Mpls gets stabilization funding

The city will use the funds to buy and rehabilitate foreclosed homes.

Alex Holmquist

With an estimated 2,500 properties to be foreclosed in Minneapolis this year, city officials have devised a plan to lessen the burden on local communities. The city will use $15.4 million in federal Neighborhood Stabilization funds to aid neighborhoods heavily affected by foreclosures. The funding was made available through the American Recovery and Reinvestment Act of 2009. There were 3,077 Minneapolis properties foreclosed in 2008 and another 2,074 foreclosures by November 2009. Earlier this month, the Minneapolis City Council and Mayor R.T. Rybak approved a spending plan for the funding. Portions of the funding will be used to help potential homeowners pay down payments and closing costs and assist nonprofit developers in purchasing foreclosed and abandoned properties. The funds will also be used to demolish properties that cannot be rehabilitated due to cost or condition and redevelop demolished or vacant properties. City Council President Barbara Johnson represents the 4th Ward in Northwest Minneapolis. Johnson said she knows the impact the money could have on this area, which has seen the most foreclosures in Minneapolis. The funds will be used to attract new homeowners to Minneapolis neighborhoods and increase property values. The funds will not only be used to acquire and demolish foreclosed properties, but for foreclosure prevention counseling services as well, Johnson said. The funding is estimated to provide financing for 70 homes, rehabilitation of 54 units, acquisition and demolition of 56 blighted properties and redevelopment of 80 properties in Minneapolis. Alyssa DePesa Granlund, a real estate agent with Edina Realty, said the plan could be beneficial, especially if the housing is owner-occupied. Granlund said local investors who buy the properties to lease them out may not take care of them to the same extent as live-in owners. She added that the city should carefully consider which properties are demolished, since it may be less costly to loan homeowners the money to fix up a property rather than build an entirely new home. The total funds must be spent by 2013, with 50 percent spent by 2012. Funding can only be used to assist families whose income is at or below 120 percent of area median income, and 25 percent must be used to assist those with an income below 50 percent of area median income.