Housing Finance

Preservation/ Rental Preservation and Rehabilitation

Statewide Outcome(s):

The rental rehabilitation activity supports the following statewide outcome(s).

A thriving economy that encourages business growth and employment opportunities.

Strong and stable families and communities.

Context:

This activity assists with the rehabilitation, repair, and stabilization of aging federally assisted rental housing and naturally affordable, unsubsidized rental housing. The majority of the federally assisted rental housing in Minnesota was developed 30- 40 years ago. These properties are in need of infusions of capital for rehabilitation and repairs. The housing cannot be adequately maintained with the housing assistance payment levels set by the federal government. Additional information about subsidized rental housing preservation needs, see http://www.mnhousing.gov/news/reports/index.aspx#bipartisan Similarly, a significant portion of the naturally affordable housing stock in Greater Minnesota struggles to finance major capital improvements and repairs because the market rents are too low to generate adequate reserves for capital repairs. Tenants in federally subsidized rental housing generally have extremely low incomes: the median annual income of tenants in these developments is under $14,000. Naturally affordable, unsubsidized rental housing receiving assistance from Minnesota Housing for capital repairs serves tenants with median annual incomes under $12,000. Housing options for households at these income levels are limited. Access to decent, affordable housing for employees is necessary ingredient for sustaining a vibrant business climate. This activity is funded with general fund appropriations for the Rental Rehabilitation Deferred Loan program (Minnesota Statutes (M.S.) section 462A.33 and 462A.05, subd. 14a), the Affordable Rental Investment Fund � Preservation (PARIF, M.S. section 462A.21, subd. 8b) and federal HOME funds for the HOME Affordable Rental Preservation program (HOME HARP). .

Strategies:

Deferred loan to stabilize properties and address capital improvement needs are made available to:

• Private owners of federally assisted rental housing that is determined to be at risk of losing federal assistance.
• Private owners of naturally affordable, unsubsidized housing that cannot support amortizing debt.

Maintenance of the existing supply of affordable and decent housing supports the statewide outcome of strong and stable families and communities and a thriving economy that encourages business growth and employment opportunities. The agency works with local non-profit organizations, local units of government and owners and developers of affordable rental housing to assemble the most appropriate package of assistance that will lead to long-term affordability and stability.

Results:

The terms of the loan provided by Minnesota Housing require maintenance of rent affordability. Owners of federally assisted housing must agree to continue participation in the federal program for the maximum term available. Owners of naturally affordable, unsubsidized rental housing must agree to maintain rents at affordable levels. Properties are monitored for compliance with the affordability requirements. Factors such as increasing operating costs, market rents, estate planning considerations, owner�s willingness to make further investments in their rental properties and the availability of resources impact the number of housing units the agency can assist with preservation and stabilization. The results increased significantly from FY 2010 to FY 2011. This is due to the rehabilitation of Riverside Plaza, which is an extremely large multifamily development in Minneapolis (1300 units). The measure for average median income demonstrates that through the PARIF program, the Agency preserves housing for very low income individuals and families whose income is less than 30 percent of area median income (AMI). Although the income level increased from FY 2010 to FY 2011, the trend is considered to be stable because it remains under the federal definition of extremely low-income (30 percent of AMI).

See the 2011 Program Assessment report for additional results information: http://www.mnhousing.gov/idc/groups/administration/documents/document/mhfa_012258.pdf

Performance Measures Notes:

Previous measures are from FY 2010 and current measures are from FY 2011.