CITY OF MINNEAPOLIS Naturally Occurring Affordable Housing (NOAH) Preservation Fund Community Development & Regulatory Services Committee March 28, 2017 3/27/2017 1
MPLS NOAH Preservation Fund • 2017 Budget includes $1.5 million for NOAH preservation • Request approval of proposed guidelines and documents • Presentation outline • Background • Regional response • Proposed Guidelines • Public comment 2
Background – Rental Housing Supply • 93,770 rental housing units • ~ 38,000 market affordable @ 60% AMI (~ 23% of the total market affordable units in the region) • Incomes $36,000 - $51,480 • Rents below $900 - $1,200 • ~12,000 affordable/restricted at 60% AMI • City LCA production goal: 422/units/year @ 60% AMI • Shrinking supply of affordable housing • Increased sales: 2010-2015, 355 property sales including 10,512 units • Approx. 12,000 fewer units affordable at 50% AMI than in 2000 3
Background – Housing Demand • 52% Minneapolis residents are renters • About half are “cost burdened” (pay more than 30% of income for housing) • Cost burden rate of low income renters (50% AMI) increased from 64% in 2000 to 74% • Compared with those who were renting in 2000, today’s renters face reduced incomes and increasing rents % Change in Median Income and Median Housing Costs by Owner/Renter Status, Minneapolis, 2000 - 2014 11% 11% 0% Income Housing Costs -14% Owner Renter 4
Regional Response • Greater MN Housing Fund: NOAH Impact Fund • $25 million fund • Preserve 1,000 units of at-risk market affordable housing • Freddie Mac Demonstration • National Housing Trust, CommonBond Communities, Mercy Housing • City of Minneapolis • Investment Policy change 2016: Allows City investment in mortgage backed securities issued by Freddie Mac where underlying mortgages are for Minneapolis NOAH properties. • NOAH Preservation Fund: $1.5 million • Changes to the Affordable Housing Trust Fund and other city policies to support preservation 5
Minneapolis NOAH Preservation Fund: Proposed Guidelines • Naturally Occurring Affordable Housing (NOAH) Defined • Rental housing in the private market without government subsidy where at least 20% of the units are affordable to households with incomes at or below 60% of the AMI • Rental housing that previously received local subsidy or low income housing tax credits, and income and/or rent restrictions will expire within the next 5 years • Eligible properties • NOAH properties in good condition occupied by tenants at risk of displacement due to anticipated rent increases • Eligible borrowers • Non-profit organization • Leveraging resources from GMHF Impact Fund or Freddie Mac Demonstration 6
Minneapolis NOAH Preservation Fund: Proposed Guidelines, con’t • Terms: • 15 years deferred loan • 0%-1% interest • Not to exceed $25,000 per affordable unit • Acquisition funding only • Affordability Requirements: • 75% of the units rent and income restricted at 80% AMI • 15-year affordability period • No involuntary displacement: rent increase limited first 2 years to 5% per year 7
Public Comment • Solicited input from stakeholders and partners • 45 day public comment period • Few comments received • Strong support for Minneapolis addressing NOAH • Recommendation to ensure long term affordability, increased tenant protections • Recommendation to expand program to address NOAH property in need of capital improvements 8
Next Steps • Funds available on first come first serve basis, based on staff evaluation that project meets Program Guidelines • Expedited review and approval • Loan Documents approved by City Attorney • CPED Director authorized to execute documents 9
Minneapolis NOAH Preservation Fund • Questions? 10
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