Multifamily program). Under current program rules, this amount will support acquisition and preservation of 100-200 NOAH units. Funds could also potentially support Opportunity to Purchase transactions and stabilization of projects acquired through the SMMF program.
Proposed Action Detail
This is expansion funding for two existing programs. NOAH properties refer to unsubsidized multifamily, Class C rental housing projects that have at least 20% of the units with rents affordable to households with incomes at or below 60% of the Area Median Income (AMI). Minneapolis has approximately 30,000 Class C units in buildings of four or more units, and fewer than 15,000 of these units have rents affordable to households with incomes at or below 60% AMI. Preservation of NOAH properties is a critical issue given the growing overall shortage of affordable housing. NOAH properties will continue to be attractive to local and national speculators, who through the pandemic have been holding cash, and are intent on maximizing cash flow through increasingly higher rents.
Funding must be fungible between the two programs so that staff can flexibly respond to opportunities based on deal specifics.
City partners for the NOAH Preservation Fund: Non-profit housing owner operators, or limited liability companies in which the managing general partner or managing member is a non-profit corporation, or public agency, with a mission to provide long term affordable housing opportunities and demonstrated experience and capacity in owning and operating high quality and well-managed affordable housing; the Land Bank Twin Cities, Inc.; or for-profit housing owner/operators with demonstrated experience in real estate ownership, operations or development serving BIPOC renters. City partners for the SMMF Program: Twin Cities Local Initiatives Support Corporation (LISC), the Land Bank Twin Cities, experienced mission-driven and/or community-based long-term owners, and tenant organizing and cooperative groups.
Racial Equity Impact
The City’s Strategic Racial Equity Action Plan (SREAP) notes that affordable, safe housing is a crucial foundation for BIPOC communities. BIPOC communities in Minneapolis experience involuntary displacement at a higher rate than white communities, and are disproportionally represented in households experiencing cost burden and severe cost burden. The City relies on property owners to provide stable rental housing situations. By supporting acquisitions of NOAH properties, we can help BIPOC residents access the housing they need.
NOAH preservation helps to reduce housing disparities among affected groups by expanding locational choice and access to decent, safe, affordable housing. The SMMF program is specifically designed to support acquisition of small-scale buildings throughout the entire city, and disposition strategies prioritize expansion of community-based ownership. Whenever possible, the City works with program partners to sell SMMF properties through processes that give priority to developers, investors, and community-based organizations with ties to the neighborhoods where they are purchasing property.
Results
Additional resources will allow these programs to operate at increased scale, leading to the opportunity for 100-200 additional units to be acquired for long term preservation. The number of units and location of units are tracked. When possible, tenant demographics are collected (post-acquisition).
Minneapolis Homes: Create & Provide Access to Homeownership
Department
Community Planning and Economic Development
Amount
$2,500,000
Staffing Needs
None
Previous ARPA Funding
Yes. Phase 1 and Funding Swaps
Problem Statement
Housing prices are increasing at an alarmingly higher rate than incomes, making homeownership out of reach for most households particularly low to moderate income households.
Proposed Action Summary
Fund the Minneapolis Homes Financing program.
Proposed Action Detail
This is an enhancement to the existing Minneapolis Homes Financing program. The intent is to align the program deliverables with Minneapolis 2040. The funds will be used to provide development gap assistance for the development of affordable ownership housing throughout the city.
Racial Equity Impact
The City of Minneapolis and Twin Cities region have the worst racial disparities in homeownership in the nation. Communities of color in the City of Minneapolis are more likely to be cost burdened and pay higher energy costs. Minneapolis Homes seeks to mitigate these disparities by stabilizing households in homeownership.
Historically, approximately 70% of homebuyers of Minneapolis Homes projects have been communities of color, with average incomes around 60% AMI. Given the increasing market concern about displacement of existing residents, the continuation and extension of this program to provide affordable homeownership opportunity is critical. Due to the increasing home sale prices and increasing rental prices, perpetually affordable units are also encouraged in the program.
Results
The proposed activity will increase the number of housing units created and maintain the high rate of service to households of color. It is anticipated that the increase in housing units created through the program will result in more units affordable to households at 80% AMI or below.
This proposal will be leveraged with a request to Minnesota Housing’s Impact Fund and create approximately 25 to 35 new affordable ownership housing units as supported by the Minneapolis 2040 plan.
Homelessness Response Staffing
Department
Regulatory Service
Amount
$668,853
Staffing Needs
Homeless Response Coordinators (3)
Homeless Response Manager
Previous ARPA Funding
No
Problem Statement
Response to the Homeless Encampments including outreach, provision of supplies (including those meant to stop the spread of COVID), and collaboration.
Proposed Action Summary
This will pay for the three Homeless Response Coordinators and a Homeless Response Manager for part of 2022 and all of 2023. The Homeless Response Coordinators are currently funded through September, 2022, two in Health and one in CPED.
Proposed Action Detail
Health and CPED have had their Homeless Response Coordinators in place since February and March of 2021. These new positions were put in place to support the City's response to homeless encampments, particularly as it pertains to the public health and public safety issues surrounding encampments. The positions, currently funded through September, 2022 using CDBG-COVID dollars will need to be supported beyond that time to continue our response to homeless encampments.
These folks provided much needed outreach to encampments to support our efforts to track the number of encampments and number of tents/structures/people in those encampments. They also work closely with others in the City and our other jurisdictional partners to have a coordinated response to encampments.
This proposal corresponds with the transfer projects from Phase 1 to Regulatory Services (Encampment Response and Homelessness Response Flexible Fund.)
Racial Equity Impact
People of color are dramatically more likely than white people to experience homelessness. More than 65% of single adults in shelter (and more than 70% of unsheltered persons) are BIPOC, with more than 50% Black/African American.
Results
The individuals and these positions allow the City to have a coordinated response to encampments. They track the encampments, the number of people in those encampments, the number of tents/structures at each encampment. They connect folks in the encampments to needed services including other outreach providers, Healthcare for the Homeless, the housing intake workers and case managers from Hennepin County and many other services providers. They provide PPE and Hygiene supplies to folks at the encampments to help prevent the spread of COVID and other infectious disease.
Rental Licensing Back Log Project
Department
Regulatory Services
Amount
$500,000
Staffing Needs
The resources will be used for temporary staffing, administrative efficiencies and overtime to address the back log.
Previous ARPA Funding
No
Problem Statement
A limited number of in-person rental licensing inspections were performed due to COVID-19 and a backlog has grown.
Proposed Action Summary
Use short term staffing alternatives and over-time to address the backlog of rental license inspections that were put on hold in 2020 and 2021.
Proposed Action Detail
During most of 2020 and the first half of 2021, Inspections staff redirected efforts towards virtual license inspections and re-prioritizing the inspections workload, focusing on Tier 3 properties and urgent complaints. We also saw a very large decrease in the number of rental complaints due to concern that renters had about COVID for several reasons including: having non family members in their homes (owners, inspectors, contractors) and for fear of retaliation -- especially if they were having difficulty paying rent.
The backlog was further impacted by early retirements, furloughs and other staffing freezes that were part of the over-all strategy to address COVID budget shortfalls.
Due to the above reasons, staff were able to conduct less than half of planned inspections in 2020 and half of 2021. It is imperative that the City gets current on the backlog to reduce displacement and to create stability for the residents.
Racial Equity Impact
People of color make up a large share of the renter community. Ensuring that we have safe and habitable housing and are conducting rental licensing within the established Tier cycle is imperative for equity and equitable outcomes.
Results
Licensing inspections ensure safe and habitable spaces for renters and holding owners accountable for maintaining properties contributes to the longevity of the housing stock in the City. We will be able to track where licensing inspections are conducted and analyze geographic impacts of licensing requirements. This data can be integrated into other sources of data such as lead and healthy housing inspections and other social determinants of health.
Women's Shelter (Phase 1)
Department
Community Planning and Economic Development
Amount
-$694,253
Staffing Needs
Funds will be implemented by existing CPED staff.
Previous ARPA Funding
Yes. Phase 1
This project has been completed with unspent dollars still available. The amount is being reallocated to the Housing Opportunity Fund.
Problem Statement
Hennepin County, in partnership with the non-profits that operate shelters and people with lived experience of homelessness identified the need for a stand-alone emergency shelter in order to provide appropriate emergency shelter for individuals who identify as women who are experiencing homelessness.
Proposed Action Summary
Funds will be used to acquire a property for the site of a new, 30-bed emergency homeless shelter for people who identify as women.
Proposed Action Detail
In 2019, Hennepin County set out a new vision of lowering barriers, improving outcomes and increasing capacity within the single adult shelter system. Specific recommendations were created in partnership with the non-profits that operate shelters and people with lived experience of homelessness. The Hennepin County Board of Commissioners approved funding in late 2019 for five of the recommendations, including a small-scale (30 bed) stand-alone emergency shelter individuals identifying as women.
Funding commitments from Hennepin County allowed the women’s shelter to open at an interim location (the Catholic Charities St Joe’s campus) in the winter of 2020, operating in accordance with CDC guidance on COVID-19 and best practices including operating on a 24-hour basis daily. The County is now in the process of identifying a permanent location.
City ARP funds will be used for acquisition costs for the permanent location. Previously committed City Emergency Solutions Grant COVID response dollars may be used for rehabilitation if needed. County staff, at direction of the County board, are actively exploring options to maintain the current level of operational funding (at $1m per year) for this program.
Racial Equity Impact
Black, Indigenous and People of Color households experience homelessness at a rate that is disproportionate to their share of the population in Minneapolis and Hennepin County. According to the 2018 Wilder Research study on homelessness, 49% of single adults experiencing homelessness in Hennepin County identified as Black or African American, but only 13.8% of the population in Hennepin County is Black or African American according to the U.S. Census. Similarly, according to Wilder Research, 15% of people experiencing homelessness identified as American Indian, while only 1% of the population of Hennepin County identifies as American Indian.
Results
Hennepin County maintains regular data on shelter usage and exits from shelter into permanent housing.
Low-Income Home Repairs/Maintenance (Phase 1)
Department
Community Planning and Economic Development
Amount
-$1,885,863
Staffing Needs
None
Previous ARPA Funding
Yes. Phase 1
The funding source for this program is being changed to CDBG-CV, freeing up ARPA the funds. There will be no reduction in program scope. For the purposes of ARPA funding, this project is being reduced and the funds reallocated to the Housing Opportunity Fund and Minneapolis Homes.
Problem Statement
A majority of households below 50% AMI are cost burdened and have barriers to financing or paying for the improvements needed for their homes. Without maintaining basic life safety and code compliance, inspectors condemn the housing, creating instability for occupants and losing out on wealth accumulation from the home. These challenges are expected to compound due to loss of income and economic stability of households due to the COVID-19 pandemic.
Proposed Action Summary
This program is available city-wide, however the City will focus outreach to communities with the most significant home repair needs and the highest concentration of households below 80% AMI. City funds will be available as 0% interest loans that are deferred and payable upon property sale. CPED would administer funds and distribute to homeowners for long term maintenance, energy efficiency, systems replacement, and environmental hazard mitigation.
Proposed Action Detail
This is an expansion of the City’s home improvement programs geared toward low and middle income homeowners. This action would create a revolving fund and provide low income families with a 0% interest loan that is deferred for 30 years and repaid upon property sale for the following:
- Long-term maintenance: roofs, siding, foundation repair, walkways
- Energy efficiency: insulation, windows, ventilation, air sealing, solar panels
- Systems replacement: HVAC, electric, or plumbing upgrades to current code standards
- Environmental hazard mitigation: mold, lead water pipe replacement, lead hazard mitigation, radon mitigation systems, addressing asthma triggers
Staff intend a loan cap of $25,000. Funding offered through this initiative would be a complement to Minnesota Housing’s programs that provide forgivable loans with no monthly payments up to $27,000 for homeowners below 30% AMI, the City’s programs offered by CPED and the Health Department that provides lead mitigation grants with no monthly payments to homeowners below 80% AMI, and Minnesota Housing’s Fix Up Fund loan that provides an amortizing loan to homeowners regardless of income.
Racial Equity Impact
BIPOC households own 13,500, or 17%, of homes in Minneapolis according to the American Community Survey and they are geographically concentrated in the Near North, Camden, Phillips, Northeast, and Powderhorn communities in wards 1, 3, 4, 5, 6, 8, and 9. Home improvement programs offered by the City are available city-wide, however rate of service and marketing efforts are significantly concentrated within the above-described geography, with approximately 85% of loans from 2010-2020 occurring in the focus area of service. These same communities overlap with the geographic areas identified by the Center for Urban and Regional Affairs where residents are at risk of displacement and are also the same census tracts that have the highest maintenance needs, according to the City Assessor condition survey. A majority of all owner-occupied households below 50% AMI are cost burdened, presenting a significant risk of housing instability if there are home repair or maintenance needs that require significant savings or additional monthly payments. The average household income of homeowners served through Minneapolis home improvement programs from 2010-2020 was $39,000 and approximately 40% of households served are Black, 55% are white, and roughly 3% Asian/Pacific-Islander and 3% Indigenous households were served. City staff analyzed outreach of its home improvement programs in 2021 and is implementing a strategy to better reach Latinx, Asian/Pacific-Islander, and Indigenous households.
Results
These funds will complement CDBG funds and leveraged Minnesota Housing products committed to emergency, health and safety, and lead mitigation improvements to homes. The investment in this program is expected to result in an increase from 30 households served annually through City funding to 80 households served annually (an increase of 50 households). Because the loan funds are expected to revolve and assuming homeowners remain in their housing for an average seven-year period, this investment of loan capital is expected to serve a total of 214 homeowners every 30 years. Staff will collect income and demographic data for all homeowners served and expect to see a significant increase in service rates to Latinx and Asian/Pacific-Islander homeowners due to implementation of a more inclusive outreach strategy.
Low Barrier Single Room Occupancy (SRO) Pilot (Phase 1)
Department
Community Planning and Economic Development
Amount
-$5,000,000
Staffing Needs
None
Previous ARPA Funding
Yes. Phase 1
This project is being combined into the Housing Opportunity Fund, allowing for more flexibility. SRO projects will be eligible to apply to the Housing Opportunity Fund.
Problem Statement
There is a severe shortage of housing affordable to individuals with incomes at or below 30% AMI. Many persons experiencing homelessness served by shelters could afford to pay rent, if more deeply affordable options were available. Single Room Occupancy (SRO) units have historically been a cost-effective part of the housing continuum serving extremely low income individuals.
Proposed Action Summary
This funding will support development and implementation of a new pilot program to fund acquisition, rehabilitation or adaptive re-use, and/or operating reserves for SRO-type properties in partnership with Hennepin County. This funding level will support acquisition/development of up to approximately 75 SRO dwelling units.
Proposed Action Detail
This is a new initiative requiring partnership with Hennepin County. Hennepin County is currently exploring a 10-year, $97 million approach to acquire/develop 1,500 SRO (and possibly efficiency) units throughout the county. Hennepin County would act as owner, and this funding would support acquisition, capital improvements and/or operating reserves for projects located in Minneapolis. The model being pursued is not supportive housing, and wouldn’t compete for limited operating subsidies or service funding. Rather, it relies on government resources up-front to deliver units without debt and breaks even on rents. (Due to the extremely narrow margins, some operating reserve might be required over time, and City funds are requested to capitalize those reserves if allowable.) Hennepin County is estimating about $65,000/dwelling unit; this level of funding could support up to 75 units, or fewer if operating reserves are also funded. MPHA has also expressed interest in being a program partner with Moving to Work subsidy.
This program aligns with current CPED work around addressing and ending homelessness. It also aligns with staff work on a new City ordinance creating a regulatory framework to allow for new – and to better regulate existing – rooming houses, single room occupancy units, and congregate living facilities.
Racial Equity Impact
People of color are dramatically more likely than white people to experience homelessness. More than 65% of single adults in shelter are BIPOC, with more than 50% Black/African American. SROs are a strategy to prevent homelessness but also transition persons in shelter into permanent housing.
ResultsThis pilot program will help address the critical shortage of deeply affordable housing, utilizing a soon to be re-allowing housing type and a model that does not compete with existing constrained long-term subsidy resources. Up to 75 SRO (or efficiency) dwelling units would result. The number of units and location of units will be tracked.