Since the collapse of the housing market after the economic recession hit in 2007, the City of Minneapolis and neighborhood organizations have been looking for new ways to encourage economic growth and homeownership in neighborhoods with high foreclosure and vacant property rates. The Minneapolis Department of Community Planning and Economic Development (CPED) recently announced a new Housing Replacement District Plan which, if passed, would allow the city to buy and redevelop up to 200 vacant, substandard and foreclosed properties throughout Minneapolis. CPED coordinator Edith Johnson said although the plan is not restricted to a specific neighborhood, the focus will be on north Minneapolis. âÄúIn this depressed market, itâÄôs unfortunate that north Minneapolis has been hit more than other areas of Minneapolis,âÄù she said. âÄúItâÄôs just the reality.âÄù Johnson said CPED has already acquired properties and is waiting for comments on the plan from neighborhood associations, the Hennepin County Board of Commissioners, and the City Planning Commission. If the City Council passes the plan after a public hearing in December, the acquired properties will be reconstructed to attract more homeowners. Bob Miller, executive director of the outgoing Neighborhood Revitalization Program, said several properties need physical improvements, such as new roofs, heating and air conditioning systems, windows and insulation. âÄúYou could name just about anything that would need to be fixed,âÄù he said. Lee Hibbard, vice president of the Southeast Como Improvement Association, said southeast Como and other neighborhoods surrounding the University of Minnesota donâÄôt have as many vacated properties as north Minneapolis, thanks to the Revolving Loan âÄî which has a 5 percent interest rate and offers up to $15,000 âÄî and the University District Home Buyers Incentive program, a down payment of up to $10,000 offered through the University District Partnership Alliance. âÄúThe housing market hasnâÄôt been the greatest, but [the loan programs] have been successful in bringing us some new homeowners,âÄù she said. Tax Increment Financing The plan is the third of its kind in Minneapolis. The city passed Housing Replacement Districts I and II in 1997 and 2003, respectively, but each plan has a five-year limit on expansion, which is why CPED is developing a third tax increment financing district (TIF) âÄî a public financing method used to generate revenues for redevelopment purposes of neighborhoods. Under a typical TIF district, the process of rehabilitating properties results in an increase in the value of the surrounding real estate. New investments eventually generate higher tax revenues, which are used to finance the redevelopment projectâÄôs debt. âÄú[TIF districts are] great for neighborhoods because they provide money to be dedicated to a specific area for improvement,âÄù Miller said. âÄú[Neighborhoods wouldnâÄôt] have to look for other sources of funding every time they needed to do something. TheyâÄôd have a restricted, dedicated source of funding.âÄù Johnson said the generated revenues can accumulate and fund more development projects in the district over time, until the plan reaches its expiration. The total cost of acquiring and rehabilitating 200 parcels is estimated to be $10,193,480, which Johnson said could come from federal funds, the Neighborhood Stabilization Program and other redevelopment grants.