Naturally Occurring Affordable Housing (NOAH) Preservation Fund - - PowerPoint PPT Presentation

CITY OF MINNEAPOLIS

Naturally Occurring Affordable Housing (NOAH) Preservation Fund

Community Development & Regulatory Services Committee March 28, 2017

3/27/2017

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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

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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

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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

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11%

• 14%

0% 11% Owner Renter Income Housing Costs

% Change in Median Income and Median Housing Costs by Owner/Renter Status, Minneapolis, 2000 - 2014

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

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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

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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

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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

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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

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Minneapolis NOAH Preservation Fund

• Questions?

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