The following is the full text (from what I have in fax form) of the NRP Resolution adopted on February 25, 2003. If you would like it in PDF format, please e-mail me offlist. I'll let the weakness of some of the "findings" speak for themselves. Gregory Luce/Project 504
. Several recent publications have asserted that Minneapolis needs more affordable housing; . The time required to create affordable housing units using public dollars-from fund allocation to RFP to completion of construction-averages over two years and requires over $25,000 of public subsidy per unit. Further, the number of units being constructed does not seem sufficient to meet the expected level of demand; . For most Americans, the majority of their wealth is found in the value of their homes; . The Federal Reserve Bank has concluded that the affordable housing issue is one of absence of income and wealth rather than absence of units; . Home owners have been able to increase their wealth for several decades, while renters have paid higher and higher rents for their living quarters with no economic benefit; . There is a significant difference between the number of Caucasian homeowners and homeowners of color; . There are many affordable homes in the City of Minneapolis, but many of the renters in need of affordable units cannot purchase those homes due to lack of down payment and uneven (non-housing related) credit histories. These renters are disproportionately persons of color; . There is another way to meet the demand for affordable housing: turn renters into owners; . Lenders, however, have traditionally been unwilling to lend home purchase money to people without funds for down payments or with uneven credit histories; . Private mortgage insurance companies-who normally insure lenders against exposure of loan-to-values greater than 80%--are also unwilling to insure "risky" borrowers; . These lending guidelines, however, do not take into account highly localized, micro-markets such as the City of Minneapolis; . The NRP can, through a partnership with local lenders, banks, and other related institutions, circumvent this "market limitation" and create a new initiative-identified herein as "renters to owners"-to increase the number of affordable homeowners; . By setting aside a pool of money to act as a mortgage insurance fund, and by working with participating lenders, we may be able to help borrowers-who would otherwise occupy existing or upcoming affordable rental units-obtain 100% home mortgage financing, with no down payment; . These potential new homeowners would be drawn from a pool of those who would normally occupy new affordable rental units, thus freeing up those units for other qualifying households; . This initiative would help achieve the adopted City Goal of "Fostering the development and preservation of a mix of quality housing types that is available, affordable, meets current needs, and promotes future growth" while meeting the goal of many neighborhoods of increasing investment in single family homes; . This program will help address income and wealth generation and involves the federal government by using homeowner tax deductions to generate more net income for lower income populations while helping them build equity and wealth in real property; . The secondary and tertiary benefits of increased homeownership, especially in neighborhoods comprised significantly of rental units, are numerous, and include a reduction in transitional families (particularly in our schools), a gradual reduction of economic cost to local government (as equity, thus wealth, builds), a reduction in crime (since neighborhoods with greater homeownership experience lower crime rates), etc.; . Many of the families who would participate in this initiative might otherwise never have the opportunity to own a home of their own; . There is a very successful precedent to the proposed model: the housing benefit provided by the Federal government through the Veteran's Administration to World War II veterans. It provided the guarantee of, on average, the top twenty percent of a home's purchase price, and thus enabled lenders to give high loan-to-value mortgages to those who would not otherwise qualify; . This initiative represents a different approach for helping solve the affordable housing dilemma: investing in people instead of buildings; . This funding would be structured as an "insurance pool" of funds, and, except for normal administrative tasks, would be spent only if claims occur; . The fund will be revolved as owners achieve a 20% share in the equity of their property and the guarantee is no longer needed. To initiate this major effort, the following resolution is offered for adoption. BE IT RESOLVED: that the NRP staff and Director, in conjunction with local lenders, banks, mortgage insurance companies and realtor organizations, develop guidelines and procedures to be approved by the NRP Policy Board for a pilot program to implement a "renters to owners" initiative. BE IT FURTHER RESOLVED: that the NRP shall set aside $2,000,000 (two million dollars) of the 2002 $4,000,000 (four million dollars) affordable housing reserves to fund this new initiative. BE IT FURTHER RESOLVED: that these funds shall be made available only after approval of the program guidelines by the Policy Board and the transfer of the 2003 NRP allocation of $11,000,000 from the City to the NRP program fund. TEMPORARY REMINDER: 1. Send all posts in plain-text format. 2. 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