Al Flowers reveals New Housing Policy and Funding Platform at Northside Mayoral forum

Housing Policy and Funding Platform

Affordable Homeownership Fund

A longer‐term commitment for affordable homeownership funding is needed in the City of Minneapolis to leverage other funds, create equal opportunities for homeownership, and fill the huge gap in the affordable housing spectrum for household wanting to purchase homes in Minneapolis. The projected population increase in Minneapolis coupled with increasing housing costs only makes the need even greater. A dedicated $10 million fund (or policies that achieve the same benefit), similar to the Affordable Housing Trust Fund (rental housing) is needed to ensure ongoing opportunities to fund affordable homeownership in Minneapolis. If not, numerous residents will be trapped in subsidized rental and the city and other public/private sources will continue to be needed in order to re-subsidize rental units in perpetuity. Some proven solutions (used in other larger cities) would serve as tools to fund and support an Affordable Homeownership Fund and are listed below:

HRA Levy

Levy a percent (up to .0185%) of property value increases over the next 10 years to fund an affordable homeownership fund.

Inclusionary Housing Policy(ies) tied to Long-term Affordability

Density bonus, unit size reduction, relaxed parking, direct city subsidy, or in‐lieu payments, could all be used as incentives to create affordable ownership housing units in Minneapolis. These types of inclusionary housing strategies have been used in other urban cities to significantly reduce or even eliminate the need for additional city investments into affordable homeownership. Inclusionary housing policies create opportunities to fund affordability through the pro forma of a project instead of direct subsidies. Important to the inclusionary housing discussion is the need to ensure and mandate permanent affordability. It makes absolutely no sense to only create affordability for a limited time period, so it would be critical to ensure long-term or permanent affordability be tied to affordable units.

Affordable Condo Development

Condo developments in Minneapolis are again becoming a point of housing development discussions. The changes in state law that just went into effect, which increase the responsibility of Homeowner Associations and decrease the liability for developers, will certainly increase the number of new condo units over the next several years. As Minneapolis continues to be more dense and populated, condos and other higher density housing options will need to play a role. East Elliot, Downtown, North Loop, and near Northeast Minneapolis housing continues to become more expensive and displacement of low- and moderate-income residents is a real concern…especially in the East Elliot neighborhood. Inclusionary Housing and/or an in-lieu funding option for all new condos would ensure that affordable units were included in these new Minneapolis condo developments.

Value Capture

If the collective belief is that housing and property values in the City of Minneapolis are going to increase, than value capture opportunities really need to be put on the table as a solution to also support the creation of affordable homeownership units in Minneapolis. Value capture opportunities can be used through TIF (or Tax Increment Financing) or Linkage Fees.

TIF for affordability funding

TIF is already used as a tool for funding many projects in Minneapolis, but might be able to be used strategically to benefit affordable homeownership on a broader basis in underserved and undervalued neighborhoods. Its already been proven in other communities that values will increase near transit and other amenities. In tying TIF investments to long-term affordable housing it will be possible to extend the TIF benefit to future generations of low- and moderate income homebuyers.

Linkage Fees for affordability funding

The City of Seattle has recently introduced Linkage Fees tied to their city’s zoning. Essentially, any new developments over 100,000 SF incur an additional fee that funds an affordable housing fund. Given the development that is occurring in several areas of Minneapolis, a Linkage Fee might prove to be a positive tool to fund a long-term affordable homeownership fund.

Proceeds from the sale of City Assets

Annually, the city of Minneapolis sells numerous assets (land, buildings, homes, other assets). In many or most cases, the proceeds from these sales – if not encumbered with funding sources – end up essentially as unrestricted general funds to be used at the city’s discretion. A portion or all of these unencumbered returned funds could be a dedicated source of funding for an affordable homeownership fund.

Another use idea that would also produce multiple benefits to Minneapolis

City Employee Homeownership Incentive

With the continued tension between many Minneapolis communities and the Minneapolis Police Department, perhaps there are opportunities to incent more Minneapolis Police Officers to live in the city. There might be a solution in providing a "community land trust - like" solution to make this work. What if the City provided a $50,000 (or other figure) "grant" to incent officers to purchase homes in Minneapolis (for this purpose we could figure out a way to adjust/eliminate income restrictions that the CLCLT uses). The "grant" would be tied to the title of the land and stay with the property. Additionally, the amount of the grant could provide more/less dependent on which neighborhoods we are working to incent homeownership. If/when the officer decides to sell, we could keep the investment (grant) in the property and make it available to another officer. It could be started as a pilot for 10 officers and work toward providing an additional 10 grants a year moving forward until we hit some goal. This would allow us to essentially create and ensure a growing number of ownership units in the city. It also will ensure that police officers will be able to purchase in the city when values go up and it becomes more cost prohibitive for them to live here in the future.

Paid for by the Truth to the People Campaign 3543 Chicago Ave. S. Minneapolis, MN 55407 Labor Donated