Minneapolis Advantage provided $500,000 dollars last year in a pilot project that gave $10,000 forgivable loans to 50 Minneapolis homebuyers. The loans were for down payment and closing costs, provided that buyers purchased homes on the same street as a foreclosed, vacant or boarded property. This month, the city of Minneapolis announced funding for expansion of Minneapolis Advantage.
The purpose of the Minneapolis Advantage Program is to help rebuild the housing market in key neighborhoods that have experienced mortgage foreclosures. In 2009, the funding pool has expanded to $1.5 million and the rules have slightly changed. The home to be purchased must be a foreclosed property, purchased for owner-occupancy, and owned for a minimum of five years. That’s right, foreclosed homes only!
This second phase of funding was made possible by the city, the Federal Home Loan Bank of Des Moines, and Wells Fargo Bank. Because of the success of the first phase last year, $1 million is available for home purchases in North Minneapolis and $500,000 in the north, northeast and south central areas of the city. Funds will help low-income households purchase foreclosed homes. The homebuyers will also receive homebuyer and homeownership education through the Minnesota Home Ownership Center.
The first phase was wide open to anyone who had great credit and was willing to buy in areas hardest hit by blighted housing. There was no income restriction and the home to be purchased did not have to be a foreclosed home–just located on the same street as a foreclosed home. Fifty new owner-occupied homes bought with the help of the program meant more stable property values for fellow homeowners, help in securing a safe atmosphere, improvement of the curb appeal of homes, and potentially attracting business investors. Although these benefits sound good, there is still concern that North Minneapolis residents are not benefitting enough.
The program was advertised with intentions to help low income households. An e-mail sent to residenets of the McKinley neighborhood, for example, said: “If you are interested in buying a home to live in and qualify for a traditional (non-sub prime) home loan, you may be able to…buy a house in our great neighborhood.”
The report on the first phase indicated that, although there were no income restrictions, 76 percent of the buyers were at 80 percent area median income (MMI) or less. Since home prices were low, the program made home buying affordable.
According to the first phase report, “65 percent of the homeowners are White; 13 percent are African-American; 19 percent are Asian; and 3 percent are of two or more races.” This reflects the demographic make-up of Minneapolis. However some critics say it doesn’t reflect the higher percentage of African American residents in North Minneapolis.
The process worked in Brian Reichow’s favor. A recipient of the first phase of forgivable loans, Reichow settled into the Homewood neighborhood in North Minneapolis down the block from a boarded home, leaving behind suburban Plymouth.
”I’ve spent my entire life in the suburbs and it wasn’t until I began a home search that I considered the city. In terms of the value and quality of the homes, I was not happy with what was in the suburbs. So I began looking at different programs,” he confessed.
The report says that, like Reichow, almost 30 percent of the Minneapolis Advantage homebuyers came from the suburbs or St. Paul and that 95 percent of these moved to North Minneapolis.
Hawthorne Housing Director Jeff Skrenes says that’s just fine with him. He would rather see suburban homebuyers stepping up to the plate, instead of watching foreclosed homes gobbled up by slumlords.
“People from outside of the community are taking advantage of the program’s benefits, but from the community’s standpoint, I see slumlords buying up mass amounts of property and filling vacant and boarded homes with bad renters. If people are coming into the area and buying foreclosed homes, that’s a gain for the area,” he said.
Ninth Ward Minneapolis Councilmember Gary Schiff is pleased with the outcomes from the first phase and recommends that the city build on its previous success with the Minneapolis Advantage Program. “I believe we can do much better than a ‘first come first serve’ approach to handing out this money,” he said. He wants to increase the 62 percent foreclosure property purchase rate from the first phase as well as the 76 percent of buyers at less than 80 percent MMI, many of whom were first-time homeowners.
“It’s nothing like the stereotypes. [This process] has really opened my eyes and changed my perception. It’s like a little piece of advertising for the city,” he said. His only reservation is concerning the new exclusive foreclosure purchasing required in the second phase. “It puts traditional home sales at a disadvantage. And with the program offering an extra $10,000 off, that’s two strikes against you,” he said.
Eligible neighborhoods for the program include Harrison, Hawthorne, Near North, Willard-Hay, Cleveland, Folwell, Jordan, Lind-Bohanon, McKinley and Webber-Camden in North Minneapolis. Northeast and South Central neighborhoods include Audubon Park, Beltrami, Holland, Sheridan, Bryant, Central, East Phillips, Midtown Phillips, Phillips West, Powderhorn Park, Ventura Village, and Whittier. The City of Minneapolis expects to re-launch the program in March 2009.
Lauretta Dawolo Towns is a freelancer for several local community and ethnic news outlets. She is also a mentor in the Big Brothers, Big Sisters program and a consultant with the Girls in Action program at Patrick Henry High School. Towns is a resident of the McKinley neighborhood in North Minneapolis where she lives with her husband and newborn son.